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

THE NEXT FARM BILL

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

HEARINGS

BEFORE THE

SUBCOMMITTEE ON CONSERVATION AND FORESTRY;

AND THE

SUBCOMMITTEE ON LIVESTOCK AND FOREIGN AGRICULTURE;

AND THE

SUBCOMMITTEE ON COMMODITY EXCHANGES, ENERGY, AND CREDIT;

AND THE

SUBCOMMITTEE ON
BIOTECHNOLOGY, HORTICULTURE, AND RESEARCH;

AND THE

SUBCOMMITTEE ON NUTRITION;

AND THE

SUBCOMMITTEE ON GENERAL FARM COMMODITIES
AND RISK MANAGEMENT;

AND THE

COMMITTEE ON AGRICULTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS

FIRST SESSION

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FEBRUARY, 28; MARCH, 9, 16, 21, 22, 28; APRIL 4; JUNE 7, 8, 22; JULY
12, 18, 2017

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Serial No. 115-3

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Part 1

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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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

U.S. GOVERNMENT PUBLISHING OFFICE

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COMMITTEE ON AGRICULTURE

K. MICHAEL CONAWAY, Texas, Chairman

GLENN THOMPSON, Pennsylvania COLLIN C. PETERSON, Minnesota,
Vice Chairman Ranking Minority Member
BOB GOODLATTE, Virginia, DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma JIM COSTA, California
STEVE KING, Iowa TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama MARCIA L. FUDGE, Ohio
BOB GIBBS, Ohio JAMES P. McGOVERN, Massachusetts
AUSTIN SCOTT, Georgia FILEMON VELA, Texas, Vice Ranking
ERIC A. ``RICK'' CRAWFORD, Arkansas Minority Member
SCOTT DesJARLAIS, Tennessee MICHELLE LUJAN GRISHAM, New Mexico
VICKY HARTZLER, Missouri ANN M. KUSTER, New Hampshire
JEFF DENHAM, California RICHARD M. NOLAN, Minnesota
DOUG LaMALFA, California CHERI BUSTOS, Illinois
RODNEY DAVIS, Illinois SEAN PATRICK MALONEY, New York
TED S. YOHO, Florida STACEY E. PLASKETT, Virgin Islands
RICK W. ALLEN, Georgia ALMA S. ADAMS, North Carolina
MIKE BOST, Illinois DWIGHT EVANS, Pennsylvania
DAVID ROUZER, North Carolina AL LAWSON, Jr., Florida
RALPH LEE ABRAHAM, Louisiana TOM O'HALLERAN, Arizona
TRENT KELLY, Mississippi JIMMY PANETTA, California
JAMES COMER, Kentucky DARREN SOTO, Florida
ROGER W. MARSHALL, Kansas LISA BLUNT ROCHESTER, Delaware
DON BACON, Nebraska
JOHN J. FASO, New York
NEAL P. DUNN, Florida
JODEY C. ARRINGTON, Texas

______

Matthew S. Schertz, Staff Director

Anne Simmons, Minority Staff Director

______

Subcommittee on Conservation and Forestry

FRANK D. LUCAS, Oklahoma, Chairman

GLENN THOMPSON, Pennsylvania MARCIA L. FUDGE, Ohio, Ranking
JEFF DENHAM, California Minority Member
DOUG LaMALFA, California TIMOTHY J. WALZ, Minnesota
RICK W. ALLEN, Georgia ANN M. KUSTER, New Hampshire
MIKE BOST, Illinois RICHARD M. NOLAN, Minnesota
RALPH LEE ABRAHAM, Louisiana TOM O'HALLERAN, Arizona
TRENT KELLY, Mississippi FILEMON VELA, Texas

______

Subcommittee on Livestock and Foreign Agriculture

DAVID ROUZER, North Carolina, Chairman

BOB GOODLATTE, Virginia JIM COSTA, California, Ranking
STEVE KING, Iowa Minority Member
SCOTT DesJARLAIS, Tennessee FILEMON VELA, Texas
VICKY HARTZLER, Missouri CHERI BUSTOS, Illinois
TED S. YOHO, Florida STACEY E. PLASKETT, Virgin Islands
TRENT KELLY, Mississippi DWIGHT EVANS, Pennsylvania
ROGER W. MARSHALL, Kansas ----

(ii)

Subcommittee on Commodity Exchanges, Energy, and Credit

AUSTIN SCOTT, Georgia, Chairman

BOB GOODLATTE, Virginia DAVID SCOTT, Georgia, Ranking
MIKE ROGERS, Alabama Minority Member
DOUG LaMALFA, California SEAN PATRICK MALONEY, New York
RODNEY DAVIS, Illinois ANN M. KUSTER, New Hampshire
JAMES COMER, Kentucky STACEY E. PLASKETT, Virgin Islands
ROGER W. MARSHALL, Kansas TOM O'HALLERAN, Arizona
JOHN J. FASO, New York DARREN SOTO, Florida

______

Subcommittee on Biotechnology, Horticulture, and Research

RODNEY DAVIS, Illinois, Chairman

BOB GIBBS, Ohio MICHELLE LUJAN GRISHAM, New
JEFF DENHAM, California Mexico, Ranking Minority Member
TED S. YOHO, Florida AL LAWSON, Jr., Florida
DAVID ROUZER, North Carolina JIMMY PANETTA, California
DON BACON, Nebraska JIM COSTA, California
NEAL P. DUNN, Florida JAMES P. McGOVERN, Massachusetts
JODEY C. ARRINGTON, Texas LISA BLUNT ROCHESTER, Delaware

______

Subcommittee on Nutrition

GLENN THOMPSON, Pennsylvania, Chairman

STEVE KING, Iowa JAMES P. McGOVERN, Massachusetts,
ERIC A. ``RICK'' CRAWFORD, Arkansas Ranking Minority Member
SCOTT DesJARLAIS, Tennessee ALMA S. ADAMS, North Carolina
VICKY HARTZLER, Missouri DWIGHT EVANS, Pennsylvania
RODNEY DAVIS, Illinois MARCIA L. FUDGE, Ohio
TED S. YOHO, Florida MICHELLE LUJAN GRISHAM, New Mexico
DAVID ROUZER, North Carolina AL LAWSON, Jr., Florida
JAMES COMER, Kentucky JIMMY PANETTA, California
ROGER W. MARSHALL, Kansas DARREN SOTO, Florida
JOHN J. FASO, New York SEAN PATRICK MALONEY, New York
JODEY C. ARRINGTON, Texas

______

Subcommittee on General Farm Commodities and Risk Management

ERIC A. ``RICK'' CRAWFORD, Arkansas, Chairman

FRANK D. LUCAS, Oklahoma RICHARD M. NOLAN, Minnesota,
MIKE ROGERS, Alabama Ranking Minority Member
BOB GIBBS, Ohio TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia CHERI BUSTOS, Illinois
SCOTT DesJARLAIS, Tennessee LISA BLUNT ROCHESTER, Delaware
RICK W. ALLEN, Georgia DAVID SCOTT, Georgia
MIKE BOST, Illinois SEAN PATRICK MALONEY, New York
RALPH LEE ABRAHAM, Louisiana STACEY E. PLASKETT, Virgin Islands
DON BACON, Nebraska AL LAWSON, Jr., Florida
NEAL P. DUNN, Florida TOM O'HALLERAN, Arizona
JODEY C. ARRINGTON, Texas

(iii)

C O N T E N T S

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Page

Tuesday, February 28, 2017--Subcommittee on Conservation and Forestry

Bost, Hon. Mike, a Representative in Congress from Illinois,
submitted statement on behalf of National Grain and Feed
Association.................................................... 47
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 4
Fudge, Hon. Marcia L., a Representative in Congress from Ohio,
opening statement.............................................. 3
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 1
Prepared statement........................................... 2
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 5

Witnesses

Coffey, Chuck, Owner/Manager, Double C Cattle Company; Member,
National Cattlemen's Beef Association, Davis, OK............... 6
Prepared statement........................................... 7
Submitted question........................................... 54
Gertson, Timothy, Co-Owner/Co-Operator, G5 Farms; Member, Board
of Directors, USA Rice Federation, Lissie, TX.................. 10
Prepared statement........................................... 11
Submitted questions.......................................... 54
Peters, Jeremy, Chief Executive Officer, National Association of
Conservation Districts, Darlington, MD; on behalf of Lee
McDaniel, Immediate Past President, National Association of
Conservation Districts......................................... 15
Prepared statement of Mr. McDaniel........................... 17
Submitted question........................................... 55
Nomsen, David E., Vice President of Governmental Affairs,
Pheasants Forever, Inc., Garfield, MN.......................... 21
Prepared statement........................................... 23
Submitted question........................................... 56
Supplementary material....................................... 49
Piotti, Hon. John F., President, American Farmland Trust,
Washington, D.C................................................ 26
Prepared statement........................................... 28
Submitted question........................................... 56
Supplementary material....................................... 51

Tuesday, February 28, 2017--Subcommittee on Livestock and Foreign
Agriculture

Costa, Hon. Jim, a Representative in Congress from California,
opening statement.............................................. 61
Rouzer, Hon. David, a Representative in Congress from North
Carolina, opening statement.................................... 59
Prepared statement........................................... 60

Witnesses

Williams, Ph.D., Gary W., Professor of Agricultural Economics and
Co-Director, Agribusiness, Food, and Consumer Economics
Research Center, Department of Agricultural Economics, Texas
A&M University, College Station, TX............................ 63
Prepared statement........................................... 65
Supplementary information.................................... 107
Submitted question........................................... 115
Steinkamp, Hon. Joseph E., Member, Board of Directors, American
Soybean Association, Evansville, IN; on behalf of Coalition to
Promote U.S. Agriculture Exports, Agribusiness Coalition for
Foreign Market Development..................................... 70
Prepared statement........................................... 71
Hamilton, Tim, Executive Director, Food Export Association of the
Midwest USA and Food Export USA--Northeast, Chicago, IL........ 76
Prepared statement........................................... 78
Supplementary information.................................... 113
Seng, Philip, President and Chief Executive Officer, U.S. Meat
Export Federation, Denver, CO.................................. 80
Prepared statement........................................... 82
Alanko, Dean, Vice President of Sales and Marketing, Allegheny
Wood Products, Petersburg, WV; on behalf of Hardwood Federation 84
Prepared statement........................................... 86
Wenger, Paul J., almond producer, Wood Colony Nut Co.;
President,; California Farm Bureau Federation, Sacramento, CA.. 88
Prepared statement........................................... 90

Thursday, March 9, 2017--Subcommittee on Commodity Exchanges, Energy,
and Credit

Scott, Hon. Austin, a Representative in Congress from Georgia,
opening statement.............................................. 117
Joint submitted letter....................................... 169
Prepared statement........................................... 119
Scott, Hon. David, a Representative in Congress from Georgia,
opening statement.............................................. 120

Witnesses

Fox, Hon. Bob, Chair, Board of Commissioners, Renville County,
MN; Member, Board of Directors, National Association of
Counties, Franklin, MN......................................... 121
Prepared statement........................................... 123
Submitted question........................................... 408
Chastain, Dennis L., President and Chief Executive Officer,
Georgia Electric Membership Corporation, Tucker, GA; on behalf
of National Rural Electric Cooperative Association............. 127
Prepared statement........................................... 129
Submitted question........................................... 408
Fletcher, Steve, Manager and Operator, Washington County Water
Company, IL; President, National Rural Water Association,
Nashville, IL.................................................. 131
Prepared statement........................................... 133
Submitted question........................................... 408
Cook, R. Craig, Chief Operations Officer, Hill Country Telephone
Cooperative, Inc., Ingram, TX; on behalf of NTCA--The Rural
Broadband Association.......................................... 135
Prepared statement........................................... 137
Submitted question........................................... 412
Duff, John, Strategic Business Director, National Sorghum
Producers, Lubbock, TX......................................... 143
Prepared statement........................................... 145
Greenwood, Hon. James C., President and Chief Executive Officer,
Biotechnology Innovation Organization, Washington, D.C......... 146
Prepared statement........................................... 148
Supplementary material....................................... 170
Submitted questions.......................................... 415

Submitted Material

Moore, Ron, President, American Soybean Association, submitted
statement...................................................... 400
CoBank ACB, submitted statement.................................. 402
National Biodiesel Board, submitted statement.................... 404
Rural Community Assistance Partnership, submitted statement...... 406

Thursday, March 9, 2017--Subcommittee on Biotechnology, Horticulture,
and Research

Davis, Hon. Rodney, a Representative in Congress from Illinois,
opening statement.............................................. 417
Prepared statement........................................... 418
Lujan Grisham, Hon. Michelle, a Representative in Congress from
New Mexico, opening statement.................................. 419
Submitted article............................................ 459

Witnesses

Field, Jr., James, Director of Business Development, Frey Farms,
LLC, Keenes, IL................................................ 420
Prepared statement........................................... 422
Supplementary material....................................... 464
Black, Jr., N. Larry, General Manager, Peace River Packing
Company, Ft. Meade, FL......................................... 425
Prepared statement........................................... 426
Gilbert, Sean, General Manager, Gilbert Orchards, Inc. and
Sundquist Fruit, Yakima, WA.................................... 428
Prepared statement........................................... 430
Hill, Jay, Owner-Operator, Hill Farms and Wholesome Valley Farms,
Mesilla Park, NM............................................... 434
Prepared statement........................................... 435
Davis, Laura, Co-Owner/Co-Operator, Long Life Farm; President,
Board of Directors, Northeast Organic Farming Association--
Massachusetts Chapter, Hopkinton, MA........................... 439
Prepared statement........................................... 441

Submitted Material

Wingard, Charles, Director of Field Operations, Walter P. Rawl &
Son, Inc., submitted statement................................. 466

Thursday, March 16, 2017--Subcommittee on Biotechnology, Horticulture,
and Research

Davis, Hon. Rodney, a Representative in Congress from Illinois,
opening statement.............................................. 471
Prepared statement........................................... 472
Lujan Grisham, Hon. Michelle, a Representative in Congress from
New Mexico, opening statement.................................. 473
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 503

Witnesses

Akridge, Ph.D., Jay T., Glenn W. Sample Dean of Agriculture,
Purdue University; Chairman, Policy Board of Directors, Board
of Agriculture Assembly, Association of Public and Land-grant
Universities, West Lafayette, IN............................... 474
Prepared statement........................................... 476
Wilkins, Richard, Chairman, American Soybean Association; Vice
President, National Coalition for Food and Agricultural
Research, Greenwood, DE........................................ 485
Prepared statement........................................... 486
Carrington, Ph.D., James C., President, Donald Danforth Plant
Science Center, St. Louis, MO.................................. 498
Prepared statement........................................... 500

Submitted Material

Johnson, Roger, President, National Farmers Union, submitted
letter......................................................... 525
American Veterinary Medical Association, submitted statement..... 526

Thursday, March 16, 2017--Subcommittee on Conservation and Forestry

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 531
Prepared statement........................................... 532
Walz, Hon. Timothy J., a Representative in Congress from
Minnesota, opening statement................................... 533

Witnesses

Geissler, C.F., George L., Forester and Director, Forestry
Services Division, State of Oklahoma; Vice President, National
Association of State Foresters, Oklahoma City, OK.............. 534
Prepared statement........................................... 536
Benedict, Susan S., Managing Partner, Beartown Family LP; Member,
Tax Policy Subcommittee, National Public Affairs Committee,
American Forest Foundation, State College, PA.................. 540
Prepared statement........................................... 541
Neiman, Jim D., President and Chief Executive Officer, Neiman
Enterprises, Inc.; President, Federal Forest Resource
Coalition, Hulett, WY.......................................... 548
Prepared statement........................................... 550
Humphries, Rebecca A., Chief Conservation and Operations Officer,
National Wild Turkey Federation, Edgefield, SC................. 553
Prepared statement........................................... 555
Harbour, Tom, National Director (Ret.), Fire and Aviation
Management, U.S. Forest Service, USDA; Founder, Harbour Fire
Consulting, Falls Church, VA................................... 558
Prepared statement........................................... 559

Submitted Material

Browning, Kathryn C., Boulder, CO, submitted letter.............. 579

Tuesday, March 21, 2017--Subcommittee on Nutrition

McGovern, Hon. James P., a Representative in Congress from
Massachusetts, opening statement............................... 583
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 581
Prepared statement........................................... 582

Witnesses

Calvert, Carrie T., Director, Tax and Commodity Policy, Feeding
America, Washington, D.C....................................... 585
Prepared statement........................................... 586
Supplementary material....................................... 629
Kubik, Frank, Director, Commodity Supplemental Food Program,
Focus: HOPE, Detroit, MI....................................... 590
Prepared statement........................................... 592
Tonubbee, Jerry, Director--Food Distribution Program, Choctaw
Nation of Oklahoma, Durant, OK................................. 595
Prepared statement........................................... 596
Kriviski, Diane, Deputy Administrator, Supplemental Nutrition and
Safety Programs, Food and Nutrition Service, U.S. Department of
Agriculture, Alexandria, VA.................................... 600
Prepared statement........................................... 602

Tuesday, March 21, 2017--Subcommittee on Livestock and Foreign
Agriculture

Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 678
Costa, Hon. Jim, a Representative in Congress from California,
opening statement.............................................. 677
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 703
Rouzer, Hon. David, a Representative in Congress from North
Carolina, opening statement.................................... 675
Prepared statement........................................... 676

Witnesses

Uden, Craig, President, National Cattlemen's Beef Association;
Partner, Darr Feedlot, Inc., Johnson Lake, NE.................. 679
Prepared statement........................................... 680
Wittenburg, Carl, Chairman, National Turkey Federation,
Alexandria, MN................................................. 683
Prepared statement........................................... 685
Buchholz, Bob, Representative, Executive Board for Region V,
American Sheep Industry Association, Eldorado, TX.............. 687
Prepared statement........................................... 688
Herring, David D., Vice President and Board Member, National Pork
Producers Council; Vice President, TDM Farms/Hog Slat, Inc.,
Newton Grove, NC............................................... 692
Prepared statement........................................... 693

Submitted Material

Glenn, Ph.D., Barb P., Chief Executive Officer, National
Association of State Departments of Agriculture, submitted
statement...................................................... 711
Johnson, Roger, President, National Farmers Union, submitted
statement...................................................... 713
Livestock Marketing Association, submitted statement............. 715

Wednesday, March 22, 2017--Full Committee

Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 717
Prepared statement........................................... 721
Goodlatte, Hon. Bob, a Representative in Congress from Virginia,
opening statement.............................................. 719
Lujan Grisham, Hon. Michelle, a Representative in Congress from
New Mexico, prepared statement................................. 723
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 719
McGovern, Hon. James P., a Representative in Congress from
Massachusetts, submitted letter on behalf of Ben Burkett, Board
President; Lisa Griffith, Acting Executive Director, National
Family Farm Coalition.......................................... 775
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 718
Submitted chart.............................................. 773

Witnesses

Mulhern, James, President and Chief Executive Officer, National
Milk Producers Federation, Arlington, VA....................... 724
Prepared statement........................................... 726
Submitted questions.......................................... 786
Dykes, D.V.M., Michael D., President and Chief Executive Officer,
International Dairy Foods Association, Washington, D.C......... 735
Prepared statement........................................... 737
Supplementary material....................................... 777

Submitted Material

Johnson, Roger, President, National Farmers Union, submitted
letter......................................................... 785

Tuesday, March 28, 2017--Subcommittee on General Farm Commodities and
Risk Management

Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 834
Crawford, Hon. Eric A. ``Rick'', a Representative in Congress
from Arkansas, opening statement............................... 787
Prepared statement........................................... 788
Nolan, Hon. Richard M., a Representative in Congress from
Minnesota, opening statement................................... 789
Prepared statement........................................... 790
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 809

Witnesses

Spurlock, Wesley, President, National Corn Growers Association,
Stratford, TX.................................................. 790
Prepared statement........................................... 791
Moore, Ron, President, American Soybean Association, Roseville,
IL............................................................. 796
Prepared statement........................................... 798
Schemm, David K., President, National Association of Wheat
Growers, Sharon Springs, KS.................................... 801
Prepared statement........................................... 802
Friederichs, Peter, President, National Barley Growers
Association, Foxhome, MN....................................... 809
Prepared statement........................................... 811
Atkisson, Dan, Vice Chairman, National Sorghum Producers,
Stockton, KS................................................... 812
Prepared statement........................................... 814

Tuesday, March 28, 2017--Subcommittee on Nutrition

Conaway, Hon. K. Michael, a Representative in Congress from
Texas, submitted letter and report............................. 919
McGovern, Hon. James P., a Representative in Congress from
Massachusetts, opening statement............................... 845
Submitted letter............................................. 964
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 896
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 843
Prepared statement........................................... 844

Witnesses

Dean, Stacy, Vice President for Food Assistance Policy, Center on
Budget and Policy Priorities, Washington, D.C.................. 846
Prepared statement........................................... 848
Sykes, Russell, Director, Center for Employment and Economic
Well-Being, American Public Human Services Association,
Washington, D.C................................................ 859
Prepared statement........................................... 861
Arthur, Joseph ``Joe'', Executive Director, Central Pennsylvania
Food Bank, Harrisburg, PA...................................... 865
Prepared statement........................................... 867
Protas, Josh, Vice President of Public Policy, MAZON--A Jewish
Response to Hunger, Washington, D.C............................ 874
Prepared statement........................................... 876
Hatcher, Jennifer, Chief Public Policy Officer and Senior Vice
President, Government and Public Affairs, Food Marketing
Institute, Arlington, VA....................................... 884
Prepared statement........................................... 885

Tuesday, April 4, 2017--Subcommittee on General Farm Commodities and
Risk Management

Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 972
Crawford, Hon. Eric A. ``Rick'', a Representative in Congress
from Arkansas, opening statement............................... 969
Prepared statement........................................... 970
Nolan, Hon. Richard M., a Representative in Congress from
Minnesota, opening statement................................... 971
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 972

Witnesses

Lee, Ronnie, Chairman, National Cotton Council, Bronwood, GA..... 973
Prepared statement........................................... 974
Submitted question........................................... 1026
Gerard, Blake, Chairman, Board of Directors, USA Rice Farmers,
Cape Giarardeau, MO; on behalf of USA Rice Federation.......... 978
Prepared statement........................................... 980
Submitted questions.......................................... 1026
McMillan, Hon. Timothy E., Co-Founder and Co-Owner, Southern
Grace Farms, Enigma, GA; on behalf of Southern Peanut Farmers
Federation..................................................... 986
Prepared statement........................................... 988
Rynning, Robert, President, U.S. Canola Association, Kennedy, MN;
on behalf of National Sunflower Association.................... 991
Prepared statement........................................... 993
Submitted question........................................... 1027
Roney, Jack, Director of Economics and Policy Analysis, American
Sugar Alliance, Arlington, VA.................................. 995
Prepared statement........................................... 996

Submitted Material

Stansel, Dwight, President, Florida Peanut Federation, submitted
letter......................................................... 1025

Tuesday, April 4, 2017--Subcommittee on Commodity Exchanges, Energy,
and Credit

Scott, Hon. Austin, a Representative in Congress from Georgia,
opening statement.............................................. 1029
Prepared statement........................................... 1030
Scott, Hon. David, a Representative in Congress from Georgia,
opening statement.............................................. 1031

Witnesses

Thiessen, Douglas, Chief Executive Officer, Alabama Ag Credit,
Montgomery, AL; on behalf of Farm Credit System................ 1032
Prepared statement........................................... 1034
Buzby, Timothy L., President and Chief Executive Officer, Federal
Agricultural Mortgage Corporation, Washington, D.C............. 1040
Prepared statement........................................... 1041
Franzen, Nathan E., President, Ag Division, First Dakota National
Bank, Yankton, SD; on behalf of American Bankers Association... 1046
Prepared statement........................................... 1047
Handke, Steven J., President and Chief Executive Officer, Union
State Bank of Everest; At-Large Director, Independent Community
Bankers of America, Everest, KS................................ 1054
Prepared statement........................................... 1055
Marlow, W. Scott, Executive Director, Rural Advancement
Foundation International--USA, Pittsboro, NC; on behalf of
National Sustainable Agriculture Coalition..................... 1061
Prepared statement........................................... 1063

Submitted Material

Johnson, Roger, President, National Farmers Union, submitted
letter......................................................... 1081
Matheson, Hon. Jim, Chief Executive Officer, National Rural
Electric Cooperative Association, submitted letter............. 1082
Coalition of Agricultural Mediation Programs, submitted statement 1083

Wednesday, June 7, 2017--Full Committee

Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 1091
Prepared statement........................................... 1093
McGovern, Hon. James P., a Representative in Congress from
Massachusetts, submitted press release......................... 1173
Panetta, Hon. Jimmy, a Representative in Congress from
California, submitted letters.................................. 1174
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 1093

Witnesses

Suppes, Ronald J., dryland wheat and sorghum producer, Dighton,
KS; on behalf of U.S. Wheat Associates......................... 1095
Prepared statement........................................... 1096
Schuler, Margaret, Senior Vice President, International Programs
Group, World Vision, Inc.--U.S., Washington, D.C............... 1099
Prepared statement........................................... 1101
Submitted questions.......................................... 1189
Salem, Navyn, Founder and Chief Executive Officer, Edesia Inc.,
Kingstown, RI.................................................. 1113
Prepared statement........................................... 1114
Supplementary material....................................... 1179
Schoeneman, J.D., Brian W., Political and Legislative Director,
Seafarers International Union (AFL-CIO), Washington, D.C.; on
behalf of USA Maritime......................................... 1121
Prepared statement........................................... 1123
Submitted questions.......................................... 1190
Jayne, Ph.D., Thomas S., Foundation Professor of Agricultural,
Food, and Resource Economics and Co-Director, Alliance for
African Partnership, Michigan State University, Kalamazoo, MI;
on behalf of Farm Journal Foundation........................... 1129
Prepared statement........................................... 1130
Supplementary material....................................... 1181

Submitted Material

Action Against Hunger, et al., joint submitted statement......... 1186

Thursday, June 8, 2017--Subcommittee on Nutrition

McGovern, Hon. James P., a Representative in Congress from
Massachusetts, opening statement............................... 1193
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 1191
Prepared statement........................................... 1192

Witnesses

Boswell, Jason, Vice President for Programs, Conduent, State and
Local Solutions, Inc., Florham Park, NJ........................ 1195
Prepared statement........................................... 1196
Mathison, Steve, Senior Vice President of Network Relations,
First Data Corporation, Omaha, NE.............................. 1198
Prepared statement........................................... 1200
Glisson, J.D., Vickie Yates Brown, Secretary, Kentucky Cabinet
for Health and Family Services, Frankfort, KY.................. 1204
Prepared statement........................................... 1206
Aaronson, Lauren, Assistant Deputy Commissioner, Office of
Business Process Innovation, New York City Human Resources
Administration, New York, NY................................... 1210
Prepared statement........................................... 1212
Supplementary material....................................... 1237

Thursday, June 22, 2017--Full Committee

Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 1239
Prepared statement........................................... 1240
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 1241

Witnesses

Duncan, J.D., Hon. Robert L., Chancellor, Texas Tech University
System, Lubbock, TX............................................ 1243
Prepared statement........................................... 1244
Submitted questions.......................................... 1316
Burns, Ph.D., Jacqueline K., Dean for Research and Director,
Florida Agricultural Experiment Station; Professor of
Horticulture, Institute of Food and Agricultural Sciences,
University of Florida, Gainesville, FL......................... 1249
Prepared statement........................................... 1251
Submitted questions.......................................... 1316
Humiston, Ph.D., Hon. Glenda, Vice President, Agriculture and
Natural Resources; Director, Agricultural Experiment Station
and Cooperative Extension Service, University of California,
Oakland, CA.................................................... 1253
Prepared statement........................................... 1254
Submitted questions.......................................... 1317
Hill, Ph.D., Walter H., Dean, College of Agriculture, Environment
and Nutrition Sciences; Vice Provost for Land-Grant University
Affairs; Research Director, USDA Evans-Allen Research and
Director, George W. Carver Agricultural Experiment Station;
Administrator, Tuskegee University Cooperative Extension,
Tuskegee University, Tuskegee, AL.............................. 1259
Prepared statement........................................... 1261
Submitted questions.......................................... 1318
Tallant, Ph.D., Steven H., President, Texas A&M University-
Kingsville, Kingsville, TX..................................... 1268
Prepared statement........................................... 1270
Submitted questions.......................................... 1318
Billy, J.D., Carrie L., President and Chief Executive Officer,
American Indian Higher Education Consortium, Alexandria, VA.... 1273
Prepared statement........................................... 1275
Submitted questions.......................................... 1319

Submitted Material

American Society for Horticultural Science, submitted statement.. 1311
National Coalition for Food and Agricultural Research, submitted
statement...................................................... 1311
National Turfgrass Federation, submitted statement............... 1315

Wednesday, July 12, 2017--Full Committee

Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 1321
Prepared statement........................................... 1322
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 1323

Witnesses

Wenger, Paul J., President, California Farm Bureau Federation,
Sacramento, CA................................................. 1325
Prepared statement........................................... 1327
Submitted question........................................... 1393
Heller, Paul, Vice President, Wonderful Citrus, Texas Division,
Mission, TX.................................................... 1331
Prepared statement........................................... 1333
Submitted question........................................... 1393
Wishnatzki, Gary E., Owner and Chief Executive Officer, Wish
Farms, Plant City, FL.......................................... 1335
Prepared statement........................................... 1336
Submitted question........................................... 1395
Murphy, Kevin, Chief Executive Officer, Driscoll's, Inc.,
Watsonville, CA................................................ 1339
Prepared statement........................................... 1341
Submitted questions.......................................... 1395
LaVigne, Andrew W. ``Andy'', President and Chief Executive
Officer, American Seed Trade Association, Alexandria, VA....... 1343
Prepared statement........................................... 1345
Submitted question........................................... 1396

Submitted Material

Glenn, Ph.D., Barbara P., Chief Executive Officer, National
Association of State Departments of Agriculture, submitted
statement...................................................... 1379
Griffin, Jack, Chief Executive Officer, Metropolis Farms,
submitted statement............................................ 1390

Tuesday, July 18, 2017--Subcommittee on Nutrition

McGovern, Hon. James P., a Representative in Congress from
Massachusetts.................................................. 1398
Submitted article............................................ 1435
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania................................................... 1397
Prepared statement........................................... 1398

Witnesses

Holzer, Ph.D., Harry J., John LaFarge, Jr., SJ Professor of
Public Policy, McCourt School of Public Policy, Georgetown
University, Washington, D.C.................................... 1400
Prepared statement........................................... 1402
Lotzar, M.S.W., Eliyahu, Student Success Coordinator, Department
of Economic & Workforce Development, Onondaga Community
College, Syracuse, NY.......................................... 1404
Prepared statement........................................... 1406
Reynolds, Heather, President and Chief Executive Officer,
Catholic Charities Fort Worth, Fort Worth, TX.................. 1409
Prepared statement........................................... 1410

THE NEXT FARM BILL

(CONSERVATION POLICY)

----------

TUESDAY, FEBRUARY 28, 2017

House of Representatives,
Subcommittee on Conservation and Forestry,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Frank D.
Lucas [Chairman of the Subcommittee] presiding.
Members present: Representatives Lucas, Thompson, LaMalfa,
Allen, Bost, Abraham, Kelly, Conaway (ex officio), Fudge, Walz,
Kuster, Nolan, O'Halleran, Vela, and Peterson (ex officio).
Staff present: John Weber, Josh Maxwell, Patricia Straughn,
Stephanie Addison, Anne Simmons, Evan Jurkovich, and Nicole
Scott.

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

The Chairman. This hearing of the Subcommittee on
Conservation and Forestry entitled, The Next Farm Bill:
Conservation Policy, will come to order. I almost want to say I
am back, but that is beside the point. Let me turn myself to
myself for an opening statement.
Good morning, and welcome to today's hearing. For some of
us, it is hard to believe it is already farm bill time again,
and to some degree, it feels like we just finished hashing out
the details of the last farm bill. But it is true that we are
already entering the 4th year of the Agricultural Act of 2014,
and that means we must now set about the hard work of preparing
for the next farm bill.
As Chairman Conaway noted at the rural economic outlook
hearing 2 weeks ago, we are entering this farm bill
reauthorization against a much different backdrop. Net farm
income has been cut in half over the past 4 years, the steepest
4 year percentage decline since the start of the Great
Depression. As I have noted before, we write farm bills for the
bad times, not the good times, and our nation's farmers and
ranchers currently are struggling with that as we speak.
While the 2014 Farm Bill has been vital in responding to
the needs of the countryside, we revisit the farm bill and all
farm bills roughly every 5 years to make sure that they are
tuned to the current conditions in the countryside. To that
end, we are starting our important aspect of this work this
morning. Over the course of the next month, each Subcommittee
will hold hearings focusing on the portions of the farm bill
that fall under their respective jurisdictions. Each
Subcommittee is going to ask stakeholders to give us their farm
bill ideas sooner, rather than later. And as an Oklahoma State
graduate, it is difficult for me to say that. Nonetheless, that
is an inside joke.
Today, we are focusing on the nation's voluntary
conservation initiatives. These initiatives have undergone many
changes over the past 2 decades, during which time I served as
Chairman and Ranking Member respectfully of the Subcommittee
with jurisdiction over the conservation title, and then as
Chairman of the full Committee. Once again, I have the pleasure
to serve in a familiar role as we begin this process. I take
conservation policy very seriously. My dedication to
conservation comes from being raised by folks who lived through
the drought and the Dust Bowl of the 1930s, and the drought of
the 1950s, both of which caused some of the hardest times rural
America has ever experienced.
As a western Oklahoma farmer, I have also seen firsthand
the important role conservation plays in making sure that a
Dust Bowl never happens again. While this Committee cannot
control the weather, we can provide our farmers and ranchers
the tools necessary to protect and conserve not only the land,
but also their way of life.
Congress has acknowledged this over the past 20 years by
making significant investments in conservation policy. We
expanded our commitment to important issues like CRP and EQIP,
while also creating new tools like CSP to expand the use of on-
farm conservation practices. The conservation title of the 2014
Farm Bill answered the call for meaningful deficit reduction,
saving taxpayers $6 billion by consolidating 23 programs into
13, further streamlining and targeting delivery to farmers,
ranchers, and foresters.
I am proud of the work that we have accomplished over the
years, and I am proud of the work of the farmers, ranchers, and
forest owners who implement these important conservation
practices. I think the results speak for themselves. Voluntary
conservation works.
That said, I understand that no policy is perfect, and I
look forward to hearing from our witnesses today about how
these critical tools can be improved to address new natural
resource challenges.
Thanks to all of our witnesses who have taken time from
their work and families to join us today. We appreciate your
efforts and your willingness to share your thoughts on the
future of conservation policy. I would be remiss if I didn't
note that I am delighted to be partnered with my Ranking Member
in this endeavor on this Committee, and Ms. Fudge, we had quite
the set of adventures in the 2012, 2013, and 2014 Farm Bill
process, and I look forward to working with her in every way.
[The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress
from Oklahoma
Good morning and welcome to today's hearing.
For some of us, it's hard to believe that it's already farm bill
time again. To some degree, it feels like we just finished hashing out
the details of the last farm bill. But, it's true that we are already
entering the 4th year of the Agricultural Act of 2014, and that means
we must now set about the hard work of preparing for the next farm
bill.
As Chairman Conaway noted at the rural economic outlook hearing 2
weeks ago, we are entering this farm bill reauthorization against a
much different backdrop. Net farm income has been cut in half over the
past 4 years, the steepest 4 year percentage decline since the start of
the Great Depression.
As I've noted before, we write farm bills for the bad times--not
the good times--and our nation's farmers and ranchers are certainly
struggling right now. While the 2014 Farm Bill has been vital in
responding to needs in the countryside, we revisit farm bills roughly
every 5 years to make sure they are attuned to current conditions in
the countryside.
To that end, we are starting an important aspect of that work this
morning. Over the course of the next month, each Subcommittee will hold
hearings focused on the portions of the farm bill that fall under their
respective jurisdictions. Each Subcommittee is going to be asking
stakeholders to give us their farm bill ideas--sooner rather than
later.
Today we are focusing on the nation's voluntary conservation
initiatives. These initiatives have undergone many changes over the
past 2 decades, during which time I served as the Chairman and Ranking
Member, respectively, of the Subcommittee of jurisdiction for the
conservation title and then as Chairman of the full Committee.
Once again, I have the pleasure to serve in a familiar role to
begin this process. I take conservation policy very seriously. My
dedication to conservation comes from being raised by folks who lived
through the drought and Dust Bowl of the 1930s and the drought of the
1950s, both of which caused some of the hardest times rural America has
ever experienced.
As a western Oklahoma farmer, I have also seen firsthand the
important role conservation plays in making sure that a Dust Bowl never
happens again. While this Committee cannot control the weather, we can
provide our farmers and ranchers the tools necessary to protect and
conserve not only the land, but also their way of life.
Congress has acknowledged this over the past 20 years by making
significant investments in conservation policy. We expanded our
commitment to important initiatives like CRP and EQIP, while also
creating new tools like CSP to expand the use of on-farm conservation
practices.
The conservation title of the 2014 Farm Bill answered the call for
meaningful deficit reduction, saving taxpayers $6 billion by
consolidating 23 programs into 13, further streamlining and targeting
delivery to farmers, ranchers, and foresters.
I'm proud of the work we have accomplished over the years, and I'm
proud of the work of the farmers, ranchers and forest owners who
implement these important conservation practices. I think the results
speak for themselves--voluntary conservation works.
That said, I understand that no policy is perfect, and I look
forward to hearing from our witnesses today about how these critical
tools can be improved to address new natural resource challenges.
Thanks to all of our witnesses who have taken time from your work
and families to join us today. We appreciate your efforts and your
willingness to share your thoughts on the future of conservation
policy.
I must also mention how delighted I am to be partnered with our
Ranking Member, Ms. Fudge.
With that, I yield to the Ranking Member for any opening remarks
she would like to make.

The Chairman. With that, I would like to yield to the
Ranking Member for any opening remarks that she would like to
make.

OPENING STATEMENT OF HON. MARCIA L. FUDGE, A REPRESENTATIVE IN
CONGRESS FROM OHIO

Ms. Fudge. Thank you very much, Mr. Chairman, and thank you
all for being here this morning.
I am really excited to be here today for our first
Conservation and Forestry Subcommittee hearing, and for the
opportunity to work with my good friend, Chairman Lucas, as we
get to work on the next farm bill.
Conservation programs are a staple of the farm bill, and
play an invaluable role in preserving our agricultural
landscapes across the country. Farmers are the original
conservationists. Their livelihood is tied to the land, and it
is in their best interest that their land be the healthiest,
most productive, and most resilient it can be. Farm bill
conservation programs help our producers accomplish just that,
while compounding benefit after benefit to deliver cleaner air,
cleaner water, and helping address some of our nation's most
pressing natural resource concerns.
The last farm bill consolidated some conservation programs
with a goal of making the programs easier for producers to use
and easier for NRCS to manage. I am interested to hear today
how those changes are working, and if, indeed, they have made
the programs easier to use and administer.
The 2014 Farm Bill's conservation title also saved almost
$4 billion over 10 years. This was a substantial cut initiated
by the Committee as part of the overall farm bill savings.
Further cuts to these programs as part of the upcoming farm
bill would significantly hamstring the efforts to achieve our
conservation goals.
I am also looking forward to hearing how our tried and true
conservation programs like EQIP, CSP, CRP, and easement
programs are working, and how they can work better for
producers on the ground.
Finally, and I know some of our witnesses will touch on
this today, I am interested to hear how the new Regional
Conservation Partnership Program is working. This program was
an effort to give more flexibility on the ground and leverage
our Federal dollars to bring more non-Federal resources to our
conservation needs.
I want to thank the witnesses, and I especially want to
thank my good friend, Chairman Lucas. I yield back.
The Chairman. The gentlelady yields back. The chair notes
that the Subcommittee is privileged and pleased that we have
both the Chairman of the full Committee and the Ranking Member
in attendance today.
Mr. Chairman, Mr. Conaway, would you have any opening
comments to make?

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

Mr. Conaway. Just that I want to thank both yourself and
the Ranking Member for kicking off this series of Subcommittee
hearings. You all are the first ones to start. All the
Subcommittees will have a series of hearings over the next
couple months, covering their areas of jurisdiction, and I am
looking forward to both of y'all's able leadership in this
endeavor, and look forward to the hearing.
With that, I yield back.
The Chairman. The gentleman yields back. The chair
recognizes the Ranking Member of the full Committee for any
comments he might make.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Well thank you, Chairman Lucas and Ranking
Member Fudge, for holding today's hearing to review
conservation policy. We will be hearing from a great panel of
witnesses today, and so I welcome to them to the Committee.
At the Committee's recent hearing on farm economy, I
expressed my intent to take a good look at the CRP program, and
try to see if we can simplify and reform and increase the acres
in that program. We lowered the cap on CRP in the 2014 Farm
Bill, even though I really didn't want to do that, but we were
loosing the acreage anyway, and if we wouldn't have lowered the
cap, the money would disappear. We used that money to protect
the conservation baseline, and it has helped offset some cuts
in other programs in title II.
But now, given what is going on around the country, it is
time for us to figure out how to get back to 40 million CRP
acres in this farm bill. This increase will help improve water
quality and address the declining wildlife populations that we
have experienced in my region of the country: big tract CRP
worked. We boomed with pheasants, ducks, and deer and other
wildlife because of it, but it has been diminished because of
economics. Because of an over-emphasis on some of these carve
outs that have been put in there to satisfy everybody's idea,
and you know, the general sign-up has become a step-child in
the program. That is the opposite of what needs to be done. I
would like to see us increase the acres, but if we don't reform
this program, I am not going to support increasing the acres.
That is how strongly I feel about it.
I am going to be looking for ways to make CRP less
complicated, to make the rental rates more affordable for the
budget, and also more competitive so that farmers aren't losing
their land to CRP. I am also interested in steps that we can
take to bring the program up to date by getting rid of the
requirement that was originally put in, because the program
originally was to get land out of production to raise prices.
We still have in place the fact that you have to have base
acres and program acres in order to get into the program. I
don't think that is necessary anymore, or right. I would like
to see us get rid of that.
By and large, the farm bill conservation programs are
working. As was said, we simplified some of these other
programs in the last bill. Now, it is time for us, in my
opinion, to take a good look at CRP and simplify that program
as well.
I am looking forward to today's witnesses, and thank the
chair for allowing me to spout off, and I yield back.
The Chairman. The gentleman is timid as always. I thank the
Ranking Member.
I would like to welcome our witnesses to the table. First,
Mr. Chuck Coffey, Owner/Manager Double C Cattle Company, Davis,
Oklahoma, on behalf of the National Cattlemen's Beef
Association. Also, Mr. Tim Gertson, a member of the USA Rice
Federation Board of Directors, Lissie, Texas. Mr. Jeremy
Peters, Chief Executive Officer, National Association of
Conservation Districts, Washington, D.C., on behalf of Mr. Lee
McDaniel, who may be under the weather, correct, Mr. Peters?
Mr. David Nomsen, Vice President of Governmental Affairs,
Pheasants Forever, Garfield, Minnesota; and the Honorable John
Piotti, President, American Farmland Trust, Washington, D.C.
And with that, Mr. Coffey, you are recognized for 5
minutes. We have these wondrous lights, green, yellow, red.
Proceed, sir.

STATEMENT OF CHUCK COFFEY, OWNER/MANAGER, DOUBLE C CATTLE
COMPANY; MEMBER, NATIONAL CATTLEMEN'S BEEF ASSOCIATION, DAVIS,
OK

Mr. Coffey. Thank you very much, Chairman Lucas, Ranking
Member Fudge. We sincerely appreciate your recognition of
agriculture's important contribution to our nation's lands.
Good morning. My name is Chuck Coffey. Ruth, my wife of 30
years, and I operate a fifth generation cattle ranch in south
central Oklahoma, where we own and operate over 30,000 acres of
grassland, rangeland. I am testifying before you today
representing the many cattle producers who each have a stake in
protecting the environment.
U.S. cattlemen own and manage considerably more land than
any other segment of agriculture. In fact, we manage the net
sum of \1/3\ of the nation's total land mass. Since our
livelihood is made on the land, the utilization of our natural
resources and being good stewards of the land not only makes
good environmental sense, it is fundamental for our industry to
remain strong. We strive to operate as environmentally friendly
as possible, and it is through voluntary conservation programs
that ranchers will continue to be proud partners with the
government to reach our environmental conservation goals.
Ranching in south central Oklahoma comes with its fair
share of difficulties, as it does for many fellow cattlemen
across the country. However, we have been able to keep our
operation sustainable during those hard times by utilizing
voluntary conservation programs and applying management
practices that enhance our operation.
Drought is a common problem in south central Oklahoma, and
requires adaptability and forward thinking to maintain the
resources we have on the ranch. In 2011 and 2012, we were
challenged with one of the worst droughts in a generation. It
was similar to the droughts of the 1950s and the droughts of
the 1930s, but praise the Lord, Mr. Lucas, we didn't have a
Dust Bowl situation due to the conservation practices that we
have on the ground. However, we survived and remained
sustainable because of our grazing management practices, and
the opportunity to work with NRCS' voluntary conservation
programs. One way we made our ranch drought resistant is by
installing solar wells and above ground water storage systems,
and even piping water to some critical areas, this water
serving both the needs of livestock and wildlife that inhabit
our lands.
We graze our cattle with a carefully managed grazing plan,
developed with the assistance of the NRCS. Through cooperation
with state and local agencies, in addition to the development
of innovative grazing strategies, we have increased perennial
grasses on our ranch, improved ground cover, greatly reduced
soil erosion, and ensured adequate forage for livestock and
wildlife.
Another key to improving the grasses on our ranch is brush
control, which we often do in partnership with NRCS when funds
are available. We use a variety of ways to reduce brush,
including prescribed burns and mechanical treatment.
Conservation programs that keep land in production and do
not limit its use are best for both ranchers and conserving our
nation's resources. That is why the working lands programs, in
my opinion, works best for ranchers. One such program, CSP, the
Conservation Stewardship Program, rewards those of us that have
been conservationists and have spent both time and money
improving our land, water, and wildlife habitats. CSP offers
cattlemen the opportunity to earn payments for actively
managing, maintaining, and expanding conservation practices.
NRCS personnel are a tremendous resource for ranchers. In
recent years, local NRCS personnel have been prevented from
going to training sessions provided by the Society for Range
Management, the Grassland Conservation Initiative meetings, and
it has also become more difficult, in my opinion, for them to
find time to get out of the office due to the tremendous
amounts of paperwork that they are required to keep up with. We
as ranchers must have well-informed NRCS personnel on the
ground with us to move forward with these innovative
conservation practices.
As Congress begins to process the next farm bill, I have a
few recommendations on how to make these programs work even
better for producers. NRCS needs to work on streamlining the
application process to be able to garner more participation in
the program. CSP, for example, needs to be simplified and based
on outcomes and adaptive management, rather than a prescribed
set of management practices.
The biggest point I would like you to take away from this
hearing is that the voluntary part of the conservation program
is what really makes it work for ranchers. If they were to
become mandatory, the rules and regs that farmers and ranchers
would be subjected to would make it harder for them to utilize
the unique conservation practices that help their individual
operations thrive.
USDA's conservation programs have been a great asset to
cattle producers, and it is important that these programs be
implemented in a practical, producer-friendly, and voluntary
manner to ensure that cattlemen can continue to responsibly
produce the world's safest, most nutritious, and affordable
source of protein. I appreciate the opportunity to visit with
you today, and thank you for your time. I would welcome any
questions moving forward. Thank you, Chairman Lucas.
[The prepared statement of Mr. Coffey follows:]

Prepared Statement of Chuck Coffey, Owner/Manager, Double C Cattle
Company; Member, National Cattlemen's Beef Association, Davis, OK
Good morning, my name is Chuck Coffey. Ruth, my wife of 30 years,
and I operate a fifth-generation cattle ranch in south central Oklahoma
where we own and operate over 30,000 acres of grassland. I am a
graduate of Texas A&M where I studied Rangeland Ecology, and proudly
have three children who have graduated from Oklahoma State University
with degrees in Agribusiness and Natural Resource Management and are
now the sixth generation on the Ranch. I taught agriculture at Murray
State College, chairing the department, until I joined the Noble
Foundation as a Pasture and Range Consultant in 1993. I am a member of
the National Cattlemen's Beef Association and am testifying before you
today representing the many cattle producers and family ranchers, who
each have a stake in protecting the environment. Thank you Chairman
Lucas and Ranking Member Fudge for allowing me to testify today on
voluntary conservation programs.
U.S. cattlemen own and manage considerably more land than any other
segment of agriculture--or any other industry for that matter.
Cattlemen graze cattle on approximately 666.4 million acres of the
approximately 2 billion acres of the U.S. land mass. In addition, the
acreage used to grow hay, feed grains, and food grains add millions
more acres of land under cattlemen's stewardship and private ownership.
Some of the biggest challenges and threats to our industry come from
the loss of our natural resources. The livestock industry is threatened
daily by urban encroachment, natural disasters, and government
overreach. Since our livelihood is made on the land, through the
utilization of our natural resources, being good stewards of the land
not only makes good environmental sense; it is fundamental for our
industry to remain strong. We strive to operate as environmentally
friendly as possible, and it is through voluntary conservation programs
that ranchers will continue to be a proud partner with the government
to reach our environmental conservation goals.
I represent the fifth-generation of ranching within the Coffey
family. As I stated earlier, we ranch on 30,000 acres of grassland
spanning across Carter and Murray counties in south central Oklahoma.
Our goals are very similar to many other ranchers around the country,
be profitable, and leave the land in better condition for future
generations. The primary way we are able to preserve the land, as well
as our ranching heritage for future generations, is through innovative
practices, diversification and voluntary conservation programs.
Ranching in south central Oklahoma comes with its fair share of
difficult times, as it does for my fellow cattlemen across the country.
However, we have been able to keep our operation sustainable during
those hard times, by utilizing voluntary conservation programs and
applying management practices that enhance the operation. Drought is a
common problem in south central Oklahoma, and it requires adaptability
and forward thinking to maintain the resources on the ranch. In 2011
and 2012, we were challenged with one of the worst droughts in a
generation. Water was virtually nonexistent and wildfires were
prevalent. But we were able to survive, and remain sustainable, because
of our grazing management practices and the opportunity to work with
the NRCS's voluntary conservation programs to improve our ranch and
make our grasslands more resilient. Also key to our survival has been
the voluntary insurance programs such as FSA's NAPP Insurance and the
private insurance known as PRF-RI insurance provided through USDA-RMA.
These voluntary programs were a great benefit to many producers who,
quite frankly, would not have survived without them.
One way we made our ranch drought-resistant is by installing solar
wells and above ground water storage systems, and even piping water to
some critical areas. This ensures our livestock and wildlife have
adequate and reliable water throughout the year.
We graze our cattle with a carefully managed grazing plan that we
developed with the assistance of the Natural Resources Conservation
Service (NRCS) and the National Grazing Lands Coalition (NGLC)
utilizing their conservation planning capabilities. We have learned
that when you utilize a flexible, planned grazing program at a
conservative stocking rate, leave grass cover after you move out of a
pasture, and give the rangeland adequate recovery time, you will grow
more grass with limited rainfall. Through cooperation with state and
local agencies, in addition to the development of innovative grazing
strategies, we have increased perennial grasses on the ranch, improved
ground cover, greatly reduced soil erosion due to both wind and water,
reduced labor inputs, and ensured adequate forage for livestock and
wildlife populations on the ranch. Our grazing strategy is a big part
of why we've been able to keep the ranch resilient and sustainable.
Furthermore, by implementing these programs we are able to keep
expenses down by lowering feed, fuel, labor and equipment costs, thus
improving the profitability of our operation.
Another key to improving the grasses on our ranch is brush control,
which we often do in partnership with NRCS when funds are available. We
use a variety of ways to reduce brush including prescribed burns and
mechanical treatment. We leave the bigger trees in to give the
grasslands a savannah effect which also provides shade for the cattle,
improving their welfare.
We are strong advocates of prescribed fire on the rangeland. We try
to mimic the fire conditions that nature historically provided the land
prior to settlement. It is a very good tool within our tool box of land
improvement measures. NRCS and the GLCI have provided valuable
assistance in our burning endeavors.
The Environmental Quality Incentive Program, or EQIP, is a cost-
share program that rewards and provides incentives to producers for
implementing conservation practices. When wildfire came through our
ranch in 2011, we had to rebuild miles of fencing. EQIP helped us do
it. One of the reasons EQIP has become popular among ranchers is
because it is a working-lands program. Conservation programs that keep
land in production and do not limit its use are best for both the
ranchers and conserving our resources.
Another working lands program is the Conservation Stewardship
Program. CSP rewards those of us that have been conservationists and
have spent the time and money in the improving of our land, water, and
wildlife habitats. CSP offers cattlemen the opportunity to earn
payments for actively managing, maintaining, and expanding conservation
activities like cover crops, rotational grazing, ecologically-based
pest management, and buffer strips.
NRCS personnel are a tremendous resource for ranchers. In recent
years local NRCS personnel have been prevented from going to training
sessions provided by the Society for Range Management and Grasslands
Conservation Initiative meetings. It is also becoming more difficult
for them to find time to get out of the office due to the tremendous
amounts of paperwork they are required to keep up with. We as ranchers
must have well informed NRCS personnel to move forward with innovative
conservation practices. They are our first go to source of knowledge.
It is critical we have ``boots-on-the-ground'' in conjunction with the
voluntary programs offered.
As Congress begins the process of developing the next farm bill, I
have some recommendations on how to make these programs work even
better for producers.

First and foremost--NRCS needs to make it as simple as
possible for farmers and ranchers to participate in these
programs. Streamlining the application process will garner more
producer participation.

Farmers and ranchers need greater access to programs like
CSP, where there is a great demand for these programs but
limited funding. I, and cattle ranchers around the country,
would like to see CSP simplified and based on outcomes and
adaptive management rather than a prescribed set of management
practices.

The EQIP program should disclose penalty cancellation costs
before producers sign on the dotted line. And producers who
enter into an EQIP contract should have the ability to
periodically revise the terms of a multiple-year contract to
adjust for rising costs over time.

NRCS should maintain and enhance EQIP at 60% or greater
allocation for livestock related applications for all
operations, regardless of their size.

Reinvigorate the focus at the local ``grassroots'' level by
increasing the NRCS staff that work with producers and provide
technical assistance at the local level.

Increase research in soil, water, plant, and wildlife
science so that we have an accurate and growing pool of data to
inform policy decisions.

The biggest point I'd like you to take away from this hearing is
that the ``voluntary'' part of the conservation programs is what really
makes it work for ranchers. We've had success using some of these
conservation programs, but just because this system works for us does
not mean it's right for everybody. It's important that we keep these
programs funded to safeguard their continued success, and above all
else--these programs must stay voluntary. A one-size-fits-all approach
that accompanies top-down regulation does not work in my industry. If
these programs were to become mandatory, the rules and regulations that
farmers and ranchers would be subjected to would make it harder for
them to utilize the unique conservation practices that help their
individual operations thrive.
I believe that economic activity and conservation go hand in hand
and we are always looking for new, innovative conservation programs
that will have tangible benefits for the environment, and help to
improve our ranching lands. USDA's conservation programs have been a
great asset to cattle producers and it is important that these programs
continue to be implemented in the same practical, producer friendly,
and voluntary manner for years to come to ensure that cattlemen will
continue to have the ability to do what we do best--produce the world's
safest, most nutritious, abundant and affordable protein while
operating in the most environmentally friendly way possible. Together
we can sustain our country's natural resources and economic 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 welcome any questions you may have.

The Chairman. Thank you, Mr. Coffey.
Mr. Gertson, you are recognized for 5 minutes.

STATEMENT OF TIMOTHY GERTSON, CO-OWNER/CO-
OPERATOR, G5 FARMS; MEMBER, BOARD OF DIRECTORS, USA RICE
FEDERATION, LISSIE, TX

Mr. Gertson. Chairman Lucas, Ranking Member Fudge, and
Members of the Subcommittee, thank you for holding this hearing
today. I appreciate the opportunity to offer testimony on
behalf of the USA Rice Federation. My name is Timothy Gertson,
and I own and operate G5 Farms along with my cousin. We are
fifth generation rice farmers, and first began farming
independently of our parents in 2009. We farm in and around
Lissie, Texas, a small community about an hour outside of
Houston.
On our farm, we normally begin planting rice March 1, and
if you take a look at the calendar, you will see that is
tomorrow. But here I am in a suit and tie in D.C., 1,500 miles
from home. That is because the issue of conservation is
critically important to me and my family.
With my testimony today, I would like to focus on the
importance of investments in working lands programs,
specifically, EQIP, CSP, and the RCPP. Rice is the only
commodity that is 100 percent irrigated, with many growers
dependent on ground water. It is necessary to flood our fields
during the growing season, and we have the option and
opportunity to maintain those floods throughout the winter to
benefit the millions of migratory water fowl passing through.
Winter flooded rice fields provide many of the same functions
for migrating water fowl as natural wetlands.
The close relationship between rice and water fowl led to
an historic partnership between USA Rice and Ducks Unlimited.
The Rice Stewardship Partnership has unified us around our
common goals and working lands conservation programs, and the
theme ``What's good for rice is good for ducks.''
Since the partnership was formed, we have worked together
to secure $25 million through three different RCPP projects
from NRCS to implement EQIP and CSP projects across all six
rice growing states, and to construct a small reservoir near my
hometown, Anita Lake, to benefit water fowl and rice farmers
when we experience drought. USA Rice would like to see the
continuation of RCPP as part of the next farm bill.
CSP, and especially EQIP, are referred to by farmers as the
workhorses of NRCS conservation programs. They are valuable
cost-share programs that incentivize implementation of
conservation practices that have proven benefits to the
environment. My father and his brothers can attest, as some of
the earliest adopters of both programs on our family operation.
Many rice farmers operate on rented cropland. These cost-
share programs allow land renters to install conservation
measures while footing only a portion of the costs.
Improvements in efficiencies benefit the farmer, while the
environmental perks benefit the landowner, simultaneously
raising the land value.
We heard there was a huge demand for the EQIP program when
we got our first contract in 2010, and we soon learned why as
the results came quickly and our input costs dropped
significantly. We cost-shared the installation of more than 4
miles of pipeline to replace the irrigation canals, resulting
in up to 20 percent less water used, providing both instant
savings and environmental benefits. What previously took 24
hours of pumping to start just a trickle of water into my
fields is now on demand and immediate.
After we implemented our initial EQIP contracts, we saw the
returns and we decided to do more of it. Due to backlogs, we
paid for it out of pocket. NRCS conservation programs not only
incentivize conservation, but they help farmers develop an
appetite to continue the environmental stewardship, making
their full value truly incalculable.
Throughout rural America, working lands programs serve as
economic drivers. It takes more than just a single farmer to
complete the work needed to implement an EQIP or CSP contract,
not to mention, the land is still in production, keeping small
communities like mine thriving, unlike some programs like CRP
that pay farmers not to grow a crop. More than 75 percent of
rice farming operations in the South operate in what USDA calls
StrikeForce counties, rural counties with more than 20 percent
of the population below the poverty line. Small towns like mine
rely on the agriculture industry for jobs. My operation alone
provides jobs to the folks in my town, and the revenue
generated from my farm is reinvested in inputs for the
following year, and ends up in the hands of small local
businesses. A new study by Texas A&M's Agriculture and Food
Policy Center drives this home, showing every U.S. farmer on
average is generating $1 million annually for their local
economy.
I have talked a lot about what the industry is doing, the
benefits working lands conservation brings to local economies,
and why these investments pay off for our taxpayers, but now I
want to talk about the real reason I am here. I have three boys
at home, ages 5, 3, and 1, and they all want to be farmers just
like Dad. They want to work the same ground that my family has
worked for the last 108 years. But without being able to
maintain the natural resources and keep my land in production,
there won't be anything left to hand to the sixth generation.
That is why I am here, is to ask this Subcommittee and the full
Agriculture Committee membership to support robust funding for
the conservation title, and to focus that support on important
working land investments so that my children can play a part in
feeding this great nation.
Thank you for your leadership, and the opportunity to offer
testimony. I look forward to working with you and your staff,
and to respond to any questions you may have. Thank you.
[The prepared statement of Mr. Gertson follows:]

Prepared Statement of Timothy Gertson, Co-Owner/Co-Operator, G5 Farms;
Member, Board of Directors, USA Rice Federation, Lissie, TX
Introduction
Chairman Lucas, Ranking Member Fudge, and Members of the
Subcommittee, thank you for holding this hearing to gather input on how
the conservation title of the Agricultural Act of 2014 is working and
hopefully how we can improve it as we start the process of writing a
new farm bill. I appreciate the opportunity to offer testimony on
behalf of the USA Rice Federation.
My name is Timothy Gertson. I own and operate G5 Farms along with
my cousin, Daniel Gertson. We are fifth generation rice farmers and
usually grow some corn and sorghum on the side. We first began farming
independently from our parents in 2009 and manage land primarily in and
around Lissie, a small community in Wharton County, Texas, about an
hour outside of Houston.
In Texas, we normally begin planting rice on March 1st; if you take
a look at the calendar you will see that is tomorrow. Planting and
harvesting are among the most stressful parts of a farmer's year. But
here I am, sitting in a suit and tie in Washington, D.C. 1,500 miles
from home. That is because the issue of voluntary, locally-led
agricultural conservation is all too important for me to hand off to
someone else.
USA Rice-Ducks Unlimited Stewardship Partnership
Conserving our natural resources is not something we take lightly
and for rice farmers our livelihoods depend on it. Rice is the only
major commodity that is 100 percent irrigated with most growers still
heavily dependent on ground water for irrigating their rice crop.
Because of the necessity to flood our fields during the growing season,
we have the option to maintain those floods throughout the fall and
winter to benefit the millions of migratory waterfowl that get 40
percent of their food source directly from our rice fields. Ducks
dabble in the shallow water for waste grain, weed seeds, and other
forms of food and the fields provide resting areas for migratory birds
on the move. Winter-flooded rice fields provide many of the same
functions for migrating waterfowl as natural wetlands.
Without the voluntary contribution of rice farmers, these birds
would lose all of that critical habitat which is exceedingly important
for the survival of many species. An industry study in 2012 found that
the estimated restoration costs of replacing flooded rice habitats with
managed seasonal wetlands would exceed $2,200 per acre. In total, the
replacement cost for wetlands nationwide would exceed $3.5 billion
without domestic rice production to replicate the effects of natural
wetlands.
This symbiotic relationship with the waterfowl industry led into a
historic partnership with Ducks Unlimited, called the Rice Stewardship
Partnership. I would even go as far as to say that we could be used as
the model for commodity and wildlife groups working together going
forward. While we both have separate missions and methods, we have
managed to collaborate and find common ground and develop goals for our
Partnership, including work on the Regional Conservation Partnership
Program (RCPP).
Regional Conservation Partnership Program Is a Success
Our Partnership was awarded $10 million in 2015 by the USDA's
Natural Resources Conservation Service (NRCS) to implement an RCPP
project across the six major rice-growing states. The project directly
funds Environmental Quality Incentives Program (EQIP) and Conservation
Stewardship Program (CSP) contracts with rice growers. While the CSP
portion of our project is still underway, the Partnership has been able
to facilitate more than 200 EQIP contracts with growers throughout the
country to further improve rice's environmental footprint.
This year, the same Partnership was able to secure an additional
$15 million through two new RCPP projects, further stretching the reach
of the cost-share programs throughout the South and constructing a
small reservoir near my hometown in Eagle Lake, Texas to benefit
waterfowl and rice farmers when we experience the all too often
droughts.
It is important to us that this fiscally responsible program is
reauthorized when you are writing the next conservation title. Our
three projects alone have pulled together nearly 100 diverse partners
to help implement their goals, communicate successes, and ultimately
share the cost of investment in working lands conservation programs to
ensure NRCS gets the most bang for their buck.
The Importance of Working Lands Programs
CSP, and especially EQIP, are referred to by farmers as the
``workhorses'' of NRCS conservation programs. They are valuable cost-
share programs that incentivize farmers to implement any number of
conservation practices on our operations that have proven benefits to
the environment. The relatively small investment made by the program
has no doubt made our land more resilient to extreme weather events by
reducing erosion and runoff and improving soil health. My father and
his brothers were some of the earliest adopters of both programs. Their
first EQIP contract was signed in 2002 and they secured a CSP contract
through the old Conservation Security Program following its inception
in the 2002 Farm Bill.
EQIP is vital because it is such a straightforward program with an
extensive list of practices that NRCS is able to assist farmers with
implementing. EQIP's structural practices can help establish the
equipment needed to better manage water resources, help with irrigation
efficiency, fencing, and erosion control.
CSP has been revised to become more like EQIP but operates with 5
year contracts to provide more time for the extensive work to be
completed. This program helps to target specific resources using a
number of complimentary practices, and has been a great tool for rice
farmers to have in our toolbox to pay for expensive long-term
management practices.
In the South it is not uncommon for most farmers to rent the
majority of their cropland, we have a system that works well for us,
usually. Many farmers do not have certainty of whether they will hold
the lease on a piece of ground from one year to the next so it is often
not worth the risk to invest a lot of capital into someone else's land.
These cost-share programs are the only thing that help to bridge that
gap, allowing land-renters to install conservation measures while
footing only a portion of the cost. Improvements in efficiencies
benefit the farmer while the environmental perks benefit the landowner
by simultaneously raising the land value. Across the country, a great
deal of EQIP and CSP contracts are carried out on rented land that
would otherwise probably be left untouched by conservation
improvements.
My father taught me to be a conservationist as just a kid, and I
was so passionate about it that I nearly took a job with NRCS on two
separate occasions. Therefore, it came as no surprise to anyone when my
operation secured its first EQIP contract in 2010, just a year into
farming. We always heard there was a huge demand for the program across
the country and we soon learned why, as the results came quickly and
our bottom line could feel the difference. We cost-shared the
installation of more than 4 miles of 16" underground pipeline to
replace irrigation canals, resulting in up to 20 percent less
irrigation water needed to grow our crop, providing both instant
savings and environmental benefits. It previously took nearly 24 hours
of pumping at a rate of 3,000 gallons per minute to build up in my old
canals to start just a trickle of water into my fields. Now, with
underground pipeline, my water supply is on demand and immediate.
Soon after our first EQIP venture, we were able to secure an
additional EQIP contract to begin cost-sharing irrigation land-leveling
portions of our operation. Level land results in less water losses when
a rice crop is flooded and that was able to provide us with an
additional ten to twenty percent irrigation water savings. As beginning
farmers, we were also fortunate enough to qualify for prioritized
applications and higher cost-sharing percentages to help incentivize
our participation.
These programs obviously provide farmers with the resources to
implement a lot of effective practices and there is clearly data to
back that up. Surprisingly, their true benefits are not so visible on
the surface. After we implemented our initial EQIP contracts, we saw
the financial returns and the obvious preservation of natural resources
and we decided to do more of it, this time on our own dime. I think
these NRCS financial assistance programs not only incentivize locally
led conservation, but they help farmers develop an appetite to continue
the environmental stewardship, making their full value truly
incalculable.
Working Lands Programs Are Economic Drivers
Throughout rural America, working lands programs serve as economic
drivers. It takes more than just one farmer to complete the work needed
to implement an EQIP or CSP contract. Think about the outside
technicians, engineers, and local soil and water conservation districts
needed to help oversee the conservation planning; the scientists, the
land movers, the equipment that needs to be purchased to implement
these conservation practices.
Not to mention, with working lands programs the land is still in
production, so the economic drivers of small communities are still
working, unlike some programs like the Conservation Reserve Program
(CRP) that pay farmers not to grow a crop. For example, my small town
has less than 75 residents and my operation's size ensures that at I'll
provide jobs for at least several of those residents. The revenue
generated from my farm is then reinvested in inputs for the following
year and ends up in the hands of other small, local businesses. Small
towns like mine rely on the agriculture industry for jobs and
investment or they would disappear; when my business prospers, everyone
around me benefits in one way or another.
My town, however, is not unique. More than 75 percent of rice
farming operations in the South operate in what USDA considers
``StrikeForce counties''--rural counties with more than 20 percent of
the population below the poverty line. These communities all rely on
vibrant farming operations to stay alive and NRCS working lands
programs help to shoulder the burden of high operating expenses. The
practices I have put into place over the years have helped make my land
more resilient to the multi-year drought we experienced a few years
ago. These conservation practices have helped me stay in business over
the course of this depressed farm economy having increased my
efficiency by increasing my yields and decreasing my input costs to
boost my margins.
When we are not in the growing season and purchasing inputs, we are
still growing the local economy. Like I mentioned, rice has this
intrinsic relationship with waterfowl and the waterfowl habitats in our
fields also serve as a perfect habitat for waterfowl hunters. The
waterfowl hunting business brings millions of dollars to the South's
local economies during the fall and winter months when work elsewhere
is short. Visitors travel from all over the world to hunt in the rice
fields and they all need lodging, food, equipment, etc.
Again, I feel like we are doing more than our part to contribute to
our local economies and the EQIP and CSP projects we are implementing
help to make that all possible. A study released earlier this month by
Texas A&M's Agricultural and Food Policy Center drives this point home,
showing that every U.S. rice farmer is generating more than $1 million
for their local economies on an annual basis.
As an industry, we see these two programs targeted every year
during the appropriations process. Their mandatory funding is cut,
reducing the amount of work NRCS can provide in each of your Districts
throughout the country and creating a backlog that will take years to
catch-up to the demand that is out there. It is important to us that
these are not only preserved but codified in a way that they are not
always seen as low-hanging fruit when it's time to find savings.
EQIP Provision Limits Long-Term Effectiveness
Current EQIP rules place an arbitrary 3 year limit on funding
annual management practices. As strong stewards of the land and staunch
advocates for migratory waterfowl, we support a change in this
limitation for projects implemented ``purely for the benefit of
wildlife''. This is necessary in order to sustain these beneficial
practices and demonstrate long-term benefits. While these annual
management practices benefit water birds, some of them ultimately
reduce farm profitability because of their expense to the farmer.
Therefore, producers will most likely stop implementing them if cost-
share assistance for these proven, effective annual management
practices is terminated after 3 years.
SAM/DUNS Is a Barrier to Conservation Adoption
Currently, farmers who want to participate in farm bill
conservation programs have to wade through an annual registry process
called the System for Award Management (SAM) and Data Universal
Numbering System (DUNS), designed for transparency for multi-billion
dollar Federal defense contractors. This complicated process to comply
with SAM and DUNS typically ties up hours of my time and that of our
local soil and water conservation district or NRCS office. It is
disincentive for many us to sign-up for these important conservation
programs. Immediately following a successful registration using SAM, my
inbox, mailbox, and phone are flooded with solicitors who have just
been provided my information, a serious breach of my privacy. The rice
industry is supportive of efforts to exempt NRCS programs from
complying with this burdensome reporting process.
Sustainability Is Necessary for Future Generations
I have talked a lot about what the industry is doing, the benefits
working lands conservation bring to our local economies, and why the
investment really pays off for taxpayers, but now I want to talk about
the real reason I am here. I have three sons under the age of 10. My
boys want to be farmers just like dad and someday farm the same land we
have been working for the last 108 years. But without being able to
make a living for my family and maintain the natural resources to keep
my land in production, there won't be anything left to hand to the
sixth generation. That is why I am here: to ensure that this
Subcommittee fights to maintain conservation title funding and
important working lands program investments so that my children can
play a part in feeding this great nation.
I thank this Subcommittee for holding this important hearing on the
farm bill's conservation title. And I appreciate, as a farmer, as a
conservationist, and on behalf of the USA Rice Federation, the work you
have done to ensure that farmers have the tools they need to implement
conservation practices on the landscape and feed our growing
population. While conservation may not necessarily be the most
controversial issue in the farm bill, it is a vital part of our
industry and a necessary investment if we want to leave our land and
operations as a legacy for our children.
Again, thank you for your leadership and for the opportunity to
offer my testimony this morning. I look forward to working with you and
your staff and will be happy to respond to any questions you might
have.
Attachment

Sustaining the Future of Rice RCPP Project Financial Breakdown July 1,
2015-June 30, 2016

Financial Support Where the Money Goes
(July 1, 2015-June 30, 2016)
$8.3 Million

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Source: 2016 Rice Stewardship Partnership Annual Report.

The Chairman. Thank you, Mr. Gertson.
Mr. Peters, you are recognized for 5 minutes.

STATEMENT OF JEREMY PETERS, CHIEF EXECUTIVE
OFFICER, NATIONAL ASSOCIATION OF CONSERVATION
DISTRICTS, DARLINGTON, MD; ON BEHALF OF LEE McDANIEL, IMMEDIATE
PAST PRESIDENT, NATIONAL
ASSOCIATION OF CONSERVATION DISTRICTS

Mr. Peters. Good morning, Chairman Lucas, Ranking Member
Fudge, and Members of the Subcommittee. Thank you for the
opportunity to testify this morning. I am Jeremy Peters, Chief
Executive Officer for the National Association of Conservation
Districts, standing in for our immediate past President, Lee
McDaniel, who is unable to attend today's hearing. We
appreciate your flexibility in allowing me to testify this
morning.
I have been involved with NACD since 2006, and became the
Association's Chief Executive Officer in April of 2015. But my
roots are in agriculture and in my family's farm in rural
southwestern Virginia, where we continue raising cattle today.
NACD represents America's 3,000 conservation districts, and
the 17,000 men and women who serve on their governing boards,
as well as their respective state and territory associations.
Conservation districts are local units of government
established under state law to carry out natural resource
management programs at the local level. Conservation districts
work with cooperating landowners and operators in all 50
states, as well as the territories, to help manage and protect
land and water resources on private working lands, and many
public lands in the United States.
Conservation districts are vital to conservation in this
country. Working with partners at USDA, they provide on-the-
ground conservation planning, technical expertise, and
scientific assistance to implement conservation practices
tailored to the landowner's management goals. Conservation
districts are also unique since they are directly involved in
the local working group process which informs NRCS about what
the greatest resource concerns are at the local level.
As NACD began its farm bill evaluation process last year,
we created a Farm Bill Task Force to guide our policy
priorities. We first created a farm bill survey to seek input
and opinions from our members on the last farm bill, what
programs were working or needed improvements and where they
wanted NACD to focus. Based upon the over 500 responses we
received, the Task Force developed a set of principles that was
officially adopted by NACD's Board of Directors at our annual
meeting earlier this month, and those principles are attached
to the written testimony that was submitted to the Committee.
These principles focus on items like local input and the need
for investments in farm bill conservation programs. While not
directly authorized under the farm bill, all of the programs
discussed in my testimony would not be as successful without
the technical and scientific expertise provided through
Conservation Technical Assistance, or CTA. Through the CTA
program, landowners work with local conservation professionals,
including conservation district employees, to develop
individual conservation plans, ensuring producers know that
they are implementing the best conservation practices to meet
their individual land's resource needs, and that taxpayers are
getting the most out of their investment.
Successful implementation of on-the-ground conservation is
also dependent on proper investment through the farm bill
conservation title. The financial and technical assistance that
farm bill dollars provide are the lifeblood of the voluntary
conservation model. Without this funding, we would see less
adoption of conservation practices and in turn, we would see
fewer conservation benefits. The last farm bill reduced
conservation spending by almost $6 billion over 10 years when
including sequestration. While NACD and the larger agriculture
and conservation community understood the budgetary constraints
that Congress had to deal with when writing the last farm bill,
the cuts to the conservation title were significant. These
funding reductions in EQIP, CSP, CRP, and ACEP have
dramatically limited the ability to put conservation on the
ground. We recommend that Congress seriously look at not only
maintaining funding for the conservation title, but we strongly
recommend increasing it.
Demands on the landscape and our natural resources are
greater than ever, and in these difficult financial times for
farmers and ranchers, it is unrealistic to think that
landowners will take on costly conservation practices with
fewer financial incentives and less technical assistance. That
is why it is even more important to double down on farm bill
conservation funding.
While there are several programs worth discussing during my
testimony, one I would like to focus on is the new Regional
Conservation Partnership Program. RCPP was created to bring
together new partners and help leverage non-Federal dollars to
achieve greater conservation outcomes. Conservation districts
and their close working relationships with landowners, have
been natural partners in many of these projects. In fact, 25
out of the 88 projects funded in the most recent round of
awards were led by conservation districts or their state
associations.
As with all programs, RCPP needs to be thoroughly evaluated
while writing the next farm bill. Even in new programs, the
locally led aspect of the conservation delivery system is
crucial to ensuring that conservation programs are focused on
the greatest resource concerns in a particular area.
Unfortunately, RCPP does not always fully take that into
account, and the local conservation practices established by
the local working groups. Greater emphasis on state and local
coordination and consultation with local conservation districts
is needed to ensure that these programs are indeed addressing
the greatest resource concerns.
An additional obstacle is the SAM and DUNS reporting
requirements. Current law requires landowners who participate
in NRCS cost-share programs to follow time consuming Federal
reporting requirements. These requirements can act as a barrier
to implementing conservation practices on the ground. The NACD
does not believe farmers and ranchers were the intended
recipient of this regulation, and thankfully, Congresswoman
Kuster and Congressman Crawford introduced H.R. 1163, Improving
Access to Conservation Act to fix this problem. The NACD
encourages the Committee to ensure its passage or its inclusion
in the farm bill.
While there are many issues that we will discuss today, the
bottom line is that our nation's conservation districts and the
locally led conservation delivery system continue to be
effective in communities all across the nation. For this to
continue, Congress must provide robust funding and continue the
tradition of a locally led conservation system. We cannot let
our nation's investment in farm bill conservation programs
continue to erode, and as this Committee begins reauthorizing
the next farm bill, we appreciate the opportunity to provide
our insights and expertise. We look forward to a farm bill that
will continue to provide the ability for landowners to conserve
our nation's soil, water, and wildlife for future generations.
Thank you.
[The prepared statement of Mr. McDaniel follows:]

Prepared Statement of Lee McDaniel, Immediate Past President, National
Association of Conservation Districts
Good morning, Chairman Lucas, Ranking Member Fudge, and Members of
the Subcommittee. Thank you for the opportunity to testify this morning
as you gather input from stakeholders on how conservation policy in the
Agricultural Act of 2014 is performing and what improvements Congress
should make in the next farm bill.
I am Lee McDaniel, Past-President of the National Association of
Conservation Districts (NACD), and I currently operate a corn, soybean,
and alfalfa hay farm in Darlington, Maryland. I have been involved with
conservation districts since 1997 when I first served on my local
district board. On my own land, I implement a variety of conservation
practices, including grassed and wooded buffers, grassed waterways,
strip cropping, and no-till farming.
NACD represents America's 3,000 conservation districts and the
17,000 men and women who serve on their governing boards, as well as
their respective state and territory associations. Conservation
districts are local units of government established under state law to
carry out natural resource management programs at the local level.
Conservation districts work with cooperating landowners and operators
in all fifty states as well as the territories to help manage and
protect land and water resources on private working lands and many
public lands in the United States.
The origins of agricultural conservation date back to the Dust Bowl
and even before with the efforts of Hugh Hammond Bennett, the father of
U.S. soil conservation. Sadly, it took the devastating effects of the
Dust Bowl to spur a real change in policy. As a part of this policy
landscape shift, the Standard State Soil Conservation Districts Law was
signed in 1937, authorizing farmers to organize local soil and water
conservation districts. These new districts gave local farmers a voice
in Federal programs and is widely acknowledged as one of the key
reasons for the success of private lands conservation.
Today, our nation's conservation delivery system reaches into
virtually every community with technical and financial assistance that
is targeted to local resource concerns. The voluntary-incentive based
model that this local input supports has and continues to work to
ensure our nation's natural resources are protected. Part of the
voluntary conservation model's purpose is to help producers comply with
local, state, and national regulatory requirements. However, voluntary
conservation can take this purpose one step further by helping avoid
the need for these regulations altogether. The general public expects
clean air and water, healthy soils and abundant wildlife habitat. The
Federal Government has a better chance at achieving these goals, not by
adding additional requirements and regulations, but by encouraging
landowners to implement good conservation practices on their land.
Conservation districts are vital to conservation in this country.
Working with partners at USDA, they provide on-the-ground conservation
planning along with technical and scientific assistance to implement
conservation practices tailored to the landowner's management goals.
Conservation districts are also unique since they are directly involved
in the Local Working Group process which informs NRCS about what the
greatest resource concerns are at the local level. Local working groups
are required to ``provide recommendations to USDA on local and state
natural resource priorities and criteria for conservation activities
and program.'' It also is the responsibility of the local conservation
district to assemble the Local Working Groups, chair the group's
meetings, identify the conservation needs of the area and ensure that
NRCS is notified of the group's recommendations. Keeping the Local
Working Groups as a critical component of conservation decisions at
NRCS is an important priority for NACD.
As NACD began its farm bill evaluation process last year, we
created a Farm Bill Task Force to guide our policy priorities. We first
created a farm bill survey to seek input and opinion from our members
on the last farm bill, what programs were working or needed
improvements and where they wanted NACD to focus. Based upon the over
500 responses we received, the Task Force developed a set of principles
that was officially adopted by NACD's Board of Directors at our annual
meeting earlier this month.
These principles focus on items like local input and the need for
investments in farm bill conservation programs. While not directly
authorized under the farm bill, all of the programs discussed in my
testimony would not be as successful without the technical and
scientific expertise provided through Conservation Technical Assistance
(CTA). Through the CTA program, landowners work with local conservation
professionals, including conservation district employees, to develop
individual conservation plans ensuring producers know that they are
implementing the best conservation practices to meet their individual
land's resource needs and that taxpayers are getting the most out of
their investment.
An additional principle is to simplify the delivery of conservation
programs. Landowners who are interested in participating in NRCS cost-
share programs face Federal reporting requirements that can be time
consuming and hard to navigate which ultimately acts as a barrier to
implementing conservation practices on the ground. Current law requires
them to obtain a Data Universal Numbering System (DUNS) number and
annually register with the Federal Government's System for Award
Management (SAM). NACD does not believe farmers and ranchers attempting
to do the right thing by putting conservation practices on the ground
were the intended recipient of this regulation and thankfully
Congresswoman Kuster and Congressman Crawford introduced legislation 2
weeks ago to fix this problem and would encourage the Committee to
ensure its passage or inclusion in the farm bill.
Successful implementation of on-the-ground conservation is
dependent on proper investment through the farm bill conservation
title. The financial and technical assistance that farm bill dollars
provide are the lifeblood of the voluntary conservation model. Without
this valuable funding, we would see less uptake of conservation
practices and in turn we would see fewer conservation benefits. In
these difficult financial times for farmers and ranchers, it is
unrealistic to think they will take on costly conservation practices
with fewer financial incentives and less technical assistance.
The Agricultural Act of 2014 consolidated conservation programs
from 23 to 13 and reduced conservation spending by almost $6 billion
over 10 years, including sequestration. Let's examine that number on a
programmatic level. Funding for the Environmental Quality Incentives
Program (EQIP), by far the most popular conservation program, had its
authorized funding level reduced by an average of $250 million for the
first 4 years of this farm bill, a devastating cut when added to the
yearly reductions in the appropriations process. The Conservation
Reserve Program (CRP), a program which was first authorized in its
current form in 1985, had its acreage cap reduced to 24 million acres,
a reduction of 25%. The Agricultural Conservation Easement Program
(ACEP) will only have an annual baseline of $250 million in Fiscal Year
18 (FY18) and beyond, a cut over 60% from pre-2013 levels. The
Conservation Stewardship Program (CSP), the largest conservation
program by acreage, was reduced by over 2 million acres per year.
While regulatory reform is something many farmers and ranchers want
to see, the general public's desire for clean air and water, healthy
soils and abundant wildlife will not wane. That is why it is even more
important to ``double down'' on farm bill conservation funding since
one of the purposes of these programs is not only to comply with
regulations but help avoid the need for them altogether. While NACD and
the larger conservation community understood the budgetary constraints
that Congress had to deal with while writing the last farm bill, the
cuts to the conservation title were significant.
Since reauthorization, conservation programs like CSP and EQIP are
regularly cut further through the appropriations process known as
Changes in Mandatory Program Spending (CHIMPs). In FY14-16, mandatory
farm bill conservation spending was reduced by nearly $1 billion
through the appropriations process alone. The bottom line is farm bill
conservation title funding was cut in the last farm bill by 10% and it
continues to be cut annually in the appropriations process. Demands on
the landscape and our natural resources are greater than ever, so we
recommend that Congress seriously look at not only maintaining funding
for the conservation title but we strongly recommend increasing it.
One of the new programs created in the Agricultural Act of 2014,
was the Regional Conservation Partnership Program (RCPP). This new
program, which combined four regionally-based programs into one larger
program, was created to further the conservation, restoration, and
sustainable use of soil, water, and wildlife and was designed to help
producers meet, or even avoid the need for, natural resource
regulations. This program helps bring together new partners and
leverage Federal funds for large-scale conservation projects.
Conservation districts, and their close working relationships with
landowners, have been natural partners in many of these projects. In
fact, in December when NRCS announced the list of 88 projects which
were receiving funding through their third funding round, conservation
districts and their state associations were the lead on 25 funded
projects and were supporting partners in many more. Altogether, the
$225 million in funding that was available during the most recent
funding round will be leveraged with an additional $500 million from
the private-sector successfully proving that this public-private
partnership can work.
As with all new programs, RCPP, needs to be thoroughly evaluated
during this process. As previously mentioned, the locally-led aspect of
the conservation delivery system is crucial to ensuring that farm bill
conservation programs, including the four programs which contribute
funding to RCPP, are being focused to meet the greatest resource
concerns in that area. Unfortunately, RCPP does not always fully take
into account the local conservation priorities established by the
locally-led process and these priorities may not be considered in the
development or funding of RCPP projects. Greater emphasis on state and
local coordination and consultation local conservation districts is
needed to ensure that these programs are indeed addressing the greatest
resource concerns.
Another program I wanted to mention during my testimony is the
Small Watershed Rehabilitation Program. In the 1940's and 1950's,
Congress passed laws which led to the construction of almost 12,000
small watershed dams, many times led by the local conservation district
in the area. These dams represent critical infrastructure in many
communities and provide approximately $2 billion in benefits from
improved water quality and erosion control. Yet with the original dams
approaching 70 years old, these aging dams now also present public
health, safety, and environmental concerns. Under Chairman Lucas'
leadership, the Agricultural Act of 2014 provided mandatory funding of
$250 million to ensure necessary investments in these infrastructure
projects. The Watershed Rehab program, and the underlying Watershed
Protection and Flood Prevention Act, continue to be a priority for the
many conservation districts who stepped up to lead these projects.
While there are a multitude of other issues which will undoubtedly
be discussed during this hearing, the bottom line is that our nation's
conservation districts and the locally-led conservation delivery system
continue to be effective in communities all across the nation. However,
for it continue to thrive, Congress must provide robust funding and
continue the tradition of a locally-led conservation system. We cannot
let our nation's investment in farm bill conservation programs continue
to erode. As this Committee begins reauthorizing the next farm bill,
NACD along with our nation's 3,000 conservation districts and the
17,000 supervisors on their local boards stand ready to provide our
insights and expertise in crafting legislation that will continue to
provide the ability for landowners to conserve our nation's soil,
water, wildlife and air.
Attachment
NACD Principles for the 2018 Farm Bill
Principle 1--The Locally-Led, Voluntary Incentive-Based Conservation
Model Works
NACD strongly believes in the locally-led, voluntary, incentive-
based model for addressing natural resource concerns; not a one-size-
fits-all regulatory scheme. Farm bill conservation programs should be
locally-led and resource driven with sufficient flexibility to direct
funding to local priorities and concerns. Program priorities should be
tailored to the natural resource needs of the states and local areas.
Local Conservation District Boards, Local Working Groups, and State
Technical Committees should help identify local needs to maximize
conservation benefits.
Principle 2--No Further Cuts to Conservation Title Funding in the Farm
Bill
Strong mandatory funding levels authorized in the farm bill are
fundamental to not only putting conservation on the ground, but for
dealing with, and ultimately avoiding, the need for environmental
regulations. The conservation title (title II) took a 10% cut in
funding in the Agricultural Act of 2014, and continues to be cut
annually during the appropriations process. Every dollar cut from
mandatory conservation programs leads directly to less conservation on
the ground and only increases the natural resources concerns and the
probability of regulatory hassles. Each farm bill conservation program
plays a significant role in addressing natural resource concerns. From
the importance of the Environmental Quality Incentives Program (EQIP),
to the Small Watershed Rehabilitation Program, robust mandatory funding
is critical. NACD believes, at a minimum, no further cuts should occur
in the next farm bill to the conservation title, and if funds are
available, to increase its funding.
Principle 3--Commitment to Working Lands
Landscapes across the nation vary in their resource concerns, and
farm bill conservation programs must continue to meet the specialized
needs of the agricultural producers who work these lands. Given the
projected increase in the world's population, programs must provide
assistance to implement or maintain conservation practices on working
lands that produce much needed food, fiber, and fuel while at the same
time protecting our natural resources.
Principle 4--Technical Assistance and Conservation Planning Are the
Bedrock of the Conservation Model
Technical Assistance and conservation planning is a critical tool
and first step in evaluating a producer's resource needs. NRCS, along
with conservation districts, helps agricultural producers plan and
apply conservation practices on the land. They develop conservation
plans; plan, design, lay out, and install conservation practices; and
inspect completed practices for certification. Conservation Technical
Assistance is vital to ensuring producers know that they are putting
the best conservation practices on their ground to meet their
individual land's resource needs.
Principle 5--Agricultural Operations Need To Be Economically Viable
In order for the locally led, voluntary, incentive-based model to
be successful, NACD believes agricultural operations need to have a
strong safety net, robust marketing opportunities, and supportive farm
policy. Without viable agricultural operations, districts will not be
able to help install conservation practices on the ground. The farm
bill must work for each facet of the nation's diverse agriculture
industry.
Principle 6--Farm Bill Education and Outreach Is Necessary
NACD believes conservation education is a necessary tool to drive
more conservation adoption. If producers are not aware of the tools
available to them, then the adoption of conservation practices will
suffer. This is especially the case with beginning, socially
disadvantaged, and limited resource farmers. NACD supports a dedicated
funding stream within title II to advance conservation adoption and
outreach.
Principle 7--Streamline and Simplify Conservation Programs/Application
Process While Reducing Administrative Burdens
Conservation programs and the application process should both be
simple and easy to understand. Administrative burdens that
disincentivize program participation should be eliminated. Just one
example of this is the SAM/DUNS reporting requirements that NRCS
program participants must comply with. This only complicates the
conservation delivery system by taking time away from NRCS staff and
producers, but can actually prevent producers with the greatest
resource needs from applying.
Principle 8--Forestry
NACD supports a forestry title that addresses the unique
complexities of forestry on non-industrial, private forest land and the
effective management of Federal and state forest lands. NACD encourages
an expansion in the ability to provide technical assistance and
outreach to non-industrial private forest owners, especially landowners
not currently engaged in conservation or managing their lands. NACD
supports addressing issues identified by state forest resource
assessments and strategies as well as state wildlife action plans and
continue to provide the ability to make regular updates to these state-
level efforts.
Principle 9--New Approaches and New Technologies
Working lands conservation is not a static term, but is constantly
changing and adapting as the introduction of new technologies and
partners occur. The farm bill should reflect this and ensure they are
addressed. This includes addressing the natural resource concerns
presented by urban agriculture as well as the recent increase in drone
technologies and the adoption of precision agriculture.

The Chairman. The gentleman's time has expired.
The chair now recognizes for 5 minutes Mr. Nomsen.

STATEMENT OF DAVID E. NOMSEN, VICE PRESIDENT OF
GOVERNMENTAL AFFAIRS, PHEASANTS FOREVER, INC.,
GARFIELD, MN

Mr. Nomsen. Chairman Lucas, Ranking Member Fudge, Members
of the Subcommittee, my name is Dave Nomsen with Pheasants
Forever. Mr. Chairman, I had the same thought when I sat down
here this morning too as you sat down. I thought, ``I am back,
and I am here once again to talk primarily about the
Conservation Reserve Program this morning.'' But I do want to
start by pointing out, there is an incredible entire suite of
conservation programs that we work with across the country. But
frankly, CRP has been this nation's most successful
conservation program at USDA.
Let's look back a little bit and start by looking at the
period from 1990 to 2010. During that period, the CRP averaged
about 32 or 33 million acres enrolled in the program. During
that time period, we had an authorization for basically a 40
million acre program. It was dinged a little bit here and
there, it was 39.2, it was 36.4, but basically a 40 million
acre program. And quite frankly, the program worked quite well
at that time. We had some good old days for pheasant hunting.
We had record pheasant harvest in a number of states, and
frankly, we would like to return to those days, and that is why
we are calling once again for an authorization for a 40 million
acre program.
We hit a bit of a train wreck starting after the 2010
period, and actually right now, if you look at the northern
Great Plains States, perhaps Montana, the Dakotas, Nebraska,
Iowa, Minnesota, and Kansas, if you look at those states, they
had 16.4 million acres of CRP in 2007. Today, they have 9.3.
Forty-three percent of those acres are gone. That grassland has
left the landscape, and for pheasants and other ground-nesting
birds; obviously, grassland habitats are critical. Between that
and then what happened with the 49th general signup results, we
are actually saying we are at a grassland conservation crisis
in much of this country, and we really need to establish CRP as
the flagship program with a 40 million acre authorization.
During that signup period, some 26,000 offers were made,
and unfortunately because of the severely reduced cap, 21,000
offers were rejected. Landowners from all across the country
that wanted to do good things for soil, water, and wildlife
conservation, they weren't allowed entrance into the program.
Mr. Chairman, in your State of Oklahoma, you came out right at
the national average, about 600 offers, 22 percent acceptance
rate. Basically four out of five people were denied entrance
into the program.
In the flagship State of South Dakota, about 42,000 acres
were offered. During the process, USDA accepted two offers on
101 acres. Frankly, that just can't continue into the future,
and it threatens the integrity and the future of the program.
That is why one of the things I am calling for is a
complete reevaluation, revamping of both the signup process,
signup period. We simply have to find ways to put those larger
tracts of grass back on that landscape that are important to
wildlife production and for hunting. We also need to take a
look at the other end of the process. During the last farm
bill, we had some really, really strong report language that
encouraged expiring CRP to be redirected into many of the other
conservation programs. It didn't happen. We have to find a way
to make that happen. The program will only continue if it does
evolve and it becomes the robust, dynamic program as acres flow
through the program, we maintain the benefits, and we go out
and capture new acres and new involvement in the program as
well.
One of the ways to do that, too, is we are going to have to
take a look at looking at the historic distribution of acres as
part of the signup process. It just simply can't keep bouncing
around the country here and there with a number of different
factors. We would like to see, for example, South Dakota go
back to about 1\1/2\ million acres in the program. That is not
going to happen with the current system that we have in place,
and the same thoughts apply to many of those other states that
I spoke about earlier.
We have a number of other priorities at Pheasants Forever
and Quail Forever, and we are going to be looking forward to
working with you and Members of the Committee on the easement
programs, on working lands programs, especially the EQIP
program where we do good things in the West. We are going to
continue to support strong conservation policies like
conservation compliance linked to crop insurance, like the
SodSaver provisions to help protect native prairies. Our
nation's sportsmen and sportswomen are really interested in
continuing the VPA-HIP Open Fields Program to help landowners
provide voluntary access for hunters and fishers.
Thank you very much for the opportunity to testify this
morning. I would be happy to take your questions.
[The prepared statement of Mr. Nomsen follows:]

Prepared Statement of David E. Nomsen, Vice President of Governmental
Affairs, Pheasants Forever, Inc., Garfield, MN
Chairman Lucas, Ranking Member Fudge, and Members of the
Subcommittee, my name is Dave Nomsen and I am the Vice President of
Governmental Affairs with Pheasants Forever and Quail Forever based out
of St. Paul, Minnesota. I am a wildlife biologist by education, served
on the Wildlife Department faculty at South Dakota State University,
and have since then worked on conservation policy and programs for
nonprofit wildlife conservation organizations, growing up in north-
central Iowa and currently living in west-central Minnesota.
I am here today representing our 735 community based Pheasants
Forever and Quail Forever chapters; and 142,000 members and volunteers
that work every day to promote and implement conservation programs.
Each year our chapters complete more than 30,000 individual projects
with farmers, ranchers and forest owners. To complement the work of our
dedicated volunteers, we have a team of 125 Farm Bill Biologists that
work as natural resource professionals with expertise in fields such as
wildlife biology, forestry, range management and precision agriculture.
They work with landowners every day to find the best voluntary based,
conservation solutions that fit producers' needs as part of their
agriculture operations and personal goals.
Since 2003, these Farm Bill Biologists have worked on over 148,000
projects with landowners covering over 5.1 million acres. These
projects involve the establishment of quality habitat that meet the
life cycle needs of a wide variety of wildlife, not only pheasants and
quail, but other species such as Golden-winged warbler in Pennsylvania,
Lesser Prairie Chickens in the Southern Great Plains and the iconic Elk
and Sage Grouse in the West, and enhancing habitat for pollinators,
like honey bees and Monarch butterflies throughout the country. In
addition to wildlife benefits, all Americans benefit from improved soil
health and water quality improvements related to wildlife conservation
projects.
Thank you for the opportunity to speak to you today about important
conservation policies and program need as part of the next farm bill.
My comments will focus on the program that is routinely referred to as
the U.S. Department of Agriculture's most successful conservation
program--The Conservation Reserve Program and I will briefly address
other important priorities that we have for the next farm bill.
Conservation Reserve Program
Originally established in 1985, the U.S. Department of
Agriculture's (USDA) Conservation Reserve program (CRP) enables farmers
and landowners to voluntarily enroll environmentally sensitive
croplands and grasslands and plant it to grasses, shrubs, and trees in
return for 10 to 15 year contracts with annual rental payments.
Originally designed for both soil erosion and commodity supply control,
the original CRP proved a great boon for wildlife. In fact, CRP's
wildlife benefits were instrumental in the programs reauthorization in
1996. That year, the CRP was reconfigured as a true resource
conservation program benefitting soil, water, and wildlife resources
while continuing to provide economic security to farmers and
landowners, and supporting rural economies and communities. Other
significant changes in 1996 strengthened CRP by allowing for mandatory
funding and creating the CRP buffer initiative. Today's generations of
sportsmen and sportswomen will view CRP's wildlife legacy as the ``good
old days'' just as previous generations thought of the ``Soil Bank
era'' of the late 1950s and 1960s. No other private lands conservation
program has benefitted hunters more than the successful CRP.
During the 20 year period from 1990-2010 CRP enrollment averaged
approximately 32-33 million acres per year with an historical peak of
36.7 million acres in 2007. During this period hunters experienced
strong levels of bird hunting across many states. Below is the lead
paragraph from our 2007 forecast that turned out to be an accurate
prediction of times to come.
Pheasants Forever's 2007 Pheasant Hunting Forecast
With potential habitat losses . . . is 2007 the boom before the bust?
Overview: All across the Midwest and Upper Midwest, signs are
pointing to an excellent pheasant hunting season. The typical pheasant
powerhouses--South and North Dakota, Iowa, Kansas, Minnesota, and
Nebraska--will again top the list. Unfortunately, because of the
potential for massive habitat losses this year and next, namely
Conservation Reserve Program (CRP) acres under soon-to-expire
contracts, we may soon be referring to 2007 as ``the good old days.''
Fig 1. Historical CRP Acreage Enrollment 1986-2016
CRP Acres By Year

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Landscape level forces after 2010 including record high commodity
and land prices coupled with budget reductions led to a 2014 Farm Bill
CRP authorization of 24 million acres and today's total enrollments
hover just below the 24 million acre cap. Unfortunately, very dramatic
changes resulting in loss of grasslands habitats have occurred over
much of the country a problem that has been exacerbated by significant
increases in cropland acreages. Additionally, the results of the 49th
general CRP signup conducted from Dec. 1st, 2015-Feb. 26th, 2016 have
led to what we characterize as a current ``grassland conservation
crisis''.
Fig [2]. Acres of Grassland/Wetlands/Shrub Land Converted Crop
Production By County, 2008-2011

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

http://static.ewg.org/pdf/plowed_under.pdf.
Calculated using the NASS-USDA Cropland Data Layer for crop
years 2008 (56m), 2009 (56m), 2010 (30m), & 2011 (30m).

In 2007, seven key upland bird hunting states (MT, ND, SD, NE, KS,
MN and IA) had 16.4 million acres of CRP. By the end of 2016, this
region contained 9.3 million acres of CRP--a loss 7.1 million acres or
43%.
49th General Signup
During CRP Signup No. 49 1.8 million acres in 26,000+ offers were
submitted. Of these 4,857 offers (18%) for 410,773 acres (22%) were
accepted nationwide. In the core northern and central plains states
renowned for upland bird hunting (MT, ND, SD, NE, KS, MN, and IA)
701,060 acres in 10,983 offers were submitted. Of these 1545 offers
(14%) for 105,745 acres (15%) were accepted. In South Dakota, the
pheasant capitol of the world, only two offers on 101 acres were
accepted (.0275%). These acceptance rates are by far the lowest ever
throughout the entire history of CRP. As a result, more than 21,000
individual offers for enrollment in CRP were denied enrollment
nationwide with nearly 9,500 of these offers from the above key upland
bird hunting states.
During the first Grassland CRP sign up that took place during the
same timeframe as CRP signup No. 49, farmers and ranchers offered over
1 million acres, and USDA only allowed 101,000 acres to enter the
program (10%). During the latest sign up, 986,000 acres were offered
and 316,000 acres were accepted (32%). Currently there are about
800,000 acres of enrollment, with most of those contracts having
delayed start date of Oct 1st, 2017 due to current CRP cap of 24M
acres.
We have seen strong demand from landowners when acres are put out
there on a more target approach. For example just last month, IA State
Acres For Wildlife (SAFE) 50,000 acres were allocated in a little more
than a week due to high landowner demand. In SD, allocations for
pheasant focused SAFE projects typically last for short times as demand
remains high.
Changing Times
Today we're at substantially reduced commodity prices, near or
record level commodity stocks, diminishing land values, cash rents, and
growing concerns about low farm incomes. Some of these reasons have
contributed to the substantial demand that we've seen for both
continuous CRP (CCRP) and general CRP signup 49. As of the end of
December 2016 CRP enrollment is at 23.49 million acres with a 24
million acre cap. Upcoming expirations are minimal with 2.5 million
acres expiring this coming September 30, 2017 and another 1.49 million
acres on September 30, 2018.
In our view, we're at a tipping point once again for CRP. Clearly,
we have strong demand to call for a substantial increase in the acreage
authorization and we recommend returning CRP to at least 40 million
acres as part of the 2018 Farm Bill. We need CRP now to address the
substantial demand to complete voluntary soil, water, and wildlife
habitat improvement projects. In addition, CRP does offer substantial
economic and income stability benefits while providing commodity price
support benefits.
Additionally, we recommend a complete review and overall of the CRP
application/signup processes. The program needs to continue to evolve
to continue as a robust and dynamic landscape level program on working
farms and ranches. Future signups should target larger blocks of
habitat important for wildlife production and hunting. It is the
combination of both the general signups larger tracts of CRP and the
corridors/buffers and targeted specialty tracts that are available
through the CCRP that result in the ``habitat mosaic'' most beneficial
to soil, water, and wildlife resources AND supports outdoor
recreational opportunities including hunting. Small, rural communities
benefit as do all residents that enjoy a high quality of life in rural
areas.
Future CRP should contain additional provisions to maximize
benefits to quail. Encouraging use of early successional native covers
in shorter-term rotations within contracts could be very beneficial.
We need to address provisions for soon to expire CRP as well. As
CRP contracts near expiration, we should support provisions encouraging
longer term resource protection including permanent options for
selected tracts. Congress should support pathways to ``move'' CRP lands
into working farms and ranching that continue CRP's resource benefits.
CRP can support grazing programs and wildlife with through
comprehensive conservation management plans that provide high quality
forage, and quality wildlife habitats.
We also believe USDA should utilize CCRP initiatives to cover areas
with high contract expiration rates. As these acres come out of a
general contract and are not extended/re-enrolled, we would ask USDA to
promote keeping field borders and environmentally sensitive/important
lands in CCRP practices. The trend has been that when a general CRP
contract expires, the entire field is brought back into production.
Other Conservation Program Priorities
In addition to maintaining a strong and robust CRP as the flagship
conservation program we support a strong Agricultural Conservation
Easement Program (ACEP) as well as the successful Environmental Quality
Incentives Program (EQIP). EQIP in particular has played an important
role in our western states where we work with ranchers and other
partners to enhance rangelands for both livestock operations and to
benefit wildlife species like sage grouse and mule deer.
Through EQIP and Partnerships, we are addressing some of the
resource concerns in forested ecosystems; however another priority is
providing wildlife benefits in CRP tree plantings, especially managing
pine stands for quality timber production in the Southeast while
benefiting Bobwhite Quail. We are encouraged that USDA implemented the
$10M in cost share assistance that was introduced in the 2014 Farm
Bill. We hope that these successes demonstrate additional resources for
management. We also continue to support the linkage between
conservation compliance and crop insurance. Sodsaver provisions play an
important role in addressing native prairie conversion and should be
continued as well.
Last, The Voluntary Public Access and Habitat Incentive Program
(VPA-HIP) plays a vital role in supporting recreational access for
hunters while supporting enhancement of wildlife habitats. We support
reauthorization of VPA-HIP at $150 million over 5 years.
Mr. Chairman, we look forward to providing more detailed program by
program recommendations to the Committee in the near future. We look
forward to participating in upcoming dialogues focused on reviewing
existing programs and procedures and to look for new efficiencies and
saving wherever possible. We pride ourselves as part of incredible
partnerships that work day to day to deliver important voluntary
incentive-based conservation programs to America's farmers and
ranchers. Thank you for the opportunity to comment and I would be
pleased to take your questions.
Additional Resources
2013 Multi-State Land Use Study: Prepared by Decision Innovation
for MN, SD, IA, IL, NE, IN, and MI Farm Bureau. July, 2013. http://
www.decision-innovation.com/webres/File/docs/130715%20Multi-
State%20Land%20Use%20Report.pdf.
Conversion of 398,223 acres if non-cropland to cropland during 2012
crop year[.] USDA-FSA. June 26, 2013 www.fsa.usda.gov/Internet/
FSA_File/cropland_noncropland.pdf.

The Chairman. Thank you, sir.
The chair now recognizes Mr. Piotti for 5 minutes.

STATEMENT OF HON. JOHN F. PIOTTI, PRESIDENT, AMERICAN FARMLAND
TRUST, WASHINGTON, D.C.

Mr. Piotti. Thank you. Chairman Lucas, Ranking Member
Fudge, Members of the Committee, my name is John Piotti and I
am the President and CEO of American Farmland Trust, AFT.
Though I am new to AFT, I have worked on farming issues in my
home State of Maine for the last 25 years, much of that time as
part of an organization that worked to protect farmland and
support farmers. And that is how I have firsthand, on the
ground experience with many of the programs within the farm
bill.
I want to thank the Committee for seeking input from
stakeholders on the priorities for the next farm bill at this
time.
For 36 years, AFT has been dedicated to protecting
America's farmland and ranchland, promoting sound farming
practices, and keeping farmers on the land. In the United
States, we lose the equivalent of 40 acres of farmland to
development every hour. Replacing our farmland with homes or
shopping centers has ripple effects for our society, from
eroding rural towns and their traditions, to decreasing our
ability to provide our citizens with healthy food, to losing
wildlife populations, to habitat destruction. AFT recognizes
that farmers and ranchers hold the solutions to many of our
most pressing environmental problems when they implement
voluntary conservation practices on their land. Finally, AFT is
concerned with the decreasing number of farmers and their
increasing age. In the time since AFT's founding, the average
age of farmers has increased from 50 to 58 years. While the
number of beginning farmers decreased by 20 percent in the last
Census of Agriculture.
The farm bill's conservation title should, and at its best,
does address all these issues. AFT used the conservation title
as a set of tools to address the complex needs of America's
farmers and ranchers, while at the same time addressing public
interest. One of AFT's goals for the upcoming farm bill is to
ensure that we retain a full set of tools, and that we fund
each program adequately.
My written testimony provides detail about how the 2014
Farm Bill voluntarily reduced spending in an effort to reduce
future deficits. The conservation title saw a ten percent
decrease in funding levels, or nearly $6 billion in cuts. A
recent CBO study shows that the entire farm bill will result in
nearly $100 billion in deficit reduction.
My point on all this is that the farm and food community
has already done its part, and should not be the target of
additional cuts with the next farm bill.
Although AFT sees great value in all of the programs in the
conservation title, my remarks today offered here early in the
farm bill process focus on two programs that benefit working
lands and that AFT has strongly been involved with, and that is
ACEP and RCPP. I will start with ACEP, the Agricultural
Conservation Easement Program, which is the farm bill's program
for protecting farmland, a necessary part of our nation's
infrastructure.
Protecting farmlands from development protects the
foundation of our agriculture and our agriculture-related
industries. Protecting farmland means protecting wildlife
habitat, water tables, and carbon that is stored in our soils.
Protecting farmland means protecting our supply of healthy
food, and protecting farmland means protecting the way of life
in rural America, and ensuring the next generation of farmers
can enter the profession. Simply put, Federal investment in
farmland protection through ACEP provides vital benefits for
Americans today and into the future.
Allow me to take just a minute to further explain one of
the many benefits of ACEP, which some people may not be
familiar with. We don't always talk about farmland protection
playing a critical role in making land more affordable for
farmers, both existing farmers who are looking to expand, and
beginning farmers who are trying to enter the profession. And
yet, in any part of this country where there are significant
development pressures, protected farmland is often the only
farmland that farmers can afford.
I earlier mentioned that the number of beginning farmers
dropped by 20 percent in the last Census of Agriculture. That
is a national statistic. It doesn't play out in every region.
In my home State of Maine, for instance, our story could not be
more different. Between 2007 and 2012, the number of beginning
farmers in Maine grew by an impressive 39 percent, and one of
the key reasons is that Maine during this period significantly
increased its farmland protection efforts, creating affordable
options for entering farmers to acquire land.
Despite the many benefits of protecting working
agricultural lands, the funding for ACEP saw a huge decrease in
the 2014 Farm Bill. The three components that were created in
that farm bill to create ACEP, Wetlands Reserve, FFRP, and the
Grassland Reserve Programs, these were funded at an average of
$732 million a year from 2009 to 2012. Yet the average for ACEP
for 2014 through 2018 is $405 million. Even more alarming is
that ACEP funding drops to $250 million annually in 2018 and
going forward.
So listen to what I just said. We are talking about going
from $732 million to $250 million, a huge drop. And already
without that step, NRCS is only funding about 30 percent of the
applicants. Think what it is going to be with the next drop in
2018.
Now in addition to ensuring adequate funding for ACEP, AFT
believes there is a need to streamline the program to ease
administrative burdens, going forward. This would save the
Federal Government significant time and money, while making the
process easier and more timely for a broad variety of farmers
and ranchers.
AFT is discussing with advocacy organizations, land
trusts----
The Chairman. Please summarize, Mr. Piotti.
Mr. Piotti. Yes?
The Chairman. Can you summarize, please, so we can get to
questions?
Mr. Piotti. Yes, absolutely.
In conclusion, I just want to say the conservation title is
vitally important, not just for farmers and ranchers, but for
all Americans. It gives our farmers and ranchers a variety of
tools to achieve cleaner air and water, healthier soils, more
wildlife habitat, and to protect farmland and ranchland. While
we all acknowledge the budget realities that the nation faces,
we believe that adequate funding for the conservation title is
critical at this time. Beyond this, these voluntary
conservation programs help our nation's farmers and ranchers
advance environmental goals without burdensome regulatory
requirements, something that is needed today more than ever.
I thank you for your time.
[The prepared statement of Mr. Piotti follows:]

Prepared Statement of Hon. John F. Piotti, President, American Farmland
Trust, Washington, D.C.
American Farmland Trust is the nation's leading conservation
organization dedicated to protecting America's farmland and
ranchland, promoting sound farming practices, and keeping
farmers on the land. Since its founding in 1980 by a group of
farmers and citizens concerned about the rapid loss of farmland
to development, AFT has helped save millions of acres of
farmland from development and led the way for the adoption of
conservation practices on millions more.
Introduction
Chairman Lucas, Ranking Member Fudge, and distinguished Members of
the Subcommittee,

My name is John Piotti and I am the President and CEO of American
Farmland Trust (AFT). Though I am new to AFT, I have worked on farming
issues in the state of Maine for 25 years, much of that time as part of
a statewide organization that has protected farmland and supported
farmers. I have first-hand, on-the-ground experience with many of the
programs within the farm bill.
I want to start by thanking Chairman Conaway and Ranking Member
Peterson, as well as Subcommittee Chairman Lucas and Ranking Member
Fudge, for seeking input from interested stakeholders on policy
priorities for the next farm bill.
For 36 years, AFT has been dedicated to protecting America's
farmland and ranchland, promoting sound farming practices, and keeping
farmers on the land. In the United States, we lose the equivalent of 40
acres of farmland to development every hour. Replacing our farmland
with homes or shopping centers has ripple effects for our society, from
eroding rural towns and their traditions, to decreasing our ability to
provide cities with fresh, local food, to losing wildlife populations
through habitat destruction. AFT also recognizes that farmers and
ranchers hold the solutions to many of our most pressing environmental
problems when they implement conservation practices on their land.
Finally, AFT is concerned with the decreasing number and increasing age
of farmers: in the time since AFT's founding, the average age of
farmers has risen from 50 to 58, while the number of beginning farmers
decreased 20% between 2007 and 2012.
The farm bill's conservation title should, and often does, address
all these issues. AFT views the conservation title programs as a set of
tools to address the complex needs of America's farmers and ranchers--
as well as public interests. Each program has demonstrated value to
producers and landowners to achieve specific outcomes tailored to their
needs. One of AFT's goals for the upcoming farm bill is to ensure that
we retain a full set of tools, and that we fund each program
adequately. More specifically, AFT believes the next farm bill should
adequately fund and streamline the Agricultural Conservation Easement
Program (ACEP) and strengthen the Regional Conservation Partnership
Program (RCPP).
The Need for Conservation Title Funding
First and foremost, AFT urges Committee Members to work with
colleagues on the Budget and Appropriations Committees to ensure that
conservation programs do not undergo additional funding cuts. The 2014
Farm Bill marked the first time a farm bill voluntarily reduced
spending, and it was the only reauthorization bill in that Congress
that voluntarily offered savings. As part of this effort to reduce
future deficits, the conservation title saw a 10% decrease in funding
levels, or nearly $6 billion in cuts. While the 2014 Farm Bill was
originally estimated to contribute $23 billion to deficit reduction
over 10 years, a recent analysis by the Congressional Budget Office
shows that the entire bill will result in nearly $100 billion in
deficit reduction. The cuts already endured, coupled with better-than-
expected spending outcomes for the 2014 bill, show that the farm and
food community has already done its part--and should not be the target
for additional cuts.
Cuts to the conservation title have many negative consequences.
Some programs, such as the Environmental Quality Incentives Program
(EQIP) and RCPP have expressly-stated purposes of providing
conservation assistance to avoid regulatory requirements for farmers;
inadequate funding stands in the way of this purpose. Further, funding
for voluntary, incentive-based conservation ensures both environmental
sustainability for our farms and economic sustainability for our
farmers and ranchers. For example, not only does ACEP provide funds for
farmers to enable them to protect their land, it also often allows them
to reinvest in their businesses. Recent cuts to ACEP mean that the
Natural Resources Conservation Service (NRCS) must turn away 70% of the
farmers and ranchers who apply for funds each year.
Although AFT sees great value in all the programs in the
conservation title, these remarks--offered early in the farm bill
process--focus on two programs that benefit working lands, and with
which AFT has been strongly involved: ACEP and RCPP.
The Importance of Federal Farmland Protection: Funding and Streamlining
ACEP
Farmland is a necessary part of our country's infrastructure.
Protecting farmland from development protects the foundation of our
agriculture and agriculture-related industries, which contribute $985
billion to the U.S. gross domestic product (GDP). Protecting farmland
means protecting wildlife habitat, water tables, and carbon stored in
our soils. Protecting farmland means protecting the supply of healthy
foods provided to our cities. Protecting farmland means protecting the
way of life in rural America and ensuring that the next generation of
farmers can enter the profession. Simply put, Federal investments in
farmland protection through ACEP provide vital benefits for Americans
today and into the future.
Allow me to take just a minute to further explain one of the many
benefits of ACEP, with which some people may not be familiar. We don't
always think of farmland protection playing a critical role in making
land more affordable for farmers, both for existing farmers who are
looking to expand, and for beginning farmers who are trying to enter
the profession. And yet, in any part of this nation with development
pressures, protected farmland is often the only farmland that farmers
can afford.
I earlier mentioned that the number of beginning farmers dropped by
20% in the last Census of Agriculture. But that's a national statistic;
that doesn't play out in every region. In my home state of Maine, for
instance, our story could not be more different: between 2007 and 2012,
the number of beginning farmers in Maine grew by an impressive 39%! And
one of the key reasons is that Maine during this period significantly
increased its farmland protection efforts, creating affordable options
for entering farmers to acquire land.
Despite the many benefits of protecting working agricultural lands,
the funding for ACEP saw a precipitous decrease in the 2014 Farm Bill.
The three component programs that were combined to create ACEP
(Wetlands Reserve Program, Farm and Ranch Lands Protection Program, and
Grassland Reserve Program) were funded at an average total of $732
million annually from 2009-2012. Yet the average for ACEP for 2014-2018
is $405 million, a 32% decrease from the previous average. Even more
alarming is that ACEP funding drops to $250 million annually in FY18
and in future years, which is a 66% decline from the previous average.
This decrease in funds makes it increasingly difficult for partners,
who rely on ACEP funds to leverage state and local funding for farmland
protection projects. AFT believes it is of utmost importance to return
ACEP funding to historic levels.
In addition to ensuring adequate funding for ACEP, AFT believes
there is a need to streamline the program to ease administrative
burdens for producers, land trusts and NRCS. This would save the
Federal Government significant time and money, while making the process
easier and more timely for a broad variety of farmers and ranchers,
from Vermont to Texas, Pennsylvania to Montana, California to Michigan,
and every state in between. AFT is discussing with other advocacy
organizations, land trusts, and state farmland protection programs how
ACEP might be refined to best serve the farmers and ranchers who need
it. We look forward to working on this important issue with Members of
this Committee and staff.
Quantifying Benefits through the Regional Conservation Partnership
Program
AFT has long championed a targeted, partnership-based project
approach to conservation to achieve landscape-scale environmental
outcomes. RCPP is an innovative program that brings together a diverse
array of partners with technical and scientific expertise and leverages
private-sector dollars. RCPP projects can focus on specific natural
resource concerns in specific geographies to magnify desired
conservation outcomes. By 2018, NRCS and its more than 2,000
conservation partners will have invested over $2.4 billion in high-
impact RCPP projects nationwide, with more than half of that funding
coming from non-Federal sources.
AFT is working with many partners to implement RCPP projects around
the country. In Washington State, AFT and partners have helped farmers
adopt conservation practices to improve water quality in Newaukum
Creek. Funding has gone towards stream-side plantings to improve
habitat, projects that help farmers better manage manure and nutrients,
and several other conservation practices. In Illinois, AFT and partners
are working to improve water quality in the Upper Macoupin Creek
Watershed, which feeds into the Mississippi River and eventually the
Gulf of Mexico. According to the Illinois Nutrient Loss Reduction
Strategy, the Macoupin Creek watershed is one of the three highest
phosphorus-yielding watersheds in Illinois. In addition to providing
technical and financial assistance for soil-saving and nutrient-saving
conservation practices, the AFT-led partnership will also address the
need for expensive new equipment that would otherwise be a significant
barrier to the adoption of water-quality practices. Included in this
watershed, and eligible for support by this project, are farmers in the
traditionally under-served African American community of Royal Lakes.
One of the goals of RCPP was to fund projects that elect to measure
environmental, social, and economic outcomes of the practices adopted
within a project area. However, AFT, like other groups, have struggled
to do so, due to the lack of guidance from NRCS on what such outcomes
mean or which measurement methods to use. AFT believes that
improvements to the farm bill could help NRCS and its conservation
partners quantify the different outcomes associated with conservation
practices, which will provide needed evidence to the public, Congress,
farmers, and the conservation community to show that voluntary
conservation works.
For these reasons, AFT believes that the farm bill should, first,
include definitions of these environmental, social, and economic
outcomes, and second, direct the Secretary of Agriculture to provide
guidance and reporting criteria to RCPP project partners. That would
enable data showing the progress that RCPP and its project partners are
having in achieving, quantifying, and reporting on these outcomes to be
regularly reported to Congress. Having information about the actual
outcomes of conservation practices, rather than simply reporting on the
dollars spent, will allow agricultural and conservation organizations
to make a stronger case for voluntary conservation going forward.
Concluding Remarks
The conservation title is vitally important not just for farmers
and ranchers, but for all Americans. It gives producers a variety of
programmatic tools to achieve cleaner air and water, healthier soils,
more wildlife habitat, and protected farmland and ranchland that
benefit us all. The importance of conservation title funding in
obtaining these public benefits cannot be underestimated. While we
acknowledge the budget realities that this nation faces, we believe
that adequate funding of the conservation title is critical to
protecting our valuable natural resources. Beyond this, these voluntary
conservation programs help our nation's farmers and ranchers advance
environmental goals without burdensome regulatory requirements. We feel
that such programs are needed now more than ever.
Thank you again, Mr. Chairman, for the opportunity to share our
views on these important issues. I would be happy to address any
questions you have.
Attachment
Funding for Agricultural Conservation Easements Under the 2008 and 2014
Farm Bills
The Agricultural Conservation Easement Program (ACEP) combined
funding from three programs in the 2008 Farm Bill: the Wetland Reserve
Program (WRP), the Farm and Ranch Lands Protection Program (FRPP), and
the Grassland Protection Program (GPP). Under the 2014 Farm Bill, the
funding level for ACEP reaches its peak in FY17 at $500 million,
compared to the peak of $882 million in FY10. In FY18, funding is
slated to drop precipitously to $250 million--a 66% decrease when
compared to the average funding level under the 2008 Farm Bill.
Funding for ACEP Under 2008 and 2014 Farm Bills

2008 Farm Bill 2014 Farm Bill

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

The Chairman. Thank you, Mr. Piotti.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing, and after that,
Members will be recognized in order of arrival. I appreciate
Members' understanding. With that, I would recognize myself for
5 minutes.
Mr. Coffey, clearly you are a very progressive sort of
fellow on your ranch, utilizing resources and programs that are
available to us. You have been in the process for a time. Could
you describe for me the availability of the technical
assistance that comes from NRCS, and the relevance that is to
how you implement your conservation practices on your ranch?
Mr. Coffey. Yes, sir. I appreciate that question.
I have been involved with both EQIP and CSP contracts. In
fact, I am currently under a CSP contract right now. I am into
a renewal program with CSP. Many of the practices that we have
used with the CSP program have including grazing management,
which requires us to leave residual forage at 12" to 14" on an
average of our pastures. We have added fencing for rotation
grazing. We have added solar wells for water management. We are
on a non-herbicide program, and so many of these conservation
practices have made us more aware of the importance of the
grasses that we have and leaving residual things behind for
future use.
The Chairman. How available is the technical assistance?
How much of a wait do you have when you need the good folks
from NRCS to work with you, those kind of questions? Even
though this Committee is focused on authorizing programs, and
our brethren on Appropriations actually fund positions at USDA,
nonetheless, it doesn't matter how good the programs are if you
can't implement them and you have to have people and technical
experts to help, correct?
Mr. Coffey. That is very true. Technical assistance is very
hard to come by. They are inundated with paperwork, and I am
good friends with them and have served on committees with them
through SRM and so forth, but it is very difficult to get them
to come out on the land to do surveys and to assist. It seems
like they are just inundated with the paperwork. If I had to
choose between payments for cost-share or these programs and
technical assistance, I would honestly choose the technical
assistance. We need more effort in that arena.
The Chairman. This is a question for the whole panel. This
summer, former Secretary Vilsack heard comments from young and
beginning farmers in Iowa about their concerns in competing
rental rates, whether the land would go to a CRP contract or be
available to rent. Part of this Committee's responsibility is
to preserve the soil, the water, and the air, but also to
preserve our productive capacity, and those young people and
beginning farmers who represent that.
Whoever on the panel, let's touch for a moment on this
issue about if we get CRP rates too high, do we choke off
farmers? By the same token, if we get CRP rates too low, which
benefits potential new farmers and expanding farmers, then we
lose the conservation benefits. Let's touch on that for just a
moment, that balance that I believe must be achieved. Whoever
would care to step in, in my remaining couple of minutes.
Mr. Nomsen. Mr. Chairman, perhaps I will start. Let me
offer the thought that first of all, I remind you that
initially put into the CRP program were county to county
limitations, being sensitive to that balance between
agriculture and CRP lands. We have struggled with many farm
bills on the CRP rental rate issue, and typically over its
history, the rates have typically lagged behind and we have had
more issues with getting them competitive and raising them.
Well, that turned a little bit with the skyrocketing land
values, cash rents that we have seen. All of a sudden, we have
probably got a bit of the opposite situation now. It is
something we do need to revisit clearly, and I think there are
ways that we can use kind of today's CRP, a little bit more of
the targeted CRP so that we can help beginning farmers and
ranchers out there a little bit more, just because of some of
the practices.
That said, I think there is a real opportunity to help
farmers and landowners right now. It is somewhat like the
situation in the early 1990s. It is not as dire; however, just
because CRP is now a true resource program, soil, water, and
wildlife, that doesn't mean that it also doesn't still have
income security and stability benefits to it, price support,
commodity supply control. Those are all elements of it, because
it is a true landscape level program, and those things are
important right now in the situation that we are in with the
agricultural economy.
The Chairman. Anyone else wish to touch on that? Mr.
Coffey?
Mr. Coffey. Thank you. Yes. I am of the opinion that I love
the working lands programs, and if we had more boots-on-the-
ground, we may not need to focus so much on set-aside land. I
mean, conservation involves livestock, wildlife, soil, water,
forages, on and on, and those can be blended together in a way
that what is good for the goose is good for the gander, so to
speak. In my opinion, putting more funding to set-asides, such
as CRP, may not be in the best interest of the taxpayer in this
country.
The Chairman. Seeing that my time has expired, I now
recognize the gentlelady, Ms. Fudge, for her 5 minutes.
Ms. Fudge. Thank you very much, Mr. Chairman. I would now
yield to the Ranking Member of the full Committee.
The Chairman. The gentlelady yields to the Ranking Member.
Mr. Peterson. I thank the gentlelady.
Mr. Peters and Mr. Gertson, you both mentioned the DUNS and
SAMS situation. A few years ago I bought a little farm, and in
a way we ought to really require every Member of this Committee
to own a farm, because I have been now subjected to all of the
different aspects of the farm programs, and I was in the CSP
program, and I have a partnership with my son. We had to get
one time the DUNS number. That was not a big deal, but then
because we are a partnership and whatever this law was that we
passed and guidance that was put out by OMB or whatever it was,
and we had to have a SAMS number.
What ended up happening, because this stuff is public
information, I get a call from somebody in Fort Lauderdale,
Florida, who tells me that I have to go through him and it is
going to cost me $600 to get this SAMS number. They are
scamming us, like they do with the IRS and so forth. Not only
is it bad enough you have to go through this, they are actually
scamming people because you don't need to pay anybody to get
this. But he basically told me I had to pay them to get this
number. Well I was only getting $700 a year out of the CSP in
the first place, we got through that and so forth. I can't see
any reason in the world why these farm programs are in this
system in the first place. We have the controls at the county
level and we know what is going on, would you agree with that,
that we should just get rid of these impediments?
Mr. Gertson. Absolutely, Congressman Peterson. Yes. I am
the guy on our farm who deals with NRCS, and yes, I am one who
has personally gotten a DUNS number and the SAM number. The
DUNS number, yes, that was no big deal, but I get solicitations
through my DUNS number as well. People come in and want me to
do stuff.
The SAM number was a complete disaster, I can tell you
that. That was a 100 percent disaster. Not only do I get tons
of solicitations because my information is out there, now, we
had millions of dollars of payments held up because the NRCS
offices weren't really even sure what to do or how to tell you
to do it right. I have a lot of farmers around me who did their
practices right, installed hundreds of thousands of dollars of
dirt work and pipelines and all of this stuff, paid it, right,
paid their bills. Now they are waiting on their cost-share and
couldn't get it, because they didn't sign up for the SAM number
because they didn't know or didn't know how or had to use the
confusing website. I can tell you from experience that the SAM
system has been a complete disaster.
Mr. Peterson. I dropped out of CSP because of it. My
contract came up. They changed the practices so it really
wasn't hardly worth anything for me to go back into it. And I
just wasn't going to go through it again, so I just dropped
out. I think there are a lot people who have done that, am I
right, Mr. Peters?
Mr. Peters. That is correct. We would agree with you, and
we, through our district, have heard countless stories similar
to your own and to Mr. Gertson's. We see this is an impediment
to getting good conservation on the ground for people that are
just seeking to do the right thing. And it is a system that was
never intended for cost-sharers----
Mr. Peterson. It is for defense contractors.
Mr. Peters. Correct.
Mr. Peterson. Mr. Nomsen, your organization supports 40
million acres, am I right?
Mr. Nomsen. That is correct.
Mr. Peterson. Who else supports it? I know the DNR guy in
Minnesota is organizing all of the DNR people in that part of
the world to support it. First, are there other folks out there
that are on board supporting the 40 million? And second, are
there people that are fighting you on that that you know of?
Mr. Nomsen. The latter part of your question is the easier
one to answer.
As we get started here in the process, I am hopeful that
many, many other groups will look to the CRP and the fact that
we need a strong increase in the program. I don't know where
the number is going to shake out for many, many groups. But to
the earlier part of your question when you mentioned the DNR,
one of the tools that we have available now that we have not
had in previous farm bill discussions is we now have a national
pheasant restoration plan that is put together by all of the
state agencies, and in that plan, one of their goals is to
support a 40 million acre CRP as one of the critical components
of the national plan as well. Thank you.
Mr. Peterson. Thank you.
I yield back, Mr. Chairman, and thank the gentlelady for
yielding.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from Pennsylvania for 5 minutes.
Mr. Thompson. Thank you, Chairman, and thank you to the
members of the panel for your individual and your
organizations' leadership on conservation. It is greatly
appreciated.
Mr. Piotti, an issue that I hear about is that there are
some provisions in the easement program that make it more
difficult for states like Pennsylvania, who have established
state easement programs to participate. Can you elaborate
further on that?
Mr. Piotti. Sure. Thank you for that question.
The ACEP program is a great program, but it is very much a
one-size-fits-all program as it is currently crafted, and there
are a number of states like Pennsylvania who have developed
very robust state-based farmland protection programs, usually
these statewide programs utilize ACEP funds as matching. You
have to bring the requirements of the state program and the
requirements of the Federal program together and make the
project happen, and that can be daunting. And we really love to
see some refinements of the ACEP program so that states like
Pennsylvania who do a good job on their own might be able to
get access to the Federal funds without jumping through quite
so many hoops.
Mr. Thompson. Just to follow up on that: are there any
specific refinements that you could recommend at this point?
Mr. Piotti. Well, we have been talking to a number of other
groups, land trusts around the country and the like, to get
very specific as part of this farm bill.
I can say right now there are just issues around some of
the specific easement language that NRCS might dictate that
might be a little different from what a state is looking for.
There are frequently timing issues, as you can well imagine,
trying to get the funds from both sources to work at the right
time for a closing in an expeditious way. There are timing
issues. In some cases there are retirement issues. Some cases
there are monitoring or baseline issues. And as I said, we are
working with a group of ag land trusts around the nation to
bring some specific information to the use of the Committee.
Mr. Thompson. Great. I appreciate that very much.
This question is for whomever would like to respond. Often
environmental groups point to regulations as the only way to
achieve conservation results. And yet, the work of NRCS has
resulted in many, specifically through voluntary conservation.
It has resulted in a remarkable number of Endangered Species
Act delistings. It has cleaned up wetlands and streams and
conserved soil. In your opinion, why does voluntary
conservation have such a better track record, and why do
farmers rarely get credit?
Mr. Gertson. I guess voluntary is a big deal. You talk to
any farmer, or rancher, for that matter, and we are pretty
independent people, right. We don't like people intervening,
telling us what to do. I used to work for a company as an
engineer for a year before I farmed. I could probably never go
work for anybody again now. I have spoiled myself. I am the
boss, right? Voluntary conservation works well in our mindset.
You will find almost every farmer and rancher is working hard
to improve his land, and natural resource conservation just
comes naturally, because that is what is required for them to
even remain profitable. You can't farm or ranch and hand
anything down to the next generation unless you are doing some
sort of conservation. I don't think that will ever be an issue.
You will always be able to have people participate, because it
just comes natural to farmers and ranchers, their mantra is
doing more with less. That is how we have to survive.
Mr. Coffey. Many times, I think where the problem is, is
that when we start talking about mandatory, it ends up being
single species specific. It is a pheasant. It is a monarch
butterfly. It is a quail. It is a lesser prairie chicken. And
that becomes the focus, and we can't see the forest for the
trees at that point, because we are staring at that one tree.
We, as ranchers and farmers, understand the entire realm of
conservation. We understand the water, the soils, the forages,
the crops, whatever it might be, and that is where our focus
is. And it is interesting how we don't do anything for the
monarch butterfly, but seasonally every year I can ride my
horse along a creek and just be covered up in monarch
butterflies when they fly through. And, too often, the focus
becomes too narrow in conservation programs.
Mr. Thompson. It seems like voluntary conservation truly is
kind of a landscape approach.
Mr. Coffey. Or it could become too narrow. Yes, sir.
Mr. Thompson. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
The chair now recognizes the gentlelady from Ohio, Ms.
Fudge, for 5 minutes.
Ms. Fudge. Thank you so much, Mr. Chairman, and thank you
all for being here. It is nice to be on a Committee where
people think that the Federal Government does something good,
that there are some good programs. Thank you for that. We may
think that they are too cumbersome, and they probably are, but
I am certainly hopeful that instead of just saying it is too
onerous, too much paperwork, help us streamline the process.
Because we do have some responsibility and accountability for
tax dollars. We just can't give you money and say have a great
day, we need for you to have some accountability. But we want
to make the program better for you as well, so please, do tell
us what that is.
To Mr. Piotti and to Mr. Peters, do you believe that the
current farm bill conservation title provides adequate funding,
and if it takes another hit in this farm bill, what do you
think the consequences might be?
Mr. Piotti. As my testimony indicated, I certainly do not
feel that there is adequate funding right now for the programs.
The last question about voluntary compliance, has an easy
answer because every farmer I have ever met wants to do what is
right by the land, but there are a lot of steps that
economically are hard to do without the support of some of
these Federal programs. We absolutely need more.
And what will happen if we don't get this support is we
will not see the results on the ground that we want to see. We
will not get the conservation impacts that we want. There will
be impacts on water. There will be impacts on soil, and there
will be impacts in the fairly near-term on the economic
viability of our farms. It would both be environmentally and
economically a bad move to not invest at the level that is
needed.
Ms. Fudge. Thank you. Mr. Peters?
Mr. Peters. Thank you, Congresswoman.
As I indicated in my testimony, we support maintaining or
increasing funding in this next reauthorization. The need for
that is several-fold. One, we know that across the country farm
and ranching is down, and it is increasingly difficult for the
cost-share investment to continue to flow forward with a low
economy. We have to continue the investment through the Federal
conservation programs.
We know the landowners continue to want to do the right
thing. We know that the pressure continues to be on the land in
terms of water, soil, wildlife. If you look at the last farm
bill, the conservation community, the agriculture community
already gave a significant amount of funding. If we continue to
cut into the programs, we are really going to be cutting into
the bone, and we just can't afford to continue to turn
landowners away when they are seeking tools to be able to do
right on their land.
Ms. Fudge. Thank you very much.
Mr. Coffey, you have talked a couple times about NRCS's
staff on the ground and the difficulty they have. Do you think
that some of it might be just a morale problem because of how
we fund it? We have continuing resolutions, we have
sequestration, we have hiring freezes. We have all of these
things that make it difficult. Do you think that that might be
part of the problem with the people on the ground?
Mr. Coffey. I certainly won't disagree with that, but those
that I tend to know have pretty good morale. But when I visit
with them, their lack of morale, it tends to be with the
paperwork and it just seems to prevent them from getting out.
They are highly educated people and they are motivated, but
they are struggling. I don't think it is a morale issue solely.
Ms. Fudge. Thank you.
Mr. Peters, of course, I am from Cleveland, Ohio, right, so
talk a little bit to me about urban farmers and what concerns
they are facing.
Mr. Peters. Absolutely. Thank you for the question.
One of the items that we understand from our districts that
urban conservationists are seeking right now is technical
assistance, and we have been working through our districts to
help identify those needs and to help meet those needs in the
communities where urban agriculture is a priority.
If you look at the landscape, the resource concerns are the
same. We want to make sure that soil is healthy and that it is
being prevented from erosion. We want to make sure that there
are not unintended consequences to the water. We want to make
sure that wildlife habitat is available. And all of those
outcomes are achieved through sound conservation planning.
One of the things that we have identified as a need in this
space of urban agriculture is strong technical assistance to
make sure that those folks that are, again, seeking to do the
right thing on their land have the resources available to do
so.
Ms. Fudge. Thank you very much, and Mr. Chairman, if you
want to sell me a part of your farm, I am in.
The Chairman. We will invite you out to work on it first.
With that, the gentlelady's time has expired.
The chair now turns to the gentleman from Georgia, Mr.
Allen, 5 minutes.
Mr. Allen. Thank you, Mr. Chairman, and I thank all of you
for being here today, and discussing the future of our
conservation programs. Many of you have stated in your
testimony, and I would have to agree that our farmers are
really the true stewards of our land. Each and every day, our
farmers spend their livelihoods caring for our lands and
preserving our natural resources for the generations to come,
and it is good to hear that we have fifth generation, and
hopefully sixth and seventh and eighth generation farmers out
there.
As the son of a farmer, I understand to a great extent what
we are talking about today, and the importance it is to the
success of our farmers and ranchers, particularly in my home
State of Georgia, which agriculture is the number one industry.
Of course, we are looking toward the next farm bill and we have
talked already today about the need to ensure that we have the
tools and programs that will help us to potentially expand
these programs and to make them successful.
The best way I know to do that, because I come from the
business world, is to look at every dollar invested and what is
the return on that dollar. We represent the taxpayers, and the
taxpayers expect us, and we should, use their money as an
investment return as far as conservation practices go.
Mr. Peters, are there any actual statistics on what for a
dollar invested what the dollar received is from this program,
which would help us to increase this in the next farm bill?
Mr. Peters. I am sure there are. I don't have those
statistics readily available with me this morning. One thing
that bears mentioning is that historically, for the Federal
investment through the farm bill conservation programs, there
are years upon years worth of cost-share that have come out of
the pockets of the farmers and ranchers and landowners that are
participating in those programs.
Mr. Allen. Right.
Mr. Peters. That is a tremendous private investment that
has leveraged those Federal funds.
Mr. Allen. And that is important, because everybody has
skin in the game.
Mr. Peters. Yes, sir.
Mr. Allen. And that is very important to our taxpayers.
Mr. Piotti, do you have any comments?
Mr. Piotti. Yes, I do. At the state level, and it was
mentioned earlier that a lot of states have farmland protection
programs that often work in companion with ACEP, and a number
of states have done these kind of analyses. And we can compile
some of that for you.
I also will point out, the NCPP program, that is one of our
better partnership programs. This has leveraged significant
dollars outside of Federal funding, and one of the requirements
of that program is to identify the economic benefits of what is
occurring, and that is happening. But to be honest, it is one
of those places where the next farm bill needs some tweaks
because, the quantification of those outcomes is not occurring
at a level that it could. But that program, which is working,
we think, very well, could be elevated to a level to not only
do great work on the ground, but begin to provide some of the
data that you are looking for.
[The information referred to is located on p. 51.]
Mr. Allen. And that is what we need in providing for these
programs.
The other thing is, as far as from the standpoint of the
Federal Government, is the Federal Government the best place to
do these programs, and of course, we talked about cost-sharing.
Everybody has skin in the game. Would we be better served to do
this in possibly another way? Any comments on that, Mr. Peters?
Mr. Peters. We feel like the conservation delivery system
that is in place is effective and it does work, and that
delivery system engages partners at the Federal, state, and the
local level. We feel like that has borne strong outcomes over
the years, and we feel like that is the way of the future.
Mr. Allen. Mr. Gertson, as far as flexibility of the
program, do you believe that the Federal Government is flexible
enough to deal with, I know that every day the farmer wakes up
is a different day. How are they working out?
Mr. Gertson. Yes, I enjoy working with NRCS. They have
worked as a good vehicle to administer programs. I share the
same concerns as Mr. Coffey. The people are great, but quite
often, I find that they are overwhelmed. That is the problem. I
love working with the NRCS employees are a lot of times a lot
like the farmers are, right, especially your field reps who
come out and do stuff, and get along with them great. Yes,
there are lot of times there is an information gap there. I
will know more about programs than they do, because the
information just hasn't disseminated down to them quick enough.
There is definitely a possible staffing or information problem
that could be there.
And I wanted to touch about how the money was being
returned?
Mr. Allen. Investment return, yes, sir.
Mr. Gertson. Right. Okay, our USA Rice and DU partnership,
the RCPP program we have been running there is an excellent
example of that. That was $25 million, and what I didn't
mention is that there has been $25 million additional private
dollars that have matched that for a total of $50 million, so
that is matching every dollar that had been given into that
program. And one other thing I would like to mention on that is
that when you are looking at stretching a taxpayer dollar, I
would point out, at least in my point of view, working lands
programs go a long way, because that money isn't going to just
the farmer. That money is going to me and then I am funneling
it right back into the economy to pay for these practices. In
my community, it is not uncommon to see, you have dirt moving
sponsoring T-ball teams or our pipeline guys are sponsoring
dinners. It is all integrated. Money that is spent in working
lands programs, and EQIP and CSP, it multiplies and goes right
back into the local economy.
Mr. Allen. Thank you. That is the kind of information we
need.
The Chairman. The gentleman's time has expired.
Mr. Allen. I yield back the time I don't have.
The Chairman. The chair readily accepts it.
The chair now recognizes the gentleman from Minnesota, Mr.
Walz, for 5 minutes.
Mr. Walz. Well I thank the Chairman, and I too would like
to thank the Chairman and the Ranking Member for starting out
this farm bill process with this hearing. For many of us in
this room, we should feel proud of the last farm bill and the
conservation title that was in it that was wildly heralded
across the spectrum as being in the right direction. And now we
come back and we improve upon those things, and being a very
literal Minnesotan, I know that the Chairman had a big presence
in that as he sits over this room with the big photo and will
be there again.
And so I would come back to this. My friends are making a
very good point of this return on the investment, trying to
understand the bigger picture, understanding how there are win-
win-wins involved in this and seeing a table like this, this is
exactly where it is at.
Over the last few years of having the privilege of being
the co-chairman of the Sportsmen's Caucus, we took it upon
ourselves to quantify outdoor activities, what they mean and
what they mean for this economy. The numbers we came to are
about $650 billion. When you take care of the environment and
you have places for people to be able to fish or to hunt or to
mountain bike or to take their Polaris out, where they are
doing the things they are doing, all of those peripheral issues
have a huge impact. To get a sense of that, that is bigger than
the pharmaceutical and auto industry combined. And couple that
with ag, that is the power of rural America, and it is working
with the coalitions that are here. And I agree, where we can do
working lands conservation, those are win-win. But we have a
broad suite of things that we can do that fill all of those
niches.
So again, and I have seen this with a $900,000 investment
in EQIP on a spring feedlot near a trout stream in southeast
Minnesota. That trout stream now generates over $4 million in
income to that local community from that investment, and that
cattleman is also running more cattle on that land in a more
responsible manner. That is a win-win-win for everybody
involved, so I do think we approach this from that perspective
that we can get this out of it, and we are doing things like
CRP. They are not just taking land out of production, which we
need to make sure that we are compensating people fairly. There
is also a return to the economy on that.
I wanted follow up, Mr. Nomsen. You mentioned the pheasant
plan. I know Minnesota's pheasant plans, and yes, in full
disclosure on this, I am very glad there are more pheasants,
because my odds increase of getting one when we are out there.
I had the pleasure, with Mr. Peterson, of seeing him get one as
we both got one. They are coming back. Tell me how the
Minnesota pheasant plan fits together with what we are doing
federally to make sure, as they set target numbers, what are we
going to have to do so they hit the targets?
Mr. Nomsen. Thank you for the question, and specifically to
the Minnesota State pheasant plan, there is a short-term goal
of a harvest of about 450,000 birds. We have a ways to go to
get to that. We are probably around 300,000 or so right now.
Our estimates are that would take probably another 600,000 or
700,000 acres of land in pheasant-friendly types of habitats.
Not all CRP, probably a combination of CRP plus perhaps grassy
habitats provided by small grains. If for some reason we saw an
increase in small grain plantings in Minnesota, these are very,
very wildlife friendly plantings. And so it is a combination of
all of those things.
And just to add to your discussion on economics that you
are all having, there is no question that conservation programs
have been incredibly successful, not only for that individual
farmer and landowner, but frankly for all Americans. If we are
doing CRP in Ohio or Minnesota and maybe the driver is some
quail or a few more pheasants or monarch butterflies, that
project is helping benefit hypoxia situations in the Gulf and
nutrient runoff and things that all Americans find important.
These conservation programs are vitally important to all of us.
Mr. Walz. Mr. Nomsen, is it possible like when we have
drought situation of the CRP, and I know we have this in
Minnesota with the hay shortage, and we are shipping hay up
from Texas and wherever we can get it. Is there a responsible
way that you can have CRP land and graze that for these folk?
Can we do that?
Mr. Nomsen. Absolutely, and I was chatting with my
colleague, Mr. Coffey, earlier and we were talking about what
is good for the herd is good for the bird.
Mr. Walz. Yes.
Mr. Nomsen. And yes, absolutely. CRP does have a managed
hay and grazing component to it. Frankly, the entire CRP
management issue is one that needs to be revisited. We need to
get the agriculture community and the producers, the
environmental groups, conservation groups at the table to
evaluate where it is at, how can we do a better job, and how
can we encourage the land management in a very, very farm and
ranch friendly way?
Mr. Walz. I would like to work with you on it, because I
think that is the key of making sure we have those people at
the table, and so when it gets tough, makes it easy for them to
get on there and graze.
I yield back.
The Chairman. The gentleman yields back.
The chair now recognizes a farmer from California, Mr.
LaMalfa, for 5 minutes.
Mr. LaMalfa. Thank you, Mr. Chairman. My apologies for the
multiple committee schedule today for my tardiness, but thank
you for your recognition.
I will jump right into it. As a rice farmer from
California, I wanted to speak with, well, good morning, Mr.
Gertson. Maybe I can talk to you for a moment here. As you
know, we are medium grain growers primarily out there, and
likewise, growers in my area have seen the program of EQIP as a
very important tool with water saving practices. We don't need
to save a lot of water right now in California, but it is
always either feast or famine. It is an ongoing issue with
water savings being a good tool, as well as shorebirds,
waterbirds.
And so in your statement which I am sure you made earlier,
that the EQIP 3 year limit provision does hamper the long-term
effectiveness of these practices for shore birds, for habitat,
for water savings, all the other benefits that the program has
shown for growers in my state and yours. Would you supply a
little more detail in what changes you would see regarding
maybe the 3 year limit provision or other areas?
Mr. Gertson. Sure, sure. Yes, we would support extending
the life of EQIP contracts. From a point of view from a farmer,
conservation is for life, for us. This isn't a 3 year deal. We
are in it for the long haul.
Mr. LaMalfa. How many years have you been on your place?
Mr. Gertson. I am sorry?
Mr. LaMalfa. You are a fifth generation. How many years----
Mr. Gertson. I am fifth generation, 108 years.
Mr. LaMalfa. One hundred and eight, okay. We are going on
86 years. We are raising the fifth.
Mr. Gertson. Yes, I have the sixth coming. I have three
boys who are coming behind me. And without conservation, we
definitely wouldn't have been there 108 years. These programs
are what are going to make farming and ranching available to
the next generation. Not only are they conserving the
environment, but it is a win-win as you guys are liking to say,
because they are also cutting our costs, right, and with
farming, we are always constantly having to cut back wherever
we can. We are always having to do more with less.
Mr. LaMalfa. Yes, sir. We are not price makers. We are
price takers.
Mr. Gertson. Right, exactly.
Mr. LaMalfa. What kind of term would you see instead of 3
years, open ended? What kind of number do you think you have
been hearing or would actually be practical?
Mr. Gertson. I don't know that I can answer that right off
the cuff.
Mr. LaMalfa. Well I am sure we will figure it out here.
Mr. Gertson. Yes.
Mr. LaMalfa. All right. Let me switch. Thank you, Mr.
Gertson.
Good morning, Mr. Coffey. I feel like Joe DiMaggio for a
second there, if you are over 40, you will get that. You see
from being a cattle rancher in Oklahoma, there are many
technical fixes that Congress needs to make to EQIP to make it
work better for farmers and ranchers. What technical problem do
you find you are running into in ranching in the Midwest there?
Mr. Coffey. Thank you. To begin with, the physical
technical problem I believe is not having enough boots-on-the-
ground, not having enough trained conservationists with NRCS
that have the time to come out and be on the ground. Now there
are other technical----
Mr. LaMalfa. What kind of timeline to get from maybe your
first request or first ask to boots-in-your-field?
Mr. Coffey. The only boot I have ever had on my place, they
were touring it and it was a training session and we were
training NRCS personnel. It has to have been to follow up on an
EQIP contract to make sure that we perform according to the
worksheet. Beyond that----
Mr. LaMalfa. Is this based more on trust? Do you go in and
do the forms at the NRCS office and more or less that is the
end of the verification?
Mr. Coffey. And then you go home, follow the worksheets,
and accomplish the goals, yes.
Mr. LaMalfa. And do they have a pretty big inbox that you
are at the bottom of sometimes on their work, do you think?
Mr. Coffey. Well I don't know how big their inbox is.
Mr. LaMalfa. Well, you know what I am saying. Does it feel
like it takes a while for you?
Mr. Coffey. I just know that they are, and it may be that
they trust me. They know me well enough so they don't feel bad
that I am not the biggest priority in the area. I don't know
what the answer is.
Mr. LaMalfa. Well that is good. It is nice to have an honor
system going.
There is one other thing that hadn't been talked about in
the Committee today on this topic. What would you put in there,
since my time is running out? What has been left out, do you
think?
Mr. Coffey. I would look at increasing the conservation
strategies. I would look to make them more adaptive and
flexible by region, and then increase the accountability, both
on the side of USDA and the producer.
Mr. LaMalfa. It is a little rigid by region? You might have
to one-size-fits-all amongst regions?
Mr. Coffey. Yes, sir. Worksheets are developed in
Washington, sent out to the State Conservationists, but if we
had more worksheets, more things by region, we could accomplish
more of our goals.
Mr. LaMalfa. It is coming from Washington. Maybe we should
put that office in like Tulsa.
Mr. Coffey. Yes, bring it over. Yes.
Mr. LaMalfa. I agree.
Mr. Coffey. Davis, Oklahoma is a nice place to live right
there in Murray County.
Mr. LaMalfa. Thank you, Mr. Coffey.
Mr. Coffey. Thank you.
The Chairman. The gentleman's time has expired.
Chair now turns to the gentlelady from New Hampshire, Ms.
Kuster, for 5 minutes.
Ms. Kuster. Thank you very much, Mr. Chairman, and to
Representative Fudge and yourself, thank you for hosting this
important discussion about conservation programs. I come from
the Northeast, New Hampshire, where we have smaller farms than
all of you, but the conservation programs are incredibly
important. I just want to echo my colleagues' comments about
the impact of the outdoor community. The conservation in New
Hampshire also leads to a great resurgence in ag returns, and
then our colleague from Maine spoke about this. We are very
proud to have a five percent increase in the number of new
farmers in New Hampshire, and we have a renewed interest in
healthy food and organics and farmers' markets, and really a
resurgence in being closer to our food. I appreciate all the
work you have done.
Our Ranking Member, Representative Peterson stole my
thunder. Thank you to both of our witnesses, Mr. McDaniel and
Mr. Gertson, for pointing out my legislation, H.R. 1163,
Improving Access to Farm Conservation Act, that talks about
this SAM-DUNS problem. I look forward to having my colleagues
on the Committee join. It is a bipartisan bill, and we can all
agree, the underlying law was not intended for farmers working
with their son or their brother or sister, as it may be, and so
we will move forward with that and try to at least alleviate
that burden of paperwork that you have been experiencing.
I have a bigger concern and will know more tonight, but I
am worried about the cuts in the budget across the board. The
President has talked about $1 trillion in infrastructure
funding, an $800 million wall. Today and yesterday, a ten
percent increase in defense budgets. I am concerned that these
are the kinds of programs that are just going to get wiped off
the map, and I am glad this is such a congenial bipartisan
hearing, because I hope as we move forward with the farm bill,
we will be able to keep this funding, because it is important
both for the agriculture community, for our outdoor economy,
for our environment, and I just wondered if any of you have any
comments on how we can come together in a bipartisan way to
make sure that we keep the funding for conservation programs.
Mr. Piotti. I will offer one thought and plant the seed if
it hasn't already been planted with you, and that is that I
view farming and farmland as being critical infrastructure, and
there is value in thinking about it that way. And the
conservation programs that undergird those activities are also
part of that infrastructure. Maybe there is an opportunity to
turn the debate around a little, and as we are thinking about
rural infrastructure, focusing more attention on agriculture.
Ms. Kuster. That is creative. I like that. Thank you very
much. That is a great idea. Any others? That is brilliant, by
the way. If they are going to spend $1 trillion, let's make
sure we are included.
Mr. Nomsen. Exactly. I would like to add to that just
briefly, in that we do need to take a hard look at return on
investment and the discussion that we had. From my chair, the
starting point is what are the resource needs out there? What
do we need on the landscape, and that should be the starting
point for the discussion. And yes, I recognize it likely is
going to get much more challenging as we start to talk about
money available and making sure that we prioritize and fund the
best of the best. That is why we need to look internally at
even all of our programs and find efficiencies and savings so
that we can put more acres out there on the ground for farmers
and landowners and for everyone.
Ms. Kuster. And can you show that return-on-investment? Do
you have that kind of analysis of the programs?
Mr. Nomsen. We do, and I actually made a note when you had
a discussion earlier, and one of the things that we will add to
our testimony are some of the studies that have looked at
individual conservation programs in terms of their efficiencies
and what are they providing to taxpayers.
[The information referred to is located on p. 49.]
Ms. Kuster. I think that information would be very helpful
for the Committee, because in a bipartisan way, we will need to
sell this to our colleagues that this is important spending,
and that is not going to be popular this cycle. I appreciate
that.
Anybody else?
Mr. Peters. Congresswoman, I want to thank you for the
question. I would say we have also talked a lot this morning
about capacity at the local level, and one of the things that
we need to make sure that we address is that as we are looking
at the delivery of financial assistance, that there is strong
conservation planning at the beginning of that process. Having
a strong plan in place, making sure that the appropriate
resource concerns are being addressed, and that the landowner
is in the management seat in the development of that
conservation plan will help us achieve the greatest outcomes
with the Federal investment, both in financial assistance and
technical assistance.
Ms. Kuster. Thank you. My time is up, but if anybody has
any other suggestions, we are going to need them to get this
done and to sell it to our colleagues on the floor.
Thanks very much.
The Chairman. The gentlelady's time has expired. She has
yielded back.
Before we adjourn, I invite the Ranking Member to make any
closing remarks that she would care to.
Ms. Fudge. Thank you so much, Mr. Chairman, and thank you
all for being here today. We appreciate your testimony, and
certainly we will take it under advisement. I think that we are
going to have a tough battle, but we are ready for the fight.
Thank you so much.
The Chairman. The Ranking Member yields back.
I would just simply note to my colleagues on the Committee,
and for that matter, the witnesses, many very important topics
have come up today. We do face a struggle as we march forward.
We have a great deal of uncertainty on what the funding issues
will be, the lay of the land, but I am confident in the full
Committee Chairman and the full Ranking Member, and I would
note for the record, the process of trying to evaluate
conservation takes many things into consideration. Whether it
is issues as simple as other programs within our jurisdiction,
like the upstream flood control dams, where you can calculate
the amount of property and lives protected, or as in the case
with CRP, how many tons of soil remain in place that don't
enter the water stream, don't move downstream, don't affect
dams and structures? There is the value of enhanced wildlife,
whether you are a sportsman, a bird lover, with a hook or a
bullet or a camera, so to speak, there is value in that. All of
these things factor in. But ultimately, we have to remember in
so many of these programs, we are talking about making
investments that are not financially practical for an
individual producer to make and achieve a return in a 3 to 5 to
7 to 10 year period. We are making investments that are for a
generation or generations or hundreds of years, and we need to
assess that in our calculations. We are investing in the future
forever.
And with that, I look forward to the work of this
Subcommittee and the work of the full Committee, and under the
Rules of the Committee, the record for today's hearing will
remain open for 10 calendar days to receive additional
information and supplementary written responses from witnesses
to any question posed by a Member.
This hearing of the Subcommittee on Conservation and
Forestry is adjourned.
[Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by Hon. Mike Bost, a Representative in Congress
from Illinois; on Behalf of National Grain and Feed Association
Chairman Lucas, Ranking Member Fudge, and Members of the
Subcommittee, thank you for having conducted this hearing to receive
input on how the conservation title of the Agricultural Act of 2014 has
operated and gather ideas for the next farm bill's conservation title.
This statement for the record is respectfully submitted by the
National Grain and Feed Association (NGFA). NGFA, established in 1896,
consists of more than 1,050 grain, feed, processing, exporting and
other grain-related companies that operate more than 7,000 facilities.
Its membership includes grain elevators; feed and feed ingredient
manufacturers; biofuels companies; grain and oilseed processors and
millers; exporters; livestock and poultry integrators; and associated
firms that provide goods and services to the nation's grain, feed and
processing industry. NGFA also has 34 State and Regional Affiliated
Grain, Feed and Agribusiness Associations.
Since enactment of the last farm bill in 2014, NGFA-member
companies have increasingly heard from consumers of their preference
for food raised in a sustainable and environmentally sensitive manner.
Fortunately, Congress had the foresight to create two working-land
programs, the Conservation Stewardship Program (CSP) and the
Environmental Quality Incentives Program (EQIP), that assist producers
in further enhancing conservation practices to produce grain-based
crops in an even more sustainable fashion. CSP and EQIP allow
agricultural producers to maintain active agricultural production on
their land while managing conservation activities. Examples of
conservation activities that participants can choose under CSP and EQIP
include fertilizer optimization practices and cover crops to reduce
erosion, improve soil organic matter, promote efficient nutrient
cycling, fix nitrogen in the soil, suppress weeds, increase
biodiversity and improve overall soil health. These conservation
activities often result in more conservation practices taking hold for
the long-term in the community and across the nation--there are 362.7
million acres of cropland and 526.9 million acres of pastureland and
rangeland for these programs to impact either directly or indirectly.
The NGFA strongly believes CSP, EQIP and other working lands
conservation programs will become increasingly important to maintaining
the long-term health of soils and in attaining the goal of
environmentally and sustainably producing food for a growing world
population.
By contrast, investing scarce conservation dollars in dramatically
increasing the size of land-idling programs like the Conservation
Reserve Program (CRP)--as advocated by some--risk short-changing
working land conservation programs.
Since 1985 when CRP was created, millions of acres of America's
best and most productive farmland have been idled under 10 to 15 year
CRP contracts, siphoning the economic lifeblood that emanates from
production agriculture out of hundreds of rural communities. Many
landowners used general CRP signups and its whole-farm enrollments as a
retirement program. Rural businesses, including farm equipment dealers,
input suppliers and banks, closed. So did schools. Rural populations
plummeted.
As can be seen in Table 1, U.S. cropland has plunged from 420.6
million acres in 1982 to 362.7 million in 2012. The long-term economic
well-being and competitiveness of U.S. agriculture depends upon
retaining production on cropland that can be farmed in an
environmentally sustainable way. The National Resources Inventory,
which is a report published by USDA's Natural Resources Conservation
Service (NRCS), found that only 60 percent of expired CRP land in 2007
returned to cropland by 2012. Thus, long-term CRP contracts contribute
to the reduction in the availability of U.S. cropland.

Table 1: U.S. Land Use
(in million acres)\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other Rural
Year Cropland CRP Land\2\ Developed Pastureland Rangeland Forest Land Land Federal Land Water Total
--------------------------------------------------------------------------------------------------------------------------------------------------------

1982 420.6 -- 71.9 131.3 419.4 410.3 42.8 398.2 49.8 1,944.1
1987 406.4 13.8 77.9 127.4 413.9 412.3 42.9 398.7 50.8 1,944.1
1992 382.0 34.0 85.2 125.8 410.2 412.2 43.2 401.0 50.5 1,944.1
1997 376.4 32.7 95.9 120.7 408.1 413.3 43.5 402.6 51.1 1,944.1
2002 367.7 31.8 104.9 119.3 407.8 413.7 43.4 404.1 51.5 1,944.1
2007 358.9 32.5 111.1 119.7 407.2 413.1 44.9 404.8 51.9 1,944.1
2012 362.7 24.2 114.1 121.1 405.8 413.3 45.4 405.3 52.1 1,944.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Source: U.S. Department of Agriculture. 2015. Summary Report: 2012 National Resources Inventory, Natural Resources Conservation Service, Washington,
DC, and Center for Survey Statistics and Methodology, Iowa.
\2\CRP land is only CRP general sign-ups and does not include CRP continuous sign-ups.

History has shown that South American countries and other foreign
competitors respond to U.S. land-idling schemes by plowing up virgin
land on more than an acre-for-acre basis, capturing export market share
previously held by U.S. farmers and depriving rural America of the
economic ripple effects that resonate from U.S. agricultural
production.
Fortunately, over the years, Congress has right-sized the CRP,
while the U.S. Department of Agriculture has refined its Environmental
Benefits Index to better target CRP on reducing soil erosion and
improving water quality, although wildlife benefits were added as a
criterion and have a disproportionately heavy weighting when USDA
determines the scoring of acres eligible for enrollment.
Even now as can be viewed in Table 2, NGFA has determined that 26
percent of the 24.2 million acres that were enrolled in the CRP general
signup as of 2012 were classified as ``prime farmland.'' Here's how
USDA's NRCS defines ``prime farmland'': ``Land that has the best
combination of physical and chemical characteristics for producing
food, feed, forage, fiber and oilseed crops . . . It has the soil
quality, growing season and moisture supply needed to produce
economically sustained high yields of crops when treated and managed to
acceptable farming methods.''

Table 2: U.S. Prime Farmland on Non-Federal Land
(in million acres)\1\
----------------------------------------------------------------------------------------------------------------
Other Rural Total Prime
Year Cropland CRP Land\2\ Pastureland Rangeland Forest Land Land Farmland
----------------------------------------------------------------------------------------------------------------
1982 228.2 -- 35.1 18.2 42.9 5.6 330.0
1987 223.4 3.3 34.7 17.6 43.3 5.7 328.1
1992 214.4 9.6 35.0 17.2 43.6 5.9 325.6
1997 210.9 9.2 34.2 17.5 44.5 6.0 322.3
2002 206.5 8.5 34.7 17.8 45.7 6.0 319.3
2007 202.0 8.7 35.5 17.9 46.3 6.4 316.8
2012 202.1 6.4 36.1 17.8 46.8 6.5 315.7
----------------------------------------------------------------------------------------------------------------
\1\Source: U.S. Department of Agriculture. 2015. Summary Report: 2012 National Resources Inventory, Natural
Resources Conservation Service, Washington, D.C., and Center for Survey Statistics and Methodology, Iowa State
University, Ames, Iowa.
\2\CRP land is only CRP general sign-ups and does not include CRP continuous sign-ups.

In addition, Table 3 shows that as of 2012, CRP had enrolled 15.3
million acres of cropland within land capability classes I, II or III,
which are the three best classes of U.S. land. The land capability
classification is a system of grouping soils primarily based on their
capability to produce common cultivated crops and pasture plants
without deteriorating over a long period. Class codes I to VIII
indicate progressively greater limitations and narrower choices for
agriculture.

Table 3: U.S. Land Capability Class I through Class III (Good Land) on non-Federal Land
(in million acres)\1\
----------------------------------------------------------------------------------------------------------------
Total Class
Year Cropland CRP Land\2\ Pastureland Rangeland Forest Land Other Rural I thru Class
Land III Land
----------------------------------------------------------------------------------------------------------------
1982 345.1 -- 73.3 66.0 111.7 12.3 608.4
1987 335.7 8.3 71.6 64.0 112.6 12.5 604.7
1992 318.7 21.8 71.3 62.5 113.0 12.8 600.0
1997 314.6 21.0 69.0 62.4 113.8 13.0 593.8
2002 307.5 20.3 68.9 63.0 115.5 13.0 588.2
2007 300.6 20.8 69.6 63.1 116.1 13.9 584.3
2012 303.0 15.3 70.5 62.8 116.6 14.2 582.5
----------------------------------------------------------------------------------------------------------------
\1\Source: U.S. Department of Agriculture. 2015. Summary Report: 2012 National Resources Inventory, Natural
Resources Conservation Service, Washington, D.C., and Center for Survey Statistics and Methodology, Iowa State
University, Ames, Iowa.
\2\CRP land is only CRP general sign-ups and does not include CRP continuous sign-ups.

Table 4 displays U.S. land capability classes IV through VIII,
which have lower capability to produce crops. NGFA believes less harm
would be inflicted on U.S. agriculture if CRP enrollments were focused
on land that had both an erodibility index score of 8 or higher and was
classified within capability classes IV through VIII. NGFA also
believes whole farms or large tracts of land within farms should not be
enrolled in CRP. Instead enrollments should be targeted at the most
environmentally sensitive portions of farms, such as critical fragments
of tracts prone to erosion, serving as drainage, frequently drowning
out or located next to streams. CRP under this new NGFA-advocated
approach would be operated in a manner that would allow farmers to work
in tandem with USDA to identify and enroll the portions of their farms
that best complement environmentally sustainable agriculture. This
surgical approach to CRP would substantially elevate the environmental
benefits (soil health and water quality).

Table 4: U.S. Land Capability Class IV through VIII on non-Federal Land
(in million acres)\1\
----------------------------------------------------------------------------------------------------------------
Total Class
Other Rural IV thru
Year Cropland CRP Land\2\ Pastureland Rangeland Forest Land Land Class VIII
Land
----------------------------------------------------------------------------------------------------------------
1982 75.5 -- 58.0 353.3 298.6 30.5 815.8
1987 70.7 5.5 55.8 349.9 299.6 30.4 811.9
1992 63.3 12.2 54.5 347.7 299.2 30.5 807.5
1997 61.7 11.7 51.7 345.7 299.5 30.5 800.8
2002 60.1 11.4 50.4 344.8 298.2 30.4 795.4
2007 58.2 11.6 50.1 344.1 297.0 31.0 792.1
2012 59.8 8.9 50.6 342.9 296.7 31.3 790.2
----------------------------------------------------------------------------------------------------------------
\1\Source: U.S. Department of Agriculture. 2015. Summary Report: 2012 National Resources Inventory, Natural
Resources Conservation Service, Washington, D.C., and Center for Survey Statistics and Methodology, Iowa State
University, Ames, Iowa.
\2\CRP land is only CRP general sign-ups and does not include CRP continuous sign-ups.

In addition to currently targeting the wrong land for CRP
enrollment, there also are indications that rental rates paid by USDA
to enroll CRP acres in several regions of the country continue to be
considerably higher than local farmland cash rental rates, thereby
pitting the U.S. Government as a competitor against young and beginning
farmers trying to enter production agriculture and remain in rural
communities.
Conclusion
As noted previously, NGFA strongly believes CSP, EQIP and other
working land conservation programs are crucial for helping U.S.
agriculture meet the challenge of preserving healthy soils and meeting
the long-term demand for producing food in an environmentally
sustainable manner. Conservation activities incentivized by CSP and
EQIP often result in more conservation taking hold in communities and
the nation. There are 362.7 million acres of cropland and 526.9 million
acres of pastureland and rangeland for CSP and EQIP to impact either
directly or indirectly.
On the other hand, idling of large tracts of productive farmland in
the Conservation Reserve Program has harmed rural economies and
contributed to the reduction in the availability of cropland upon which
U.S. agriculture depends.
As it considers the next farm bill, the NGFA urges Congress to
retain the current CRP acreage cap of 24 million acres and avoid
repeating the mistakes of the past when CRP was used as a supply
control program, which only encouraged greater production by America's
foreign competitors. To achieve greater conservation, NGFA recommends
criteria be placed on future CRP enrollments to target land that has
both an erodibility index score of 8 or above and is classified within
capability classes IV through VIII. NGFA also believes whole farms or
large tracts should not be enrolled in CRP. Instead CRP enrollments
should be targeted at the most environmentally sensitive portions of
farms, such as critical fragments of tracts prone to erosion, serving
as drainage, frequently drowning out or located next to streams.
NGFA believes scarce Federal funding should be targeted at working
land conservation programs, such as CSP and EQIP, which promote
agricultural sustainability. Finally, NGFA requests that Congress
carefully examine the issue of CRP rental rates, which in some cases
are considerably higher than local farmland cash rental rates and serve
as an economic barrier for the next generation of American farmers to
get into production agriculture.
The NGFA appreciates the opportunity to submit this statement for
the hearing record, and would be pleased to respond to any questions
Members of the Subcommittee may have.
______

Supplementary Material Submitted by David E. Nomsen, Vice President of
Governmental Affairs, Pheasants Forever, Inc.
Insert
Mr. Nomsen. Exactly. I would like to add to that just
briefly, in that we do need to take a hard look at return on
investment and the discussion that we had. From my chair, the
starting point is what are the resource needs out there? What
do we need on the landscape, and that should be the starting
point for the discussion. And yes, I recognize it likely is
going to get much more challenging as we start to talk about
money available and making sure that we prioritize and fund the
best of the best. That is why we need to look internally at
even all of our programs and find efficiencies and savings so
that we can put more acres out there on the ground for farmers
and landowners and for everyone.
Ms. Kuster. And can you show that return-on-investment? Do
you have that kind of analysis of the programs?
Mr. Nomsen. We do, and I actually made a note when you had a
discussion earlier, and one of the things that we will add to
our testimony are some of the studies that have looked at
individual conservation programs in terms of their efficiencies
and what are they providing to taxpayers.
Date: March 24, 2017
To: House Committee on Agriculture, Subcommittee on Conservation and
Forestry
From: Dave Nomsen, Pheasants Forever, Inc.

Re: February 28, 2017 Hearing Addendum to Testimony

Below is additional information submitted as an addendum to my
testimony of February 28, 2017 including a response to Representative
Bost regarding pollinators.* Thank you for including this in the record
with my testimony and please feel free to contact me with any
additional comments or questions.
---------------------------------------------------------------------------
*The response to Hon. Mike Bost's submitted question is located on
p. 56.
---------------------------------------------------------------------------
Additional Statement on the Environmental Quality Incentives
Program--We urge policymakers to expand funding for the Environmental
Quality Incentives Program (EQIP) and to increase to 10% funds used for
wildlife conservation practices. For example, we strongly support the
Working lands for wildlife initiatives that we work in partnership with
NRCS on implementing. Specifically the Sage Grouse Initiative in the
West, Lesser Prairie Chicken Initiative in the Southern Great Plains,
and even working on young forest initiatives to benefit the Golden
Winged Warbler in the East. Just a few months ago, Quail were added as
one of the priorities.
USDA--NRCS and FSA Conservation Programs
Since the inception of various conservation programs in farm bill's
since 1985, PF has worked with respective agencies to leverage funding
through financial and in-kind contributions. Some of the best examples
we have of these partnerships are with NRCS and the EQIP program,
especially as it relates to delivery wildlife related practices. This
includes the initiatives under the Working Lands for Wildlife. We are
partnership with NRCS to fully leverage the Federal funding, with
state, local and private sources. This is most evident with Three of
NRCS WLFW initiatives Sage Grouse, Golden-winged Warbler, Lesser
Prairie Chicken, and we will certainly be engaged range wide with the
addition of Bobwhite Quail. Not only do our community led chapters and
volunteers assist in implementing USDA conservation programs, our
organization, with assistance from NRCS, have supported our Farm Bill
Biologist program. In partnership with state/county agencies, and other
non-government organizations, we have a team of Farm Bill Biologists
that work as natural resource professionals with expertise in fields
such as wildlife biology, forestry, and range management. Every day,
they work with landowners that encompass farms, ranches and forestland
thought out the Country, to find the best voluntary based, conservation
solutions that fit producers' needs as part of their agriculture
operations and personal goals.
One of our organizations top priorities, along with many of our
partners, are to maximize the wildlife benefits, soil health, and water
quality through voluntary Federal, state and local conservation
programs on as many acres of fields, farms, ranches and forestlands as
possible.
Additional Sources of information About the Economics of Conservation
Programs
Economic Impacts of CRP on Rural Economies, and Wildlife Benefits of
Farm Bill Conservation Programs on Fish and Wildlife
Shortly after CRP was implemented in the 1985 Farm Bill, there were
regional concerns that the CRP negatively impacted local economies. No
question, this is a very complex issue and we would like to highlight
some literature for reference that suggests that, over the 30 year
history, CRP has had little or no impact on most rural economies. In
fact, several analyses suggest that CRP stimulated local economies
through, keeping fa[r]mers on the land (i.e., they were not forced to
relocate to more urban areas) increased recreational opportunities
through hunting, improving fisheries through reducing soil erosion and
water quality improvement, and overall providing natural resource
benefits for all Americans. We also contend that CRP has always been a
working lands program through the fact that most acres can be hayed
and/or grazed through the managed haying and grazing provisions, and
even expanded to other conservation practices/programs if the USDA
Secretary deems necessary in an emergency situation. We offer the view
that by keeping a robust CRP on the landscape, we can maximize crop,
forage and fiber production, while reducing soil erosion, improving
water/air quality and providing wildlife benefits.
The Conservation Reserve Program--Economic Implications for Rural
America. USDA-ERS Report: https://www.ers.usda.gov/webdocs/
publications/aer834/19569_aer834_researchbrief_1_.pdf.
The Conservation Reserve Program--An Economic Assessment: https://
www.ers.usda.gov/webdocs/publications/aer626/50870_aer626fm.pdf.
Bibliography--Effects of Agricultural Conservation practices on
fish and wildlife. USDA-ARS: https://www.nal.usda.gov/waic/effects-
agricultural-conservation-practices-fish-and-wildlife.
It is estimated that pheasant hunting alone, provides $500 million
annually: http://nationalpheasantplan.org/national-plan/.
Implications of a Reduced Conservation Reserve Program--The Council
on Food, Agriculture, and Resource Economics: http://www.cfare.org/
UserFiles/file/publications/Wu-Weber_8.21%5B1%5D.pdf.
Assessing Cost-Effectiveness of the Conservation Reserve Program
and its Interaction with Crop Insurance: http://www.card.iastate.edu/
products/publications/synopsis/?p=1232.
2014 Farm Bill Field Guide to Fish and Wildlife Conservation:
https://www.fws.gov/greatersagegrouse/documents/Landowners/
2014_Farm_Bill_Guide
%20to%20Fish%20and%20Wildlife%20Conservation.pdf.
______

Supplementary Material Submitted by Hon. John F. Piotti, President,
American Farmland Trust
Insert
Mr. Allen. . . .
The best way I know to do that, because I come from the
business world, is to look at every dollar invested and what is
the return on that dollar. We represent the taxpayers, and the
taxpayers expect us, and we should, use their money as an
investment return as far as conservation practices go.
Mr. Peters, are there any actual statistics on what for a
dollar invested what dollar received from this program, which
would help us to increase this in the next farm bill?
Mr. Peters. I am sure there are. I don't have those
statistics readily available with me this morning. One thing
that bears mentioning is that historically, for the Federal
investment through the farm bill conservation programs, there
is years upon years worth of cost-share that have come out of
the pockets of the farmers and ranchers and landowners that are
participating in those programs.
Mr. Allen. Right.
Mr. Peters. That is a tremendous private investment that has
leveraged those Federal funds.
Mr. Allen. And that is important, because everybody has skin
in the game.
Mr. Peters. Yes, sir.
Mr. Allen. And that is very important to our taxpayers.
Mr. Piotti, do you have any comments?
Mr. Piotti. Yes, I do. At the state level, and it was
mentioned earlier that a lot of states have farmland protection
programs that often work in companion with ACEP, and a number
of states have done these kind of analyses. And we can compile
some of that for you.
I. Benefit-Cost Analyses of Farmland Protection
The Public Benefits of Farmland Protection
Farmland protection easements are well known for the private
benefits that they offer to farmers, who commonly use the funds from
selling their development rights to reinvest in their businesses, pay
off debt, or retire. In addition, farmland protection offers many
public benefits, including:

Avoided taxpayer expenditures on municipal community
services and infrastructure given less sprawl.

Preserved economic makeup of the community, as protected
farms maintain agriculture support industries and remain
affordable to farmers.

Avoided urban runoff, supporting water quality.

Protected permeable surfaces in watersheds, supporting water
quantity, flood control, and water purification.

Reduced landscape fragmentation, supporting biodiversity and
wildlife habitat.

There are many methods for estimating a dollar value of these
benefits of farmland protection. The following examples, though using
differing methodologies, both show a positive benefit-to-cost ratio for
protected farmland.
Environmental Return on Federal Farmland Protection Funds
A study from Lancaster County, Pennsylvania, evaluated 13 ecosystem
service benefits on protected cropland and pastureland. These ecosystem
services included aesthetic quality, pollination, recreation, water
regulation, and animal habitat, among others. The dollar values were
drawn from peer-reviewed research that used multiple methodologies
including market pricing, cost avoidance, replacement cost, travel
cost, hedonic values, and contingent valuation.
The report showed the value of these services to be between $27
million and $219 million annually, depending on the ecosystem service
valuation used. These lands were preserved in perpetuity at a combined
total of roughly $100 million in state and Federal funding and $13
million in private funds from the Lancaster Farmland Trust (Schwartz &
Kocian, 2014). Assuming the Federal input was $50 million (\1/2\ of the
total public investment), it would take only 2 years at the very lowest
estimate to pay back the benefits environmentally--to say nothing of
the public economic benefits from the protection of agricultural jobs
and businesses, the taxes paid by the farmers, the sale of farm
products, and the agriculture-related industries supported.
Federal Farmland Protection Cost-Benefit Analysis
On the Federal level, the Natural Resources Conservation Service
(NRCS) (2014) produced a benefit-cost analysis of the Farm and Ranch
Lands Protection Program (FRPP), a precursor to the present
Agricultural Conservation Easement--Agricultural Land Easement (ACEP-
ALE) program. Instead of placing a dollar value on the ecosystem
services provided, NRCS used a ``willingness-to-pay'' (WTP) model,
which in effect uses survey data to calculate a value for protected
farmland based on what urban dwellers are willing to pay to have their
local farmland protected. The NRCS calculated the average annual WTP
per thousand acres per household to be $1.54.
In FY 2007, FRPP protected 54,490 acres at a cost of almost $73
million, for an average cost of about $1,300 per acre. The benefits
from these lands based on WTP was about $11 million in that year.
However, the estimates of total net benefits for the FY 2007 FRPP
baseline, taking into account the fact that these are perpetual
easements, range from $81 million to $285 million (for a seven percent
and three percent discount rate, respectively). These estimates both
constitute a positive net return on the investment of Federal funds.
References
Natural Resources Conservation Service. 2014. Final Benefit-Cost
Analysis for the Farm and Ranch Lands Protection Program (FRPP).
Schwartz, A., and Kocian, M. 2014. Beyond Food: The Environmental
Benefits of Agriculture in Lancaster County, Pennsylvania. Earth
Economics, Tacoma, WA.
II. Quantifying Conservation Benefits in the Regional Conservation
Partnership Program
Two interconnected points were made by several Members during the
Subcommittee on Conservation and Forestry hearing, The Next Farm Bill:
Conservation Policy; first, that farmers do not often receive credit
for their implementation of voluntary conservation methods, and second,
that it is important to wisely invest taxpayer dollars in conservation
programs that show measurable results and provide evidence to the
American public that conservation programs offer a good return on
investment.
American Farmland Trust (AFT) believes that the new Regional
Conservation Partnership Program (RCPP) provides a unique opportunity
to satisfy both those points. One of the stated goals of RCPP has been
to fund projects that elect to measure environmental, social, and
economic outcomes of the practices adopted within a project area. These
specific, on-the-ground outcomes would make the case that voluntary
conservation is working and would allow farmers to receive credit for
the public benefits they provide.
While some studies have attempted to quantify the environmental or
economic benefits associated with conservation, more needs to be done
to empower RCPP partners to gather this data. Congress should encourage
the United States Department of Agriculture Natural Resources
Conservation Service (USDA NRCS) to define those desired outcomes,
provide methods to measure the outcomes, and establish reporting
criteria so success stories can make it back to NRCS and to the
Congress.
Efforts To Quantify Environmental and Economic Benefits of Federal
Conservation Programs
There are a variety of studies that attempt to quantify
environmental or economic benefits associated with conservation
activities such as water quality improvements in specific watersheds
and the increases in spending on outdoor recreation and sportsmen's
activities. However, no definitive studies exist that quantify the
environmental and economic benefits of specific conservation programs,
or of total Federal conservation spending.
Until about a decade ago, Federal agricultural conservation
programs were solely quantifying their success by counting the dollars
spent, conservation contracts signed, and acres or units of practices
implemented rather than on-the-ground outcomes. In 2003, the NRCS
Conservation Effects Assessment Project (CEAP) began modeling
simulations to estimate the environmental effects of conservation
practices on cropland in 12 very large river basins. The latest CEAP
report for the Western Lake Erie Basin identified $277 million in
annual investment in conservation practices by the area farmers
(without specificity to spending by Federal, state, or local programs)
that are estimated to reduce annual sediment losses by 81 percent,
nitrogen losses by 36 percent, and phosphorus losses by 75 percent.
The United States Fish and Wildlife Service estimates that the
Conservation Reserve Program (CRP) has helped achieve a net increase of
two million additional ducks per year (a 30 percent increase in duck
production) in North Dakota, South Dakota, and northeastern Montana
since 1992 (FSA, 2013). Modeling simulation by the Food and
Agricultural Policy Research Institute (FAPRI) estimates that CRP
reduces nutrient losses by 565 million pounds of nitrogen and 113
million pounds of phosphorus, compared to land that is cropped (FSA,
2013).
From the economic perspective, a University of Virginia study found
that every $1 of state or Federal funding invested in agricultural best
management practices would generate $1.56 in economic activity in that
state (Rephann, 2010). The Chesapeake Bay Foundation (2014) estimated
that having a clean Chesapeake Bay would provide $130 billion in
economic benefits annually to watershed residents, in the form of air
and water filtering, agricultural and seafood production, enhancement
of property values, and protection from floods and hurricanes. The cost
of implementing such a plan has been valued at $5-$6 billion dollars
annually.
Still other studies attempt to quantify the economic impact of
activities related to public recreation lands, clean, healthy waters,
and healthy wildlife populations, all of which are supported by
agricultural conservation funding. During the hearing, Representative
Walz of Minnesota noted the example of a $900,000 Environmental Quality
Incentives Program (EQIP) grant on a feedlot that led to cleaner water
in a nearby trout stream that generates $4 million for the local
economy through recreational activities. The Congressional Sportsmen's
Foundation (2013) estimated the country's ``sportsmen and women are an
economic force, fueling the American economy,'' spending $90 billion in
2011 and specifically $3 billion on the American system of conservation
funding.
All of these studies are important efforts to quantify
environmental and economic benefits associated with public and private
investments in the environment and agriculture. We need more of them.
Farmers Want To Know What Their Voluntary Conservation Efforts Are
Accomplishing in Their Own Backyards
In order to more fully understand the benefits of RCPP and other
conservation programs, we need to quantify the environmental, economic,
and social outcomes of the conservation programs. RCPP, as an
innovative program that brings together a diverse array of partners and
leverages private-sector dollars to implement targeted best management
practices, is an ideal place to start. By 2018, NRCS and its more than
2,000 conservation partners will have invested over $2.4 billion in
high-impact RCPP projects nationwide, with more than half of that
funding coming from non-Federal sources.
Other than counting the dollars spent and the practices adopted,
farmers and the RCPP project partners want to know what environmental
benefits their conservation activities are achieving in their project
area. To address this issue, AFT believes that the farm bill should,
first, include definitions of these environmental, social, and economic
outcomes, and second, direct the Secretary of Agriculture to provide
guidance and reporting criteria to RCPP project partners to measure
those outcomes. AFT would be happy to visit with Members and staff of
the House Subcommittee on Conservation to provide examples of various
outcome definitions and measurement methods.
References
Chesapeake Bay Foundation. 2014. Cleaning Up the Chesapeake: A
Valuation of the Natural Benefits Gained by Implementing the Chesapeake
Clean Water Blueprint. http://www.cbf.org/document.doc?id=2258.
Congressional Sportsmen's Foundation. 2013. ``America's Sporting
Heritage: Fueling the American Economy.'' http://sportsmenslink.org/
uploads/page/EIR_full_12_feb_low_res.pdf.
Farm Services Agency (FSA). 2013. Environmental Benefits of the
Conservation Reserve Program: United States. https://www.fsa.usda.gov/
Internet/FSA_File/us_benefits_2013.pdf.
NRCS Conservation Effects Assessment Project (CEAP). 2016. Effects
of Conservation Practice Adoption on Cultivated Cropland Acres in
Western Lake Erie Basin, 2003-06 and 2012. https://www.nrcs.usda.gov/
wps/portal/nrcs/detail/national/technical/nra/ceap/pub/
?cid=nrcseprd949606.
Rephann, T. 2010. Economic Impacts of Implementing Agricultural
Best Management Practices to Achieve Goals Outlined in Virginia's
Tributary Strategy. http://cbf.org/document.doc?id=467.
______

Submitted Questions
Response from Chuck Coffey, Owner/Manager, Double C Cattle Company;
Member, National Cattlemen's Beef Association
Question Submitted by Hon. Mike Bost, a Representative in Congress from
Illinois
Question. As of November 2016, there have been little over 340,000
acres enrolled in pollinator habitat since the program was established
in 2012. In your opinion, has this program and the investments made my
outside organizations made a meaningful difference in increasing the
population and health of the pollinator population and are there any
changes that you would like to see to make this program more effective?
Answer. While it's still premature to determine the cumulative
impact of the pollinator habitat efforts, we do know that agriculture,
and grazing in particular, plays a critical role in conserving the
pollinator habitat we have and establishing new habitat where we can.
We also know that these efforts are most effective and appeal to the
widest audience when they are truly voluntary and incentive-based. It's
also critical to recognize the benefit of these voluntary conservation
efforts by offering assurances to participating producers when making
ESA listing determinations.
Response from Timothy Gertson, Co-Owner/Co-Operator, G5 Farms; Member,
Board of Directors, USA Rice Federation
Questions Submitted by Hon. Mike Bost, a Representative in Congress
from Illinois
Question 1. You said in your testimony that when you participate in
the EQIP program you saw immediate benefits to your bottom line. This
return on investment then led you to implement the same conservation
practices on more of you acres. What benefits did you see that were
worth putting you own skin in the game and did you look at utilizing
the Conservation Guaranteed Loan Program offered my FSA? Finally, do
you know of any other producers who take this same approach to
conservation efforts?
Answer. We cost-shared the installation of more than 4 miles of 16"
underground pipeline to replace irrigation canals, resulting in up to
20 percent less irrigation water needed to grow our crop, providing
both instant savings and environmental benefits. A quick calculation
shows that since installation our new pipeline alone has saved
somewhere between 1,000 and 2,000 ac-ft of water. This is enough water
to fill between 500 and 1,000 Olympic-sized swimming pools. Not only
are we saving the water, we are saving the cost of pumping it, and that
has a big impact on my bottom line. It previously took nearly 24 hours
of pumping at a rate of 3,000 gallons/minute to build up in my old
canals to start just a trickle of water into my fields. Now, with
underground pipeline, my water supply is on demand and immediate. This
added precision to my irrigation scheduling lends itself to increased
yields by minimizing crop stress, again helping my bottom line.
Almost every single rice producer I know in my county and the
surrounding counties has applied for EQIP or CSP funding.
Unfortunately, not all of them have received it. Many farmers apply
year after year for EQIP to help get started with their conservation
practices only to be turned down because of lack of funding. EQIP is
extremely competitive in our region because everyone has seen the
benefits that these conservation practices bring to our land, water,
wildlife, and economy.
We have looked at FSA loan programs before, but not the
Conservation Guaranteed Loan Program in particular. We wrote off
talking to FSA about any loan programs several years ago because their
process was too time consuming and it takes too long for approval. In
my area, conservation practices have to be installed between crop
rotations. This means there is a limited timeframe to get the practice
installed. The weather can be hard enough to work around, I can't
imagine having to wait on a loan approval as well.

Question 2. Your testimony should be required reading when it comes
to the positive impact working lands conservation programs has on local
economies. As you point out, with working lands programs, the land is
still in production and as a result you are able to provide jobs for
several of the residents in your town. Generally, how would your
ability to contribute to the local economy be impacted if there were a
dramatic shift in policy that allowed for millions of more acres to be
retired/idled through CRP?
Also, with you being a young farmer, do you feel that beginning
farmers and ranchers are competing for rental acres with CRP contracts
that are too high? As an example, in Illinois, CRP rates in some areas
of the state are over $300 an acre. What do you believe could be done
to reform the rental rate?
Answer. If millions of additional acres were to be enrolled in CRP
I'd really be wondering where the money came from to pay for those
contracts. Is that money that could have been spent on working lands
programs? Something that really frustrates me is that CRP is a
`conservation' program, but it feels like it should fit under the
commodity title. I understand that the intent of the program is to
provide conservation benefits, but I feel like the same goal could be
accomplished on that land by using EQIP or CSP and keeping the land in
production. Producers enrolled could be required to do things like
strip till, min till, or no-till, or cover cropping to reduce erosion
and improve water quality. I know those types of practices don't work
perfectly in every region and for every crop. We can't no-till rice (we
tried it when I was in high school) because you run the risk of the
ground never drying out in the spring to be able to plant.
Since a lot of rice seems to be grown on rented land and most
beginning farmers rely on rented land, it's got to be an issue if
you're surrounded by lots of open land but it's tied up in 10 year CRP
contracts. If my landlord is considering enrolling the land I rent into
CRP, that does not give me any certainty about the future and it's
going to deter me from implementing any conservation whether cost-share
or out of pocket on that land if I may not farm it next year.
Question 3. As of November 2016, there have been little over
340,000 acres enrolled in pollinator habitat since the program was
established in 2012. In your opinion, has this program and the
investments made my outside organizations made a meaningful difference
in increasing the population and health of the pollinator population
and are there any changes that you would like to see to make this
program more effective?
Answer.
Question Submitted by Hon. Ralph Lee Abraham, a Representative in
Congress from Louisiana
Question. Mr. Gertson, it's great to see such a young, and positive
rice farmer in here, I've got quite a few rice farmers in my own
District and it's promising to see you undeterred from farming after
the way the market's been. You say a lot of rice farmers rely on rented
land and that's a deterrent from forking over the money to implement
conservation practices, can you tell us a little bit more about how
NRCS incentivizes farmers to implement practices on rented land?
Response from Jeremy Peters, Chief Executive Officer, National
Association of Conservation Districts; on Behalf of Lee
McDaniel, Immediate Past President, National Association of
Conservation Districts
Question Submitted by Hon. Mike Bost, a Representative in Congress from
Illinois
Question. As of November 2016, there have been little over 340,000
acres enrolled in pollinator habitat since the program was established
in 2012. In your opinion, has this program and the investments made my
outside organizations made a meaningful difference in increasing the
population and health of the pollinator population and are there any
changes that you would like to see to make this program more effective?
Answer.
Response from David E. Nomsen, Vice President of Governmental Affairs,
Pheasants Forever, Inc.
Question Submitted by Hon. Mike Bost, a Representative in Congress from
Illinois
Question. As of November 2016, there have been little over 340,000
acres enrolled in pollinator habitat since the program was established
in 2012. In your opinion, has this program and the investments made my
outside organizations made a meaningful difference in increasing the
population and health of the pollinator population and are there any
changes that you would like to see to make this program more effective?
Answer. While the leadership demonstrated by USDA in creating and
delivering a pollinator habitat incentive is to be applauded, many of
the pollinator benefits and national goals are well short of
achievement. Two important national pollinator goals are striving to
lower annual honey bee hive losses to 15% and to increase the area
occupied by monarch butterfly on overwintering sites in Mexico to 6
hectares. National Hive losses remain at 40 to 50% and 2017 monarch
wintering area was estimated at 2.91 hectares. Much work remains to be
done.
The Conservation Reserve Program (CRP) and the suite of NRCS
Working Lands for Wildlife Programs offers perhaps the single greatest
opportunities to impact these national pollinator goals and subsequent
pollinator populations. Unfortunately, too often the habitats created
through these programs falls short of providing the high quality
pollinator habitat needed. Examples of improvements that would
significantly benefit pollinators and CRP program results include:

(1) Design seeding mixtures using more updated and appropriate
planting rates and design.

(2) Allow the use of a broader range of pollinator-friendly species
adapted to a geographic area.

(3) Increase the minimum requirements for pollinator plantings to 15
pollinator-friendly forb species and encourage the use of
highly diverse seeding mixtures.

(4) Implement seed establishment practices that allow a broader
range of establishment and management options.

(5) Adjustment to the current EBI to include pollinator value as a
criteria and placing those projects in the geography that
will most benefit pollinator species (honey bees, monarch
butterflies, etc.).

Recommendations regarding these and other opportunities to increase
and improve forage, CRP outcomes and habitat for pollinators through
USDA conservation programs have been submitted by a broad coalition of
conservation, commodity and agriculture groups through the Honey Bee
Health Coalition.

NRCS site with pollinator and monarch butterfly information:
https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/
plantsanimals/pollinate/?cid=nrcseprd402207.
Response from Hon. John F. Piotti, President, American Farmland Trust
Question Submitted by Hon. Mike Bost, a Representative in Congress from
Illinois
Question. As of November 2016, there have been little over 340,000
acres enrolled in pollinator habitat since the program was established
in 2012. In your opinion, has this program and the investments made my
outside organizations made a meaningful difference in increasing the
population and health of the pollinator population and are there any
changes that you would like to see to make this program more effective?
Answer. American Farmland Trust (AFT) has long been involved in
efforts to improve the health and increase the population of
pollinators through the use of integrated pest management (IPM) and
other conservation practices, and in efforts to incorporate more
pollinator habitat into farming operations. Wild bees and honeybees
provide a critical service to agriculture and to natural ecosystems by
ensuring pollination of crops and wild plants. Both types of bees
contributed to an estimated total of 11 percent of the agricultural
gross domestic product of the United States in 2009, equivalent to
$14.6 billion (Koh, et al., 2016).
Therefore, AFT applauds the efforts to enroll hundreds of thousands
of acres in pollinator habitat through the Conservation Reserve Program
(CRP) CP-42 Pollinator Habitat practice, although this particular
program has not historically been an area of involvement for AFT.
According to a recently published study, wild bee populations declined
across 23 percent of the United States between 2008 and 2013. The study
also identified 139 counties where low bee abundance corresponds to
large areas of pollinator-dependent crops, accounting for nearly 40
percent of the pollinator-dependent crop area in the country (Koh, et
al., 2016). Additional study would be necessary to determine whether
practices defined under CP 42 have had a broad-reaching impact in
changing these trends since 2013. However, promoting pollinator-
friendly practices in regions where native bee population declines have
been measured should be a priority.
Outside of CRP, there are several USDA programs that also offer the
opportunity to protect pollinators and their habitats. AFT is currently
involved in a Conservation Innovation Grant (CIG) in Michigan that is
piloting the use of Pollinator Habitat Credits on protected farms. This
innovative approach seeks to draw in corporations and businesses that
have established corporate sustainability programs and are searching
for projects in which to invest corporate sustainability funds, thereby
leveraging Federal funds with private funds. By focusing on developing
pollinator habitat on protected farmland, this project ensures that its
gains will not be under threat from development.

Reference

Koh, I., Lonsdorf, E.V., Williams, N.M., Brittain, C., Isaacs, R.,
Gibbs, J., & Ricketts, T. (2016). Modeling the status, trends, and
impacts of wild bee abundance in the United States. Proceedings of the
National Academy of Sciences, 113(1), 140-145.

THE NEXT FARM BILL

(INTERNATIONAL MARKET DEVELOPMENT)

----------

TUESDAY, FEBRUARY 28, 2017

House of Representatives,
Subcommittee on Livestock and Foreign Agriculture,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:25 p.m., in
Room 1300 of the Longworth House Office Building, Hon. David
Rouzer [Chairman of the Subcommittee] presiding.
Members present: Representatives Rouzer, DesJarlais, Kelly,
Marshall, Costa, and Evans.
Staff present: Bart Fischer, Caleb Crosswhite, Callie
McAdams, Darryl Blakey, Mollie Wilken, Stephanie Addison, Liz
Friedlander, Matthew MacKenzie, Mike Stranz, Troy Phillips, and
Carly Reedholm.

OPENING STATEMENT OF HON. DAVID ROUZER, A REPRESENTATIVE IN
CONGRESS FROM NORTH CAROLINA

The Chairman. This hearing of the Subcommittee on Livestock
and Foreign Agriculture entitled, The Next Farm Bill:
International Market Development, will come to order. Let me
apologize for our delay in getting started, but votes take
precedent around here, and we just arrived back from a series
of votes.
Before I go into my opening statement, I want to recognize
a new Member that I see here on the Republican side, Mr.
Marshall. Welcome to the Subcommittee. As you all know, Mr.
Marshall is a new Member from Kansas, and it is great to have
you here on the Subcommittee with us.
Well, thank you all for gathering here this afternoon as
the Committee continues its work to reauthorize the farm bill
in advance of its expiration next fall.
As was explained in this morning's Conservation and
Forestry Subcommittee hearing, the plan is for each
Subcommittee to hold at least two hearings exploring the farm
bill programs and issues under its respective jurisdiction.
This afternoon, we will focus on a slate of programs that,
unfortunately, do not get much attention until they become
targets for cuts during consideration of farm bills and various
appropriations measures. Those are the trade promotion and
market development programs administered by the USDA. A number
of you here, myself included, have been through a lot of those
fights.
The goal today is to change that narrative, by giving a
wide variety of organizations who receive funding from those
programs a platform to discuss the continued need for the
programs, and the innovative ways in which they use them to
establish and enhance markets for U.S. products overseas.
I also look forward to hearing from a distinguished
economist on today's panel about the economic benefits that the
two programs; MAP and FMD, in particular, generate within our
own borders.
Given the uncertainty of the future of our existing trade
agreements, and the blatant disregard of WTO commitments by a
handful of our global competitors, I see tremendous value in
these effective and proven methods of gaining new access for
U.S. goods abroad and developing those market relationships.
These programs truly embody an America first policy.
From improving customer trust in U.S. beef in South Korea,
to developing export markets for ice cream in China, to putting
our cotton exports on a more level playing field with our
global competitors, I am impressed with the overarching
benefits that market development funding brings to the U.S.
agricultural industry as a whole.
I look forward to learning more today about the success of
the USDA programs that provide such opportunities, but I am
certainly open to suggestions as to how to improve them, moving
forward.
Again, thank you all for being here.
[The prepared statement of Mr. Rouzer follows:]

Prepared Statement of Hon. David Rouzer, a Representative in Congress
from North Carolina
Good afternoon, and thank you all for gathering here this afternoon
as the Committee continues its work to reauthorize the farm bill in
advance of its expiration next fall.
As was explained in this morning's Conservation and Forestry
Subcommittee hearing, the plan is for each Subcommittee to hold at
least two hearings exploring the farm bill programs and issues under
its respective jurisdiction.
This afternoon, we will focus on a slate of programs that,
unfortunately, do not get much attention until they become targets for
cuts during consideration of farm bills and appropriations measures--
the trade promotion and market development programs administered by
USDA.
The goal today is to change that narrative, by giving a wide
variety of organizations who receive funding from those programs a
platform to discuss the continued need for the programs and the
innovative ways in which they use them to establish and enhance markets
for U.S. products overseas.
I also look forward to hearing from a distinguished economist on
today's panel about the economic benefits the two largest programs--MAP
and FMD--generate within our own borders.
Given the uncertainty of the future of our existing trade
agreements, and the blatant disregard of WTO commitments by a handful
of our global competitors, I see tremendous value in these effective
and proven methods of gaining new access for U.S. goods abroad and
developing those market relationships. In my opinion, these programs
truly embody an ``America first'' policy.
From improving customer trust in U.S. beef in Korea, to developing
export markets for ice cream in China, to putting our cotton exports on
a more level playing field with our global competitors, I am impressed
with the overarching benefits that market development funding brings to
the U.S. agricultural industry as a whole.
I look forward to learning more today about the success of the USDA
programs that provide such opportunities, but I am certainly open to
suggestions as to how to improve them moving forward.
Again, thank you all for being here, and with that, I yield to the
Ranking Member for his opening remarks.

The Chairman. I yield to the Ranking Member, Mr. Costa, for
his opening remarks.

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

Mr. Costa. Thank you very much, Mr. Chairman. And I want to
thank the Members of the Subcommittee and our panel in advance.
This hearing of the Livestock and Foreign Agriculture
Subcommittee, entitled, The Next Farm Bill: International
Market Development, is critical for so many reasons, and I will
explain in my comments. But the fact of the matter, in my most
sincere view, is that too often American agriculture gets taken
for granted because we do it so well. With 2\1/2\ percent of
our nation's population directly involved in the production and
the processing of the food and fiber that is grown in America,
we have allowed the rest of our population to pursue other
goals in their life. And American farmers, ranchers, and dairy
people are among the best producers in the world; the finest
quality, the highest yields, the safest food that is grown
anywhere. And we do it so well that we are able to not only
feed our entire country, but large parts of the world.
This context for the Subcommittee, Mr. Chairman, and as we
begin setting the table for the next farm bill that we will all
be actively engaged in, it is important that we not take this
for granted; that we recognize it as a food security issue as
we formulate the policies, and we recognize trade is an
important part of that component. We can't consume all the
products we produce. And so, unfortunately, trade in the last
year or so, on both sides, has become a bit of a political
football, some might say a pariah. It is important for the
agriculture community to stand strong in its support for
international market development, global trade, and the
programs that we are going to talk about here today.
I was proud to be one of the 28 Democrats in the House who
voted for Trade Promotion Authority. I received a lot of grief
for it. That is fine, because this Administration, like the
last Administration, needs strong negotiating directions and
parameters that they must be able to work with. The farm bill
authorizes a few international market development programs we
will talk about this afternoon for America's farmers, ranchers,
dairy producers, and their products abroad. The Market Access
Program, the Foreign Market Development Program, and the
Technical Assistance for Specialty Crops Program all provide
vital funding for their roles in America's agricultural
industry.
It makes it easier for American farmers and ranchers and
dairy producers to market their products in foreign markets
where it is not always a level playing field, as we know. And,
of course, everybody seeks, wherever I go around the world,
American products. They really like California products, and I
market them all equally.
I disagree though with the new Administration's
shortsighted approach to trade. Its withdrawal from the Trans-
Pacific Partnership is going to be looked upon in the next
several years as something we need to recognize that China is
going to enter into that market, and I hope that we are not the
losers as a result of that choice.
These programs play a critical role, not only in TPP, but
T-TIP and other negotiations. Let me give you some examples. In
my home State of California, agricultural export values were
$20 billion for a third consecutive year; 2015 it was $20.6
billion. Furthermore, California's share of the total U.S.
agricultural exports was 15.6 percent. My family and other
families have been doing this for two, three, four generations.
Whether you believe it or not, the fact is, nobody does it
better. Nobody does it better than American agriculture, and
that is the bottom line.
In closing, I believe Ambassador Froman said it best. The
question about trade agreements, and let's be clear about this,
we can be critical and that is fine, and I get the politics,
but a trade agreement only works when you have cooperation on
both sides. It has to be a win-win. If it is a win-lose, the
other country is not going to agree. Why would they? Why should
they? So as Ambassador Froman said, ``The question is not
whether we roll back the tide of globalization, but it is
whether or not we are going to shape it or be shaped by it.
Whether we are going to do everything we can to ensure that it
reflects our values, or let others define the values.'' We face
a choice: raise the bar or stay on the sidelines as other
countries write the rules of the game. That is my view. The
United States must lead, not be led. These programs that we
will talk about this afternoon provide American agriculture and
the 2.2 million farmers in the country with markets, access to
customers all over the world who enjoy the fruits of these
agriculturalists' labor. And it is not always a level playing
field, and that is why these programs are so important.
The funding ought to be maintained, and in some areas
increased, and we will talk about that during the farm bill
process.
Finally, Mr. Chairman, you have been very kind with the
time, and I would be remiss if I didn't make one other comment.
All of us around here benefit from the wonderful people who we
work with; our staff. We get a chance to ask the tough
questions, and have the interaction and solve problems for our
constituents, but if it wasn't for our staff we would be in a
world of hurt, at least I would. And one, Mr. Donald Grady, has
worked for over 5 years on my staff, and has done a terrific
job on two farm bills, and I guess it was because he looked at
a third farm bill that he was taking that admonition by, Mr.
Greeley or someone who said, ``Go West, young man, go West,''
and this Georgian wants to move to California. I don't
understand why. But I want to thank you, Donald Grady, on
behalf of our entire staff and our entire team for the work you
have done for myself and for the Agriculture Committee. Thank
you very much.
The Chairman. The chair would request that other Members
submit their opening statements for the record so the witnesses
may begin their testimony, and to ensure that there is ample
time for questions.
I would like to recognize our witnesses at the table, and
let me introduce them very briefly.
Dr. Gary Williams is Professor of Agricultural Economics
and Co-Director of the Food, Agribusiness, and Consumer
Economic Research Center at Texas A&M University. The Honorable
Joseph Steinkamp, Director of the American Soybean Association,
and here on behalf of the Coalition to Promote U.S.
Agricultural Exports and the Agribusiness Coalition for Foreign
Market Development. Mr. Tim Hamilton, Executive Director of the
Food Export--Midwest and Food Export--Northeast, Chicago,
Illinois. Mr. Philip Seng, President and CEO, U.S. Meat Export
Federation in Denver, Colorado. And Mr. Dean Alanko, Vice
President of Sales and Marketing, Allegheny Wood Products,
Petersburg, West Virginia, here on behalf of the Hardwood
Federation.
And now I would like to recognize Mr. Costa to introduce
the witness from California.
Mr. Costa. Well, thank you again, Mr. Chairman.
We have a distinguished panel here, and we are looking
forward to their testimony. One of those individuals is a
gentleman who I have known for many years. He is a leader in
American agriculture and he is the Chair and President of the
California State Farm Bureau, my dear friend, Mr. Paul Wenger.
He and his family have farmed in the great San Joaquin Valley
for generations. He is serving his fourth term as the
California Farm Bureau President; the largest state Farm
Bureau, I believe, in the nation, and he has served in that
capacity with distinction. We have a lot of diversity in
California, and sometimes Paul's job is like herding squirrels,
but he brings a great deal of knowledge and expertise as a
third generation almond and walnut farmer in the great
California Central Valley, and we thank you, Paul, for being
here.
The Chairman. Dr. Williams, please begin when you are
ready.

STATEMENT OF GARY W. WILLIAMS, Ph.D., PROFESSOR OF
AGRICULTURAL ECONOMICS AND CO-DIRECTOR,
AGRIBUSINESS, FOOD, AND CONSUMER ECONOMICS
RESEARCH CENTER, DEPARTMENT OF AGRICULTURAL
ECONOMICS, TEXAS A&M UNIVERSITY, COLLEGE STATION, TX

Dr. Williams. Well, Chairman Rouzer, Ranking Member Costa,
Members of the Subcommittee, thank you for the opportunity to
be here today to testify to you as you consider the next farm
bill and international market development programs.
Recently, we have all heard a great deal about the
difficulties and uncertainties currently facing U.S.
agriculture, policies that haven't worked as planned and new
policies to consider. I am pleased to be here today to talk
briefly about the USDA export market development programs
which, according to recent research by my colleagues and I at
Texas A&M University, Oregon State University, Cornell
University, and Informa Economics, have worked consistently and
effectively for over 50 years to bolster the profitability of
not only production agriculture, but the broader U.S. economy
as well.
Total annual spending of the two primary USDA export market
development programs; the Market Access Program, or MAP, and
the Foreign Market Development Program, or FMD, has risen
sharply in recent years, but only because of the growing
contributions from the private-sector which now account for
over 70 percent of the total. The growth in contributions from
industry demonstrates there is strong recognition of the
effectiveness of the MAP and FMD programs in opening,
expanding, and maintaining export markets.
In the recent study I mentioned, my colleagues and I
subjected the USDA export market development programs to a
rigorous economic analysis. Our research team devised a
completely different and highly rigorous methodology to test
whether the USDA export promotion programs were as effective in
promoting U.S. agricultural exports, and as impactful on the
U.S. economy as reported by previous studies. Frankly, I was
skeptical of those studies, but then surprised by our own study
results. We found that the programs, indeed, have been highly
effective in boosting U.S. agricultural exports and export
revenues. The study found that over their history, these
programs have added an annual average of 15 percent to the
value of U.S. agricultural exports, eight percent to the volume
of U.S. agricultural exports, and nearly seven percent to the
price of U.S. agricultural exports.
The study also concluded that over their history, the
programs have generated a return of $28.30 in additional export
revenue for every dollar invested in the programs. We also
found that the programs have contributed importantly to the
profitability of the U.S. farm sector, benefitted the entire
U.S. economy, and created employment up to nearly 240,000 full-
and part-time jobs across the entire economy.
And after we finished with that study, our team was asked
to simulate two alternative scenarios of increased funding for
MAP and FMD programs. In the first scenario, we doubled the MAP
and FMD funding in each year by $46.9 million, to a total of
$469 million over 5 years, with essentially no increase in
cooperator contributions. In the second scenario, we again
doubled MAP and FMD funding over 5 years, as in the first
scenario, but this time we increased cooperative contributions
by 50 percent, with increases of $46.9 million each year, to a
total of $703.6 million by the end of the 5 year period.
Under both scenarios, we found that the additional
investments would generate high returns in additional
agricultural export revenue, about $18 of returns per
additional dollar invested under the first scenario, and $16 in
the second scenario. Export gains would also be substantial
under both scenarios; a total of $17 billion of additional
exports under the first scenario, and $22.5 billion of
additional exports in the second. Now, what this means is that
an increase in investment in these two programs would pay for
itself many times over. Gains across the farm economy would be
equally as substantial under both scenarios.
Importantly, the analysis demonstrated convincingly that
the positive impacts of the programs on the farm sector would
generate multiplier effects across the entire economy. For
example, we found that U.S. output, or sales, would increase by
a total of up to $53 billion in the first scenario, and $70
billion in the second. U.S. GDP would be higher by a total of
up to $23 billion under the first scenario, and $30 billion
under the second. U.S. employment would increase by up to
64,000 new jobs under that first scenario, nearly 85,000 jobs
under the second scenario.
Now, in conclusion, our analysis demonstrated clearly that
the investment in the FMD and MAP programs has been, and
continues to be, a highly successful and cost-effective means
of strengthening the profitability and maintaining the
viability of the U.S. farm economy. In addition, the programs
are clearly pro-growth for the entire U.S. economy.
I would be hard-pressed to name any other U.S. farm program
that has been as consistently effective over such a long period
of time in working to support our farm sector, while supporting
the growth of the entire U.S. economy, and at the same time
generating a high return on the investment of farmer and
taxpayer funds.
Thank you, Mr. Chairman. I would be glad to try to answer
any questions.
[The prepared statement of Dr. Williams follows:]

Prepared Statement of Gary W. Williams, Ph.D., Professor of
Agricultural Economics and Co-Director, Agribusiness, Food, and
Consumer Economics Research Center, Department of Agricultural
Economics, Texas A&M
University, College Station, TX
Chairman Rouzer, Ranking Member Costa, and Members of the
Subcommittee, thank you for the opportunity to testify today as you
focus on the next farm bill and international market development
programs. I am professor of Agricultural Economics and Co-Director of
the Food, Agribusiness and Consumer Economics Research Center at Texas
A&M University. Recently, we have all heard a great deal about the
difficulties and uncertainties currently facing U.S. agriculture,
policies that have not worked as planned, and new policies that need to
be considered. I am pleased to be here today to talk briefly about the
USDA Export Market Development Programs which have worked consistently
and effectively over fifty years to bolster the profitability and
viability of not only production agriculture but the broader U.S.
economy as well, according to recent research by several of my
colleagues at Texas A&M University, Oregon State University, Cornell
University, Informa Economics and I (``Economic Impact of USDA Market
Development Programs,'' available on-line at: https://www.fas.usda.gov/
sites/default/files/2016-10/2016econimpactsstudy.pdf).
The primary components of USDA Export Promotion Programs are the
Market Access Program (MAP) and the Foreign Market Development program
(FMD). These two programs are public-private partnerships between USDA
and nonprofit U.S. agricultural trade associations, farmer
cooperatives, nonprofit state-regional trade groups and small
businesses to conduct overseas marketing and promotional activities.
The Foreign Agricultural Service (FAS) administers these programs
within the USDA.
The total annual spending under the USDA Export Market Development
Programs has risen sharply in recent years but not because of growing
government spending on these programs. Rather, contributions from the
private-sector, the program cooperators, have continued to rise from
about 50% of the total spending in the late 1990s to currently over 70%
(Figure 1). In terms of the cost share of the funds for export market
promotion, the private-sector contributed a record average of 240%
percent in 2014. The growth in industry contributions demonstrates the
strong industry recognition of the effectiveness of the MAP and FMD
programs in opening, expanding, and maintaining export markets.
In a recent study, my colleagues and I subjected the USDA Export
Market Development Programs to a rigorous economic analysis to answer
three critical questions. First, have the USDA Export Market
Development Programs achieved their avowed objective of increasing the
foreign demand for U.S. agricultural products and, as a result,
supported the U.S. agricultural sector? Second, has any increase
achieved in exports been sufficient to contribute more to the
profitability of the agricultural sector than the cost of the programs?
Third, have the programs contributed to the growth of the overall U.S.
economy?
Two previous studies concluded that the USDA Export Market
Development Programs have been highly effective in promoting exports
with substantial benefits to the U.S. economy. I must say that I was
skeptical of those results. So our research team devised a completely
different and highly rigorous methodology to test whether those export
promotion programs were as effective in promoting U.S. agricultural
exports and as impactful on the U.S. economy as the previous studies
purported.
I was personally surprised by the results of our study. In answer
to the first two critical questions we posed at the beginning of our
research, the study concluded that:

USDA Export Market Development Programs have been highly
effective in boosting U.S. agricultural exports and export
revenues.

The study found that over their history (1977-2014), USDA Export
Market Development Programs have added an annual average of
15.3% ($8.15 billion) to the value of U.S. agricultural
exports, 8.0% (11.5 million mt) to the volume of aggregate U.S.
agricultural exports, and about 6.7% ($25.07/mt) to the
aggregate price of U.S. agricultural exports.

USDA Export Market Development Programs generated a high
benefit-to-cost ratio (BCRs) over history in line with what
previous studies have found.

We calculated the undiscounted net export revenue BCR of the USDA
Export Market Development Programs (including both USDA
expenditures and cooperator contributions) to be 28.3. In other
words, over their history, the programs have generated a net
return of $28.30 in additional export revenue for every dollar
invested in export promotion

In answer to the third critical question, the study concluded that
the USDA Export Market Development Programs:

Contribute substantially to the profitability of the U.S.
farm economy.

The study concluded that the USDA export promotion programs
boosted annual average farm cash receipts by up to $8.7 billion
(2.8%), net farm income by up to $2.1 billion (3.7%), farm
asset value by up to $1.1 billion (0.1%), and employment in the
agrifood sector by up to 93,900 jobs (2.4%).

Benefit the entire U.S. economy.

The study also concluded that the positive impact of the USDA
Export Market Development Program on the agricultural sector
has generated multiplier effects across the entire economy like
the ripples you make in water after an initial splash. The
results show that on average over the 2002-2014 period, the
programs have added up to $39.3 billion in economic output, up
to $16.9 billion in GDP, and up to $9.8 billion in labor income
to the U.S. economy.

Create jobs.

Finally, the study also concluded that the USDA Export Market
Development Programs have added up to an annual average of
239,800 full and part-time jobs across the entire economy,
reducing unemployment by up to 3%.

After concluding that study, my colleagues and I were asked to use
the models and analytical procedures we developed to provide guidance
on the impacts of alternative increased funding scenarios for USDA's
Foreign Market Development Program (FMD) and Market Access Program
(MAP) and industry export market promotion contributions on export
revenues, the farm economy, and the overall macro economy. Two future
funding scenarios were simulated with our models:

Scenario 1: Government expenditures for MAP and FMD were
doubled over 5 years through annual increments of $46.9 million
to a total of $469 million (double the base year) with
cooperator contributions increasing approximately 10% in the
first year to $515.6 million and then remaining flat at that
level for the following 4 years.

Scenario 2: Government expenditures for MAP and FMD were
again doubled over 5 years as in the first scenario but
cooperator contributions were increased by 50% over that period
through annual increases of $46.9 million for a total of $703.6
million by the end of the 5 year period.

The analysis of these two future funding scenarios use the base
starting point for MAP and FMD combined funding of $234.5 million and
cooperator contributions of $468.7 million. The 50% increase in
cooperator contributions in the second scenario is reasonable based on
interviews that we conducted with MAP and FMD participants in the
original study. All of those we interviewed indicated that they would
expand their market promotion activities if funding for FMD and MAP
programs was increased because of the effectiveness of their current
activities. Some also responded that they would expand their market
promotion offices overseas in that case.
The analysis concluded that the additional investments under both
scenarios would generate high benefit-cost ratios (BCRs) of $18.2 for
every additional dollar invested in export market development under
Scenario 1 and $16 for every additional dollar invested under Scenario
2. In addition, as illustrated in Figure 2 and shown in Tables 1 and 2,
the future funding analysis concluded that:

Export gains would be substantial under both scenarios.

The value of U.S. agricultural exports would increase by an
annual average of $3.4 billion and $4.5 billion under Scenarios
1 and 2, respectively (Figure 2). That would add up to an
export value gain of $17.1 billion and $22.5 billion,
respectively, under the two scenarios over the entire 5 year
period.

Gains to the farm economy would be equally substantial under
both scenarios.

Farm cash receipts would increase by an annual average
of up to $2.2 billion under Scenario 1 and up to $2.9
billion under Scenario 2. Over the entire 5 year period,
the farm cash receipt gain would be up to $11.1 billion
under Scenario 1 and $14.6 billion under Scenario 2.

Net cash farm income would increase by an annual
average of up to $0.5 billion and $0.7 billion,
respectively under the two scenarios for a 5 year gain of
up to $2.7 billion and $3.5 billion under Scenarios 1 and
2, respectively.

Farm asset values would increase by an annual average
of up to $0.29 billion and $0.4 billion and up to $1.5
billion (less) and $1.9 billion over the entire 5 year
period.

Up to 24,200 new jobs would be added in the agrifood
sector under [S]cenario 1 and up to 31,900 new jobs under
Scenario 2.

The overall U.S. economy would experience a substantial
multiplier effect from the farm economy boost under both
scenarios.

U.S. output (sales) would increase by an average
annual of up to $10.6 billion and $14.0 billion under the
Scenarios 1 and 2, respectively and by a total of up to
$53.1 billion and $70.0 billion over the entire 5 year
period of analysis.

U.S. GDP would be higher by up to $4.5 billion and
$6.0 billion each year on average under Scenarios 1 and 2
for a total of up to $22.7 billion and $30.0 billion,
respectively, over the entire 5 year period under the two
scenarios.

U.S. labor income would be higher by up to $2.6
billion and $3.5 billion on average each year under
Scenarios 1 and 2 and by up to $13.1 billion and $17.5
billion over the entire 5 year period.

U.S. employment would increase by up to 64,000 new
jobs under Scenario 1 and up to 84,600 new jobs under
Scenario 2.

In conclusion, our critical analysis of the USDA Export Market
Development Programs demonstrated clearly that the public-private
partnership to promote U.S. agricultural exports under the FMD and MAP
programs has been and continues to be a highly successful and cost-
effective means of strengthening the profitability and maintaining the
viability of the U.S. farm economy. In addition, the USDA Export Market
Development Programs are clearly pro-growth for the entire U.S.
economy. The benefits of export promotion to the farm economy multiply
through the economy adding importantly to our national output, GDP,
labor income, and level of employment. An incremental increase of $46.5
million annually over the next 5 years to these historically successful
programs along with an expected 50% increase in contributions to the
program by private-sector cooperators would return $16 dollars in
additional export revenue for every dollar invested and generate up to
an additional $3.5 billion in net cash farm income, $30 billion in
additional U.S. GDP, and up to 84,600 new jobs. I would be hard-pressed
to name any other U.S. farm program that has been as consistently
effective over such a long period of time in working to support our
farm economy while supporting the growth of the entire U.S. economy and
at the same time generating a high return on the investment of farmer
and taxpayer funds.
Thank you, Mr. Chairman. I would be glad to try and answer any
questions.
Figure 1: USDA Export Market Development Programs Funding,\1\ 1977-2014

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Source: FAS/USDA.
---------------------------------------------------------------------------
\1\Includes government expenditures on market promotion through the
FMD and MAP Programs and industry contributions. All data converted to
a calendar year basis.
---------------------------------------------------------------------------
Figure 2: Simulated Annual Changes in U.S. Export Revenue Achieved
Under Agricultural Export Funding Scenarios 1 and 2

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

*10% increase in first year over baseline and then flat for
next 4 years.

Table 1: General Economy Impacts of the Funding Scenario 1 Relative to the Baseline Funding Scenario, Years 1-5
----------------------------------------------------------------------------------------------------------------
Less than Full Employment Full Employment
Variable Flat Funding ----------------------------------------------------------------------
Base Valuea Change Percent Change Change Percent Change
----------------------------------------------------------------------------------------------------------------
Agriculture Sector $U.S. billions $U.S. billions % $U.S. billions %
----------------------------------------------------------------------------------------------------------------
Farm cash receipts 321.2 2.2 0.7 1.8 0.6
Net cash farm income 63.9 0.5 0.8 0.5 0.9
Farm assets 2,161.4 0.29 0.01 0.19 0.01
1,000 jobs 1,000 jobs 1,000 jobs
Employment in agrifood 3,900.4 24.2 0.6 17.2 0.4
sectorb
----------------------------------------------------------------------------------------------------------------

U.S. Economy $U.S. billions $U.S. billions % $U.S. billions %
----------------------------------------------------------------------------------------------------------------
U.S. Output (Gross 25,070.0 10.6 0.04 1.3 0.005
Sales)
U.S. GDP 14,522.5 4.5 0.03 0.8 0.006
U.S. Labor Income9,017.0 2.6 0.03 0.3 0.004
1,000 jobs 1,000 jobs c1,000 jobs
U.S. Employment 173,414 64.0 0.04 -- --
----------------------------------------------------------------------------------------------------------------
Note: -- = Not available as an output from this analysis.
aThe base value is for the year 2010. The ``base value'' is the average annual level of a variable in the
absence of the promotion program. Some variables such as U.S. economic welfare and labor wage do not have a
base value because the models only calculate the change in those variables and not a base value.
bThe base employment value is measured as actual 2010 jobs as reported in IMPLAN. In the full employment
analysis, total U.S. employment is held fixed but labor is mobile across sectors of the economy.
cThe assumption of full employment by definition means that all labor is fully employed so that any change in
the economy cannot impact the level of employment.

Table 2: General Economy Impacts of the Increased Funding Scenario 2 Relative to the Baseline Funding Scenario,
Years 1-5
----------------------------------------------------------------------------------------------------------------
Less than Full Employment Full Employment
Variable Flat Funding ----------------------------------------------------------------------
Base Valuea Change Percent Change Change Percent Change
----------------------------------------------------------------------------------------------------------------
Agriculture Sector $U.S. billions $U.S. billions % $U.S. billions %
----------------------------------------------------------------------------------------------------------------
Farm cash receipts 321.2 2.9 0.9 2.3 0.7
Net cash farm income 63.9 0.7 1.1 0.7 1.1
Farm assets 2,161.4 0.4 0.02 0.3 0.01
1,000 jobs 1,000 jobs 1,000 jobs
Employment in agrifood 3,900.4 31.9 0.8 22.7 0.6
sectorb
----------------------------------------------------------------------------------------------------------------
U.S. Economy $U.S. billions $U.S. billions % $U.S. billions %
----------------------------------------------------------------------------------------------------------------
U.S. Output (Gross 25,070.0 14.0 0.06 1.7 0.007
Sales)
U.S. GDP 14,522.5 6.0 0.04 1.1 0.007
U.S. Labor Income9,017.0 3.5 0.04 0.4 0.005
1,000 jobs 1,000 jobs c1,000 jobs
U.S. Employment 173,414 84.6 0.05 -- --
----------------------------------------------------------------------------------------------------------------
Note: -- = Not available as an output from this analysis.
aThe base value is for the year 2010. The ``base value'' is the average annual level of a variable in the
absence of the promotion program. Some variables such as U.S. economic welfare and labor wage do not have a
base value because the models only calculate the change in those variables and not a base value.
bThe base employment value is measured as actual 2010 jobs as reported in IMPLAN. In the full employment
analysis, total U.S. employment is held fixed but labor is mobile across sectors of the economy.
cThe assumption of full employment by definition means that all labor is fully employed so that any change in
the economy cannot impact the level of employment.

The Chairman. Thank you, Dr. Williams. That was impressive
testimony, but even more impressive that you fit it in within 5
minutes.
Dr. Williams. I practiced it.
The Chairman. Mr. Steinkamp.

STATEMENT OF HON. JOSEPH E. STEINKAMP, MEMBER, BOARD OF
DIRECTORS, AMERICAN SOYBEAN ASSOCIATION, EVANSVILLE, IN; ON
BEHALF OF COALITION TO PROMOTE U.S. AGRICULTURAL EXPORTS,
AGRIBUSINESS COALITION FOR FOREIGN MARKET DEVELOPMENT

Mr. Steinkamp. Good afternoon, Chairman Rouzer, Ranking
Member Costa, and Members of the Subcommittee.
I am Joe Steinkamp, a soybean farmer from Indiana, and
member of the Board of Directors of the American Soybean
Association. ASA is a trade association that represents U.S.
soybean farmers on policy and international issues. I am
testifying today on behalf of the Coalition to Promote U.S.
Agricultural Exports and the Agribusiness Coalition for Foreign
Market Development. These coalitions comprise over 75
organizations representing farmers, ranchers, fishermen, forest
product producers, cooperatives, small businesses, regional
trade organizations, and State Departments of Agriculture.
We commend you for holding this hearing to review the
effectiveness of export promotion programs, and expanding
exports for U.S. agricultural products.
Agricultural export market development depends on
longstanding, successful partnerships between not-for-profit
U.S. agricultural trade organizations, farmer cooperatives, and
not-for-profit state-regional trade groups, small businesses,
and with the use of the Foreign Agricultural Service of the
USDA. These partnerships share the cost of overseas marketing,
promotional activity such as market research, trade shows,
trade servicing, and retail and education programs.
Under the Market Access Program and the Foreign Market
Development Program, our private-sector groups contribute an
estimated $469 million annually for international market
development. These contributions, which are leveraged by FAS
funding of $234.5 million, represent \2/3\ of the combined
buying power of the two programs. My written statement provides
numerous examples of how the export promotion efforts under MAP
and FMD have contributed to the phenomenal growth of exports of
soybeans and soy products. Last year we exported a record $28
billion in soybeans, soybean oil, and soybean meal,
representing an outstanding 62 percent of all soybean
production.
Similar success stories can be cited from how MAP and FMD
have been cost-effective in helping U.S. exports of other
agricultural commodities, including corn, wheat, rice, cotton,
livestock, meat products, dairy, forest products, peanuts,
seafood, and a host of horticultural products. Agricultural
exports are one of the brightest lights in the U.S. economy,
with a strong multiplier effect that is especially pronounced
in rural communities. According to the USDA Economic Research
Service, $150 billion in U.S. agricultural exports that
occurred in 2014 produced $190 billion in economic activity,
for a total of $340 billion of economic output. Those
agricultural exports supported 1.1 million full-time U.S.
civilian jobs, and importantly, 800,000 non-farm sector that
were required to assemble and process, distribute the
agricultural products for export. That represents 7,550 jobs
for every $1 billion of agricultural export revenue.
Despite the growth in U.S. agricultural exports, the
effective level of Federal funding that reaches agricultural
cooperators carrying out market development has steadily
eroded. Since the 2002 Farm Bill, inflation and depreciation of
the U.S. dollar have reduced the promotional part of MAP and
FMD by almost 30 percent. USDA administrative expenses for
Fiscal Year 2016 further reduced available MAP and FMD funds by
$6.6 million. In addition, sequestration in Fiscal Year 2016
reduced MAP funding by $13.6 million and FMD funding by $2.4
million. The result is fewer dollars of actual programs, even
while the benefits that these programs provide keep increasing.
In order to bolster the U.S. international market
development efforts, boost U.S. agricultural exports, and help
U.S. agriculture and related businesses in rural America
prosper, the Coalition to promote U.S. Agricultural Exports and
the Agribusiness Coalition for Foreign Market Development
strongly urge Congress to increase the funding of the Market
Access Program to $400 million, and the Foreign Market
Development Program to $69 million, with the increases phased-
in, in the next farm bill.
Agricultural exports, for years, have been the strongest
positive contributor to our nation's trade balance. I think
that is worth repeating. Agricultural exports have been the
strongest positive contributor to our nation's trade balance.
Increasing exports is a significant tool to improve lives for
American farmers and ranchers, while creating jobs and
expanding the farm economy, and the larger economy as a whole,
increasing revenues to the Treasury.
Finally, the FMD and MAP programs have been critically
important to that success. ASA, along with the MAP and FMD
Coalitions, hope this hearing will strengthen our support in
Congress to not only maintain, but to increase funding for
agricultural export programs as well as support for the Foreign
Agricultural Service of the USDA.
Again, I would like to open myself up and say I would be
glad to answer any questions the Committee may have.
[The prepared statement of Mr. Steinkamp follows:]

Prepared Statement of Hon. Joseph E. Steinkamp, Member, Board of
Directors, American Soybean Association, Evansville, IN; on Behalf of
Coalition to Promote U.S. Agricultural Exports, Agribusiness Coalition
for Foreign Market Development
Opening Remarks
Good morning, Chairman Rouzer, Ranking Member Costa, and Members of
the Subcommittee. My name is Joe Steinkamp, I am a soybean farmer from
Evansville, Indiana. Since 2013 I have served as a Director for the
American Soybean Association (ASA). Thank you for inviting me to
testify before the Subcommittee today on the importance of export
promotion programs including the Market Access Program (MAP) and the
Foreign Market Development Program (FMD). My testimony today is on
behalf of both the American Soybean Association as well as the
Coalition to Promote U.S. Agricultural Exports (MAP coalition) and the
Agribusiness Coalition for Foreign Market Development (FMD coalition).
ASA is the national, not-for-profit organization that represents
U.S. soybean farmers on policy and international issues. The MAP and
FMD coalitions embody over 75 organizations representing farmers and
ranchers, fishermen and forest product producers, cooperatives, small
businesses, regional trade organizations and the state Departments of
Agriculture. We appreciate the opportunity to appear before you today,
and commend you for holding this hearing to review export promotion
programs and their effectiveness in expanding exports of U.S.
agricultural products.
Importance of MAP/FMD
In order to bolster U.S. international market development efforts,
further boost U.S. agricultural exports, and help U.S. agriculture and
related businesses in rural America prosper, the Coalition to Promote
U.S. Agricultural Exports and the Agribusiness Coalition for Foreign
Market Development strongly believe that Market Access Program (MAP)
funding should be increased to $400 million annually and Foreign Market
Development (FMD) program funding to $69 million annually, with the
increases phased in as part of the next farm bill.
Agricultural exports are one of the brightest lights in the U.S.
economy, with a strong multiplier effect that is especially pronounced
in rural communities. According to USDA's Economic Research Service
(ERS):

The $150 billion in U.S. agricultural exports that occurred
in 2014 produced an additional $190 billion in economic
activity for a total of $340 billion of economic output;

Those agricultural exports supported 1.1 million full time
U.S. civilian jobs, including 800,000 in the non-farm sector
(73 percent of the total employment effect) required to
assemble, process and distribute agricultural products for
export; [and]

This represents 7,550 jobs for every $1 billion of
agricultural export revenue.

Agricultural export market development depends on long-standing,
successful partnerships between nonprofit U.S. agricultural trade
associations, farmer cooperatives, nonprofit state-regional trade
groups, small businesses, and USDA to share the costs of overseas
marketing and promotional activities such as market research, trade
shows, trade servicing, and retail and educational promotions.
Under the MAP and the FMD program, administered by USDA's Foreign
Agricultural Service (FAS), these private-sector groups contribute an
estimated $468.7 million annually, primarily from farmer-funded check-
off programs, into international market development and promotion. In
fact, these ``industry'' contributions, which are leveraged by public
funds, represent more than 70 percent of the buying power of the
programs.
Nowhere is the importance of export promotion more evident than in
the U.S. soybean industry. Soybeans and soybean products are our
country's number one export commodity. Last year, we exported a
whopping $28 billion in soybeans, soybean oil and soybean meal. This
amount represents \1/5\ of all U.S. agricultural exports and over 62
percent of U.S. soybean production.
A 2016 study commissioned by the U.S. Soybean Export Council showed
that international marketing activities conducted on behalf of U.S.
soybean growers increased soybean exports each year by an average of
993,600 metric tons (MT), or nearly five percent. For soybean meal and
soybean oil, the average annual growth over that period was estimated
to be somewhat larger at 15 percent (808,600 MT) and 24 percent
(149,600 MT), respectively.
This translates to $29.6 of additional export revenue per dollar
spent on international promotion. At the producer level, that
additional export revenue translates into a cost benefit ratio of $10.1
in additional profit to grower per dollar spent on international
promotion.
This impressive export growth could not have been achieved without
the unique government-industry partnership that characterizes the
market development and export promotion programs administered by the
Foreign Agricultural Service (FAS) and carried out by organizations
representing U.S. farmers and ranchers. By any measure, the Foreign
Market Development ``Cooperator'' Program and the Market Access Program
have been tremendously successful and extremely cost-effective in
helping expand U.S. exports of soybeans and other agricultural
commodities such as corn, wheat, rice, cotton, livestock and meat
products, dairy, forest products, peanuts, seafood, and a host of
horticultural products. I have been asked by the Subcommittee to
concentrate my testimony on the Foreign Market Development Cooperator
Program and its role in expanding U.S. agricultural exports.
The Foreign Market Development (Cooperator) Program
The Foreign Market Development (FMD) Program is a public-private
partnership program dedicated to long-term market development of
foreign markets for U.S. agricultural exports.
Under the FMD program, U.S. Government funding is leveraged with
contributions by U.S. farmers, ranchers, and agri-industry to carry out
targeted market development activities. Activities implemented under
the FMD program are most often focused on opening and maintaining
foreign markets, while working on long-term changes to key constraints
affecting a market to allow for increased U.S. exports. FMD allows U.S.
market development organizations that represent U.S. farmers and
ranchers (referred to as ``Cooperators'' due to the cooperative
private-public partnership they have with FAS) to establish an on-
ground country or regional presence, identify new markets and address
long-term foreign import constraints and export growth opportunities.
The FMD Program provides cost-share assistance to allow market
development cooperators to:

1. Conduct market research. This includes: investigating the volume
of in-country product to meet demand in a market; the
suitability/viability of in-country product; the
compatibility of U.S. product; variables to market success;
importance of exports from other competing countries;
history of product domestically/internationally;
competitiveness of U.S. product; infrastructure
capabilities to import U.S. products; and access to
importers/processors/retailers.

2. Carry out market analysis. This includes: determining the size of
a current market; potential size of the market in the
future if structural changes were made to allow for an
improved market environment; the opportunity for U.S.
exports and likely U.S. share; impediments to trade;
political situation, demographics, and economic stability
of the market; long-term viability of in-country demand;
and government accessibility and regulatory environment for
market access.

3. Implement long-term market development activities following up on
favorable market research and analysis. Implementation of
market development activities constitutes the bulk of
funding and activities under the FMD program. Market
development activities include: supporting the long-term
presence of people and office facilities in key markets to
develop sound and expanding trade relationships; providing
technical assistance to buyers and users of the product;
capacity building and education through seminars and one-
on-one work that ensure market growth for participating
commodities and products; facilitating trade teams to U.S.
to see U.S. production standards and supply infrastructure;
facilitating U.S. farmer, rancher, and industry visits to
current and prospective markets to develop import networks
and product specifications to meet local market needs.

Under the FMD program, private-sector Cooperators such as ASA, U.S.
Wheat Associates, U.S. Grains Council, USA Rice Federation, Cotton
Council International, National Peanut Council and others work with
U.S. producers, exporters, and others in the industry to develop
strategic marketing plans detailing market characteristics, constraints
limiting U.S. exports, and proposed activities to overcome those
constraints. These detailed marketing plans are submitted to FAS as a
``Unified Export Strategy'' for the U.S. commodity in question. FAS
reviews all submitted Unified Export Strategies and makes FMD funding
allocations based on criteria included in FMD program regulations that
include cost-share contributions by U.S. industry, capabilities and
experience of the Cooperator in successfully developing markets and
increasing U.S. exports, importance of the commodity in overall U.S.
agricultural trade, and anticipated increases in U.S. exports resulting
from the FMD funding.
Examples of How ASA Has Utilized FMD Program Cost-Share Funding To
Develop Foreign Markets for U.S. Soybeans and Products
ASA became the first USDA-funded Cooperator under the FMD program
in 1956, when we opened a foreign market development program in Tokyo,
Japan. At that time, Japan was importing only small quantities of U.S.
soybeans, and the Japanese had expressed concerns about the quality of
U.S. soybeans. During our first year, ASA participated in a series of
trade fairs and partnered with a coalition of Japanese business
interests in conducting market development activities. Our in-country
staff worked closely with Japanese industry leaders at all stages, from
buyer to retailer, as well as with university and research technicians,
and the technical and popular news media.
Japan proved to be an ideal country to begin export promotion,
becoming our largest foreign market in the 1970s, 1980s, and 1990s.
Over the years ASA worked with feed millers and the Japanese swine,
dairy, and poultry industries to educate and demonstrate the value of
putting high-quality soybean meal made from U.S. soybeans in feed
rations. ASA collaborated with Japanese soybean processors and
importers to develop close and outstanding trade relations and to
increase the quality and demand for soybean oil made from U.S.
soybeans, both in the human utilization market as well as in the
industrial and printing ink markets. Additionally, ASA partnered with
the Japanese tofu, natto, and miso industries to demonstrate the
quality of U.S. food grade soybeans and to link Japanese importers with
U.S. exporters. Our office in Tokyo continues to service this critical
market today, and Japan remains a top market for U.S. soybean products,
surpassed only by China and Mexico. U.S. exports of soybeans to Japan
today are valued at $1.3 billion.
ASA went on to open other foreign offices and to conduct market
development activities in other markets. From regional and country
offices located in strategic areas, ASA International Marketing staff
and consultants continue to implement market development activities
with customers around the world that are increasing demand for U.S.
soybeans and soy products today.
But while Japan represents our first success story, China is
perhaps our most impressive. ASA opened an office in Beijing in 1982.
At that time China did not have a vertically-integrated animal feed
industry, and livestock production lacked health and nutritional
standards. China has the largest swine herd on the planet, but much of
it was backyard-based and did not include soybean meal in diets.
Similarly, while China produces more fresh water aquaculture fish than
the rest of the world combined, 20 years ago none of the fish feed
included soybean meal. Through a long-term and comprehensive program to
demonstrate the value of soy-based feeds, ASA helped build demand for
soybeans to the level China imports today. Since 1995, while feed use
in China grew 140 percent, soybean meal used in animal feed rose an
astronomical 839 percent. And we've seen the amount of soybean meal
used in aquaculture feeds grow from zero just 20 years ago to 7 million
metric tons this year. The value of U.S. soybean exports to China has
grown 26 fold, from $414 million in 1996 to over $14 billion in 2016.
Mexico is another example. With technical assistance and education
and nutrition seminars sponsored by ASA International Marketing, Mexico
has gained an appreciation of the benefits of soy for human
consumption. Mexico's retailers now sell millions of liters of soy-
fruit beverages, among other products. And U.S. soy exports have grown
over the years from virtually zero in the late 1970's to the current
value of $2.5 billion in 2016.
The FMD program provides cost-share assistance to ASA and our
export arm, the U.S. Soybean Export Council, to implement activities
that have set the stage for the growth of U.S. soybean exports. With
the assistance of the FMD program, we have launched a large number of
feeding and demonstration trials in key international markets. Through
capacity-building activities such as training and on-farm consultations
to promote improved swine and poultry practices, as well as education
on the benefits of soy protein for human consumption, the FMD program
has been extremely successful in helping us develop product
specifications and the supply networks to build demand for our products
and meet local market needs. More recently, we have engaged in market
development activities to promote the use of soy for industrial
products such soy ink, solvents, lubricants, and engine oils, to name
just a few.
These FMD funds have been leveraged with contributions by U.S.
soybean farmers themselves through the soybean check-off, as well as
with contributions by U.S. exporters. Today, the FMD funds ASA receives
are leveraged with soybean farmer and industry funding on a 2-to-1
basis--meaning that for every $1 invested in market development by the
FMD program, U.S. soybean farmers and industry are investing $2 to more
than match FMD funding.
Four Important Points about the FMD ``Cooperator'' Program
1. FMD is cost-effective. Funds are awarded on a competitive basis
via a comprehensive industry strategy evaluated by FAS
using a formula that takes into consideration export
potential, experience with managing export programs as well
as industry contributions. The process helps ensure that
U.S. taxpayer's money is being invested in the agricultural
sector and organization with the highest chance of success.
Every organization that participates in the FMD program
must contribute its industry's resources to the program.
Thus, U.S. Government expenditures actually leverage more
resources for foreign market development than American
agriculture would be able to accomplish with only private-
sector funds.

2. The FMD program increases export of U.S. agricultural products.
I've highlighted just a few examples of how U.S. soybean
farmers have successfully utilized cost-share assistance
provided under the FMD program to develop long-term markets
and increase exports. Similar success stories can be told
by the U.S. corn, rice, wheat, cotton, livestock, forestry,
and horticultural product industries.

3. The FMD program helps U.S. agriculture overcome the effects of
foreign trade practices. U.S. agricultural exports often
face subsidized or otherwise unfair competition from
foreign products. U.S. agricultural organizations utilize
FMD resources to combat the multitude of challenges in the
international marketplace.

4. The FMD program helps keep U.S. agricultural exports strong,
which in turn supports 1.1 million American jobs. These
jobs were on the farm, ranch, in the forest and on the
water, as well as in banking, transportation, processing
and other related industries. Every state and local economy
in the U.S. has jobs that are dependent upon healthy
exports of U.S. agricultural products.
Need for Funding Increase
A 2016 econometric study of export demand by Informa Economics IEG,
working with Texas A&M University and Oregon State University
economists, showed that between 2002 and 2014:

a return on investment by MAP and FMD of a remarkable $24 in
export gains for every additional $1 spent on foreign market
development, consistent with results from several previous
studies;

a dramatic average annual increase in farm income of $2.1
billion because of program activities; [and]

creation of 239,000 new full and part-time jobs related to
the programs.

Federal funding for MAP was last increased in the 2002 Farm Bill,
reaching $200 million annually in 2006. Federal funding for the FMD
program was last increased in the 2002 Farm Bill to $34.5 million
annually. Since the last increases were approved, the size of the
foreign agricultural market that those funds are meant to develop has
more than tripled to more than $800 billion a year.
Despite a tremendous growth in U.S. agricultural exports and
opportunities for farmers and small businesses abroad, the real,
effective Federal funding that reaches the agricultural cooperators
carrying out market development work has steadily eroded even while
international competitors continue to greatly outspend us.
Looking just at the FY16 FAS allocation of MAP and FMD funding, the
factors that have caused the erosion include:

Sequestration in FY16 reduced annual available MAP funding
by $13.6 million and FMD funding by $2.4 million.

USDA administrative expenses in FY16 reduced available MAP
and FMD program funds by $6.6 million.

Since the 2002 Farm Bill was enacted, inflation and a
depreciated U.S. dollar have reduced the real, effective
promotional power of U.S. agricultural market development
programs by almost 30 percent.

The result is fewer dollars for actual programs, even while demand
for the benefits these programs provide increases.
In FY17, just $173.5 of the $200 million MAP appropriation was
allocated to the 68 nonprofit commodity organizations participating in
the program. Just $26.6 million of the FMD appropriation was allocated
to the 23 nonprofit commodity organizations participating in that
program. Taking inflation into account, this means the $200.1 million
total that FAS awarded for MAP and FMD in FY17 had an actual
promotional power of only $140.1 million.
Other Important Considerations
With growing global food demand, MAP and FMD participants
have the opportunity to service more customers who seek to buy
an increasing volume and variety of products. In fact, since
the 2002 Farm Bill, overall agricultural imports of the
overseas markets that U.S. exports are competing for rose by
more than 330 percent, from $247 billion in 2002 to $834
billion. This significant increase in market size, combined
with the diminished purchasing power of MAP and FMD funding
since 2002, means that our producers are not well equipped to
take on more aggressive foreign competition.

New demands on MAP and FMD funding related to work on non-
tariff trade barriers, while reflecting the collaborative work
that cooperators often do to supplement efforts of FAS and
other regulatory agencies, put greater strain on funding that
in the past went exclusively to market development and
promotion activities.

A 2015 survey of the cooperators showed that they could
readily make effective use of a considerable increase in MAP
and FMD funding. In addition, more nonprofit producer groups
are establishing national organizations and are anxious to
apply for program funding. Greater demand will be placed on the
fixed program funds as more organizations become eligible to
apply for MAP and FMD.

Competitors in foreign countries receive substantially more
public support than is provided to U.S. agricultural exporters.
A 2013 study showed that in 2011, competing government support
for agricultural exports from just 12 countries and the EU
Central Government (not including individual member states) was
$700 million per year. For comparison, the U.S. budgets
approximately $235 million annually in public funds through MAP
and FMD for agricultural export promotion and market
development. A 2016 study of competitive agricultural export
market development investments showed that the EU allocates
$255 million annually just to promote wine.
Conclusion
The FMD and MAP programs are among the few tools that help American
agriculture and American farmers remain competitive in the global
marketplace. They are considered to be non-trade distorting or ``Green
Box'' programs under World Trade Organization (WTO) rules.
These cost-share market development and export promotion programs
help keep U.S. agricultural exports strong, which in turn support over
one million American jobs. These jobs are on U.S. farm and ranches, but
also are in processing, transportation, financing, and other related
industries. Every state and local economy in the U.S. has jobs that are
dependent upon healthy exports of U.S. agricultural products.
Agricultural exports have for years been the strongest positive
contributor to our nation's balance of trade. Increasing exports is a
significant tool to improve the lives of America's farmers and ranchers
while creating jobs, improving our balance of trade, expanding the farm
economy and larger U.S. economy, and increasing receipts to the
Treasury. The FMD and MAP programs have been critically important to
this success. ASA and the MAP and FMD Coalitions hope this hearing will
strengthen the resolve of Congress to not only maintain but to increase
the support for agricultural export promotion programs, as well as
strong support for the Foreign Agricultural Service of USDA. I would be
happy to answer any questions the Subcommittee may have.

The Chairman. Thank you very much.
Mr. Hamilton.

STATEMENT OF TIM HAMILTON, EXECUTIVE DIRECTOR, FOOD
EXPORT ASSOCIATION OF THE MIDWEST USA AND FOOD
EXPORT USA--NORTHEAST, CHICAGO, IL

Mr. Hamilton. Good afternoon, Mr. Chairman, and thank you,
Members of the Subcommittee.
I am Tim Hamilton. I am the Executive Director of Food
Export--Midwest and Food Export--Northeast. These are two of
the state regional trade groups that some of the prior
witnesses have mentioned. We help small and medium-sized
companies to export their products to foreign markets.
Like our counterparts in the West and the South, we work
with State Departments of Agriculture, using MAP funds to
increase the number of food companies and agricultural
companies that export, and to help those exporters increase
their sales.
We focus almost exclusively on helping small companies.
Many of these firms are family-owned. They are located in both
rural and urban locations. What they all have in common is that
they are exporting U.S. agricultural products.
Food and agricultural producers are challenged to find
growth opportunities here at home. At the same time, emerging
markets overseas offer huge growth potential. Even among the
firms who want to export, they are uncertain how to proceed.
Small firms are often reluctant, unsure of how do business in
another country. With support from MAP, we provide education
and training to help them target their best markets, and
overcome whatever hurdles they face.
Once export-ready, their first challenge is to find
customers. We arrange meetings with qualified international
buyers. We offer technical support at international trade
shows, making sure companies are prepared with appropriate
pricing, translations, market research, and competitor data. By
preparing them ahead of time, we greatly improve their chances
for success.
During 2015, with support from the MAP, Food Export--
Midwest and Food Export--Northeast have assisted more than
1,400 different firms. They collectively reported more than
$1.5 billion in new export sales, and project nearly double
that in additional sales over the next year. These companies
reported 563 new hires over that period of time, and we
estimate that their total overall export sales supported nearly
12,000 jobs.
The American Popcorn Company was founded in 1914 in Sioux
City, Iowa, and is still a family-owned and operated company
today. Many of their competitors have been acquired by large
food conglomerates. The company counts their 170 employees as
part of their extended family, some dating back to the 1930s.
Their growers are based in Iowa, Nebraska, and South Dakota, so
their economic impact extends across the region. A main factor
of the company's success has been exporting. With the support
from the Market Access Program, their Jolly Time brand popcorn
is now sold in 35 countries around the world, and their export
sales have grown from $2 million to $11 million, and comprise
over ten percent of their total revenue. That growth has led to
a ten percent increase in their number of employees, and helped
to support the construction of a new production facility.
In Philadelphia, the Bassetts Ice Cream Company is a fifth
generation family business, dating back to 1861. In 2008,
Bassetts was selling around $12,000 worth of ice cream in
China. With help from MAP, Bassetts now generates nearly $2
million per year annually in export sales that accounts for 25
percent of their revenue. This export growth has led to hiring
new staff and expansion of their production line. Purchases of
milk and cream have grown by 25 percent, benefitting many
Pennsylvania dairy farms. The first container of Bassetts Ice
Cream just arrived in Korea this month, and they are having
talks currently with buyers from the Middle East.
In our work with international customers, we are constantly
reminded of the extensive and increasing support that our
competitor nations offer. A 2013 study showed that government
support for agricultural exports from just 12 European
countries and the EU Central Government was $700 million per
year. For comparison, the U.S. spends $235 million on MAP and
FMD. An additional study in 2016 showed that the EU allocates
$255 million per year just to promote their wine exports.
What we are doing is not enough. More than 95 percent of
U.S. companies do not export. As our competitors ramp up their
efforts, we need additional support. We are proposing that
funding for MAP be increased to $400 million over the life of
the next farm bill. I have a statement from the Coalition to
Promote Exports that I would like to introduce for the record
that supports that request.
The rhetoric around trade has become complex and highly
charged, but the simple fact is that export trade remains
critically important to American agriculture. We need to market
our farm products aggressively against broad foreign
competition, and programs like MAP and the FMD are tools that
we need to remain competitive.
Mr. Chairman, and Members of the Subcommittee, I encourage
you to support efforts, including MAP and FMD, that continue to
boost America's food and ag exports, that support our farmers,
our small businesses, and the Americans that produce these
outstanding products.
Thank you.
[The prepared statement of Mr. Hamilton follows:]

Prepared Statement of Tim Hamilton, Executive Director, Food Export
Association of the Midwest USA and Food Export USA--Northeast,
Chicago, IL
Good afternoon, Mr. Chairman. My name is Tim Hamilton, and I am
Executive Director of Food Export--Midwest, and Food Export--Northeast.
These are State Regional Trade Groups that offer services to help small
and medium U.S. food and agricultural companies promote their products
in foreign markets. We commend you, Mr. Chairman, and Members of the
Committee, for holding this hearing and appreciate this opportunity to
share our work.
The organizations I represent are associations of the 22 midwestern
and northeastern state departments of agriculture. Like our
counterparts in the West and South, we work with our member states
using MAP Funds to increase the number of food and agricultural
companies that export, and to help current exporters increase the
volume and value of their sales.
We focus almost exclusively on helping small companies. Many of
these firms are family owned. Most of them are food processors that use
ag commodities as inputs which they turn into finished goods for
export. They are located in both rural and urban locations. What they
all have in common is that they are made from U.S. agricultural
products.
Food and agricultural producers are challenged to find growth
opportunities here at home. At the same time, emerging markets overseas
offer tremendous growth potential for these U.S. producers, if only
companies know about these markets and how to take advantage of them.
Even among firms who want to export, they are uncertain how to
proceed. Small firms are often reluctant, unsure of how to do business
in another language, another currency, another culture. With support
from MAP, we provide education and training to help them target their
best markets, and overcome whatever hurdles they face.
Once export ready, their first challenge is to find customers: We
arrange meetings with qualified international buyers. We offer
technical support at international trade shows, making sure companies
are prepared with appropriate pricing, translations, market research,
competitor data, and introductions to the right foreign customers. By
preparing them ahead of time, we significantly improve their chances
for success.
Like in the U.S., it is essential that exporters promote their
products in these competitive markets. Our promotional support can help
these firms get their products established and increase their market
share. This support includes advertising, demonstrations, trade show
costs, label modifications, and others. It is all made possible through
MAP funding, and is done on a cost-share basis, with companies
investing at least 50% of the costs.
During 2015, with support from MAP, Food Export--Midwest and
Northeast have assisted 1,406 different firms, most of them small
businesses. They reported more than $1.5 billion in new export sales,
and project nearly double that in additional sales over the next year.
These companies reported 563 new jobs because of this program, and we
estimate that their overall export sales support nearly 12,000 new or
existing jobs.
American Popcorn, Sioux City, Iowa
American Popcorn Company was founded in 1914 in Sioux Falls, IA and
is still family owned and operated today. Many of their competitors
have been acquired by large food conglomerates. The company counts
their 170 employees and many multi-generational growers throughout the
region as part of their extended family, some dating back to the 1930s.
Their growers are based in Iowa, Nebraska and South Dakota so their
economic impact extends across the region.
A main factor of their success has been exporting. With support
from the MAP, their Jolly Time brand popcorn is now sold in 35
countries, and their export sales have grown from $2 million to $11
million, and comprises over 10% of their total revenue.
That growth had led to a 10% increase in their number of employees
and helped support a new production facility. Their economic impact in
western Iowa is significant, and they attribute their export success to
support from the Market Access Program.
Bassetts Ice Cream, Philadelphia, PA
Bassetts Ice Cream is a fifth-generation family business and a
Philadelphia tradition since 1861. In 2008 Bassets was selling around
$12,000 of their ice cream in China. With help from Food Export--
Northeast supported by MAP, Bassetts now generates $2 Million annually
in export sales, accounting for 25% of their revenues.
This export growth has led to hiring new staff and expansion of
their production line. Purchases of milk and cream have grown by 25%,
benefitting many Pennsylvania dairy farms. The first container of
Bassetts ice cream just arrived in Korea this month and they have talks
taking place with buyers in the UAE and other [Middle Eastern]
countries.
This is a prime example of the Market Access Program providing
economic benefit for both rural and urban communities. As a small
regional ice cream manufacturer, international sales would not be
possible without the Market Access Program.
Schafer Fisheries, Thomson, Illinois
Schafer Fisheries, Inc., located in Northwestern Illinois' 17th
Congressional District, is a wholesale/retail distributor of fresh fish
and frozen seafood. This family owned business, established in 1954,
purchases and processes fresh fish caught by over 100 commercial
fishermen within a 1,000 mile radius. They have broad U.S. distribution
and now sell internationally. Schafer has used services offered through
Food Export--Midwest and funded by MAP to grow their export sales from
$85,000 to $2,000,000 over the past decade.
Since they started exporting they have added six new employees and
they are currently selling to 16 countries and considering expansion
with a new plant. They attribute their export success to the Market
Access Program.
U.S. Greens, Larned, KS
U.S. Greens is a family-owned and operated manufacturing company
that has been producing and processing greens since 1946 in Larned, KS
in the state's 1st Congressional District. They provide premier
nutritional powdered greens for commercial resale and production
included alfalfa, barley grass and wheat grasses. Four years ago with
support from the Market Access Program they began to explore
international markets and in a short time they have gained over
$200,000 in export sales. This growth contributed to their need for a
new milling center Bonner Springs, KS.
Many of the jobs that are supported by agricultural exports are
intrinsically U.S. jobs. They cannot be outsourced overseas. They are
tied to farm production in the U.S. The products are grown here, and
they are processed here. If we are able to maintain our overseas
markets, then these jobs will be held by Americans. If we lose these
overseas markets, then we risk losing these jobs to our competitors in
China, Europe and elsewhere.
In our work with international customers, we are constantly
reminded of the extensive and increasing support that our competitor
nations offer. Our competitors receive substantially more public
support than do U.S. farmers. A 2013 study showed that in 2011,
competing government support for agricultural exports from just 12
European countries and the EU Central Government was $700 million per
year. For comparison, the U.S. budgets approximately $235 million
annually in public funds through MAP and FMD for agricultural export
development. A 2016 study of our competitors showed that the EU
allocates $255 million annually just to promote wine.
But what we are doing is not enough. More than 95% of U.S.
companies do not export. As our competitors ramp up their efforts, we
need additional support. U.S. food and agricultural products are
recognized around the world for being safe, high quality and
innovative. This is a real opportunity for our country.
Every day, we see small U.S. companies successfully entering that
global marketplace that they were previously unaware of, or fearful of.
And we hear from them day after day, that most of them could not have
done it without the support made possible from the MAP program.
The rhetoric around trade has become complex and highly charged.
But the simple fact is that Export trade remains critically important
to American agriculture. We need to market our farm products
aggressively against broad foreign competition, and export programs
like the MAP are the tools that agriculture needs to remain
competitive. Additional MAP resources can help us reach more firms,
increase jobs in the U.S., become competitive overseas and maintain our
market share.
U.S. agriculture must be aggressive in competing overseas in order
to maintain our industry at home. Our nation's exports of food and
agricultural products can continue to be a major success story. This is
not the time to cut back on these efforts. It is a chance to take
advantage of these global opportunities, and provide the support and
incentive that companies, including small companies, need to pursue
these markets, build sales, and put Americans to work.
Mr. Chairman and Members of the Committee, I encourage you to
support efforts that continue to boost America's food and agricultural
exports, including MAP, that support our farmers, our small businesses,
and the Americans that produce these outstanding products. Thank you.

The Chairman. Thank you.
Mr. Seng.

STATEMENT OF PHILIP SENG, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, U.S. MEAT EXPORT FEDERATION,
DENVER, CO

Mr. Seng. Yes. Good afternoon. My name is Philip Seng,
President and CEO at the U.S. Meat Export Federation (USMEF). I
am here today to speak on behalf of the interests of the U.S.
red meat industry.
I would like to talk about the fact that the Market Access
Program and the Foreign Market Development Program have worked
very well for the U.S. Meat Export Federation to develop new
markets, displace our worldwide competition, and defend
American meat products' market share from aggressive
competition throughout the world.
The Market Access Program and its predecessor, the Target
Export Assistance Program and the Market Promotion Program,
have been extremely strategic and successful export tools for
the U.S. meat industry over the last 30 years. During this
time, the U.S. has made great advancements in market access,
but while market access played a part in our export growth,
market access alone does not guarantee exports. Many times we
have seen markets open, only to be confronted by consumers who
are skeptical about our products, or simply unaware of the
product's safety and quality. We must dignify trade access with
sound marketing programs, and Market Access Program's funds
have allowed us to address these challenges. Together, access
and marketing are a proven recipe for success in the
international marketplace.
Starting in Japan in the late 1980s, we have deployed
Market Access Program funds to demonstrate the profitability
and the quality of U.S. beef, pork, and lamb in supermarket
shelves and restaurants throughout Japan. But, today's growing
trade challenges are raising important new questions about how
we maintain our export momentum, and continue to derive the
benefits from growing exports that have accrued to farmers,
ranchers, and allied industries.
To provide the Committee with tangible examples of market
development work, the U.S. Meat Export Federation has carried
out using Market Access Program funds, I would like to quickly
review some of these success stories. The Market Access Program
was very significant to us as far as opening up the Japanese
market back in 1987. That is when we first received our first
tranche of funding. And at that time, the U.S. was a net
importer both of beef and pork, and within 10 years we had
basically successfully transitioned to become a net exporter of
both beef and pork in that market.
As the U.S. red meat industry's first American
representative stationed overseas, I was tasked with initiating
the commercial links between beef and pork producers and
processors in the United States and potential Japanese buyers.
Utilizing the Market Access Program funds, we were able to
build these sales channels and basically dignify the
negotiations with sound marketing programs in Japan. These
tactics included meat cutting seminars, sometimes offering
samples to consumers, conducting cooking classes, not really
rocket science, but these were collectively successful in
generating visibility for American beef and pork in that
market. And from 1995 through 2000, approximately $32 million
in market promotion funding was basically utilized to build
demand for U.S. beef and pork in Japan.
Another example of where this has been very successful is
in South Korea. You only have to go back about 8 years to
recognize when we were doing the KORUS negotiations for the
free trade agreement with Korea, we had 100,000 people for 100
days in the streets in Seoul, and the chart in my testimony
will show that we had consumer confidence in our product that
was less than three percent. Today it is well over 50 percent.
And just this last year, we exceeded our good friends from
Australia in that market as the number one supplier, as we did
last year, as well as Japan. Really, when we take a look at
these programs, they have been very significant for us in what
we are trying to do.
On a daily basis, they assess the opportunities and threats
in the marketplace. I mean when we take a look at what we are
trying to do in defending our market, we have to defend our
methodology of production agriculture. Our presence in the
markets, our offices in the markets, the people on the ground,
the boots-on-the-ground, if you will, have been very effective
as far as demonstrating our commitment from the U.S. meat
industry as being a reliable supplier in the international
marketplace.
While the benefits of the Market Access Program and Foreign
Market Development Program are viewed in our industry as being
well-established, the path forward is opaque and somewhat
ominous. Challenges have never been so plentiful, ranging from
growing protectionism and anti-trade sentiment, to animal
disease threats and new export competition. The U.S. industry
has to be ever vigilant as we address these, and the only way
we can address these issues and these challenges is through the
Market Access Program and the FMD program.
The other thing that we are trying to do constantly, and
this has been 50 years, 60 years of U.S. efforts in the
international marketplace, is to underscore our reliability as
a U.S. supplier, that countries that are not food self-
sufficient can be food-secure through imports and depending on
U.S. agriculture. This is something that we have to continue to
extol because right now, some of our markets that we are
dealing in, I was just in Mexico last week, that is being
called into question. The fact that the United States is a
dependable supplier of product is one of the key cornerstones
of our trade policy.
Also, I would be remiss if I didn't indicate the
appreciation that I have for the Foreign Agricultural Service
of the United States. They play a critical role around the
world, and our communication with the cooperator program and
with the Foreign Agricultural Service has been really a recipe
for success for us.
So I say make America great, like U.S. agriculture. If you
take a look at U.S. agriculture, we have 30 years of trade
surpluses. One farmer feeds 155 people in the world, and we are
made up of small holders as well as large holders, it is the
best diplomatic tool that we have. And I really support
increases to the MAP program as well as to the FMD program, as
my colleagues have indicated.
Thank you.
[The prepared statement of Mr. Seng follows:]

Prepared Statement of Philip Seng, President and Chief Executive
Officer, U.S. Meat Export Federation, Denver, CO
Good afternoon. My name is Philip Seng, President and CEO at the
U.S. Meat Export Federation (USMEF). I am here today to speak on behalf
of the interests of the U.S. red meat industry and to explain how we
utilize funding from the USDA Market Access Program and the Foreign
Market Development Program to develop new markets, displace our
formidable, worldwide competition, and defend American meat products'
market share from aggressive competitors.
For our industry, the Market Access Program and its predecessors,
the Targeted Export Assistance Program and the Market Promotion
Program, have been extremely strategic and successful export tools over
the last 30 years. During this time, the U.S. has entered a number of
free trade agreements and made great advancements in market access. But
while market access played a part in our export growth, market access
alone does not guarantee exports. How many times have we been elated
about newly opened markets, only to be confronted by consumers who are
skeptical or simply unaware of our products' safety and quality? We
must dignify trade access with sound marketing programs, and Market
Access Program funds have allowed us to address these challenges.
Together, access and marketing are a proven recipe for success.
In market after market, starting in Japan in the late 1980s, we
have deployed Market Access Program funds to demonstrate the
profitability of featuring U.S. beef, pork and lamb on supermarket
shelves and restaurant menus, while simultaneously building consumer
demand and sales. But we are not alone in these efforts, and the
international marketplace is increasingly crowded with competitors.
Ironically, many are mimicking our strategies and tactics initiated
under the Market Access Program. But the growing trade challenges are
raising important new questions about how we maintain our export
momentum and continue to derive the benefits from growing exports that
have accrued to farmers, ranchers and the allied industries associated
with producing and exporting red meat.
To provide the Committee with tangible examples of market
development work the U.S. Meat Export Federation has carried out using
Market Access Program funds, I would like to quickly review some
success stories before discussing my vision for the future. When Market
Access Program funding first became available in 1987, the export side
of our industry was in start-up mode. Exports were largely an
afterthought, and there was little understanding in the industry of the
meat consumption habits of any foreign market or of the growth
potential of these markets. The U.S. was a net importer of both beef
and pork, with pork imports nearly double our export volumes. But just
8 years later, the U.S. had successfully transitioned to a net exporter
of both pork and beef.
As the U.S. red meat industry's first American representative
stationed overseas, I was tasked with initiating commercial links
between beef and pork producers and processors in the U.S. and
potential Japanese buyers. Utilizing Market Access Program funds, the
U.S. industry began to build sales channels. First, these were with
importers, distributors, processors and food service representatives,
then we began working with supermarket chains, such as Aeon, and
restaurants, such as Ito Yokado. The tactics, which included meat-
cutting seminars, offering meat samples to consumers and conducting
cooking classes, were straightforward--not rocket science--but they
were collectively successful in generating visibility and sales of
American beef and pork. Like the launch of any new brand, resource
needs were substantial, and individual companies--especially the
smaller ones that were a major part of the early marketing efforts--
were justifiably reticent to invest in what was then a risky
undertaking. From 1995 through 2000, approximately $32.5 million in
Market Promotion Program and Market Access Program funding was utilized
to build demand for U.S. beef and pork in Japan. During this period,
U.S. beef and pork exports increased by approximately $1 billion, a 30-
to-1 return.
Another success story is the rebuilding of consumer confidence in
U.S. beef in South Korea, which last year became a $1 billion market
for U.S. beef exports for the very first time. At the beginning of this
decade, only five percent of Korean consumers were confident in the
safety of U.S. beef. Although a free trade agreement between the U.S.
and Korea was about to be finalized, how could we possibly capitalize
without addressing this situation? Market Access Program funding played
a critical role in restoring faith in the safety of our product, and
exports grew accordingly--as evidenced by this graphic:
Consumer Confidence on U.S. Beef Safety and Korea's Imports of U.S.
Beef

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Source: USMEF-Gallup and GTA import data. www.USMEF.org.

The basic market development template that was developed and
utilized in Japan has been successfully utilized in other markets,
including Korea (as noted above), Mexico, Taiwan, Hong Kong, the
European Union and the Middle East. In addition to supporting our
marketing work, Market Access Program and Foreign Market Development
Program funding has also allowed us to maintain a network of foreign
offices staffed by technical and marketing experts who serve as boots-
on-the-ground representatives of the U.S. red meat industry. On a daily
basis, they assess the opportunities and threats in the marketplace,
while building relationships that are vital to our ability to provide
accurate and timely intelligence on developments in the markets. The
U.S. Meat Export Federation's presence in the markets also has proven
to be an extremely effective means of demonstrating the U.S. red meat
industry's long-term commitment as a reliable supplier of beef, pork
and lamb.
It is important to also highlight the role the Market Access
Program has played in jump-starting the interest and resource
participation by our industry in the effort to expand exports. As
success stories started to impact the bottom line of our industry--from
ranchers to exporters and all the allied industries in between--
stakeholders began to invest. We estimate that for every dollar the
Market Access Program invested with the U.S. Meat Export Federation, we
are now able to generate at least $3 to $4 more from U.S. industry
contributions and from in-market partners and customers.
While the benefits of the Market Access Program and the Foreign
Market Development Program are viewed in our industry as being well
established, the path forward is opaque and some argue, ominous.
Challenges have never been so plentiful, ranging from growing
protectionism and anti-trade sentiment, to animal disease threats and
the rise of new export competitors. On the latter, the U.S. industry,
which spent the past few decades developing and displacing our
competition, now has to devote more resources to defending our market
position. A tremendous amount of effort has been expended by the U.S.
Government and Market Access Program participants to build
international confidence in our ability to be a reliable exporter of
U.S. agriculture products, but fresh doubts are arising about our
commitment to free and unencumbered trade.
This comes at an inauspicious time, because in many ways,
opportunities have never been greater. From a supply perspective,
exports have room to grow. For U.S. beef and pork, we export just 15
percent and 26 percent, respectively, of our annual production. On the
demand side, new import markets are emerging that hold great potential.
A generation ago, China was a major meat exporter, but now it has
become the world's largest importer of both beef and pork. However,
developing a loyal customer and consumer base for U.S. red meat in
China will still be extremely complex and command substantial
resources. Starting at the border, import conditions are strict; for
example, U.S. beef is still banned from importation. Distribution
infrastructure is still developing, and the sheer size of the potential
consumer base is daunting. With major regional differences in eating
habits and cuisines, marketing approaches need to be tailored to each
particular geographical area. Most importantly, our major competitors
in Europe, South America and Oceania are all spending heavily to build
their own presence in the market. In some cases, they are being aided
by favorable import conditions and low duty rates gained through free
trade agreements. If one considers China a frontier marketplace, the
U.S. is one of many homesteaders.
Other emerging markets beckon, such as Indonesia, where huge
opportunities exist for increased beef consumption. Potential also
exists in markets that were traditionally viewed only as competitors.
There is unfilled demand in Brazil that can be met by U.S. beef exports
now that that market is open, and our comparative advantage in pork
production allows us to export to countries like Australia, Guatemala
and--possibly in the future--to African markets. And despite claims
that markets like Japan are developed, they continue to evolve and hold
great growth potential. For example, U.S. pork captures only a 20
percent share of Japan's total consumption, and purchases by Japanese
consumers of U.S. fresh chilled product reached record levels last
year.
Holding our own in traditional markets while also exploring new
ones requires an increase of resources. But perhaps even more
importantly, the Market Access Program and the Foreign Market
Development Program funding signal the commitment of the U.S. red meat
industry--and U.S. agriculture overall--to being a consistent and
reliable global supplier of high-quality, safe and affordable
foodstuffs. This Committee understands that U.S. agriculture and the
U.S. red meat export industry have worked diligently to demonstrate to
countries that are not 100 percent self-sufficient in food production
that they can still be 100 percent ``food-secure'' with dependable
import sources, especially the United States. We take very seriously
our responsibility, not only to the hundreds of thousands of farmers
and ranchers who are now producing ever-larger quantities of products
for foreign customers, but also to those foreign customers themselves,
who benefit and rely on our ability to supply them.
Thank you for the opportunity to provide a red meat industry
perspective on exports and to discuss the critical importance of the
Market Access Program and the Foreign Market Development Program to our
success in international markets.

The Chairman. Thank you.
Mr. Alanko.

STATEMENT OF DEAN ALANKO, VICE PRESIDENT OF SALES AND
MARKETING, ALLEGHENY WOOD PRODUCTS,
PETERSBURG, WV; ON BEHALF OF HARDWOOD FEDERATION

Mr. Alanko. Yes, good afternoon. Thank you, Chairman
Rouzer, Ranking Member Costa, and Members of the Subcommittee
for inviting me to testify before you today.
My name is Dean Alanko and I am the Vice President of Sales
and Marketing for Allegheny Wood Products, headquartered in
Petersburg, West Virginia.
Allegheny Wood Products was formed in 1973, and continues
to be a family-owned and operated company, directly employing
over 900 people at nine sawmills, five drying facilities, one
hardwood pellet mill, and a dimension plant. There are also
hundreds of additional jobs created in support industries for
our manufacturing operations, such as loggers and truckers, to
name a few. We sell products worldwide, with export sales in
excess of $63 million in 2016. We have shipped products to over
28 countries.
My focus today is on the hardwood lumber and veneer
industries, and while not an edible, agricultural product, it
is an important agricultural product to rural America just the
same. The U.S. hardwood lumber industry produced more than 8.3
billion board-feet in 2016. For some perspective, 8.3 billion
board-feet is equivalent to about one million truckloads of
hardwood lumber.
The U.S. hardwood industry is not made up of large Fortune
500 companies. It is very much a rural-based industry made up
mostly of small and medium-sized family-owned operations. A
great example of this highly fragmented industry is my own
company. While we are one of the three largest manufacturers
volume-wise of hardwood lumber, we represent less than two
percent of total production.
In addition to sawmillers such as myself, this industry
also represents millions of private, non-industrial forest
owners. Strong markets for hardwood lumber products help
maintain strong ties between the hardwood industry and these
private forest owners. The revenue stream resulting from
harvesting of mature trees creates the economic incentive to
maintain forestland as forestland.
Many hardwood companies are heavily reliant on exports for
their livelihood. Approximately 40 percent of all hardwood
lumber production, and nearly 60 percent of the highest value-
added grades of hardwood are now exported, totaling $2.4
billion in 2016. Exports of hardwood veneer totaled $280
million in 2016, which is more than 55 percent of domestic
production. The U.S. also enjoys a healthy trade surplus of
$1.3 billion in hardwood lumber, up from $1.1 billion in 2015.
It is vital that the markets remain open and continue to
expand for these businesses and the men and women they employ.
This is where the work of the American Hardwood Export Council,
or AHEC, jointly funded by the Market Access Program, Foreign
Market Development Program, and industry dues, play such an
important role. AHEC has laid out a four-part strategy designed
to grow overseas markets. Adequate funding from the MAP and FMD
programs is essential to our success. With continued and
hopefully increased funding, AHEC will do the following to
promote U.S. hardwoods overseas. First, seek out new markets
for hardwood products. In areas of the world where there is
limited understanding of U.S. hardwoods, most notably inland
China, India, and the Middle East, AHEC will continue to
increase demand by providing technical information, trade
servicing, and technical seminars to the importing and
manufacturing industries overseas. Second, promote new uses and
applications for hardwood within existing markets. In 2017,
AHEC will continue to be actively involved in identifying and
growing potential new market segments, such as hardwood use and
structural applications found in high-rise building
construction. Third, continue to extol the environmental
credentials of U.S. hardwoods. With the introduction of illegal
logging and trade policies across the globe, and the
development of policies to reduce CO2 emissions,
especially in the building sector, the need to promote the
strong environmental benefits of U.S. hardwoods is more
important than ever. Fourth, create networking opportunities
for U.S. exporters. In 2017, AHEC will create a number of
opportunities for U.S. exporters to engage with overseas
buyers, manufacturers, and specifiers in more than 20 building,
furniture, and design trade shows around the globe.
Let me say again how critical exports and export markets
are to my company, to rural communities, and to the hardwood
industry as a whole. This industry benefits significantly from
the MAP and FMD programs every day. It is vital MAP and FMD
continue to be available, and that funding increase to meet the
expanding needs of this industry. I can say without hesitation
that without these programs, our businesses would be smaller,
produce fewer goods, and employ less people.
Thank you for allowing me to address the Committee. I am
happy to respond to questions either today or in writing.
[The prepared statement of Mr. Alanko follows:]

Prepared Statement of Dean Alanko, Vice President of Sales and
Marketing, Allegheny Wood Products, Petersburg, WV; on Behalf of
Hardwood Federation
Good afternoon. Thank you Chairman Rouzer, Ranking Member Costa,
and Members of the Subcommittee for inviting me to testify before you
today. My name is Dean Alanko and I am the Vice President of Sales &
Marketing of Allegheny Wood Products Headquartered in Petersburg, WV.
Allegheny Wood Products was founded in 1973 by John and Patricia Crites
and continues to be a family owned and operated company, directly
employing over 900 people at nine sawmills, five drying facilities one
hardwood pellet mill, and a dimension plant. There are additional jobs
created in support industries for our manufacturing operations . . .
loggers, truckers, and construction workers to name a few. We sell
products worldwide, with export sales in excess of $63 million in 2016.
We have shipped products to over 28 countries.
The U.S. wood products industry, including hardwood, softwood and
paper products is an important contributor to the U.S. economy,
accounting for approximately four percent of the total U.S.
manufacturing GDP. Wood products companies are among the top ten
manufacturing sector employers in 47 states, producing $210 billion in
products annually. The industry as a whole employs nearly 900,000
people; more than the automotive, chemicals and plastics industries.
And most of them are in rural areas where employment opportunities can
be limited.
My focus today is on the hardwood lumber and veneer industries. The
U.S. hardwood lumber industry produced more than 8.3 billion board-feet
in 2016, a solid number for this industry, but still well below our
1999 peak of 12.6 billion. For some perspective, that is approximately
one million truckloads of hardwood lumber.
The U.S. hardwood industry is not made up of big Fortune 500
companies. It is very much a rural based industry made up of small and
medium sized family-owned operations, on both the resources and
manufacturing sides of the business. A great example of this highly
fragmented industry is my own company . . . while we are one of the top
three volume producers of U.S. hardwoods, we represent Less Than 2% of
the total market.
In addition to the saw-millers such as myself, this industry also
represents millions of private, non-industrial forest owners. Strong
markets for hardwood lumber products help maintain strong ties between
the hardwood industry and these private forest owners. The revenue
stream resulting from limited, selective harvesting of mature trees
creates the economic incentive to maintain forestland as forestland.
Many hardwood companies are heavily reliant on exports for their
livelihood. Approximately 40% of all hardwood lumber production and
nearly 60% of the highest value-added grades of hardwood are now
exported, totaling $2.4 billion in 2016. Exports of hardwood veneer
totaled $280 million in 2016, which is more than 55% of domestic
production. The U.S. also enjoys a healthy trade surplus of $1.3
billion in hardwood lumber, up from $1.1 billion in 2015.
With the migration of the U.S. domestic furniture and wood products
manufacturing industries, and less than robust new housing demand,
international promotion has never been more important to the U.S.
hardwood industry. The U.S. is by far the world's largest exporter of
hardwoods, accounting for nearly \1/4\ of all global trade. U.S.
hardwood exports have more than doubled in the past 5 years.
For the U.S. hardwood industry, ``globalization'' is much more than
just an abstract concept; it is a concrete reality that influences
business decisions on a daily basis. However, globalization has meant
not only the migration of manufacturing, but has also led to
unprecedented growth in global purchasing power. Indeed, it has now
become clear that much of the increased demand for hardwood products--
including finished products--is coming from outside the U.S.,
especially in the rapidly growing economies of Asia. In terms of
promotion, therefore, it is very important that our industry recognize
and target not only the high-volume re-export manufacturing sectors of
today and tomorrow, but we must also identify new market opportunities
and niches within well-established, so-called ``mature'' markets such
as the EU. With the help of MAP and FMD, the American Hardwood Export
Council (AHEC) programs are designed to do both, by providing a wide
array of information to overseas importers, distributors, specifiers
and end users of wood products.
It is vital that markets remain open for these businesses and the
men and women they employ. This is where the work of the American
Hardwood Export Council, or AHEC, jointly funded by the Market Access
Program (MAP), Foreign Market Development (FMD) program and industry
dues plays such an important role.
AHEC has laid out a four-part strategy designed to ``grow the pie''
in overseas markets for U.S. hardwood exporters. Adequate funding from
the MAP and FMD programs is essential to our success. With continued
and hopefully increased funding, AHEC will do the following to promote
U.S. hardwood products to the world:

(1) Seek out new markets for hardwood products:

In areas of the world where there is limited understanding of
U.S. hardwoods, most notably inland China, India and the
Middle East, AHEC will continue to increase demand by
providing technical information, trade servicing and
technical seminars to the importing and manufacturing
industries overseas. In more mature markets, the focus will
be on demonstration projects, design/architectural
seminars, and a targeted PR campaign.

(2) Promote new uses and applications for hardwood within existing
markets:

In 2017 AHEC will continue to be actively involved in
identifying and growing potential new market segments, such
as hardwood use in structural applications found in high
rise building construction--most notably Cross-Laminated
Timber (CLT) engineering, or the potential for thermally-
modified or treated hardwoods to gain a foothold in the
exterior applications market.

(3) Continue to exto[l] environmental credentials:

With the introduction of illegal logging and trade policies
across the globe and the development of policies to reduce
CO2 emissions, especially in the building
sector, the need to promote the strong environmental
benefits of American hardwoods is more important than ever.
2017 marked the official launch of the American Hardwood
Environmental Profile (AHEP), an environmental profiling
tool that will combine legality information, sustainability
data from the U.S. Forest Service and LCA impacts from MAP-
funded research.

(4) Create Networking Opportunities for U.S. Exporters:

In 2017 AHEC will create a number of opportunities for U.S.
exporters to engage with overseas buyers, manufacturers and
specifiers in more than 20 building, furniture and design
trade shows around the globe. USDA funds help to offset the
booth costs but each U.S. company is responsible for their
own travel expenses creating direct industry contributions
to the programs. AHEC will also sponsor Conventions in
China and Mexico and host dozens of seminars and strategic
networking opportunities tied to major target market
industry events.

Let me reiterate, how critical exports and export markets are to my
company, to rural communities and to the hardwood industry as a whole.
Companies like Allegheny Wood Products benefit significantly from the
MAP and FMD program every day. I can say without hesitation that
without these programs our business would be smaller, produce fewer
goods and employ less people.
One important concrete example of where MAP funding has proven
absolutely critical to my company as well as the rest of our industry
was the U.S. Illegal Logging Risk Assessment study commissioned by
AHEC. Recent legislation to combat illegal logging in the EU, Japan and
Australia require wood suppliers to show that that their raw material
was legally sourced--a difficult task for a fragmented industry that
purchases logs from millions of private landowners. The peer-reviewed
study showed that on a national level the risk of U.S. hardwood being
illegally harvested was negligible. This has provided reassurance to
foreign governments and has kept open many of the world's highest-value
markets to U.S. exporters. As a private company, it would have been
next to impossible to produce such credible reassurance.
Thank you for allowing me to address the Subcommittee. I am happy
to respond to questions either today or in writing.

The Chairman. Mr. Wenger.

STATEMENT OF PAUL J. WENGER, ALMOND PRODUCER, WOOD COLONY NUT
CO.; PRESIDENT, CALIFORNIA FARM BUREAU FEDERATION, SACRAMENTO,
CA

Mr. Wenger. Good afternoon. Thank you, Mr. Chairman,
Ranking Member Costa, and Members of the Committee. I really
appreciate the opportunity to testify on the trade title for
the farm bill.
I am Paul Wenger, President of the California Farm Bureau,
third generation, and I will tell you now that I am bilingual
and I will use the term amond and almond interchangeably. And I
am a member of the Blue Diamond Growers.
As the largest agricultural organization in California, the
California Farm Bureau is a statewide, nonprofit, membership
organization representing 53 counties that include over 28,000
producers of more than 400 commodities. For nearly a century,
Farm Bureau has worked to preserve, protect, and promote family
farms and ranches.
Like the California Farm Bureau, Blue Diamond Growers has a
more than 100 year history of serving California almond
farmers. Blue Diamond is a nonprofit, farmer-owned, marketing
cooperative owned by over \1/2\ of the almond growers in
California. It is also the world's largest processor and
marketer of almonds.
The almond industry is particularly relevant for today's
hearing as over 80 percent of the world's almonds are grown in
California, and almonds are the largest agricultural export for
our state. Blue Diamond exports almonds and almond ingredients
to more than 90 countries. Overall, the almond industry
contributes $11 billion to California's economy, creating over
100,000 jobs in the state, as well as more than 37,000 export-
related jobs.
As discussion of the new farm bill begins, I will share the
positive impact three of the programs in the bill's trade title
have on California farmers and ranchers.
I would like to begin with the Market Access Program. Its
purpose is to expand agricultural export markets overseas.
Agricultural exports are critical to the American economy.
According to the USDA's Economic Research Service, in 2014 ag
exports produced a total of $340 billion in economic output.
Those exports supported 1.1 million full-time U.S. civilian
jobs; approximately 800,000 of which were jobs to the non-farm
sector. Consequently, for every $1 billion of agricultural
export revenue, it would create 7,550 jobs.
Many commodities in California benefit from the Market
Access Program, including, but not limited to, dairy,
pistachios, cherries, peaches, table grapes, pears, prunes,
strawberries, cotton, rice, wine, citrus, and walnuts. The
program ensures that these and other participating commodities
can, on a cost-share basis, achieve maximum opportunity when
developing markets overseas.
While I could share details of each California commodity
benefitting from the Market Access Program, as an almond
grower, I comment today on how my cooperative, Blue Diamond,
utilizes Market Access Program funds provided by the 2014 Farm
Bill to improve international demand for domestically produced
almonds. These efforts continue to offer a destination for the
almonds I and my fellow California growers produce. They
support U.S. jobs by improving export markets around the world.
In my written testimony, I have included as an exhibit six
specific success stories documenting recent examples of where
the MAP program has been used effectively to build consumer
demand for Blue Diamond almonds. Let me briefly highlight one
of those to just give you a sense of how these funds are being
utilized.
In Canada last year, Blue Diamond used Market Access
Program funds to partner with a large retailer to stock for the
first time North American-labeled almond product at six of the
chain's large supermarket locations in the greater Vancouver
region. A 2 day in-store sampling program was conducted which
focused on Blue Diamond's superior taste consistency, high
quality, and nutritious attributes. During the demo week alone,
the supermarket sold 60 percent of the initial product cases
purchased. As sampling programs continue at this new account,
Blue Diamond anticipates even greater purchase quantities and
sales figures.
As you can see, the efforts of just one Market Access
Program participant are generating solid results. Blue Diamond
has a successful track record of launching new and innovative
almond products in markets around the world, leading the
development of new sources of revenue for thousands of U.S.
almond growers, as well as thousands of non-farm employees who
help process and deliver our various products. MAP funds remain
essential. Part of this strategy is for Blue Diamond to
establish critical footholds in new markets.
The 21st century global market remains an extremely
challenging one. Markets do not just open, build and sustain
themselves. Consumer awareness, acceptance, and preferences do
not just happen. The target is a continually moving one.
Success in establishing and growing markets for U.S.
agricultural products is best achieved through focused and
coordinated efforts by all parties involved to have a stake in
achieving success. This most certainly includes the critically
important partnership of U.S. Government and agricultural
stakeholders.
You can be assured that America's competitors are also
approaching this challenge in a similar manner. One quick
example, in 2016, the European Union allocated $255 million
annually for the promotion of wine alone. This is more than the
total amount that we allocate for all agricultural commodities.
The Market Access Program is a model of innovative and
effective government-industry relationship. The synergies
produced through the program are compelling and well-
documented.
In today's increasing challenging environment for America's
farmers and ranchers, the need for expanding the program has
never been greater. We would encourage you to look to expanding
not only this, but sustaining the TASC, the Technical
Assistance for Specialty Crops, at its current levels, and also
increase FMD funding from its current levels.
I would be more than willing to answer any questions you
might have.
[The prepared statement of Mr. Wenger follows:]

Prepared Statement of Paul J. Wenger, Almond Producer, Wood Colony Nut
Co.; President, California Farm Bureau Federation, Sacramento, CA
Good afternoon, Mr. Chairman and Members of the Committee. Thank
you for the opportunity to testify on the trade title of the farm bill.
I am Paul Wenger, the President of California Farm Bureau
Federation. I am also a third-generation almond farmer and a member of
Blue Diamond Growers.
The California Farm Bureau Federation is a state-wide nonprofit
organization representing 53 counties that include over 28,000
producers of more than 400 commodities. For nearly a century, Farm
Bureau has worked to preserve, protect and promote family farms and
ranches.
Like the California Farm Bureau Federation, Blue Diamond Growers
has a more than 100 year history of serving California almond farmers.
Blue Diamond is a nonprofit, farmer-owned marketing cooperative owned
by over \1/2\ of the almond growers in California. It is also the
world's largest processor and marketer of almonds.
The almond industry is particularly relevant for today's hearing as
over eighty percent of the world's almonds are grown in California, and
almonds are the largest agricultural export from the state. Blue
Diamond exports almonds and almond ingredients to more than 90
countries. Overall, the almond industry contributes $11 billion to
California's economy creating over 100,000 jobs in the state, as well
as more than 37,000 export related jobs.
As discussion of the new farm bill begins, I will share the
positive impact three of the programs in the bill's trade title have on
California farmers and ranchers.
Market Access Program (MAP)
I would like to begin with the Market Access Program. This program
is overseen by USDA's Foreign Agricultural Service, (FAS). Its purpose
is to expand agricultural export markets overseas. Agricultural exports
are critical to the American economy. According to USDA's Economic
Research Service (ERS), in 2014 agricultural exports produced a total
of $340 billion in economic output. Those exports supported 1.1 million
full time U.S. civilian jobs. Approximately 800,000 of the jobs were
non-farm sector. Consequently, for every $1 billion of agricultural
export revenue there are 7,550 jobs (https://www.ers.usda.gov/data-
products/agricultural-trade-multipliers/2014-data-overview.aspx).
Over the years, we have seen extremely successful results from the
Market Access Program. A recent study by Informa Economics IEG, working
with Texas A&M University and Oregon State University economists,
showed a return of $28 in export gains for every $1 spent on export
promotion programs. The study also showed an average annual increase in
farm income of $2.1 billion resulting from the Market Access Program
activities. In addition to the high return rate and the increase in
farm income, the program resulted in the creation of 239,000 new full
and part-time jobs (http://www.uswheat.org/newsMeetings/emd-1a)
[Attachment].
Many commodities in California benefit from the Market Access
Program, including but not limited to dairy, pistachios, cherries,
peaches, table grapes, pears, prunes, strawberries, cotton, rice, wine,
citrus, and walnuts. The program ensures that these and other
participating commodities can, on a cost-share basis, achieve maximum
opportunity when marketed overseas.
While I could share details of each California commodity benefiting
from the Market Access Program, as an almond grower, I will comment
today on how Blue Diamond utilizes Market Access Program funds provided
by the 2014 Farm Bill to improve international demand for domestically
produced almonds. These efforts continue to offer a destination for the
almonds I produce. They support U.S. jobs by improving U.S. economic
output. (Please see Exhibit A for Blue Diamond Growers Market Access
Program success stories).
In my written testimony submission, I have included as an exhibit
six specific success stories documenting recent examples of where the
Market Access Program has been used effectively to build consumer
demand and preference for Blue Diamond almonds. Let me briefly
highlight a couple of these just to give you a sense of how these funds
are being utilized.
In Canada last year, Blue Diamond used Market Access Program funds
to partner with a large retailer to stock for the first time North
American labeled almond product at six of the chain's large supermarket
locations in the greater Vancouver region. A 2 day in-store sampling
program was conducted which focused on Blue Diamond's superior taste
consistency, high quality, and nutritious attributes. During the demo
week alone, the supermarket sold 60 percent of the initial product
cases purchased. As sampling programs continue at this new account,
Blue Diamond anticipates even greater purchase quantities and sales
figures.
In another case, during the period May-June 2016, Blue Diamond
conducted an in-store marketing campaign for snack almonds at 960 7-
Eleven outlets in Hong Kong. This promotion targeted health conscious
consumers seeking a nutritious and convenient snack that is ideal for
active kids and families. Using Market Access Program funds, Blue
Diamond supported development of creative advertising materials and
off-shelf product positioning with acrylic racks. The promotions also
highlighted that Blue Diamond snack almonds are a great accompaniment
for watching summer soccer games and other popular sporting events. By
locating Blue Diamond products off-shelf, the promotion reached new
consumers and generated additional brand awareness and interest. This
effort generated a significant increase in sales, achieving twice the
average sales per month compared to the prior period.
As you can see, the efforts of just one Market Access Program
participant are generating solid results. Blue Diamond has a successful
track record of launching new and innovative almond products in markets
around the world, leading the development of new sources of revenue for
thousands of U.S. almond growers. These funds remain an essential part
of this strategy, supporting Blue Diamond to establish critical
footholds in new markets. Blue Diamond will continue to rely on the
Market Access Program funds to support successful product launches
through strategic product campaigns.
The 21st century global market remains an extremely challenging
one. Markets do not open, build and sustain themselves. Consumer
awareness, acceptance and preferences do not just happen. The target is
a continually moving one. Success in establishing and growing markets
for U.S. agricultural products is best achieved through focused and
coordinated efforts by all involved parties with a stake in achieving
success. This most certainly includes the critically important
partnership of the U.S. Government and U.S. agricultural stakeholders.
You can be assured that America's competitors in the global market
place are approaching the challenge in a similar manner. For example, a
2016 study showed that the European Union allocates $255 million
annually for the promotion of wine alone. This is more than the total
amount we allocate for all U.S. agricultural commodities.
The Market Access Program is a model of innovative and effective
government-industry partnership. The synergies produced through the
program are compelling and well-documented. In today's increasingly
challenging environment for America's farmers and ranchers, the need
for expanding the program has never been greater. Currently, the
program receives $200 million in funding. Blue Diamond is asking for an
increase to $400 million in funding and Farm Bureau also supports an
increase. The last increase in Market Access Program funds occurred in
the 2002 Farm Bill reaching the current level of funding in 2006. (For
additional success stories please see: http://www.agexportscount.com/
value-of-ag-exports/).
The Technical Assistance for Specialty Crops (TASC) Program
Another USDA program that has significantly benefitted U.S.
specialty crop producers, including almond growers, is the Technical
Assistance for Specialty Crops program, or TASC. Currently funded at $9
million annually, TASC provides grants to eligible U.S. organizations
to address sanitary, phytosanitary, and technical barriers in targeted
foreign countries that prohibit, constrain, or threaten market access
for U.S. specialty crops.
USDA's Foreign Agricultural Service reviews TASC proposals on a
competitive basis, approving those that both meet the program's
requirements and clearly demonstrate how the activity will address and
resolve the identified barrier or constraint. Awards are for a maximum
of $500,000 per year and for projects of up to 5 years. These funds
help support such critical activities as pest and disease research,
technical exchanges, field trials and pre-clearance programs, all with
a view to resolve trade barriers and expand U.S. exports of specialty
crops.
Blue Diamond used this program for the almond industry to obtain
technical assistance to obtain reinstatement of the Indian Government's
previous approval of the use of Phosphine as an acceptable fumigant for
almonds. $80,000 was approved for this and a successful result was
obtained. This is our industry's second largest market, after Spain.
The U.S. Census Bureau data reports that U.S. almond exports to India
were valued at over $490 million in 2016. Last year, the California
almond industry again utilized TASC to support exchanges with key
Government of India officials aimed at raising awareness and
understanding of supply channel practices, and labeling, certification,
and export procedures.
TASC is yet another example of how the industry-government
partnership can be effectively leveraged to the benefit of America's
farmers, and the U.S. economy.
Foreign Market Development Program (FMD)
The third program is the Foreign Market Development Program (FMD).
FMD benefits the U.S. economy and creates jobs by assisting U.S.
farmers, processors, and exporters in developing new foreign markets
and increasing market share in existing markets. The program focuses on
generic U.S. commodities and lays the groundwork for commercial sales
by establishing long-term relationships.
These efforts under FMD might include such activities as addressing
infrastructure constraints, modifying codes or standards, and
identifying new end-uses for the commodity or product.
The partnership between USDA and industry participants under the
FMD program has proven to be an effective component in the overall
trade development toolbox.
In closing, agricultural exports are vital to preserving,
protecting, and promoting California agriculture, accounting for over
$20 billion in value out of the state's $47 billion in production. The
trade title of the farm bill should continue to provide these essential
trade-promoting programs.
Thank you very much for allowing me to testify today on this very
important subject. I will be pleased to answer any questions that you
may have.
Respectfully Submitted,

Paul Wenger.
Exhibit A
1. Blue Diamond Growers Gain Retail Distribution for Flavored Snack
Nuts in Canada
In 2016, Blue Diamond used Market Access Program funds to support
in-store sampling demonstrations at grocery retailers throughout
Canada. As a core part of Blue Diamond's strategy in Canada, in-store
sampling allows shoppers at major retail chains to taste Blue Diamond's
flavored snack nut products while receiving literature and information
about the Blue Diamond brand, as well as the premium, value-added
almond products. This has a significant impact on convincing consumers
to become regular almond consumers, and provides strong sales to major
retail partners. Furthermore, Market Access Program activities in 2016
continue to be an essential support for Blue Diamond in Canada where
difficult price increases and limited expansion due to rising commodity
prices proved challenging during the prior year. In-store sampling
programs are a cost-effective activity that positively impact
distribution and consumer awareness. In this way, Market Access Program
funds remain vital to Blue Diamond's efforts in Canada to increase
visibility, generate consumer trial and purchase for snack nuts, and
maintain and expand key retail account listings.
Blue Diamond's in-store sampling demonstrations have already
generated good returns this year. T&T Supermarkets in Western Canada is
a new retail account listing for Blue Diamond in 2016, where Blue
Diamond flavored snack nuts are the first North American labeled almond
product stocked at six of their large supermarket locations in the
greater Vancouver region. T&T Supermarkets caters to a predominantly
Asian customer base, representing a new opportunity for Blue Diamond to
expand. During the last week of May, Blue Diamond conducted a 2 day in-
store sampling program at all six T&T Supermarket locations featuring
three different flavors of Blue Diamond's signature snack almonds.
Point of Sale (POS) materials were visible at each store, and brand
literature highlighting Blue Diamond's superior taste consistency, high
quality, and nutritious attributes were distributed to shoppers. During
the demo week alone, T&T sold 60% of the initial product cases
purchased. Since the promotion, T&T Supermarkets have purchased an
additional 55% of product for regular sales. As sampling programs
continue at this new account, Blue Diamond anticipates even greater
purchase quantities and sales figures. Market Access Program funds
remain an essential foothold for Blue Diamond in this market, where
Blue Diamond is consistently seeking to expand market opportunities and
reach new customer demographics. Furthermore, these activities support
increased product recognition, ensuring good returns for all U.S.
almond growers.
2. MAP Funds Support Blue Diamond Promotion at 7-Eleven Stores in Hong
Kong
To encourage increased consumption of snack almonds during the pre-
summer period in Hong Kong, Blue Diamond conducted an in-store
marketing campaign at 960 7-Eleven outlets from mid-May through June
2016. The widespread convenience store promotion targeted health
conscious consumers seeking a nutritious and convenient snack that is
ideal for active kids and families. Using Market Access Program funds,
Blue Diamond supported development of creative advertising materials
and off-shelf product positioning with acrylic racks. The promotions
also highlighted that Blue Diamond snack almonds are a great
accompaniment for watching summer soccer games and other popular
sporting events. By locating Blue Diamond products off-shelf, the
promotion was able to reach new consumers and generate additional brand
awareness and interest.
Blue Diamond's aggressive advertising and eye-catching Point of
Purchase materials allowed for a successful increase in sales,
achieving twice the average sales per month compared to the prior
period. This was despite an overall weak sales environment seen
throughout the rest of the retail sector in Hong Kong. Market Access
Program funds played a critical part in supporting the success of this
promotion, ultimately enabling a key C-store retailer in the market, 7-
Eleven, to remain confident in the profitability of the Blue Diamond
brand and products. Through Market Access Program funds, Blue Diamond
is able to conduct targeted promotions with important retailers,
supporting continued distribution and consumption in the market.
3. MAP Funds Support Blue Diamond Social Media Campaign in Japan
In 2016, Blue Diamond utilized Market Access Program funds to
support targeted social media promotions for the beverage Almond Breeze
in Japan. Blue Diamond launched Original and Unsweetened Almond Breeze
in Japan in 2013. In years since, Blue Diamond has conducted aggressive
product and brand promotions necessary to establish and grow this new
category. Moreover, Japan represents a challenging market for Almond
Breeze to penetrate given the significant annual influx of new products
in the beverage sector. A strong and active social media presence for
Blue Diamond Almond Breeze in Japan is a key component of the marketing
strategy. Social media sites including Facebook and Instagram are
widely used by Blue Diamond's target consumers and act as a hub for
raising brand awareness, educating on product use in recipes, directing
users to the Blue Diamond website, and allowing consumers to interact
and provide feedback to posted content. Blue Diamond Japan posts weekly
updates of recipes and photos, along with messaging around healthy and
active lifestyles to target key consumer groups.
So far in 2016, Blue Diamond has achieved 42% aided awareness among
social media users through this platform, with a target goal of
achieving 50% awareness by the end of the year. Heightened awareness on
social media continues to support strong sales. Overall, Blue Diamond
Almond Breeze now holds around 45% market share in Japan; sales in 2015
were up 102% for Almond Breeze over 2014; and projected sales for
Almond Breeze over the next 5 year period are anticipated to average
40% growth annually. Given that the brand was only introduced 3 years
prior, Blue Diamond is making positive gains in a difficult market.
Future promotions and social media activity that build on this momentum
are critical to ensure long-term market success. Furthermore, Blue
Diamond is leading the development and growth of an entire new product
category--Almond Breeze--and providing a new source of sales and
revenue for the U.S. almond industry. As such, the support of Market
Access Program funding remains an important foothold for Blue Diamond
and U.S. almonds in Japan.
4. Blue Diamond Growers Sees Increased Sales for Almond Breeze in the
United Kingdom
Blue Diamond utilizes Market Access Program funds to support key
product launches in new markets around the globe. In 2012, the United
Kingdom (UK) was one of the first international markets where Blue
Diamond launched their Almond Breeze product. In the few years since
launching, Almond Breeze has achieved success as both sales and
distribution continue to expand. In order to differentiate product,
Blue Diamond's marketing and promotions in 2016 prominently emphasize
that Blue Diamond is based in the U.S. and grows all their own almonds
used to make Almond Breeze products. This message highlights Blue
Diamond as the ``almond experts,'' and allows consumers to connect with
the popular ``farm-to-table'' trend. This marketing message is
communicated through a comprehensive, multimedia marketing campaign in
the UK that includes print and online advertising, active social media
(Instagram and Facebook), blogger partnerships, in-store
demonstrations, and trade show participation.
As of May 2016, sales for Almond Breeze in the UK are tracking at
44% higher than the same month in 2015. Similarly, overall category
growth in the UK has expanded by 47% over the last 52 weeks, indicating
further opportunity for additional sales growth going forward. In light
of the trending success with Original and Unsweetened Almond Breeze,
Blue Diamond utilized Market Access Program funds to support the launch
of the new product, Almond Breeze Barista Blend, an almond beverage
formulated specifically for use in coffee beverages. Barista Blend
premiered at the London Trade Show for Foodservice, a key event for the
cafe and foodservice sector in the market. Barista Blend will continue
to be targeted towards both the foodservice and consumer sectors. By
launching new and innovative products in international markets, Blue
Diamond remains committed to opening and developing new sources of
product revenue for the entire U.S. almond industry.
5. Blue Diamond Growers Sees Early Success for Almond Breeze in Finland
with Support from Advertising and Blog Campaigns
Blue Diamond launched Almond Breeze in Finland during 2015. To
ensure a successful first year, in 2016 Blue Diamond continued to
utilize Market Access Program funds to support print and online
advertising, as well as important blogger partnerships. These outlets
continue to be extremely effective in promoting Almond Breeze products
available in the market--Original, Unsweetened, and Barista Blend. Blue
Diamond's marketing program for Almond Breeze in Finland targets and
appeals to female consumers aged 20+ as a nutritious, flavorful, and
versatile almond beverage, ideal for use in coffee beverages,
smoothies, cooking recipes, and on its own. By securing consistent
almond product awareness and coverage through advertising and blogger
features on popular fashion and lifestyle platforms, Blue Diamond is
successfully reaching their target market.
During 2016, Market Access Program funds supported the development
and placement of half-page, color print advertisements with nine
different Finnish fashion, fitness, and lifestyle magazines. Ads
highlighted the health benefits of Almond Breeze Unsweetened--a
naturally light almond beverage containing calcium, while also
naturally free of gluten, dairy, lactose, and soy. Additionally, two of
Finland's leading online fashion and lifestyle blog sites--Lily.fi and
Mona's Daily Style--have each featured the newest product, Almond
Breeze Barista Blend, in their blog content with various recipes.
Almond Breeze Barista Blend photos and blogger reviews remain active on
both sites. Finland has witnessed a surge in home-barista trends, so
the timing of Blue Diamond's Almond Breeze Barista Blend launch,
supported through coordinated print and online promotions, has provided
Blue Diamond with ample opportunity to capture additional market share.
In fact, Barista Blend has already expanded distribution significantly,
covering both foodservice and the traditional grocery aisle. Sales for
Barista Blend are now on-par with Blue Diamond's second-leading
product, Almond Breeze Original, which is up 67% in sales and 24% in
distribution over the year prior. Almond Breeze Unsweetened remains the
leading Blue Diamond product in the Finnish market, with sales up 80%
and distribution up 59% over the year prior.
6. MAP Funds Support Blue Diamond Branded Caravan Promoting Almond
Breeze Throughout Japan
In June 2016, Blue Diamond utilized Market Access Program funds to
support the Almond Breeze caravan tour promoting Almond Breeze
throughout Japan. This marks the third year that Almond Breeze has
utilized a branded caravan in Japan to conduct outreach to consumers.
The branded caravan strategically visits Blue Diamond listed account
retailer parking spaces, farmers markets, and other consumer events to
distribute samples of Almond Breeze in smoothies, lattes, and on its
own. Supplementary communication tools distributed include recipes,
almond information fact sheets, and directives to visit the Almond
Breeze Japan website and social media sites (Facebook and Instagram).
By positioning the caravan outside of retailer and consumer food or
shopping locations, and by demonstrating the use of Almond Breeze in
various recipes, Blue Diamond is generating both increased awareness
and consumer product trial. Additionally, the activity reinforces
distribution at both listed and targeted accounts by demonstrating the
success of Blue Diamond products at key retailers. Japan continues to
be a large and dynamic market to penetrate, so Blue Diamond's
consistent marketing efforts over the first 3 years there are both
necessary and effective.
Blue Diamond launched Original and Unsweetened Almond Breeze in
Japan in 2013 as the first such nationally supported product in the
market. In years since, Blue Diamond has conducted aggressive product
and brand promotions to establish and grow this new category. The
Japanese market is one of the most dynamic and difficult markets to
penetrate with new beverage products, and Blue Diamond has achieved
early success in its first 3 years: Blue Diamond Almond Breeze holds
around 45% market share in Japan; sales for Almond Breeze during 2015
were up 102% over 2014; and sales for Almond Breeze are projected to
hit an average of 40% growth annually over the next 5 year period. Part
of Blue Diamond's early success with Almond Breeze can be attributed to
favorable consumer trends around health and wellness, particularly
among Japan's large aging population and working-age consumers who
continually seek nutritional or niche dietary products to fit modern
tastes and lifestyles.
Market Access Program funding remains critical to establishing
Almond Breeze and expanding awareness of U.S. almond products
throughout Japan. Through the support of these promotional activities,
Japanese consumers are now consuming Almond Breeze on a daily basis,
driving exports of U.S. almonds.
Attachment
USDA Export Promotion Programs Boost U.S. Farm Export Value by 15
Percent, Create Thousands of Jobs
Revised 10/11/16

Agricultural export market development programs funded through the
farm bill have contributed an average of $8.2 billion per year, a total
of more than $309 billion, to farm export revenue between 1977 and 2014
according to a new study conducted by noted land grant university
economists.
``In other words, these programs have accounted for 15 percent of
all the revenue generated by exports for U.S. agriculture over that
time. To me, such a positive result is just stunning,'' said Dr. Gary
Williams, Professor of Agricultural Economics and Co-Director of the
Agribusiness, Food, and Consumer Economics Research Center at Texas A&M
University, who led the study.
The study examined the effectiveness of the Market Access Program
(MAP) and the Foreign Market Development (FMD) program. They are part
of a public-private partnership that provides competitive grants for
export development and promotion activities to nonprofit farm and ranch
organizations that contribute funds from check-off programs and
industry support.
As a result of MAP and FMD funding, average annual farm cash income
was $2.1 billion higher, and annual average farm asset value was $1.1
billion higher over 2002 through 2014. The programs increased total
average annual U.S. economic output by $39.3 billion, GDP by $16.9
billion and labor income by $9.8 billion over the same time. The study
results also showed that the economic lift created by these programs
directly created 239,000 new jobs, including 90,000 farm sector jobs.
By testing what would happen if Federal MAP and FMD funding were
eliminated, the study showed that average annual agricultural export
revenue would be lower by $14.7 billion, with corresponding annual
average declines in farm cash income of $2.5 billion and significant
drops in GDP and jobs.
``I would say these are very successful economic development
programs based on their impact to the farm and general U.S. economy,''
Dr. Williams concluded.
The nonprofit agricultural organizations that participate in MAP
and FMD contributed about $470 million dollars per year to the programs
in 2014. That was more than 70 percent of total funding. The Federal
budget for MAP has been fixed at $200 million per year since 2006 and
FMD's $34.5 million annual budget has not changed since 2002. The
Commodity Credit Corporation programs are administered by USDA's
Foreign Agricultural Service (FAS), which is required to report to
Congress periodically on program effectiveness.
This is the third study of FAS export promotion programs since 2007
but the first to use an export demand analysis to measure their
effectiveness. MAP and FMD participating organizations U.S. Wheat
Associates, USA Poultry & Egg Export Council and Pear Bureau Northwest
sponsored the new study, which was funded by USDA FAS. Informa
Economics assembled data to support the study, recruited the team of
five agricultural economists from Texas A&M, Oregon State University
and Cornell University, interviewed dozens of MAP and FMD participants
and reported on results.
The new study identified a return on investment from these programs
between 1977 and 2014 of 28-to-1, which Dr. Williams considers quite
strong and showing consistent results with the two other MAP and FMD
studies.
``The average return on investment, or benefit to cost ratio, for
27 previous industry specific export promotion studies is just under
11-to-1,'' Dr. Williams said. ``So I was, frankly, quite surprised that
the return was this high. The previous MAP and FMD studies showed
returns of 25-to-1 in 2007 and 35-to-1 in 2010.''
Informa's report concluded that no matter what type of analysis is
used or what time period is considered, ``the results of this study and
previous studies all demonstrate the importance and effectiveness of
market promotion funding on exports, the farm economy and the overall
macro economy.''

USDA Cost-Benefit Study Contributors:

Dr. Gary Williams is Professor of Agricultural Economics and Co-
Director of the Agribusiness, Food, and Consumer Economics Research
Center (AFCERC) at Texas A&M University, College Station, Tex. He is
the AFCERC chief operations officer responsible for managing the
research program of the Center and leads AFCERC research and outreach
projects relating to commodity and agribusiness markets and policy and
international trade and policy. He is also an Associate Faculty Member
of the Department of International Affairs in the Bush School of
Government and Public Service at Texas A&M University. His areas of
teaching and research emphases include commodity promotion programs,
international agricultural trade and development, agricultural policy,
and marketing and price analysis. Dr. Williams was raised in Lubbock,
Texas and holds a Ph.D. and an M.S. degree in Agricultural Economics
from Purdue University and a B.S. in Economics from Brigham Young
University. Prior to joining the faculty at Texas A&M University in
1988, he gained experience as a professor and Assistant Coordinator of
the Meat Export Research Center at Iowa State University, Senior
Economist at Chase Econometrics, agricultural economist for the USDA,
and Special Assistant to the U.S. Deputy Under Secretary of Agriculture
for International Affairs and Commodity Programs at USDA. In recent
years, he has become particularly well known for his research on the
economic effectiveness of commodity check-off programs, including those
for soybeans, cotton, lamb, dairy, Florida orange juice, Texas citrus,
Texas pecans, and others. He is also well known for his research on
U.S. and world oilseed and oilseed product markets and the U.S.
livestock industry including issues related to sheep and lamb markets
and the effects of concentration in the beef packing industry. He
recently served as Chair of a National Academy of Science Committee on
the Status and Economic Performance of the U.S. Sheep and Lamb
Industry. He also recently served as a member of a National Academy of
Science Committee on the Future of Animal Science Research.
Dr. Jeff Reimer, Associate Professor, College of Agricultural
Sciences, Oregon State University, Corvallis, Ore. Dr. Reimer has been
with Oregon State University since 2005. His research program concerns
topics in international trade, the economics of food and agriculture,
and general equilibrium modeling. Dr. Reimer teaches courses in
agricultural price and market analysis, micro-economic theory, and
international trade. Dr. Reimer grew up on a farm in Illinois before
receiving a bachelor's degree from the University of Illinois and
spending 3 years working in agricultural development in rural
Bangladesh. After completing his doctorate in Agricultural Economics
from Purdue University in 2003, he spent 2 years as a research
associate at the University of Wisconsin-Madison. At Oregon State
University he has been major advisor for ten graduate students and been
the recipient of more than a dozen grants and contracts. He has
published more than 30 journal articles and book chapters, including in
the Journal of International Economics, Economic Inquiry, and the
American Journal of Agricultural Economics.
Dr. Rebekka M. Dudensing, Assistant Professor and Extension
Specialist, Department of Agricultural Economics, Texas A&M University.
Dr. Dudensing's responsibilities include the analysis of economic and
fiscal impacts. She also studies economic responses to natural
disasters and the roles of business and social structures in community
economic development. She has done extensive economic impact modeling
including IMPLAN I-O approaches. Much of her research is driven by the
concerns of Extension clientele with objectives to find solutions to
those local concerns and to project these issues to a wider audience
though applied research and methodological improvements. Dr. Dudensing
is particularly interested in the sustainability of agriculture- and
natural resource-dependent rural communities.
Dr. Bruce A. McCarl, University Distinguished Professor and Regents
Professor of Agricultural Economics at Texas A&M University. He
received his B.S. in Business Statistics at the University of Colorado
and Ph.D. in Management Science from Pennsylvania State University. His
recent research efforts have largely involved policy analysis (mainly
in climate change, climate change mitigation, water economics, and
biosecurity) as well as the proper application of quantitative methods
to such analyses. He teaches graduate courses in applied mathematical
programming and applied risk analysis. He was part of the 2007 Nobel
Peace Prize winning Intergovernmental Panel on Climate Change.
Dr. Harry M. Kaiser, Gellert Family Professor of Applied Economics
and Management, Cornell University, Ithaca, N.Y. Dr. Kaiser teaches and
conducts research in the areas of price analysis, marketing, and
quantitative methods. Professor Kaiser has written 114 refereed journal
articles, four books, 17 book chapters, over 150 research bulletins,
and received $8 million in research grants in these areas. Since 1994,
Professor Kaiser has been the director of the Cornell Commodity
Promotion Research Program. Much of his research focuses on the market-
wide economic effects of commodity advertising and promotion programs.
Currently, Professor Kaiser and his staff annually conduct the economic
analysis required by the U.S. Congress for the national dairy and fluid
milk processor advertising programs.
Joe Somers, Vice President, Informa IEG, Washington, D.C. Somers is
responsible for economic analyses and agricultural policy consultancy
work. He brought to Informa more than 25 years of experience with
USDA's Foreign Agricultural Service (FAS) as a Foreign Service officer
and has been a member of Informa's staff since 2002. While at FAS, he
served in Brazil and Argentina and traveled on official USDA fact-
finding trips. In Washington, D.C., he supervised and conducted world
supply/demand and trade policy analyses for a wide range of commodities
and managed publication of several analytic circulars. He also was
director of research and marketing for the GIC Group, Alexandria,
Virginia, where he was responsible for business development and
economic and market analyses. He received his bachelor's degree in
political science from Northeastern University, Boston and master's in
agricultural economics from the University of Massachusetts, Amherst.
http://www.fas.usda.gov/programs/market-access-program-map
http://www.fas.usda.gov/programs/foreign-market-development-program-
fmd

The Chairman. Thank you, Mr. Wenger. I am glad that you
clarified that almond can be pronounced almond or amond.
Mr. Wenger. Yes.
The Chairman. All this time I thought my friend and
colleague, Jeff Denham, was just talking funny. And you can
tell him I said that.
Mr. Wenger. Well, they are almonds on the tree. You have to
knock the L out of them to get them on the ground, and then
they become amonds.
The Chairman. I appreciate that clarification.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
I now recognize myself for 5 minutes.
Thank you all. That was very, very informative testimony
from each of you. There was a common theme throughout,
obviously, and I want to drill-down on that just a little bit
and maybe frame the question this way.
When you have declining Federal investment in these
programs, or let's just say, for example, these programs get
zeroed-out, obviously we are all going to fight against that,
but should that be the case, talk about the impact that that
would have. What is it about the Federal investment that
leverages these private dollars to the degree that it does? And
I might add, I have been very, very impressed with the amount
of increase in the private-sector dollars put towards these
promotion efforts. But obviously, there is a catalyst there.
That seed money on the Federal side is so critically important.
Drill-down on that just a little bit for us if you can, any one
of you.
Mr. Wenger. Maybe I will start. It is your responsibility
to utilize wisely taxpayer dollars. It comes from a broad
section of American taxpayers, not just in agriculture, as we
look at the farm bill, and certainly safety net-type programs
are very important. The uniqueness of MAP funding and FMD
funding is well beyond the farm. Whether I as a producer am
profitable at the end of the year, as a grower all those people
who are on the upside side for the suppliers of my inputs, they
have a place that I can utilize monies to pay for them, but
more the downside, the marketing side. You think whether it is
Blue Diamond and others, all the people from the janitors to
the clerks, and everybody else that made the packaging, the
shipping to the ports, the longshoremen, everybody is put to
work. It creates an awful lot of economic activity and wealth
for other people far beyond. I can't think of a better
investment that isn't targeted just to one individual part of
our social fabric, but it goes everywhere.
And I will just give you a quick example. Port of Oakland,
58 percent of the products, the containers going out of the
Port of Oakland, are agriculturally generated. Of that, 70
percent comes out of the farms and the fields in California.
When you think about the truckers and the longshoremen, they
are put to work because of things that you are doing with MAP
and FMD.
Mr. Alanko. I would like to follow up on that next.
The Chairman. Yes, sir.
Mr. Alanko. There are two areas that quickly come to mind
with me in the hardwood industry. One is the technical support
that we are given by AHEC. The American hardwood grading system
is very technical, and it is only used on American hardwoods.
People around the world that would utilize our hardwoods need
to be educated not only on the grades of hardwoods and how they
can be utilized, but on the various species that we have. We
have over 12 species that are commercially used around the
world.
The other is access. As I had stated earlier, with so many
new policies around the world, trade policies and regulations
on illegal logging and timber being imported into places, the
American Hardwood Export Council, the use of these funds, has
put in place some programs that allow our wood access into
areas that we could not come up with these programs without
that funding.
Mr. Seng. The area that concerns me probably the most would
be the role of the competition in the markets. There are 25
countries supplying pork to Japan today. There was a time where
we were primarily the only supplier, and maybe one from Denmark
or Canada. There are 72 countries supplying pork and beef to
China today. The European COFFERS (Combating Fiscal Fraud and
Empowering Regulators), you heard about wine here, but if you
look at their subsidy equivalence for exports, it is close to
$1.8 billion. We cannot compete if we don't have these programs
in these markets. It is as simple as that. And they compete
with us not only on quality of the product, et cetera, but we
deal with the Europeans with animal welfare issues, when it
comes to sustainability issues. There are all these other
issues that we are dealing with as far as trying to sell our
product, and our way of producing our agriculture.
To me, the role of competition, the unlevel playing field,
that is getting more unlevel as we speak, these are probably
some of the key areas that the MAP program and the FMD program
work. It gives us a chance.
The other thing, if I look at just the U.S. Meat Export
Federation, the composition of the exporting companies in our
organization, there are maybe eight companies that are over $1
billion as far as total size. This is a program for the small
holders. And we have so many companies that are just family
companies that are exporting and doing very well at it.
This is an enabling program for us to get into new markets,
not just the existing markets but new markets, and it has been
very successful. So the competition is intense. Both
competition from the private-sector and competition from
governments who are very, and more than willing to subsidize
their exporters in these endeavors.
The Chairman. Pardon me. If you had to list two countries
that are our top two competitors, those who have really amped
up their game on this front, who would that be?
Mr. Seng. Well, I would say right now, the European Union,
as a result of the closure of the Russian market, has taken new
steps as far as their entree into Asia. They have displaced the
United States, they have displaced other competitors, the
Canadians, et cetera, Japan, Korea, Philippines, Vietnam. They
have 80 percent market share in Vietnam as far as pork. I would
say also Australia has been a very formidable competitor to us
as well. They are not open to U.S. beef at this point in time,
after 13 years, but they compete very handsomely with us in a
lot of these markets.
So I would say those two countries; Australia and probably
the European Union, are two very formidable competitors right
now.
The Chairman. Thank you. My time has expired.
Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. I want to
make note that I concur with the comments you made earlier in
terms of the challenge that we have before us as we write the
new farm bill.
I want to, Mr. Seng, underline the comment you just made
because some of this debate here doesn't square with the facts.
The European Union is doing precisely what you said, and they
negotiate as a common market as the Union. They are not allowed
to do bilateral agreements. And by the way, our trade with the
European Union constitutes almost \1/2\ of the world's trade.
We will see what happens with the UK and what terms they end up
breaking away, if, in fact, they do, there is some debate about
that. But the fact of the matter is that we have to recognize
that different blocks around the world negotiate treaties on
that basis.
Let me just be frank with all of you. You are preaching to
the choir here with this Subcommittee and the Agriculture
Committee. We are going to need your efforts, your
organizations' efforts, and all the folks you represent out
there as we try to put this farm bill together. That is just
the bottom line. And your testimony, obviously, substantiates
the large degree of economic benefits that accrue, not just to
American agriculture, but to America's entire economy. We have
to be able to make that statement much more succinctly and
clearer.
Mr. Wenger, you did a good job in talking about some
examples in California, and we have talked many times about
this, but how do we explain in that sense to urban dwellers in
America, when we are looking at our budget this year and we are
looking at the farm bill, who might wonder what are the
benefits from using taxpayer dollars to fund these programs?
Mr. Wenger. Thank you, Mr. Costa. Just to reiterate what I
said before, as we talk about the farm bill in general, and I
say I am from agriculture, and they talk about subsidies and
other things, and this has come up from time to time to folks,
but----
Mr. Costa. It is called a subsidy by many.
Mr. Wenger. Pardon me?
Mr. Costa. It is called a subsidy by many.
Mr. Wenger. Yes, it is. And I say, well, it is interesting
that, as I said earlier, once the almonds and the walnuts leave
my farm, there are a lot of people put to work; people that are
trucking, that are processing, and the folks that work in the
different processing plants. And certainly, Blue Diamond is a
major contributor and component of our almond industry, but
there is a lot more, and those put an awful lot of people to
work every single day. And so they come to work for a salary,
and so their tax dollars, what little bit of it would go into
this type of a program for MAP funding or to help develop under
FMD, those are coming back to them, because if we take those
products and market them around the world, we are helping the
rest of the world grow richer by imports that we bring into
here. But as we see the growing middle class around the world,
the one thing that they want is agricultural products from the
United States, especially the Pacific Rim, California.
Mr. Costa. They want better nutrition, higher protein, and
we do that well.
In this highly competitive global marketplace that we live
in today, where I stated in my opening comments that the trade
is not always fair, what would be the consequences do you think
if, in the farm bill, these programs were further reduced or
eliminated? And you can all comment, Paul, but please, anyone.
Dr. Williams. I can answer some of that, at least with
numbers. We actually did that particular analysis in our study.
We simulated what would happen, what would the world look like
if these programs did not exist. And the answer is that we
would lose 240,000 jobs in any particular year, we would lose
about $39.3 billion in output in this country, $16, $17 billion
in GDP, and labor income would drop by about $10 billion. So
just on the economy side, it would be fairly devastating.
Mr. Costa. Mr. Williams, would you provide that information
to all the Members of the Subcommittee and full Committee? We
can use that to substantiate our case and enter it into the
record.
Dr. Williams. Yes, sir, I would be happy to, Mr. Costa.
[The information referred to is located on p. 107.]
Mr. Costa. Yes. The final comment or question, I don't know
who would like to take it on, but we can talk about the
European Union and how they exceed our levels in terms of
changing the level of competition, unfairly I might add. I mean
really, what a lot of these agreements are all about is trying
to level the playing field. Right? Level the playing field. So
what would you suggest as we look upon the farm bill and future
trade agreements?
Mr. Wenger. Try to be more specific. I guess we are having
a little trouble understanding. As far as this funding?
Mr. Costa. Well, as far as the funding, we are going to
have to have future trade agreements, right? I mean without
them it becomes a leverage game, and we get retaliatory tariffs
and then we get into a trade war, and that is my greatest fear.
Mr. Wenger. Well, certainly, it is a fear of all of us, in
particular in California with the various commodities we have.
Again, we have been very supportive of TPP. NAFTA, while it has
had its issues, it has still been a good trade agreement.
Certainly, TPP even fixed a few of the things that needed to be
fixed from agriculture's perspective, had TPP passed. It is
great to be able to do bilaterals, but we all know that once
you get two people together and now you try to bring in a
third, how are you are going to be able to settle that, because
everybody wants the better deal with the other one. And so in
our view, multilateral trade agreements are better. No matter
what, we have seen that because of some of the phytosanitary
issues, and nontariff trade barriers that we have been able to
use some of the TASC funds for the specialty crops to be able
to get around some of those.
So that is why, no matter what happens here in the next few
months or next couple of years on trade agreements, these kind
of funds are very, very important.
Mr. Costa. Well, and my time has expired, Mr. Chairman, but
you point out something that we all ought to keep in mind; the
nontariff trade barriers are a big, big part of facilitating
trade agreements. And that is part of the handicap that
American agriculture too often has.
The Chairman. The gentleman from Tennessee, Mr. DesJarlais.
Mr. DesJarlais. Thank you, Mr. Chairman. I appreciate all
you gentlemen being here today and giving your testimony.
Mr. Seng, I had a few questions for you. The U.S.'s ability
to work its way into the beef market in South Korea is
certainly a success story about our capabilities in becoming a
key player in foreign markets that were initially reluctant to
importing U.S. products. Following the 2008 protest in Seoul,
South Korea, against the importation of U.S. beef, we became
the top supplier by 2016. These sales even exceeded $1 billion
in 2016, which is a substantial increase over the pre-Korea
Free Trade Agreement sales levels. How are you investing in
market development in Korea, and how has that investment helped
build consumer confidence in U.S. beef?
Mr. Seng. Yes. In Korea, we work it basically from the left
to the right, if you will. There are importers, and then we
work through the whole food service establishments, and as far
as Korea, we work it to the retail, and we work it right down
to the consumers. Our programs basically are pretty profound at
the fact that they reach from the border all the way to the
consumer. And we recognize consumers vote every day, and that
was one of the issues that we had in Korea, as you know, back
in 2008. But initially in 2008, we couldn't even get an
advertising agency to say we would want to promote U.S. beef in
the market. They thought that was such a negative.
And so there has been a tremendous amount of work that was
done, and all this was done through working through the
channels, working through very judiciously developed supply
chains, which was done with the MAP program and FMD program and
industry dollars that were attracted because of those programs.
And after about 10 years of this steady persistence in the
market, that is how we did achieve this, but it is a long pull.
But, trade access, and this goes back to the earlier
question, is very important, but trade access does not
guarantee, for example, market share. Trade access does not
help remove some of the SPS barriers that we deal with that
surface when we are working in these markets. It doesn't
qualify customers, it doesn't build supply chains. All these
types of things that we are doing, you can call it soft
marketing, if you will, but these things are really what
dignify trade negotiations. And that was proven to us in Korea,
we proved the same thing in Japan, and this is really the
importance of the MAP and the FMD program is that it is that
constant commitment to the market that is unwavering, and that
is very important in the international marketplace.
Mr. DesJarlais. Okay, thank you. And most U.S. beef though
is consumed domestically. It is my understanding that Japan and
other countries in Asia have proven to be growing premium
markets for beef cuts that Americans find less desirable. What
are these cuts and what are we doing to promote them in Japan
and other Asian markets?
Mr. Seng. Well, that is what we call the fifth quarter.
There is a lot of work that has been done, for example, like
beef tongue in the United States sells for three times more
than it will in the United States. I think that is the beauty
of the export market; every pound of meat that we export is
sold for more in the international marketplace than it would be
sold here. And so what we have taken as an example is Mountain
Chain Tripe; tripe that we don't eat much in this country. It
is valued in Japan, and we will get, again, a premium of two to
three times what it costs in the United States.
So we take a look at a market, and we look at the
international marketplace like it is a mosaic, and as we look
at different countries, what kinds of products will apply to
these different countries. And this is the export success that
we have is, we have a diversified portfolio, going to almost
100 countries and maximizing the value of each cut of each item
that goes into these various markets. And that has really been
the success.
So today, the average producer in the United States that is
producing beef receives about a $275 export dividend. That is
the premium you get from the export market. It is $60 on a
market hog.
Mr. DesJarlais. Okay. And finally, in our last minute here,
China is the fastest growing beef market in the world, and we
are missing out on a crucial market share with the current ban.
Aside from market share programs, what are some other means
available so that we can continue to restore international
confidence in our beef exports to increase the likelihood China
reopens its market to U.S. beef?
Mr. Seng. That is a very tough question, because for 13
years now we have been denied access to the Chinese market. I
think that we are always trying to figure out how we can work
with the Chinese. We are working--let's say there is the closed
market of China, but the USMEF with our industry partners, are
working behind the wall, if you will. We are trying to build
clientele, we are trying to develop supply chains, we are
trying to create a demand pool from within the market, so once
that market does open up we are ensconced already in the
market. That is the same kind of example we did in Japan 30
years ago, but we think that is going to be the recipe for
success. We have to have some demand pool from the Chinese
themselves. And you are right, it is the fastest growing market
in the last 10 years; last year over $1.2 billion, 1.2 million
metric tons were exported to China.
Mr. DesJarlais. Thank you, Mr. Seng.
Mr. Seng. You bet.
Mr. DesJarlais. I yield back.
The Chairman. Thank you. I now want to move to Dwight
Evans, a new Member from Pennsylvania. Welcome to the
Subcommittee.
Mr. Evans. Thank you, Mr. Chairman. Mr. Chairman, I would
like to pick up a little bit on the question around the jobs. I
heard that you mentioned over 240,000 jobs could be effected.
When you say the 240,000 jobs, is that the jobs beyond the
agricultural sector too?
Dr. Williams. Yes. Mr. Evans, in the ag sector, and this is
agriculture and agrifood, it is 94,000 jobs, but overall
through the entire economy we are talking up to 240,000. Yes,
sir.
Mr. Evans. I also heard a question, can you speak to the
current technical assistance provided by the Technical
Assistance for Specialty Crops program that is being provided,
and the benefits of an increase in this program, can you speak
to that issue, Mr. Wenger?
Mr. Wenger. Yes, most consider that as far as the Technical
Assistance for Specialty Crops, probably if we could maintain
funding there, there is not as big of a need to increase that
funding as what we would like to see increase in MAP funding
and FMD funding.
Usually, when you take care of a sanitary/phytosanitary,
nontariff trade barrier, usually it is around inspections,
pests, and things like that, then you have solved that problem.
It is not an ongoing issue. So from our standpoint, when you
are looking at the challenged financial situation where you get
the best bang for the buck, we would say MAP funding and FMD
funding.
Mr. Evans. I would like to go back again about the jobs.
When you talk about the jobs, you talked about the aspect of
terms of the dollar impact, and repeat that again in terms of
the impact, in terms of cost aspect of what it can mean in
loss.
Dr. Williams. Jobs as well as the other impacts? Across the
entire economy, this is a multiplier effect that happens.
First, you have the impact in the ag community because there
are more exports, right, and that generates revenue within the
ag community. And then there is spending on input suppliers as
well as household spending, as well as up and down the supply
chain there is additional spending. We have more
transportation, more transportation needs more fuel, more fuel
means others working. So all the way along the supply chain
that additional revenue coming in generates jobs up and down
the supply chain. And so when I tell you there are 240,000 more
jobs, I am talking not just in agriculture, and not only up and
down the supply chain, but across the economy as that
multiplies out from agriculture through everything from
transportation to even consumer goods, because the people that
earn money as a result of that go out and spend money for
Christmas for toys and other things. So there is a whole
multiplier effect throughout the whole economy. So that is
where those jobs come from, and that is where the additional
sales output number I told you of $39.3 billion in additional
gross sales or output, because of that, all those additional
sales that happen both sort of backward linkages from
agriculture into the input industry, and forward linkages into
the rest of the economy. And GDP, that is an additional $16.9
billion in additional gross domestic product being generated as
a result of that.
So this is a phenomenon that happens not just in
agriculture, but radiates out from agriculture through the
economy as a result of spending, and additional spending, and
re-spending as those dollars multiply through and generate jobs
through the economy.
Mr. Evans. Mr. Chairman, I yield back the balance of my
time.
The Chairman. Thank you.
Mr. Marshall.
Mr. Marshall. Yes, thank you, Mr. Chairman.
I was invited last week to go back to the first farm bill
ag hearing in my home state with Senator Roberts. I was
expecting to talk about the farm bill. Probably the biggest
feverish issue was trade though. I mean it reached a fever
pitch that my ag producers are just, I hate to say panicked,
but were very, very concerned.
So I guess my first question to Dr. Williams, those finite
resources, I am trying to figure out how much money to allocate
towards Title I, towards crop insurance versus these programs.
How would you help me prioritize a little bit where to place
those monies?
Dr. Williams. Mr. Marshall, I wouldn't presume to tell you
how to spend my money----
Mr. Marshall. Yes, sir.
Dr. Williams.--but I can tell you that these particular
programs are different in the sense that not only did they help
support the ag economy and the rest of the economy, they also
return money back, so there is a return on the investment. So
these other programs, they spend and you generate some incomes
there, but this is actually a sort of investment. I think about
this as being an investment kind of program.
I believe in crop insurance. It is a critical program for
our country. I believe in the safety net programs. They are
critical for the country. But, as an important component of all
of that, you also have to have the trade aspect of our programs
working, and FMD and MAP are a critical component, according to
our research, of maintaining a viable agricultural community.
So I wouldn't say that you need to shift money out of FMD.
In fact, in my view, from my research and my background, we are
spending too little. Let me tell you why. That $28 per $1 spent
that we return back, that tells you actually that we are
spending too little. What that says is that we are leaving $28
out there that we are not getting for every $1 we are not
spending. For every $1 additional we spend, we are going to get
another $28.
Mr. Marshall. Yes. Okay. I think there is obviously some
saturation there eventually.
My next question is for Mr. Seng. Mr. Seng, we don't have a
Secretary of Agriculture confirmed, we don't have a Trade
Ambassador confirmed, and our President says we have good trade
agreements, he wants better, that he wants bilateral trade
agreements. The people that are out there in the trenches that
are in these foreign countries working for us, doing this, how
much are they being impacted by the lack of these people in
position, and how do you feel going to these bilateral trade
agreements will impact agriculture and what your people do out
there in the field?
Mr. Seng. Right. Well, it is really hard at this point in
time to understand exactly what direction the President is
leading us as far as these bilateral agreements. A lot of us
spend a lot of time, and we work with some very fine people who
worked very hard on TPP, and we could see that there was one
chapter on market access but there were 27 other chapters in
TPP.
What we are concerned about is this: And I was just in
Mexico a week ago, and what I am picking up in Mexico both from
the trade, from organizations, and from the government, is this
big area of uncertainty. People don't know what is coming.
Mr. Marshall. Right.
Mr. Seng. And without a Secretary of Agriculture, without
leadership on agriculture at this point in time, and I say that
very carefully, our buyers around the world are becoming
insecure. The hallmark of U.S. trade policy and of U.S.
diplomatic policy has always been that we look at agriculture
as probably the most important diplomatic tool that we have.
And we have said for years, going back to Kika de la Garza and
way back even before him, we have said for years that even
though you are not self-sufficient, you can be food-secure
because you can depend on the United States as a supplier. What
is being called into question now is with this uncertainty,
with what is going on especially south of the border, where
Mexico at one point in time looked north for all the sources of
their corn, soybeans, wheat, you name it, beef, pork, now they
are starting to look south. And that is the government policy
of diversification, but we are seeing the same thing when it
comes to the private-sector. And from their standpoint, it is a
food security issue.
And so all of a sudden, issues that become a question of--
it is not so much whether we sell more product here or there,
but it is a food security issue for a lot of these countries.
Mr. Marshall. Okay.
Mr. Seng. And this is something that we need to really take
into consideration.
Mr. Marshall. Okay. Border adjustment tax, is that
impacting anybody out in the field, that conversation. Does
anyone want to grab that one real quick? The concept of a
border adjustment tax, is that scaring people out in the
fields?
Mr. Wenger. Well, it is a double-edged sword, but
certainly, for a lot of folks, some of the criteria we have to
produce under, I don't think they are quite so worried about
that because with the regulations, especially in California,
that we have to deal with today when we see that we now have an
8 hour workday, 40 hour workweek in agriculture coming up, it
is mindboggling. Weather doesn't dictate an 8 hour workday, 40
hour workweek. But we see a lot of producers going to Mexico,
and so we would be competing with that product. So I would
think some people would probably relish the idea that there
would be some leveling playing field for producers who go to
Mexico, and want to bring that product in here and compete with
domestic producers.
The Chairman. Thank you, Mr. Marshall.
We are going to have votes coming up here before long, so
we are going to wrap it up here. But I want to offer an
opportunity for Mr. Costa to make any closing remarks he may
have, and then I have a few remarks myself.
Mr. Costa. Well, thank you again, Mr. Chairman, Members of
the Subcommittee. I am looking forward to this year as we
reauthorize the farm bill. And as I said to you a moment ago,
today's hearings begin to draw a line in the sand, but we
certainly cannot do this by ourselves. There is going to be
heavy lifting and a lot of these programs we understand the
validity and the importance of, but a lot of other folks do
not. And, therefore, we are going to insist in your help big
time if we are going to be successful. And I will work, in a
bipartisan way, every day I can with the Chairman of this
Subcommittee and with my colleagues on both sides of the aisle
to produce a farm bill in this Congress, because that is the
goal line.
The Chairman. Thank you, Mr. Costa.
I want to thank all the witnesses for your testimony today.
It has really, really been great. You have certainly helped to
beef-up the record on this particular issue.
And in closing, I want to share a little example. As some
of you may know, I served in the state legislature, in the
State Senate specifically, for two terms. I was in the Minority
my first term, in the Majority my second term. And the second
term in the Majority, I co-chaired what was known as the NAR
Subcommittee, which those of you up here would know as
Agriculture Appropriations in Washington, D.C., here on Capitol
Hill. When I was Chairman, we included $300,000 of seed money
for market promotion for sweet potatoes, specifically in
Europe. And we went from roughly, I believe, $42 million
exported to Europe, to now today with that recurring funding of
$300,000 to $500,000, I believe the total exports are about
$124 million or so. That is a substantial return on investment
that is really just a microcosm or small example of the much
bigger picture here. And so we need to do everything we can to
ensure that these programs remain funded, and hopefully
increase the amount of mandatory funding that we can get to
them, because we are going to reap the results and the benefits
many times over the investment. And so anything and everything
that you all can do, outside groups and farmers and ranchers
all across the country, even those who pronounce almond amond,
we need everybody's help. And I implore you to do everything
possible to maximize our leverage on that front.
With that, under the Rules of the Committee, the record of
today's hearing will remain open for 10 calendar days to
receive additional material and supplementary written responses
from the witness to any question posed by a Member.
This hearing of the Subcommittee on Livestock and Foreign
Agriculture is adjourned.
[Whereupon, at 3:41 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Supplelmentary Information Submitted by Gary W. Williams, Ph.D.,
Professor of Agricultural Economics and Co-Director, Agribusiness,
Food, and Consumer Economics Research Center, Department of
Agricultural Economics, Texas A&M University
In the hearing of the Subcommittee on Livestock and Foreign
Agriculture on February 28 (The Next Farm Bill: International Market
Development), Ranking Member Costa requested additional information on
the likely consequences of eliminating or substantially reducing the
funding for the USDA MAP and FMD programs. In response, I have attached
the results of our analysis of the consequences of eliminating those
programs for U.S. agricultural exports, the U.S. farm economy, and the
overall general U.S. economy entitled: ``Economic Consequences of
Eliminating Funding for USDA Export Market Development Programs''.
To help respond to questions by other Subcommittee Members, I have
attached two more files summarizing other key results from our study of
the USDA Export Market Development Programs:

``Economic Consequences of Increased Funding for the USDA
Export Market Development Programs''[; and]

``Historical Benefits of USDA Export Market Development
Programs''.

Please let me know if I can be of further service to the
Subcommittee.

Dr. Williams.
Insert 1
Dr. Williams. I can answer some of that, at least with
numbers. We actually did that particular analysis in our study.
We simulated what would happen, what would the world look like
if these programs did not exist. And the answer is that we
would lose 240,000 jobs in any particular year, we would lose
about $39.3 billion in output in this country, $16, $17 billion
in GDP, and labor income would drop by about $10 billion. So
just on the economy side, it would be fairly devastating.
Mr. Costa. Mr. Williams, would you provide that information
to all the Members of the Subcommittee and full Committee? We
can use that to substantiate our case and enter it into the
record.
Dr. Williams. Yes, sir, I would be happy to, Mr. Costa.
Economic Consequences of Eliminating Funding for the USDA Export Market
Development Programs
U.S. economic losses that would occur from completely eliminating
USDA Market Development Programs (FMD/MAP funding) with cooperators
responding by cutting their funding of export promotion by 50% (see
Tables 1 and 2)\1\ based on recent research study:\2\
---------------------------------------------------------------------------
\1\All changes relative to flat funding over 5 years (continued
current levels of authorized funding over 5 years).
\2\Williams G.W., J.J. Reimer, R.M. Dudensing, B.A. McCarl, H.M.
Kaiser, J. Somers, ``Economic Impact of USDA Market Development
Programs,'' Informa Economics, IEG, Prepared for U.S. Wheat Associates,
USA Poultry & Egg Export Council, Pear Bureau Northwest, and the USDA
Foreign Agriculture Service, June 2016. Available on-line at: http://
www.agexportscount.com/developing-markets/.
---------------------------------------------------------------------------
U.S. Agricultural Export Losses
Annual average loss of $14.7 billion (7.9%) in U.S.
agricultural export value.

Loss of $235.2 billion in export value over a 15 year
period.
U.S. Agricultural Sector Losses\3\
---------------------------------------------------------------------------
\3\The range of losses refers to the results from conducting the
analysis under two alternative assumptions--full employment and less
than full employment. The smaller losses are generally associated with
the full employment assumption.
---------------------------------------------------------------------------
Annual average losses:

U.S. farm cash receipts: Between $7.0 billion (2.2%)-
$9.9 billion (3.1%)

U.S. net cash farm income: Between $2.4 billion
(3.7%)-$2.5 billion (3.8)

U.S. farm asset value: Between $0.7 billion (0.03%)-
$1.3 billion (0.1%).

Losses in employment (full and part-time jobs) in the
agrifood sector (food product processing as well as production
agriculture):

64,400 jobs (1.7%)--102,800 jobs (2.6%)
U.S. Economy Losses
Average annual losses:

U.S. economic output (sales): Between $3.6 billion
(0.01%)-$45.3 billion (0.2%)

U.S. GDP: Between $2.6 billion (0.02%)-$19.5 billion
(0.1%)

U.S. labor income: Between $0.9 billion (0.01%)-$11.3
billion (0.1%).

Losses in U.S. employment (full and part-time jobs):

Up to 278,600 full- and part-time jobs across the
entire economy (0.2%).

U.S. regional annual average losses (see Table 2):

Northeast: $2.02 billion in sales, $841.5 million in
GDP, and $483.1 million in labor income

South: $8.85 billion in sales, $3.48 billion in GDP,
and $2.05 billion in labor income

Midwest: $15.93 billion in sales, $6.43 billion in
GDP, and $3.68 billion in labor income

West: $6.97 billion in sales, $3.25 billion in GDP,
and $1.97 billion in labor income

U.S. regional average employment losses (see Table 2):

Northeast: 10,800 jobs

South: 64,500 jobs

Midwest: 94,100 jobs

West: 44,700 jobs

Table 1: Average Annual Losses by the U.S. Farm Sector and General
Economy from Eliminating USDA Export Market Development Fundinga
------------------------------------------------------------------------
Less than Full Employment Full Employment
----------------------------------------------------
Sector Average Percent Average Percent
Annual Loss Loss Annual Loss Loss
------------------------------------------------------------------------
Agriculture Sector $U.S. % $U.S. %
billions billions
------------------------------------------------------------------------
Farm cash receipts 9.9 3.1 7.0 2.2
Net cash farm 2.5 3.8 2.4 3.7
income
Farm assets 1.3 0.1 0.7 0.03
1,000 jobs 1,000 jobs
Employment in 102.8 2.6 64.4 1.7
agrifood sectorb
------------------------------------------------------------------------
U.S. Economy $U.S. % $U.S. %
billions billions
------------------------------------------------------------------------
U.S. Output (Gross 45.3 0.2 3.6 0.01
Sales)
U.S. GDP 19.5 0.1 2.6 0.02
U.S. Labor Incom11.3 0.1 0.9 0.01
1,000 jobs 1,000 jobs
U.S. Employmentb 278.6 0.20 -- --
------------------------------------------------------------------------
Note: -- = No change since labor is always fully employed. See Note b.
aAssumes that cooperator groups respond by cutting back their funding of
export promotion by 50%. All changes shown are averages over a 5 year
period relative to the flat funding base value (2010) which is the
average annual level of a variable in the absence of the promotion
program.
bIn the full employment analysis, by definition all labor is always
fully employed so while labor can be shifted from one industry to
another, the total employment is not allowed to change. In the less-
than-full-employment scenario, employment can increase as labor shifts
among industries but also because labor can be hired from the ranks of
the unemployed.

Table 2: Average Annual Losses by the U.S. Farm Sector and General
Economy from Eliminating USDA Export Market Development Funding by
Census Regiona
------------------------------------------------------------------------
Northeast South Midwest West
------------------------------------------------------------------------
millions of $U.S. (2010)
------------------------------------------------------------------------
Output (Gross 2,022.8 8,845.5 15,931.6 6,969.1
Sales)
GDP 841.5 3,480.7 6,432.2 3,248.0
Labor Inco483.1 2,051.6 3,679.0 1,965.0
------------------------------------------------------------------------
thousands of jobs
------------------------------------------------------------------------
Employment 10.8 64.5 94.1 44.7
(thousands of
jobs)
------------------------------------------------------------------------
aAssumes that cooperator groups respond by cutting back their funding of
export promotion by 50%. Analysis assumes less than full employment.
Full employment is not necessarily a useful concept in a regional
context since labor can flow from one region to another easily given a
change in demand in some region.

Insert 2
Economic Consequences of Increased Funding for the USDA Export Market
Development Programs
U.S. economic benefits that would occur from increasing funding for
the USDA Market Development Programs (FMD/MAP funding) over a 5 year
period under two alternative increased funding scenarios as reported in
a recent research report\1\ are listed below.
---------------------------------------------------------------------------
\1\Williams G.W., J.J. Reimer, R.M. Dudensing, B.A. McCarl, H.M.
Kaiser, J. Somers, ``Economic Impact of USDA Market Development
Programs,'' Informa Economics, IEG, Prepared for U.S. Wheat Associates,
USA Poultry & Egg Export Council, Pear Bureau Northwest, and the USDA
Foreign Agriculture Service, June 2016. Available on-line at: http://
www.agexportscount.com/developing-markets/.
---------------------------------------------------------------------------
The two future funding scenarios simulated:

Scenario 1: Government expenditures for MAP and FMD doubled
over 5 years through annual increments of $46.9 million to a
total of $469 million (double the base year) with cooperator
contributions increasing approximately 10% in the first year to
$515.6 million and then remaining flat at that level for the
following 4 years.

Scenario 2: Government expenditures for MAP and FMD again
doubled over 5 years as in the first scenario but cooperator
contributions increased by 50% over that period through annual
increases of $46.9 million for a total of $703.6 million by the
end of the 5 year period.

Economic benefits that would accrue under the two scenarios as
illustrated in Figure 1 and shown in Tables 1 and 2:\2\
---------------------------------------------------------------------------
\2\All changes are relative to flat funding over 5 years (continued
current levels of authorized funding). Also, changes in text refer to
an assumption of less than full employment. Tables 1 and 2 show the
changes under the assumptions of both full and less-than-full
employment.

---------------------------------------------------------------------------
Export gains would be substantial under both scenarios.

Average annual gain in U.S. agricultural exports: $3.4
billion and $4.5 billion under Scenarios 1 and 2,
respectively (Figure 1). Five year gain of $17.1 billion
and $22.5 billion, respectively, under the two scenarios.

Returns to farmer and taxpayer dollars invested would be
high:

Scenario 1: Benefit-cost ratio (BCR) of $18.2 for
every additional dollar invested in export market
development.

Scenario 2: BCR of $16 for every additional dollar
invested in export market development.

Gains to the farm economy would be equally substantial under
both scenarios.

U.S. farm cash receipts: Average annual gains of up to
$2.2 billion under Scenario 1 and up to $2.9 billion under
Scenario 2. Total contribution over 5 years of up to $11.1
billion under Scenario 1 and $14.6 billion under Scenario
2.

U.S. net cash farm income: Average annual gains of up
to $0.5 billion and $0.7 billion, respectively, under the
two scenarios. Five year gains of up to $2.7 billion and
$3.5 billion under the two scenarios, respectively.

U.S. farm asset values: Average annual gains of up to
$0.29 billion and $0.4 billion, respectively, under the two
scenarios, Five year gains of up to $1.5 billion and $1.9
billion, respectively.

Agrifood Sector Employment: A contribution of up to
24,200 new jobs under Scenario 1 and up to 31,900 new jobs
under Scenario 2.

The overall U.S. economy would experience a substantial
multiplier effect from the farm economy boost under both
scenarios.

U.S. economic output (sales): Average annual gains of
up to $10.6 billion and $14.0 billion under the two
scenarios, respectively. Five year gains of up to $53.1
billion and $70.0 billion under the two scenarios,
respectively.

U.S. GDP: Average annual gains of up to $4.5 billion
and $6.0 billion under the two scenarios, respectively.
Five year gains of up to $22.7 billion and $30.0 billion,
respectively, under the two scenarios.

U.S. labor income: Average annual gains of up to $2.6
billion and $3.5 billion under the two scenarios,
respectively. Five year gains of up to $13.1 billion and
$17.5 billion under the two scenarios, respectively.

U.S. employment (full and part-time jobs):
Contribution of up to 64,000 new jobs under Scenario 1 and
up to 84,600 new jobs under Scenario 2.
Figure 1: Simulated Annual Gains in U.S. Export Revenue Achieved Under
USDA Export Market Development Funding Scenarios 1 and
2a

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

*10% increase in first year over baseline and then flat for
next 4 years.
aChanges relative to flat funding over 5 years
(continued current levels of authorized funding).

Table 1: Scenario 1--Average Annual Gains by the U.S. Farm Sector and
General Economy from Increased USDA Export Market Development Fundinga
------------------------------------------------------------------------
Less than Full Employment Full Employment
----------------------------------------------------
Variable Average Percent Average Percent
Annual Gain Gain Annual Gain Gain
------------------------------------------------------------------------
Agriculture Sector $U.S. % $U.S. %
billions billions
------------------------------------------------------------------------
Farm cash receipts 2.2 0.7 1.8 0.6
Net cash farm 0.5 0.8 0.5 0.9
income
Farm assets 0.29 0.01 0.19 0.01
1,000 jobs 1,000 jobs
Employment in 24.2 0.6 17.2 0.4
agrifood sectorb
------------------------------------------------------------------------
U.S. Economy $U.S. % $U.S. %
billions billions
------------------------------------------------------------------------
U.S. Output (Gross 10.6 0.04 1.3 0.005
Sales)
U.S. GDP 4.5 0.03 0.8 0.006
U.S. Labor Income2.6 0.03 0.3 0.004
1,000 jobs 1,000 jobs
U.S. Employmentb 64.0 0.04 -- --
------------------------------------------------------------------------
Note: -- = No change since labor is always fully employed. See Note b.
aAll changes shown are averages over a 5 year period relative to the
flat funding base value (2010) which is the average annual level of a
variable in the absence of the promotion program.
bIn the full employment analysis, by definition all labor is always
fully employed so while labor can be shifted from one industry to
another, the total employment is not allowed to change. In the less-
than-full-employment scenario, employment can increase as labor shifts
among industries but also because labor can be hired from the ranks of
the unemployed.

Table 2: Scenario 2--Average Annual Gains by the U.S. Farm Sector and
General Economy from Increased USDA Export Market Development Fundinga
------------------------------------------------------------------------
Less than Full Employment Full Employment
----------------------------------------------------
Variable Average Percent Average Percent
Annual Gain Gain Annual Gain Gain
------------------------------------------------------------------------
Agriculture Sector $U.S. % $U.S. %
billions billions
------------------------------------------------------------------------
Farm cash receipts 2.9 0.9 2.3 0.7
Net cash farm 0.7 1.1 0.7 1.1
income
Farm assets 0.4 0.02 0.3 0.01
1,000 jobs 1,000 jobs
Employment in 31.9 0.8 22.7 0.6
agrifood sectorb
------------------------------------------------------------------------
U.S. Economy $U.S. % $U.S. %
billions billions
------------------------------------------------------------------------
U.S. Output (Gross 14.0 0.06 1.7 0.007
Sales)
U.S. GDP 6.0 0.04 1.1 0.007
U.S. Labor Income3.5 0.04 0.4 0.005
1,000 jobs 1,000 jobs
U.S. Employmentb 84.6 0.05 -- --
------------------------------------------------------------------------
Note: -- = No change since labor is always fully employed. See Note b.
aAll changes shown are averages over a 5 year period relative to the
flat funding base value (2010) which is the average annual level of a
variable in the absence of the promotion program.
bIn the full employment analysis, by definition all labor is always
fully employed so while labor can be shifted from one industry to
another, the total employment is not allowed to change. In the less-
than-full-employment scenario, employment can increase as labor shifts
among industries but also because labor can be hired from the ranks of
the unemployed.

Insert 3
Historical Benefits of USDA Export Market Development Programs
The benefits of the USDA Export Market Development Programs (FMD/
MAP) over history on U.S. agricultural exports, the U.S. agricultural
sector, and the broader U.S. economy according to a recent study\1\ are
listed below and summarized in Tables 1 and 2:
---------------------------------------------------------------------------
\1\Williams G.W., J.J. Reimer, R.M. Dudensing, B.A. McCarl, H.M.
Kaiser, J. Somers, ``Economic Impact of USDA Market Development
Programs,'' Informa Economics, IEG, Prepared for U.S. Wheat Associates,
USA Poultry & Egg Export Council, Pear Bureau Northwest, and the USDA
Foreign Agriculture Service, June 2016. Available on-line at: http://
www.agexportscount.com/developing-markets/.
---------------------------------------------------------------------------
U.S. Agricultural Export Benefits (1977-2014)
Annual average addition of 15.3% ($8.15 billion) to the
value of U.S. agricultural exports, 8.0% (11.5 million mt) to
the volume of aggregate U.S. agricultural exports, and about
6.7% ($25.07/mt) to the aggregate price of U.S. agricultural
exports.

A total of $309.7 billion in additional export revenues and
437 million metric tons of additional export volume over the
entire period.

Net export revenue benefit-cost ratio (BCR) of 28.3. That
is, over their history, the programs have generated a net
return of $28.30 in additional export revenue for every dollar
invested in export promotion.
U.S. Agricultural Sector Benefits (2002-2014)
Two scenarios were considered: (1) full employment (full) and (2)
less than full employment (less). Benefits of the USDA Export Market
Development Programs under the two scenarios:

Annual average additions:

U.S. farm cash receipts: $8.4 billion (2.7%) (full)
and $8.7 billion (2.8%) (less).

U.S. net cash farm income: $1.1 billion (1.8%) (full)
and $2.1 billion (3.7%) (less).

U.S. farm asset value: $1.0 billion (0.05%) (full) and
$1.1 billion (0.1%) (less).

Total additions over the entire 2002-14 period:

U.S. farm cash receipts: $109.2 billion (full) to
$113.1 billion (less)

U.S. net cash farm income: $14.3 billion (full) and
$27.3 billion (full)

U.S. farm asset value: $13.0 billion (full) and $14.3
billion (less).

Contribution to employment (full and part-time jobs) in the
agrifood sector (food product processing as well as production
agriculture):

93,900 (2.4%) jobs (less) and 90,000 (2.3%) jobs
(full)
U.S. Economy Benefits (2002-2014)
The full employment (full) and less than full employment (less)
scenarios considered here as well. Benefits of the USDA International
market Development Programs under the two scenarios:

Average annual additions of U.S. economic activity:

U.S. economic output (sales): $7.1 billion (full) and
$39.3 billion (less)

U.S. GDP: $4.4 billion (full) and $16.9 billion (less)

U.S. labor income: $1.7 billion (full) and $9.8
billion (less).

Total additions to the U.S. economy over the entire 2002-14
period:

U.S. economic output (sales): $510.9 billion (full)
and $92.3 billion (less)

U.S. GDP: $219.7 billion (full) and $92.3 billion
(full)

U.S. labor income: $22.1 billion (full) and $127.4
billion (less)

Contributions to U.S. employment (full and part-time jobs):

Up to 239,800 full- and part-time jobs across the
entire economy.

Reduction in U.S. unemployment by up to 3.0%.

GDP contribution (average annual) by industry (Table 2):

Service industry: $1.89 billion (full) and $7.20
billion (less)

Agriculture and agribusiness: $1.47 billion (full) and
$5.62 billion (less)

Wholesale and Retail trade: $0.37 billion (full) and
$1.40 billion (less)

Other: $0.70 billion (full) and $2.68 billion (less)

Table 1[a]: Average Annual Historical Gains by U.S. Agriculture Sector and General U.S. Economy from the USDA
Export Market Development Programs, 2002-2014
----------------------------------------------------------------------------------------------------------------
Less than Full Employment Full Employment
-------------------------------------------------------------------------------
Sector Average Annual Average Annual
Gain Percent Change Gain Percent Change
----------------------------------------------------------------------------------------------------------------
Agriculture Sector $U.S. billions % $U.S. billions %
----------------------------------------------------------------------------------------------------------------
Farm cash receipts 8.4 2.7 8.7 2.8
Net cash farm income 2.1 3.7 1.1 1.8
Farm assets 1.1 0.1 1.0 0.05
1,000 jobs 1,000 jobs
Employment in agrifood sectorb 93.9 2.4 90.0 2.3
----------------------------------------------------------------------------------------------------------------
U.S. Economy $U.S. billions % $U.S. billions %
----------------------------------------------------------------------------------------------------------------
U.S. Output (Gross Sales) 39.3 0.2 7.1 0.03
U.S. GDP 16.9 0.1 4.4 0.03
U.S. Labor Income 9.8 0.1 1.7 0.02
1,000 jobs 1,000 jobs
U.S. Employmentb 239.8 0.14 -- --
----------------------------------------------------------------------------------------------------------------
Note: -- = No change since labor is always fully employed. See Note b.
aAll changes shown are annual average contributions to the historical average value over the period of 2002-
2014.
bIn the full employment analysis, by definition all labor is always fully employed so while labor can be shifted
from one industry to another, the total employment is not allowed to change. In the less-than-full-employment
scenario, employment can increase as labor shifts among industries but also because labor can be hired from
the ranks of the unemployed.

Table 1[b]: Average Annual Historical Contributions of USDA Export Market Development Programs to the U.S.
Agriculture Sector and General U.S. Economy, 2002-2014
----------------------------------------------------------------------------------------------------------------
Base average Less than Full Employment Full Employment
Variable valuea (2002- ------------------------------------------------------------------
2014) Change Percent Change Change Percent Change
----------------------------------------------------------------------------------------------------------------
Agriculture Sector $U.S. billions $U.S. billions % $U.S. billions %
----------------------------------------------------------------------------------------------------------------
Farm cash receipts 310.2 8.4 2.7 8.7 2.8
Net cash farm income 58.0 2.1 3.7 1.1 1.8
Farm assets 2,081.2 1.1 0.1 1.0 0.05
1,000 jobs 1,000 jobs 1,000 jobs
Employment in agrifood 3,900.4 93.9 2.4 90.0 2.3
sectorb
----------------------------------------------------------------------------------------------------------------
U.S. Economy $U.S. billions $U.S. billions % $U.S. billions %
----------------------------------------------------------------------------------------------------------------
U.S. Output (Gross Sales) 25,070.0 39.3 0.2 7.1 0.03
U.S. GDP 14,785.6 16.9 0.1 4.4 0.03
U.S. Labor Incom9,017.0 9.8 0.1 1.7 0.02
1,000 jobs 1,000 jobs 1,000 jobs
U.S. Employmentb 173,414.20 239.8 c0.14 -- --
----------------------------------------------------------------------------------------------------------------
Note: -- = Not available as an output from this analysis. See Note a.
aThe ``base value'' for a variable is the average annual level of that variable in the absence of the promotion
program.
bIn the full employment analysis, by definition all labor is always fully employed so while labor can be shifted
from one industry to another, the total employment is not allowed to change. In the less-than-full-employment
scenario, employment can increase as labor shifts among industries but also because labor can be hired from
the ranks of the unemployed.

Table 2: Average Annual Historical GDP Contribution of USDA Export
Market Development Programs by Sector, 2002-2014a
------------------------------------------------------------------------
Less than full
Sector employment Full employment
------------------------------------------------------------------------
$U.S. billions (2010)
------------------------------------------------------------------------
Production Agriculture and $4.10 $1.07
Support Industries
Food Processing $1.50 $0.39
Other Agriculture Product $0.02 $0.01
Processing
Mining, Energy, and $0.80 $0.21
Utilities
Construction and Maintenance $0.10 $0.03
Other Manufacturing $1.10 $0.29
Wholesale and Retail Trade $1.40 $0.37
Transportation and $0.60 $0.16
Warehousing
Services $7.20 $1.89
-------------------------------------------
Total..................... $16.90 $4.43
------------------------------------------------------------------------
aIn the full employment analysis, by definition all labor is always
fully employed so while labor can be shifted from one industry to
another, the total employment is not allowed to change. In the less-
than-full-employment scenario, employment can increase as labor shifts
among industries but also because labor can be hired from the ranks of
the unemployed.

______

Supplelmentary Information Submitted by Tim Hamilton, Executive
Director, Food Export Association of the Midwest USA and Food Export
USA--Northeast
The Case for Increased Funding for USDA Foreign Agricultural Service
(FAS) Export Market Development Programs
January 2017

In order to bolster U.S. international market development efforts,
further boost U.S. agricultural exports, and help U.S. agriculture and
related businesses in rural America prosper, the Coalition to Promote
U.S. Agricultural Exports and the Agribusiness Coalition for Foreign
Market Development strongly believe that Market Access Program (MAP)
funding should be increased to $400 million annually and Foreign Market
Development (FMD) program funding to $69 million annually, with the
increases phased in as part of the next farm bill.
Agricultural exports are one of the brightest lights in the U.S.
economy, with a strong multiplier effect that is especially pronounced
in rural communities. According to USDA's Economic Research Service
(ERS):

The $150 billion in U.S. agricultural exports that occurred
in 2014 produced an additional $190 billion in economic
activity for a total of $340 billion of economic output;

Those agricultural exports supported 1.1 million full time
U.S. civilian jobs, including 800,000 in the non-farm sector
(73% of the total employment effect) required to assemble,
process and distribute agricultural products for exports; [and]

This represents 7,550 jobs for every $1 billion of
agricultural export revenue.

A return on investment by MAP and FMD of a remarkable $24 in
export gains for every additional $1 spent on foreign market
development, consistent with results from several previous
studies;

A dramatic average annual increase in farm income of $2.1
billion because of program activities; [and]

Creation of 239,000 new full and part-time jobs related to
the programs.

Federal funding for MAP was last increased in the 2002 Farm Bill,
reaching $200 million annually in 2006. Federal funding for the FMD
program was last increased in the 2002 Farm Bill to $34.5 million
annually. Since the last increases were approved, the size of the
foreign agricultural market that those funds are meant to develop has
more than tripled to more than $800 billion a year.
Diminished Buying Power at a Crucial Time for Agriculture
Despite a tremendous growth in U.S. agricultural exports and
opportunities for farmers and small businesses abroad, the real,
effective Federal funding that reaches the agricultural cooperators
carrying out market development work has steadily eroded even while
international competitors continue to greatly outspend us.
Looking just at the FY16 FAS allocation of MAP and FMD funding, the
factors that have caused the erosion include:

Sequestration in FY16 reduced annual, available MAP funding
by $13.6 million and FMD funding by $2.4 million.

USDA administrative expenses in FY16 reduced available MAP
and FMD program funds by $6.6 million.

Since the 2002 Farm Bill was enacted, inflation and a
depreciated U.S. dollar have reduced the real, effective
promotional power of U.S. agricultural market development
programs by almost 30 percent.

FAS reserves $3.5 million for Global Broad-based Initiatives
(GBIs) involving multiple cooperators. While extremely valuable
and strongly supported by cooperators, GBIs nonetheless reduce
the total available MAP funding for individual cooperator
programs.

The result is fewer dollars for actual programs, even while demand
for the benefits these programs provide increases.
In FY17, just $173.5 of the $200 million MAP appropriation was
allocated to the 68 nonprofit commodity organizations participating in
the program. Just $26.6 million of the FMD appropriation was allocated
to the 23 nonprofit commodity organizations participating in the
program. Taking inflation into account, that means the $200.1 million
total that FAS awarded for MAP and FMD in FY17 had an actual
promotional power of only $140.1 million.
Other Important Considerations
With growing global food demand, MAP and FMD participants
have the opportunity to service more customers who seek to buy
an increasing volume and variety of products. In fact, since
the 2002 Farm Bill, overall agricultural imports of the
overseas markets that U.S. exports are competing for rose by
more than 330 percent, from $247 billion in 2002 to $834
billion. This significant increase in market size, combined
with the diminished purchasing power of MAP and FMD funding
since 2002, means that our producers are not well equipped to
take on more aggressive foreign competition.

New demands on MAP and FMD funding related to work on non-
tariff trade barriers, while reflecting the collaborative work
that cooperators often do to supplement efforts of FAS and
other regulatory agencies, puts greater strain on funding that
in the past went exclusively to market development and
promotion activities.

Submitted Question
Response from Gary W. Williams, Ph.D., Professor of Agricultural
Economics and Co-Director, Agribusiness, Food, and Consumer
Economics Research Center, Department of Agricultural
Economics, Texas A&M University*
---------------------------------------------------------------------------
*There was no response from the witness by the time this hearing
was published.
---------------------------------------------------------------------------
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Question. Last year, the Department of Agriculture requested a $1.5
million appropriation for Foreign Agricultural Service staffing at the
United States Embassy in Havana, Cuba. This was approved by the Senate
Appropriations Committee in their bill to fund Agriculture Department
activities over this fiscal year.
To the knowledge of your research center, what restrictions
currently apply to the Market Access Program and the Foreign Market
Development Program regarding use of their funding to promote
agricultural exports to Cuba?
Answer.

THE NEXT FARM BILL

(RURAL DEVELOPMENT AND ENERGY PROGRAMS)

----------

THURSDAY, MARCH 9, 2017

House of Representatives,
Subcommittee on Commodity Exchanges, Energy, and Credit,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Austin
Scott of Georgia [Chairman of the Subcommittee] presiding.
Members present: Representatives Austin Scott of Georgia,
Goodlatte, Davis, Comer, Marshal, Faso, David Scott of Georgia,
Kuster, Plaskett, O'Halleran, Soto, and Peterson (ex officio).
Staff present: Darryl Blakey, Emily Wong, Haley Graves,
John Weber, Josh Maxwell, Paul Balzano, Stephanie Addison, Evan
Jurkovich, Liz Friedlander, Troy Phillips, Faisal Siddiqui,
John Konya, and Carly Reedholm.

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

The Chairman. Well, good morning everyone. Welcome to the
Commodity Exchanges, Energy, and Credit Subcommittee's first
hearing of the new Congress. Today's hearing is part of an
ongoing series where each Subcommittee is holding at least two
hearings to discuss the farm bill programs and issues under its
respective jurisdiction.
Before I go any further, I would like welcome Mr. Comer to
his first meeting of the Subcommittee, and to the Subcommittee.
David, were all of your people on the Subcommittee last year?
Mr. David Scott of Georgia. No, we have two new Members,
Mr. Chairman. And I would like to welcome our new Members who
are on their way to our hearing. First, Tom O'Halleran from
Arizona. He serves in Arizona's First Congressional District.
It is good to know a little about his background. He is a
former homicide detective, small business owner, what a
combination, and served three terms in the Arizona House of
Representatives and one in the Senate.
We also have Mr. Darren Soto from Florida, District Nine.
Serves Florida's Ninth Congressional District, which is a
prominent citrus and cattle district. He served in the Florida
Legislature for a decade before coming to Congress.
And so we welcome all our new Members, and look forward to
working with each and every one of them.
The Chairman. I want to thank you, Ranking Member Scott,
for again agreeing to serve in the leadership of this
Subcommittee. I look forward to working with you again. We have
had a good relationship for many years, long before I came to
Congress, going back to our time together in the state
legislature.
Mr. David Scott of Georgia. Absolutely.
The Chairman. We have a couple of other Members that will
be joining us later. I know we have Representative Roger
Marshal from Kansas' First District, and Representative John
Faso from New York's 19th District on the Republican side.
Today, we are going to be reviewing the rural development
and energy programs in the 2014 Farm Bill. These programs
support infrastructure construction, encourage capital
formation, and help to promote economic development across
rural America.
It is appropriate that this is the topic of the first
hearing in support of the next farm bill. So much of what rural
America will be able to accomplish over the next decade will be
tied to how well these programs work.
Every day our young rural citizens look around them, assess
their lives, and try to make the best choices they can about
their future. Unfortunately, too many feel that they have more
opportunities somewhere else, and when they leave, they leave
behind hollowed-out communities that grow older, that become
less adaptable, and that are unable to maintain their quality
of life that so many of us has enjoyed.
With today's hearing, we will begin to examine ways we can
reverse that cycle.
For many rural communities, rural development initiatives
help to offset the high fixed costs of providing basic services
like clean water, reliable electricity, and universal phone
service. Residents of these communities simply would not be
able to afford to live there without these key investments.
Federal support for infrastructure remains a key part of our
commitment to rural America. But, our commitment to rural
America is not just about new pipes and wires. While we often
think of progress as a new powerline, a new water treatment
plant, or a new broadband connection, real progress is about
expanding opportunities. We must use these programs to narrow
the divide between rural and urban America.
Upgrading water and energy infrastructure can improve
quality of life, while bringing new employment opportunities.
Building a new health center can bring new care for families.
Installing broadband can bring new ideas to students and
innovation to farmers and ranchers. Renewable energy
development can create valuable markets and income
opportunities for farmers, keeping them on the land, and viable
domestic energy policies can create new job opportunities in
rural communities. Providing investment capital can further
link agricultural producers with the global economy. The jobs,
the health care, the ideas, and the market access are the real
measures of progress for rural America.
For almost 90 years, USDA's Rural Development office and
its predecessors have been working to bring opportunities to
rural residents. As we begin work on the next farm bill, I am
looking forward to hearing from our witnesses about how
Congress can improve the initiatives we have in place. Rural
development and energy programs in the farm bill will need to
find ways to do more with less due to budget constraints. I
look forward to the creative ideas from our witnesses about how
we can grow opportunities and rebuild rural communities.
[The prepared statement of Mr. Austin Scott follows:]

Prepared Statement of Hon. Austin Scott, a Representative in Congress
from Georgia
Good morning everyone. Welcome to the Commodity Exchanges, Energy,
and Credit Subcommittee's first hearing of the new Congress. Today's
hearing is part of an ongoing series where each Subcommittee is holding
at least two hearings to discuss the farm bill programs and issues
under its respective jurisdiction.
Before I begin, I'd like to thank Ranking Member Scott for again
agreeing to serve with me in the leadership of this Subcommittee. I am
looking forward to working with you again this Congress.
In addition I want to welcome our new Members to the Subcommittee.
On the Republican side we have: Representative James Comer from
Kentucky's First District, Representative Roger Marshal from Kansas'
First District, and Representative John Faso from New York's Nineteenth
District.
I yield to Ranking Member David Scott to introduce his new Members.
Today, we're going to be reviewing the rural development and energy
programs in the 2014 Farm Bill. These programs support infrastructure
construction, encourage capital formation, and help to promote economic
development across rural America.
It is appropriate that this is the topic of our first hearing in
support of the next farm bill. So much of what rural America will be
able to accomplish over the next decade will be tied to how well these
programs work.
Every day our young rural citizens look around them, assess their
lives, and try to make the best choices they can about their futures.
Unfortunately too many feel they have more opportunities somewhere
else, and when they leave, they leave behind hollowed-out communities
that grow older, that become less adaptable, and that are unable to
maintain their quality of life.
With today's hearing, we will begin to examine ways we can reverse
that cycle.
For many rural communities, rural development initiatives help to
offset the high fixed costs of providing basic services like clean
water, reliable electricity, and universal phone service. Residents of
these communities simply would not be able to afford to live there
without these key investments. Federal support for infrastructure
remains a key part of our commitment to rural America.
But, our commitment to rural America is not just about new pipes
and wires. While we often think of progress as a new powerline, a new
water treatment plant, or a new broadband connection, real progress is
about expanding opportunities. We must use these programs to narrow the
divide between rural and urban America.
Upgrading water and energy infrastructure can improve quality of
life while bringing new employment opportunities. Building a new health
center can bring new care for families. Installing broadband can bring
new ideas to students and innovation to farmers and ranchers. Renewable
energy development can create valuable markets and income opportunities
for farmers, keeping them on the land, and viable domestic energy
policies create new job opportunities in rural communities. Providing
investment capital can further link agricultural producers with the
global economy. The jobs, the healthcare, the ideas, and the market
access are the real measures of progress for rural America.
For almost 90 years, USDA's Rural Development office and its
predecessors have been working to bring opportunities to rural
residents. As we begin work on the next farm bill, I am looking forward
to hearing from our witnesses about how Congress can improve on the
initiatives we have in place.
Rural development and energy programs in the farm bill will need to
find ways to do more with less. I look forward to creative ideas from
our witnesses about how we can grow opportunities and rebuild rural
communities.
With that, I will turn it over to our Ranking Member, Mr. David
Scott, for any comments he would like to make.

The Chairman. With that, I will turn it over to our Ranking
Member, Mr. David Scott, for any comments he would like to
make.

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

Mr. David Scott of Georgia. Thank you, Mr. Chairman, and
thank you for holding this important hearing today. It is a
very, very important topic for so many of our American
citizens.
And I would like to extend a warm welcome to all of our
witnesses. They are very distinguished and knowledgeable. We
look forward to hearing from them. And I especially want to
send a very warm greeting to Mr. Dennis Chastain. Mr. Dennis
Chastain is the President and the CEO of Georgia EMC, from
Tucker, Georgia. We are delighted to have you. Welcome, and I
look forward to your testimony.
Mr. Chairman, rural development and energy programs that we
are going to take a look at today are, in many respects, what I
call the unsung heroes of the farm bill. While all of our farm
bill programs are good and very much needed for rural America,
these programs in rural development and energy specifically aim
to help keep our rural economies' engines running by providing
new opportunities, continued progress, and assisting our most
vulnerable populations.
And I am always amazed at the breadth of our rural
development programs, when I look at them or hear about them
from my constituents in Georgia. These programs; rural
development and energy, help keep the lights on for our rural
residents by doing four, four, very important things. First,
they provide broadband access; second, they give our rural
businesses and entrepreneurs access to hard-to-find capital;
third, they help our farmers' bottom lines; and fourth, they
help provide the essential community facilities that keep a
community going and viable, like emergency response, schools,
hospitals, roads, and long-term care housing. It is really
remarkable when you think about all that we ask the Department
of Agriculture to do, and the vision needed to make these very
important programs work.
Our witnesses today are going to touch on some of the most
important rural development and energy programs that the USDA
is administering, and how these programs are working on the
ground. Even with the remarkable scope of these programs, it is
very critical, Mr. Chairman, that our Committee take a hard
look to make sure that they are working the way they are
intended to. And hopefully we can get some feedback from our
distinguished guests on how we can make sure the programs are
working as they are intended to, and if there is anything that
we can do to improve the situation, to do differently, to help
these programs work better for the folks who use them, and help
better accomplish priorities on the ground.
Rural development touches every state in our country, and
is absolutely critical to the health of our nation's economy.
Mr. Chairman, I look forward to hearing from our witnesses
today and delving into these challenges rural development is
facing, and the success that we have seen.
Thank you, Mr. Chairman.
The Chairman. Thank you, Ranking Member Scott.
I also have a letter from Farm Credit that I understand
that you would like to submit on behalf of both of us, and
without objection, we will accept that letter.
Mr. David Scott of Georgia. Yes, I do.
[The letter referred to is located on p. 169.]
Mr. David Scott of Georgia. Here it is.
The Chairman. Thank you.
The chair would request that other Members submit their
opening statements for the record so the witnesses may begin
their testimony, and to ensure that there is ample time for
questions.
The witnesses for panel one, one, I would like to welcome
you to the table, the Honorable Bob Fox, Chair of Renville
County Board of Commissioners, Franklin, Minnesota, on behalf
of the National Association of Counties. Mr. Dennis Chastain,
President and CEO of Georgia EMC, Tucker, Georgia, on behalf of
the National Rural Electric Cooperative Association. Mr. Steve
Fletcher, Manager and Operator, Washington County Water
Company, Nashville, Illinois, on behalf of the National Rural
Water Association. Mr. Craig Cook, Chief Operating Officer,
Hill Country Telephone Cooperative, Inc., Ingram, Texas, on
behalf of NTCA--The Rural Broadband Association. Mr. John Duff,
Strategic Business Director, National Sorghum Producers,
Lubbock, Texas. The Honorable Jim Greenwood, CEO, Biotechnology
Innovation Organization, Washington, D.C.
Congressman Greenwood, welcome back to Washington.
Chairman Fox, please begin when you are ready.

STATEMENT OF HON. BOB FOX, CHAIR, BOARD OF
COMMISSIONERS, RENVILLE COUNTY, MN; MEMBER, BOARD OF DIRECTORS,
NATIONAL ASSOCIATION OF COUNTIES, FRANKLIN, MN

Mr. Fox. Chairman Scott, Ranking Member Scott, and Members
of the Subcommittee, thank you for the opportunity to join you
today.
My name is Bob Fox, and I serve on the Board of County
Commissioners for Renville County, Minnesota, and I am also
here today representing the National Association of Counties.
Renville County is located 90 miles west of Minneapolis,
with a population of almost 16,000. As a key member of
intergovernmental partnership, counties are responsible for
making significant investments in our nation's essential
infrastructure, maintaining our nation's justice and public
safety, and investing in community health systems.
Every day, county leaders make decisions to influence both
local and national prosperity, while shaping the quality of
life in America. Counties play a pivotal role in rural economic
development, but face increasing challenges to provide critical
programs and services to American families. Despite the
critical role our counties play in our nation's economy, too
many Americans in rural areas are not sharing in our nation's
economic growth. Rural America is still feeling the effects of
the Great Recession. Like many rural counties around the
country, our farm-based economy in Renville County has suffered
a long economic downturn. After 9 years of decline, we lost
close to ten percent of our jobs we had in 2002. Today, many
rural counties are experiencing a strain on local funding
options due to declining populations, stemming from aging, out-
migration, and job loss. Ongoing population losses reduce tax
base which has a direct effect on our ability to fund and
finance programs and services. Additionally, 42 states impose
some type of limitation on the counties to increase property
taxes, restricting our ability to raise revenue.
Rural counties are also experiencing a rising cost of
construction. In Renville County, our ag industry requires a 10
ton road system to allow five-axel semi-trailer trucks to move
crops to market. In 2004, it cost less than $300,000 to build a
1 mile, 10 ton road. Today, the cost for that same road is $1
million per road mile.
With these challenges in mind, we have specific
recommendations on how to use the next farm bill to ensure the
vitality of our under-served counties, while positioning rural
America to compete in an ever-expanding global market.
First, the entire Rural Development portfolio is critical
for ensuring long-term economic competitiveness of our rural
counties and nation at large. USDA's Rural Utilities Service
invests billions to help counties to provide safe water, high-
speed broadband Internet, while programs like Rural Business
Development Grant Program, and Intermediary Relending Program
under the Rural Business--Cooperative Service provides grants
and competitive direct loans to counties to help expand small
businesses and business facilities.
And under the Rural Housing Service, which brings me to my
second point, the Community Facilities Direct Loan and Grant
Program is an essential tool for counties to address the unique
needs of rural communities. The Community Facilities Program
provides counties with flexible, affordable funding, and
financing to help develop essential community facilities. We
use these funds to purchase, construct, improve essential
facilities like hospitals, childcare centers, assisted living
facilities. Additionally, these funds can be used to purchase
equipment and pay for project expenses.
In my county, our aging critical access hospital was unable
to meet the increasing demand for outpatient care. Through the
Community Facilities Program, in 2015, Renville County was able
to build the Renville County Medical Center, a 65,000\2\
facility, which includes 18 exam rooms, 16 inpatient suites,
outpatient and specialty clinics, and a telemedicine suite.
This investment through the Community Facilities Program helped
to change our overall outlook on the health of our community
and economy.
Last, the Strategic Economic and Community Development
Program incentivizes regional collaboration, and should remain
a priority in the new farm bill. This program allows USDA to
direct investments toward projects that support strategic,
economic development plans across multi-jurisdictional areas.
Thus, rural counties are now able to increase the likelihood of
funding key economic development projects through regional
collaboration. This program is a positive step for our nation's
rural counties and should continue to be a priority in our next
farm bill.
In closing, counties need a strong Federal,
intergovernmental partner, and a robust rural development title
in the next farm bill to help serve America's rural
communities. Your support for these programs will not only
ensure the vitality of under-served counties, but also position
rural America to compete in a global market.
Thank you, Mr. Chairman, and Members of the Committee for
the opportunity to testify today, and I look forward to your
questions.
[The prepared statement of Mr. Fox follows:]

Prepared Statement of Hon. Bob Fox, Chair, Board of Commissioners,
Renville County, MN; Member, Board of Directors, National Association
of Counties, Franklin, MN
Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee, thank you for the opportunity to join you today to
discuss the challenges and opportunities counties face in delivering
critical programs and services to rural communities and the pivotal
role the next farm bill will play in helping to address development in
rural America.
My name is Bob Fox and I have served on the Board of County
Commissioners for Renville County, Minnesota since 2002. I am also here
today representing the National Association of Counties (NACo) where I
serve on the NACo Board of Directors, the Agriculture and Rural Affairs
Policy Steering Committee and Rural Action Caucus. I live on a fourth-
generation farm that has been in my family for over 100 years.
Renville County is a very rural county located 90 miles west of
Minneapolis with a population of almost 16,000 residents. Renville
County has a diverse agricultural economy--producing corn, soybeans,
edible beans, peas, sweet corn, and sugar beets. On our southern border
we also have the Minnesota River Valley and some of the oldest granite
deposits in North America.
Founded in 1935, NACo is the only national organization that
represents our nation's 3,069 counties. NACo brings together county
officials from across the country to advocate with a collective voice
on national policy, exchange ideas and build new leadership skills,
pursue transformational county solutions, enrich the public's
understanding of county government and exercise exemplary leadership in
public service.
About Counties
As key intergovernmental partners with the states and Federal
Government, counties are responsible for delivering a broad array of
programs and services that provide a foundation for prosperous
communities with strong and stable economies. To achieve this
foundation, counties make significant investments in our nation's
essential infrastructure; maintain our nation's justice and public
safety system; and invest in community health systems, including
hospitals, nursing homes, public health, mental health and substance
abuse programs.
Transportation and infrastructure are core public-sector
responsibilities and the driving force for connecting communities and
strengthening our economy. Counties are the single largest stakeholder
in our nation's transportation infrastructure system--owning and
maintaining over 45 percent of our nation's roads and 40 percent of our
nation's bridges. Collectively, counties annually invest over $550
billion in our nation's essential infrastructure including more than
$100 billion each year on roads, bridges, transit and water systems.
Counties are also responsible for the health and well-being of our
communities. We invest over $83 billion each year to support over 1,900
public health departments, nearly 1,000 county-owned hospitals, 900
nursing homes and 750 behavioral health authorities.
Additionally, counties play a major role in two main areas of
justice and public safety: emergency response and preparedness and the
criminal justice system. Each year, counties invest almost $93 billion
for justice and public safety services including the operation of 3,041
police and sheriff departments and 2,785 jails.\1\
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\1\http://www.naco.org/counties-matter.
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The decisions that county leaders make every day influence both
local and national prosperity while shaping how communities grow and
contribute to Americans' quality of life.
Today, I would like to discuss some of the primary challenges for
counties to fund and finance rural economic development projects and
highlight how Congress can help us tackle these challenges. Throughout
my testimony today, I will underscore two main points for the Committee
to consider as you begin work on the next farm bill. These points
include:

Counties play a pivotal role in rural economic development
but face increasing challenges to provide critical programs and
services to America's families.

The farm bill is imperative to ensuring the vitality of our
under-served communities, but also positioning rural America to
compete in an ever-expanding global economy.

The farm bill is a major priority for all our nation's counties--
rural and urban alike. As the governing authority over the U.S.
Department of Agriculture, the farm bill is critical for counties who
are responsible for delivering and administering vital services to many
of our nation's under-served families. From clean water and broadband
infrastructure to nutrition assistance and energy conservation--the
farm bill helps all of America's counties provide a strong foundation
for a better tomorrow.
While the farm bill has an impact on the daily lives of all
Americans, it is particularly important for our nation's rural
families. Roughly \2/3\ of the nation's 3,069 counties are considered
rural with a combined population of 60 million. Rural counties are
responsible for the vast majority of food, energy, and environmental
benefits for the rest of the country. Additionally, rural communities
are the source of nearly 90 percent of renewable water resources, and
home to important service sector and manufacturing hubs.
Counties Play a Pivotal Role in Rural Economic Development But Face
Increasing Challenges To Provide Critical Programs and Services
to America's Families
Despite the critical role rural counties play in our nation's
economy, too many Americans in rural areas are not sharing in our
nation's economic growth.

To help provide a national perspective on how county economies are
faring from year to year, NACo releases County Economies,\2\ an annual
report examining economic recovery and growth patterns across the
nation's 3,069 county economies. The report is developed from an
analysis of data from Woods and Poole Economics and focuses on the
annual changes in four economic performance indicators in each county:
economic output (GDP), employment, unemployment rates and home prices.
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\2\http://www.naco.org/resources/county-economies-2016-widespread-
recovery-slower-growth.
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According to our analysis, Rural America is still feeling the
effects of the Great Recession. After a decade, almost \1/2\ of small
county economies have yet to return to pre-recession jobs levels
compared to only 13 percent of large county economies. My own county
economy, Renville County, Minnesota, has yet to recover all the jobs
lost during the last recession. Like many rural counties around the
country, our farm-based economy has suffered a long economic downturn.
After 9 years of decline, we lost close to ten percent of the jobs we
had in 2002.
Economic growth is also slowing down across rural counties. The
overwhelming majority of rural county economies added jobs at a slower
pace in 2016 relative to 2015. In my home state of Minnesota, job
growth accelerated in only seven percent of county economies last year.
Last, Americans are feeling it in their pocketbooks as well. Wages
in most rural county economies are growing slower than last year.\3\
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\3\http://www.naco.org/resources/county-economies-2016-widespread-
recovery-slower-growth.

Rural counties also face numerous challenges that strain local
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funding options.

Today, many rural counties are experiencing declining populations
due both to aging and out-migration. Ongoing population losses reduce
our tax base, which has a direct effect on our ability to fund and
finance programs and services within our communities.
Local property taxes remain the major source of revenue for
counties. Thus, trends in property values can significantly impact
county revenues and expenditures.
Additionally, 42 states impose some type of limitation on counties'
ability to increase property taxes, further exacerbating the situation.
Only 12 states authorize counties to collect their own local gas taxes,
which are limited to a maximum rate in most cases and often require
additional citizen and/or state approvals for implementation.
These hurdles significantly impact counties' ability to effectively
raise additional revenue to pay for services and infrastructure. Due to
these state and focal funding constraints, rural counties depend on a
strong state and Federal partnership to deliver critical investments to
help bolster our local and national economy.

Rural counties are also experiencing rising costs of construction
projects.

In addition to numerous limitations on local revenue sources,
counties are facing rising costs for infrastructure projects. Based on
the American Road and Transportation Builders Association's highway
construction price index, the cost of construction, materials and labor
for highway and bridge projects increased 44 percent between 2000 and
2013, outpacing the 35 percent increase in general inflation.
In my county, we own and maintain 711 road miles and 218 bridges
which are critical to not only our local communities, but to our
overall economy and our shipment of goods to market. This critical
infrastructure has become more expensive to repair and upgrade. Over
the next 7 years, Renville County has over 50 bridges that will require
additional maintenance costing the county an estimated $12 million. Our
county requires a 10 ton road system to allow for the five-ax[le] semi-
trailer trucks to move crops to market. To support the necessary
investments in our ailing infrastructure, in 2012, we made the
difficult decision to raise property taxes and to bond for the needed
improvements.
Our greatest challenge is ensuring that we can build and maintain a
safe, robust and efficient infrastructure system that allows Renville
County and Minnesota to remain competitive in an increasingly global
marketplace.

The farm bill is imperative to ensuring the vitality of our under-
served counties, but also positioning rural America to compete in an
ever-expanding global economy.

Unfortunately, rural counties today face many challenges that
further diminish our ability to deliver critical infrastructure and
economic development projects. As we look ahead to the next farm bill,
it is imperative that we strengthen the U.S. Department of
Agriculture's (USDA) Rural Development programs and streamline the
application process while providing the flexibility for local
governments to leverage funding and financing to fit the unique needs
of our nation's rural communities. Therefore, there are three main
points I would like to make as the Committee develops a comprehensive
rural development title as part of the next farm bill.
First, the overall USDA Rural Development portfolio of programs
should continue to help to ensure the long-term economic
competitiveness of our rural counties and the nation at-large. The
continued commitment to our nation's rural communities through USDA's
Rural Development Programs help strengthen the intergovernmental
partnership and our shared goals of promoting economic prosperity and
opportunity across the country.
In 2016, USDA's Rural Utilities Service (RUS) invested more than
$13.9 billion to help counties provide safe water to over 19.5 million
residents and brought high-speed broadband Internet to over six million
new users.\4\
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\4\https://www.rd.usda.gov/files/USDARDProgressReport2016.pdf.
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Under the Rural Business--Cooperative Service (RBS), USDA created
more than 791,000 jobs through rural business grants and loans in 2016.
Since FY 2009, RBS has invested more than $11.5 billion--including $1.2
billion in Fiscal Year 2016 alone--to support rural businesses. The RBS
helps provide capital, technical support and educational opportunities
to spur growth in the rural workforce.\5\
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\5\https://www.rd.usda.gov/files/USDARDProgressReport2016.pdf.
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Programs like the Rural Business Development Grant Program and the
Intermediary Relending Program promote rural economic growth by
providing grants and competitive direct loans to counties to help start
or expand small businesses and business facilities.
USDA's Rural Housing Service (RHS) helps counties obtain grants,
loans and loan guarantees for multi-family housing, child care centers,
emergency and first-responders stations, schools and hospitals. Since
2009, RHS has helped approximately 1.2 million rural Americans buy,
refinance or repair their homes and invested more than $12 billion in
essential community projects.\6\
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\6\https://www.rd.usda.gov/files/USDARDProgressReport2016.pdf.
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Second, the Community Facilities Direct Loan and Grant Program--
under RHS--should continue to serve as an essential tool for counties
to fund and finance critical programs and services to fit the unique
needs of rural communities. Through the Community Facilities program,
rural counties are provided flexible and affordable funding and
financing to help develop essential community facilities. These funds
can be used to purchase, construct or improve essential facilities like
hospitals, child care, assisted living facilities, courthouses and
transitional housing. Additionally, these funds can be used to purchase
equipment and pay for related project expenses. This program is
relevant to rural communities with less than 20,000 residents per the
latest U.S. Census Data.
The Community Facilities Program uses a combination of grants,
direct loans and guaranteed loans to help fund and finance critical
infrastructure projects in rural counties. Applications for funds are
graded on a point system using a combination of population and median
household income levels.
For direct loans under the Community Facilities Program, the
interest rates are set by USDA Rural Development--typically around 2.3
percent--and remain fixed for the entire term of the loan.
Additionally, loan amortization terms must not exceed the ``useful life
of the facility,'' the applicant's authority, or 40 years--whichever is
less.
Additionally, applicants must be unable to finance the project from
their own resources or through commercial credit at reasonable rates
and terms. This is an important distinction to make as the Community
Facilities Program is oftentimes the only option for rural communities
in need of providing critical programs or services that are otherwise
out of the fiscal reach of the county.
In 2016 alone, the Community Facilities Program invested
approximately $2.5 billion in 1,354 community infrastructure projects
to help serve approximately 26.4 million rural residents including over
$875 million in 134 rural health care facilities, and over $862 million
for 257 rural education infrastructure projects.
Since 2008, the Community Facilities Program has invested over $648
million in Minnesota to support over 430 essential community facilities
serving 1.95 million residents.
In my county, increased demand for outpatient care required more
preventative and diagnostic care spaces. Unfortunately, our aging
critical access hospital was unable to meet the increasing demands of
our county's healthcare needs.
Through the Community Facilities program, in 2015 Renville County
was able to build the Renville County Hospital and Clinic Medial
Center--a 65,000\2\ facility which includes 18 exam rooms and a
procedure room in the ambulatory clinic; 16 inpatient suites; lab,
radiology, therapy, outpatient and specialty clinics; two operating
rooms and an educational center. The program provided a direct loan of
$18.9 million and a guaranteed loan of $4.7 million to help replace a
county-owned critical access hospital.
As a result of this funding, the new facility has driven our
physician recruitment efforts over the past 3 years at Renville County
Hospital and Clinic. New physicians are being drawn to work at a state-
of-the-art medical center which has been critical in meeting the
increasing demands on patient care services.
The USDA Community Facilities Program has helped change our overall
outlook on the health of our community and economy. USDA has long been
considered a trusted partner to Renville County. This familiarity and
willingness to work together served as a catalyst to launch the
development of our new Renville County Hospital and Clinics medical
center.
Third, the Strategic Economic and Community Development program
should remain a priority in the new farm bill for incentivizing
regional collaboration. Commonly referred to as the ``regional
language,'' Section 6025 of the 2014 Farm Bill created the Strategic
Economic and Community Development (SECD) program which allows USDA
Rural Development to direct investments towards projects that support
strategic economic and community development plans across multi-
jurisdictional areas.
Through the new provision, individual projects can receive
additional priority funding points by meeting a few criteria that
demonstrate its role as part of a larger regional economic development
plan. Thus, rural counties are now able to increase the likelihood of
funding key economic development projects through regional
collaboration.
The SECD Program created a ten percent set-aside under four Rural
Development programs across the entire agency to help support the new
provision. These programs included the Community Facilities Program
under RHS, the Water and Waste Disposal Program under RUS, and both the
Rural Business Development Grants Program, and the Business & Industry
Guaranteed Loans Program under RBS.
In 2016, 114 applicants were given the ``Regional Development
Priority'' consideration for a combined total of over $85 million in
funding and financing.\7\
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\7\https://www.rd.usda.gov/files/USDARDProgressReport2016.pdf.
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Rural counties can no longer plan inside a silo. We must look to
our regional partners to identify and leverage our collective assets to
ensure the long-term vitality and stability of our local economy.
Through the SECD Program, counties are able to invest in local economic
development efforts that serve as a foundation for future investments
to help better promote our regional assets. This program is a positive
step for our nation's rural counties and should continue to be part of
the rural development title as you begin developing our next farm bill.
In closing, counties need a strong Federal intergovernmental
partner--and a robust rural development title in the next farm bill--to
help deliver critical programs and services to America's rural
communities. USDA rural development programs--like Community Facilities
and the Strategic Economic and Community Development program--help
counties make essential investments in rural communities which
subsequently strengthen both the local and national economy. Your
support for these programs will not only ensure the vitality of our
under-served counties, but also position rural America to compete in an
ever-expanding global market.
Thank you, Mr. Chairman and Members of the Committee for the
opportunity to testify today and I look forward to your questions.

The Chairman. Mr. Fox, you did an exceptionally good job.
Four minutes and 19 second on that timer up there works just
right, if the rest of you can do the exact same thing, it would
be perfect.
Thank you, Mr. Fox. Mr. Chastain.

STATEMENT OF DENNIS L. CHASTAIN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, GEORGIA ELECTRIC MEMBERSHIP CORPORATION, TUCKER, GA;
ON BEHALF OF NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION

Mr. Chastain. Thank you, Chairman Scott, and Ranking Member
Scott, for inviting me to testify today. It is an honor to be
here to help lay the groundwork for the next farm bill. And I
am proud that two fellow Georgians are in leadership positions
that have influence over a bill that is vitally important to
the electric cooperatives in Georgia and across the nation.
I am the President and CEO of Georgia EMC. Georgia EMC is
the trade association that represents the 41 not-for-profit
electric distribution cooperatives in the State of Georgia, as
well as our state's power generation and transmission
cooperatives. Collectively, Georgia's 41 EMCs serve about \1/2\
the population of Georgia, over 75 percent of the land area of
Georgia, and we employ over 5,000 Georgians in our operations.
I am here today not only representing the electric
cooperatives in Georgia, but I am also here representing the
National Rural Electric Cooperative Association that represents
all of America's electric cooperatives.
While our first business priority is to deliver reliable,
affordable electricity to our members, our purpose is much
greater than that. We exist to benefit the communities we
serve. We are more than just poles, wires, transformers, and
electrons. Electric cooperatives are the engines that drive
economic opportunity across the heartland and rural areas of
America. That is why the farm bill is essential for electric
cooperatives, for Georgia, and for the nation. The farm bill
contains important rural development tools that support our
efforts to strengthen our communities, and I would like to talk
about just a few.
Since 1936, loans from the REA, now the Rural Utilities
Service at USDA, have helped build, expand, and improve the
infrastructure across rural America necessary to deliver power,
clean water, and other critical services. That public-private
partnership has been, in my opinion, the greatest single rural
economic development program of the 20th century. It made farms
more productive and rural life more desirable. Rural
electrification attracted new business to rural areas, brought
modern medicine where it couldn't reach before, and improved
the overall quality of life in rural America. That fundamental
task of improving the lives of our nation's rural citizens is
as important now as it has ever been.
The RUS depends on the yearly appropriations from the
Agriculture Appropriations bill. We are grateful that Chairman
Conaway and Ranking Member Peterson have consistently led a
bipartisan letter with several hundred other Congressional
signatures to appropriators advocating for robust RUS funding.
Part of our support comes from the fact that we are such a
good investment for the Federal Government. The President's
budget request for 2017 estimates that the Federal Government
could earn up to $300 million in net revenue from RUS loans in
this year alone. We thank you for your past support of RUS, and
ask that you please continue to provide that support.
In addition to investing in the electric cooperative
network, the fees paid on RUS loans are used to fund Rural
Economic Development Loans and Grants, known as the REDL&G
Program. In Georgia and around the country, this program has
helped expand businesses, renovate hospitals, and improve
essential infrastructure in rural communities. We believe the
REDL&G Program is a valuable tool in offsetting population
flight and job losses in rural Georgia and around the country.
For years, electric cooperatives across the country have
provided information and advice to consumers to help them use
electricity more efficiently and cost-effectively. The Rural
Energy Savings Program Act included in the last farm bill was
modeled in part on a program at Habersham EMC in northeast
Georgia. This unique program that allows co-op homeowners to
finance energy efficiency upgrades in their homes, and then pay
those loans back on their monthly power bills. The efficiency
gains resulted in a net savings to the consumer.
We encourage you to maintain the Rural Energy Savings
Program and the Energy Efficiency and Conservation Loan
Program. We believe these programs can help others around the
country replicate Georgia's successes in saving energy and
saving our member owners money.
Just as with other types of infrastructure, rural America
can't be competitive without access to high-speed broadband
service. Some electric co-ops around the country are interested
in helping connect rural customers to those services. While we
are not a silver bullet by any means, we understand these rural
communities, want to see them succeed, and know that adequate
broadband service is a key to their future competitiveness in
our modern global economy. As Congress contemplates
telecommunication and infrastructure policies in the farm bill
and other legislative packages, we believe that all potential
providers, including electric cooperatives, should be eligible
for programs designed to bridge the digital divide.
Electric cooperatives enjoy a productive partnership with
the Federal Government and with the communities we serve to
promote the health of rural America. We look forward to
continuing to work with you towards that important goal.
Thank you, and I am happy to answer any questions you may
have.
[The prepared statement of Mr. Chastain follows:]

Prepared Statement of Dennis L. Chastain, President and Chief Executive
Officer, Georgia Electric Membership Corporation, Tucker, GA; on Behalf
of National Rural Electric Cooperative Association
Thank you, Chairman Scott and Ranking Member Scott, for inviting me
to testify. It's an honor to be here today to help lay the groundwork
for the next farm bill. I'm proud that two fellow Georgians have such
influence over a bill that is so important to electric cooperatives.
My name is Dennis Chastain. I am the current President and CEO of
the Georgia Electric Membership Corporation, but I've worked for
electric co-ops for 30 years in a variety of economic development
roles. I am here today representing Georgia EMCs and the National Rural
Electric Cooperative Association.
Georgia EMC is a statewide trade association representing the
state's 41 EMCs, Oglethorpe Power Corporation, Georgia Transmission
Corporation, and Georgia System Operations Corporation. Altogether,
customer-owned EMCs provide electric power and related services to over
4.5 million people in Georgia--nearly \1/2\ the population--across 73
percent of the state's land area. And we employ over 5000 people.
While our first business priority is to deliver reliable,
affordable electricity to our members, our purpose is much greater than
that. We exist to benefit the communities we serve. We are more than
just a poles, wires, and electrons company. Our broader purpose is to
provide the power that empowers our communities to thrive. We are much
more than just small electric utilities--we are the engines that drive
economic opportunity across the heartland and rural areas everywhere.
Co-ops have been supporting rural America for almost 80 years, and
in many ways that job is more important now than it ever has been.
Rural areas still grow most of the food, generate most of the power,
and manufacture most of the goods that this country consumes. When
rural areas suffer, electric cooperatives suffer and, more importantly,
the country as a whole suffers. That is why the farm bill is essential
for co-ops, for Georgia, and for the country. The farm bill contains
important rural development tools that support our efforts to
strengthen our communities.
I'd like to start by asking you to think broadly about what rural
economic development is. There were few greater developments in our
country's history than the electrification of rural America. It made
farms more productive and rural life more desirable. It allowed kids to
go to school, attracted new business, and brought in modern medicine
where it couldn't reach before.
While the lights came on nearly 80 years ago, rural development is
just as essential in 2017. For example, in some areas of the country,
we are today with Internet access where we were with electricity at the
beginning of the last century. Without access to high speed Internet,
rural America won't be able to compete. I would also argue that efforts
to modernize the grid and improve energy efficiency are important for
rural development because they make life more affordable, secure and
convenient for the people who live there. In all these cases, electric
cooperatives will continue to play instrumental and innovative roles in
keeping rural America vibrant in the 21st century.
Rural Utilities Service (RUS)
In the early 1900's, as urban areas began to electrify, rural areas
lagged behind. Eventually, farmers and ranchers in remote areas took
the initiative to form electric cooperatives and did the work
themselves. As a Georgian, I have to note that it was at Warm Springs,
in my home state, that President Franklin Roosevelt saw firsthand the
access and cost challenges faced by rural electricity consumers and
recognized the important role of the electric cooperative. That's why,
on May 11, 1935, he signed an executive order creating the Rural
Electrification Administration and supported subsequent legislation to
formalize the partnership that allowed electric cooperatives to access
affordable credit from the Federal Government to finance that
infrastructure.
In the past 80 years, a lot has changed, but the same fundamental
challenge still exists--how to affordably connect those few customers
in high cost rural areas. What was then called the Rural
Electrification Administration is now the Rural Utilities Service and
it's as relevant today as it was back then. REA and RUS loans have
helped build, expand and improve the infrastructure across rural
America necessary to deliver power, clean water, and other necessities.
It has been the most successful public-private infrastructure
investment program in the history of the country.
RUS loans help electric co-ops reduce costs and improve reliability
for our members by financing basic maintenance like replacing poles and
wires. But it also helps us fund projects to make our systems more
modern, efficient, and secure.
RUS depends on a yearly appropriation from the Agriculture
Appropriations bill. We are grateful that Chairman Conaway and Ranking
Member Peterson have consistently led a bipartisan letter with several
hundred signatures to appropriators advocating for robust RUS funding.
Part of our support comes from the fact that we are such a good
investment for the Federal Government. The President's Budget request
for 2017 estimated that the Federal Government could earn up to $300
million in net revenue from RUS loans. We thank you for your past
support of RUS, and ask that you please continue to provide that
support.
We also ask that you support policies that allow us to use RUS
loans to address a broad set of co-op needs--whether for generation,
transmission and distribution of baseload power, for integration of
renewables, for making environmental upgrades to existing generation,
or for adopting new technologies that make the grid ``smarter.''
Just as the times have changed and the needs of rural America have
changed, so too has the RUS loan program. We have appreciated working
with the Committee over the years to help make the program more
streamlined and efficient, and we look forward to exploring new ways to
continue to improve the program. Modernizing the RUS loan program is
good for borrowers (electric co-ops) and taxpayers. The RUS annually
reviews and approves billions of dollars of loans, and finding ways to
more efficiently process those loans reduces burdens on taxpayers while
meeting borrowers' needs more quickly as well.
Guaranteed Underwriter Program
Another important financing option available to electric
cooperatives is loans from cooperative banks. Cooperative lenders add
healthy competition to the marketplace. The farm bill contains a
provision that allows those loans to be guaranteed by RUS for
cooperative business purposes. We encourage the Committee to continue
that policy.
In addition to investing in the electric cooperative network, the
fees paid on Guaranteed Underwriter Loans can be used to fund Rural
Economic Development Loans and Grants--known as the REDL&G program.
Rural Economic Development Loans and Grants (REDL&G)
Under the REDL&G program, USDA provides zero-interest loans to
utilities (including electric co-ops), which, in turn, pass the funds
through to local businesses and other groups that create jobs in rural
areas. This positive cycle of business development can strengthen both
the co-op and the local communities by helping stabilize populations
and the co-op's customer base.
Since 2011, Georgia co-ops have conducted around $6 million in
REDL&G projects. Included among those projects are the renovation of a
hospital and the construction of a new cattle feed operation to support
local agribusiness. We believe the REDL&G program is a valuable tool in
offsetting population flight and job losses in rural Georgia and around
the country.
Energy Efficiency
For years, electric co-ops across the country have provided
information and advice to consumers to help them use electricity more
efficiently and cost-effectively. The wide range of assistance includes
rebates for energy-efficient appliances, switching to more energy
efficient light bulbs and time of day rates to encourage off-peak
usage.
The Rural Energy Savings Program Act included in the last farm bill
was modeled in part on the How$mart program at Habersham EMC in
Georgia. This is a unique program that allows co-op homeowners to
finance energy efficiency upgrades in their homes then pay back those
loans on their monthly bills. The efficiency gains result in a net
savings for the customer.
We encourage you to maintain the Rural Energy Savings Program and
the Energy Efficiency and Conservation Loan Program. We believe these
programs can help others replicate Georgia's successes around the
country to save energy and save our owners money.
Broadband
Just as with other types of infrastructure, rural America cannot be
competitive without access to high speed broadband service. Many
comparisons are drawn between the lack of access to robust broadband
service today and the need for electrification in rural areas 80 years
ago--with the urban areas of the country well-served, and rural areas
being left behind. Some electric co-ops around the country are leading
the way in connecting rural customers to high speed broadband. While
we're not a silver bullet, we understand these communities and want to
see them succeed. As Congress contemplates telecommunication and
infrastructure policies in the farm bill and in other legislative
packages, we believe that all potential providers including electric
cooperatives should be eligible for programs designed to bridge the
digital divide.
Conclusion
We are a healthy nation because we have vibrant, bustling urban
cities and because we have verdant, productive rural areas.
Unfortunately, whether it's infrastructure or jobs or access to health
care, it seems that too often rural America gets the short end of the
stick. The farm bill is important legislation that helps to address
some of those disparities.
Electric Cooperatives enjoy a productive partnership with the
Federal Government and with the communities we serve to promote the
health of rural America. We look forward to continuing to work with you
toward that important goal. I'm happy to answer any of your questions.

The Chairman. Thank you.
Mr. Fletcher.

STATEMENT OF STEVE FLETCHER, MANAGER AND OPERATOR, WASHINGTON
COUNTY WATER COMPANY, IL; PRESIDENT; NATIONAL RURAL WATER
ASSOCIATION, NASHVILLE, IL

Mr. Fletcher. Chairman Scott, Ranking Member Scott,
Congressman Davis from my home state, and Members of the
Subcommittee, it is an honor to testify before you on the USDA
Water and Waste Water Programs, and the associated technical
assistance that directly benefits small and rural communities.
I am Steve Fletcher, and I have the honor to serve as
President of the National Rural Water Association. NRWA is a
water utility organization with over 31,000 members. Please
note, 94 percent of community water systems in the U.S. serve
rural communities under 10,000 in population.
I am also the manager and operator of the Washington County
Water Company. This water utility started with the Farmers Home
Administration loan and grant in 1979, with only 700 customers.
We have received additional financing from rural development to
expand and upgrade our utility 12 times. Currently, we serve
4,600 customers in parts of southern counties. We simply could
not afford to debt service a commercial credit loan with the
income of our customers.
We currently sell treated water to several small towns that
made the decision to discontinue operating their treatment
plants because they couldn't afford to staff, maintain, and
upgrade the utility.
We also operate and conduct all required testing for most
of these systems. We do this at our cost because they are our
neighbors.
I make these points to further highlight the fact that
without affordable financing and the direct assistance provided
by the Rural Development, and entities like NRWA, many small
and rural communities simply couldn't afford to provide basic
clean, safe, and affordable water and waste water services for
their residents. This story is not uncommon throughout rural
America.
People take it for granted that their water is always safe
and uninterrupted. This infrastructure, or what I call the
invisible infrastructure, is not just about digging holes and
putting pipes in the ground, these investments have many direct
and indirect benefits. They provide jobs, many times increase
the tax base for new business or housing development, they are
a catalyst for economic and community growth.
Mr. Chairman, as you draft the rural development title in
the new farm bill, we would like to focus on four issues.
First, the majority of rural communities in the nation have
relied on Rural Development for affordable financing and
technical assistance to provide essential water and waste water
services, and to overcome the lack of population density. As
previously mentioned, many rural areas lack the financial
capability and technical expertise to debt service commercial
credit. The grant portion makes assistance possible for lower-
income residents and communities. With the current backlog of
$2.5 billion, the demand for these Rural Development water and
waste water loans and grants is evident.
Second, the Rural Development Circuit Rider Program. Since
1980, circuit riders have provided on-site technical assistance
to small communities in all states to ensure that facilities
operate at the highest level possible for public health
protection. We currently have 117 full-time circuit riders in
the field in all 50 states, and 85 of these circuit riders have
over 25 years of experience. This assistance actually saves
money, and protects the community and the government's
investments by ensuring that efficient and sustainable
practices are followed. I must also emphasize the direct, on-
the-ground, 24/7 disaster assistance we provide. We are on the
frontline of responding to disasters in all 50 states. Chairman
Scott and Ranking Member Scott, a recent example of this is
when Georgia Rural Water Association worked with over 50
systems in southwest Georgia immediately after a tornado struck
south Georgia on Sunday, January 22, to help respond to the
devastation.
Third, the Waste Water Technical Assistance Program. This
initiative provides on-the-ground technical assistance directly
to communities for waste water treatment facilities. Assistance
includes design and upgrade recommendations, daily operation
and maintenance advice, permit renewals, and helping these
systems meet compliance requirements from state and Federal
programs.
Fourth, as President Trump has emphasized, a robust bill is
needed to address the aging infrastructure in our nation. NRWA
supports the President's goal to increase infrastructure
investments, and requests funding to be directed to our rural
communities, including providing resources to the existing
tried and true rural development programs.
We at the National Rural Water Association also share the
mission and vision of our rural development partner; a mission
to serve, regardless of income or location, every rural
community in need.
Thank you, Chairman Scott and Ranking Member Scott, for
allowing me to testify.
[The prepared statement of Mr. Fletcher follows:]

Prepared Statement of Steve Fletcher, Manager and Operator, Washington
County Water Company, IL; President; National Rural Water Association,
Nashville, IL
Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee. It is an honor to testify before you on the Department of
Agriculture's (USDA) Water and Waste Water programs and the associated
technical assistance that directly benefit small and rural communities.
I am proud of the work of this Committee and specifically the Rural
Development programs that have lifted up the quality of life for so
many of the residents in my home State of Illinois and throughout this
nation. Thank you.
I am Steve Fletcher and I have the honor to serve as the President
of the National Rural Water Association. The National Rural Water
Association (NRWA) is a water utility organization with over 31,000
members. Our member communities have the very important public
responsibility of complying with all applicable regulations and for
supplying the public with safe drinking water and sanitation every
second of every day. Most all water supplies in the U.S. are small; 94%
of the country's 51,651 drinking water supplies serve communities with
fewer than 10,000 persons, and 80% of the country's 16,255 wastewater
supplies serve fewer than 10,000 persons.
I am also the Manager and Operator of the Washington County Water
Company. This water utility started with a Farmers Home Administration
loan and grant in 1979 with only 700 customers. This community worked
for years to bring running water to their residents. Since inception,
the Washington County Water Company has received additional financing
from Rural Development to expand and upgrade our utility. Currently, we
serve 4,600 customers in seven counties. This rural utility, like the
overwhelming majority in the Rural Utilities Service (RUS) portfolio,
have never been late on a payment. This would not have been possible
without the direct assistance from the Department of Agriculture's loan
and grant program. We simply could not afford to debt service a
commercial credit loan with the income of our customers.
We currently sell treated water to several small towns that made
the decision to discontinue operating their drinking water treatment
systems because they couldn't afford to staff, maintain and upgrade
their utility to meet U.S. Environmental Protection Agency (EPA)
standards. We currently provide staff to sewer treatment utilities for
two small towns that don't have the resources to properly operate and
maintain those facilities. We also send staff to several other small
towns to operate and conduct all required testing for their drinking
water systems. As previously mentioned, many of these small towns do
not possess the capacity to adequately operate their systems without
this direct on-site assistance. We provide these services at our cost
for a simple reason, they are our neighbors.
I make these points to further highlight the fact that without
affordable financing and the direct assistance provided by Rural
Development and entities like NRWA, many small and rural communities
simply couldn't afford to provide the basic service of clean, safe and
affordable water and waste water service for their residents.
As I travel around the nation in my current role as the President
of NRWA, I learn that my story is not uncommon throughout our rural
communities. The grant portion coupled with the direct on-site
technical assistance makes these systems affordable and sustainable for
their communities. These investments have paid dividends for 70 years
in the small and rural communities across this nation.
The Rural Development mission area has a wide and holistic approach
necessary to enhance and protect the health and vitality of Rural
America. We look at these USDA investments, especially in
infrastructure, and witness their impact on the quality of life for
these rural communities. People take it for granted that their water is
always safe and uninterrupted. This infrastructure or what I call the
``invisible infrastructure'' is not just about digging holes and
putting pipes in the ground. These investments have many direct and
indirect benefits; they provide jobs, many times increase the tax base
from new business or housing development; they are a catalyst for
economic and community growth while at the same time enhancing and
maintaining the health and environment for the residents. In many
cases, new businesses would not entertain locating in an area without
water and wastewater services. We all drink the water we produce and I
would offer that we are the first line of defense for the water quality
that our customers use in their daily lives, especially hospitals and
doctors' offices.
Mr. Chairman, as you draft the Rural Development title in the new
farm bill, we would like you to focus on six issues under the Rural
Development mission area.
First, the RUS Water and Waste Water Loan and Grant programs. The
majority of the rural communities in the nation have relied on Rural
Development (and the predecessor agency, Farmers Home Administration)
for affordable financing and technical assistance to provide these
essential services. As previously mentioned, many remote rural areas
lack the financial capability and technical expertise to debt-service
commercial credit. The grant portion makes this assistance possible for
lower-income residents and communities. The Water and Waste Water loan
and grant program work in unison. In FY 2016, the RUS average loan
grant ratio was 66% loan and 34% grant. Some will suggest that grant
money is not needed and the community should just finance the project
with 100% loan. This is simply not the case. My point is that the
grants are carefully administered by RUS as an investment in order to
make this vital service affordable and not over burden lower-income
communities and customers.
Rural Development is unique that all their customers are rural. In
FY 2016, 85% of the projects served populations of 5,000 or less and
70% of all projects served populations of 2,500 or less. The average
family income was $36,178 with an average monthly water bill of $47.72
and sewer bill of $48.05. In FY 2016, 582 projects were funded with
loans and grants that totaled $1.5 billion in direct RUS assistance.
With a current backlog of $2.5 billion derived from 995 applications,
the demand for these Rural Development programs is evident.
Many projects take years of personal investments from the local
leaders and community. Everyone on the system is paying the same amount
for their water or sewer bill, the retiree, the fireman, the local
Mayor, everyone is treated the same. The local ownership and operation
is another source of pride for the community.
Second, the Rural Development Circuit Rider Program. Since 1980,
Circuit Riders have provided on-site technical assistance to small
communities in all states for water infrastructure development,
environmental compliance, training, certification, operations,
management, rates, disaster response, training, energy audits,
financial management and governance; all necessary to ensure that
facilities operate at the highest level possible for public health
protection. We currently have 117 full-time Circuit Riders in the field
in all 50 states. Currently, over 85 or 72% have over 25 years'
experience in the industry. Many of these seasoned field employees
could find higher paying jobs and ones that did not require extensive
travel, but they are driven and receive great personal satisfaction
from their work.
This assistance actually saves money and protects the community and
government's investments by ensuring that efficient and sustainable
practices are followed. The low delinquency and default rate for this
program is directly linked to the technical assistance provided to
these utilities.
I must also emphasize the direct on-the-ground disaster assistance
we provide. The Circuit Riders are on call 24 hours a day, 365 days a
year. A disaster for our customers is anytime they turn on the faucet
and they have no water. That is a disaster for this customer and we are
sensitive to that issue and respond immediately. I am referring to
natural disasters like the floods in South Carolina, Hurricanes Hermine
and Matthew in Florida, the recent tornadoes in Georgia, Oklahoma,
Mississippi and Arkansas. We are on the front line when these events
occur. State associations provide equipment and personnel across state
lines to provide immediate disaster relief. NRWA, through our
experienced state affiliates, conducts annual emergency response
training to prepare for these events.
Chairman Scott, and Ranking Member Scott, the Georgia Rural Water
Association contacted and worked with over 50 systems in southwest
Georgia immediately after the tornados struck South Georgia on Sunday,
January 22nd, to respond to the devastation.
These seasoned employees have long standing relationships and trust
built within the communities they serve. The on-site or hands-on
assistance is required to address complex issues and build that trust.
Third, the Waste Water Technical Assistance program. This
initiative provides on-the- ground technical assistance directly to
communities for waste water treatment facilities. Assistance includes
design and upgrade recommendations, daily operation and maintenance
advice, assisting with permit renewals and helping these systems meet
compliance requirements from state and Federal regulations.
Fourth, the Rural Development field structure. Rural Development
offers a holistic approach for the economic vitality of a rural
community whether it is water or waste water infrastructure, broadband,
business loans or grants or essential community facilities; the field
structure is a vital tool to deliver these programs. I have witnessed
the restructuring and reduction of employees and offices in Rural
Development in 2011 and 2012 that reduced the field structure by over
1,000 staff. Unfortunately, Rural Development lost numerous senior
staff with expertise in water, business and housing. I would caution
reducing this field presence further. Rural Development is still
training and filling key positions to deliver these programs. Rural
Development has used technology to help bridge this gap. RD Apply, a
new easy to use online application has been employed and used by many
of our currents members. The Circuit Riders also use this application
to directly assist their customers. As you are aware, Rural Development
is also moving ahead on ePER, an electronic preliminary engineering
report that should save communities money and time. I know it is
difficult in this budget climate but any efforts to preserve or enhance
this field structure will make a difference in serving remote rural
areas, especially ones that experience pervasive poverty.
Fifth, future infrastructure funding. As President Trump has
emphasized, a robust bill is needed to address the aging infrastructure
in our nation. NRWA supports the President in this endeavor. We request
your assistance to ensure any national water infrastructure proposal
would include funding to address the specific needs for our rural
communities, including providing resources through the existing Rural
Development programs to adequately serve rural communities.
Sixth, the RUS eligible population limit. I close with an
additional suggestion for the Committee. The current underlying
statutory authority for the Rural Development Water and Waste Water
programs is set at the 10,000 population limit. The Secretary has
little flexibility or waiver authority to address communities that have
grown or slightly exceed that limit. In the past, Congress was able to
list these communities within a general provision contained in the
annual appropriations bills. With the changing demographics in Rural
America, we believe that providing the Secretary flexibility to assist
these communities would be beneficial. If a community can demonstrate
economic hardship, rural character and the need for RUS assistance,
that community should be considered. Funding priority could still
remain with the existing applicants from lower-income communities under
the existing 10,000 population ceiling.
Additionally, the Water and Waste Water Guaranteed Loan program is
vastly underutilized. For FY 2016, only four loans were made that
totaled $7,118,000. Increasing the population ceiling for this program
to 20,000 will help these larger rural communities, especially ones
with more resources and capacity necessary to debt service market rate
loans.
We at the National Rural Water Association also share the mission
and vision of our Rural Development partner; a mission to serve,
regardless of income or location, every rural community in need. Like
Rural Development, we want to ensure no community in Rural America is
left behind. No community can grow and improve without the sustaining
resources of water and wastewater services. With your continued support
and leadership, we will continue to prosper.
Thank you, Chairman Scott and Ranking Member Scott for allowing me
to testify and I would be happy to answers any questions that you may
have at this time.

The Chairman. Thank you, Mr. Fletcher.
Mr. Cook.

STATEMENT OF R. CRAIG COOK, CHIEF OPERATIONS
OFFICER, HILL COUNTRY TELEPHONE COOPERATIVE, INC., INGRAM, TX;
ON BEHALF OF NTCA--THE RURAL BROADBAND ASSOCIATION

Mr. Cook. Good morning, Chairman Scott, Ranking Member
Scott, and Members of the Subcommittee. Thank you for inviting
me to testify before you today on the farm bill and the
importance of advanced telecommunication services to rural
development.
My name is Craig Cook, I am here on behalf of Hill Country
Telephone Cooperative in Ingram, Texas, and NTCA--The Rural
Broadband Association, which represents about 850 of the 1,000
or so rural telecom providers in the U.S.
As many of Subcommittee Members are aware, because small
rural telcos serve your districts, we provide broadband and
other advanced telecom services to the most rural areas of the
U.S., including substantial agriculture and energy producing
regions.
The immense economic, health care, education, and public
safety benefits of high-speed broadband are well known by now.
A recent study revealed that rural telecom investment
contributed $24.1 billion to the U.S. economy in 2015, and
supported approximately 70,000 jobs.
Broadband helped solve the problem of distance by opening
up new education and job opportunities in rural America, and
connects rural veterans and others with healthcare
professionals, helping rural businesses tap into global
markets, and, of course, helps farmers and ranchers use the
Internet to analyze livestock and crop data with modern
precision agriculture tools.
Rural areas are unique. While they need broadband to
compete, and our nation needs rural broadband so everyone can
share in what rural America offers, the vast distances and low
density of rural areas undermine the business case for the
enormous capital and operational cost of deploying networks. A
small rural broadband provider can't walk into a typical bank
and expect financing for a network that measures payback over a
period of decades, not years.
USDA's RUS telecom loan portfolio provides up-front capital
for deploying rural telecom networks. RUS brings years of
experience and familiarity with the telecom industry, and rural
areas gain from financing networks through its telecom
infrastructure and broadband loan programs, both of which
provide loans paid back with interest to the benefit of the
U.S. taxpayer. Similarly, the Community Connect Grant Program
serves the most rural areas, where a loan may not make sense.
We urge the Subcommittee to continue its support for these
programs, and refrain from making extensive changes that might
lead to more uncertainty.
At Hill Country, we have appreciated having a dedicated and
experienced partner like RUS, and just last year finished
upgrading 20 percent of our network so that more of our
customers have access to 25 Mbps and higher broadband speeds.
And this is a project that wouldn't have been possible this
soon without capital from RUS.
As a compliment to up-front financing like that available
through RUS, the High-Cost Universal Service Fund Program, the
USF, is essential to enable the business case for delivering
broadband in rural areas. The USF helps keep consumer rates
affordable on networks once they are built, and sustains
operation of those networks.
Over the past 10 years, the USF High-Cost Fund has
undergone extensive reforms to orient the program towards
supporting broadband networks. As a result, small telcos now
receive support for offering broadband-only services, thanks to
help of dozens of Members of Congress, including Members of
this Subcommittee.
Though we have made progress on USF reform, the High-Cost
Program has been under the same effective cap since 2011, and
lacks sufficient resources to make the reforms actually
meaningful to consumers. This USF budget issue must be
addressed or rural consumers will pay much more for broadband
than urban Americans, and rural consumers will experience much
slower speeds.
This unfortunate reality violates the statutory mandate for
reasonably comparable rates and services in rural and urban
America. I raise this budget concern because USF justifies the
business case for rural broadband by keeping rates affordable.
More consumers are using more data-intensive broadband
applications with each passing year. This enormous consumer
demand cannot be met with short-term broadband solutions that
may soon need replacing due to insufficient capacity. The
resources of RUS and USDA are most efficiently and effectively
invested in future-proof networks that will be readily upgraded
over time to meet consumer demands. And we must take steps to
ensure that facilities financed by USDA or supported by USF are
not overbuilt by another carrier deploying a network financed
or supported by a different program.
The provision of rural broadband service is an important
job that the rural industry is committed to, and we appreciate
Congress taking time to understand how rural areas remain
served through the provision of necessary resources.
It is an honor to be with you today, and I welcome any
questions you may have from me. Thank you.
[The prepared statement of Mr. Cook follows]

Prepared Statement of R. Craig Cook, Chief Operations Officer, Hill
Country Telephone Cooperative, Inc., Ingram, TX; on Behalf of NTCA--The
Rural Broadband Association
Introduction
Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee, thank you for this opportunity to testify about rural
development, broadband, and the 2018 Farm Bill. I am Craig Cook, Chief
Operations Officer at Hill Country Telephone Cooperative. My remarks
today are on behalf of Hill Country, as well as NTCA--The Rural
Broadband Association, which represents approximately 850 rural
community-based carriers in 45 states that offer advanced
communications services throughout the most sparsely-populated areas of
the nation.
Rural Telecom Industry Innovation
Small, rural telecom providers like Hill Country connect rural
Americans with the world--making every effort to deploy advanced
networks that respond to consumer and business demands for cutting-
edge, innovative services. Fixed and mobile broadband, video, and voice
are among the many services that rural Americans can access thanks to
our industry's commitment to serving sparsely populated areas. The
rural telecom industry has always been innovative--leading the way in
converting to digital switched systems, providing wireless options to
their hardest to reach customers, enabling distance learning and tele-
health applications, and where possible deploying future-proof all-
fiber systems.
Hill Country Telephone
I have been part of the industry for nearly 30 years, spending the
last 2 years at Hill Country. My experience has focused on telecom
regulation and public policy, technical operations, engineering
services, and business development. In addition to having worked for
consulting firms and smaller rural service providers, I've also had the
opportunity to work for larger service providers such as GTE. Hill
Country is a local telecommunications provider with 111 employees
serving a 2,900\2\ mile area--an area larger than the state of Delaware
with only 4.4 subscribers per square mile. But, 22 percent of our
customers reside in just 3\2\ miles, while the remaining 78 percent
reside in the other 2,897\2\ miles--so the population density of the
more rural areas is only 3.4 customers per square mile. We provide
12,700 total connections to wireline voice, high-speed broadband, and
video services over a network that employs a mix of fiber and copper
facilities. In actual network terms, we have deployed 3,842 copper
route miles and 1,699 fiber route miles.
Our sparsely-populated service territory does not make an
attractive business case for Wall Street and will not support multiple
providers making the substantial capital investments needed to serve
such a large area. For Hill Country, like many other NTCA members that
serve agricultural communities and other rural areas, the challenges of
distance and density hit close to home.
Rural Telecom and Economic Development
Broadband-capable networks are critical to helping rural
communities overcome these challenges. Our networks allow agricultural
producers and other rural businesses to communicate with suppliers and
sell to new markets, they enable education of our children on par with
opportunities in urban areas, and they make our communities attractive
destinations for people and businesses to relocate. In rural America,
that translates into economic development that produces jobs, not only
in agriculture, energy and other industries with a strong rural
presence, but in the healthcare sector, and just about any other retail
industry that requires broadband to operate.
Importance of USDA Financing
As this Committee deliberates the upcoming farm bill
reauthorization, please be mindful that access to capital for rural
broadband projects is limited. Smaller broadband providers like Hill
Country and other NTCA members have only a few options for financing
network construction. Small rural broadband providers cannot walk into
large commercial banks to obtain financing for a network that will
serve a small number of people over a large area, with the payback
measured in decades rather than years.
Cost-effective Rural Utilities Service (RUS) loans offered through
the U.S. Department of Agriculture (USDA) are therefore an essential
resource for small providers that serve rural America. Apart from RUS,
only a few committed, mission-driven lenders like CoBank and the Rural
Telecommunications Finance Cooperative (RTFC) typically provide
financing to enable small rural providers to build networks in their
communities. As a complement to financing, universal service funding
(USF) then helps to justify the business case for such construction.
The ongoing High Cost USF support ensures that consumers can afford the
services offered over the financed networks now and in the future.
The State of Rural Broadband Deployment Progress
Consumer Demand, Fiber, and Future-Proof Networks
Hill Country Telephone and other NTCA members have made remarkable
progress in deploying advanced networks in their communities. A survey
of NTCA members conducted last year found that 49 percent of
respondents' customers are served via fiber-to-the-home (FTTH), up 20
percent from 2013. Twenty-nine percent of customers are served via
copper loops, 15 percent cable modem, six percent fiber-to-the-node
(FTTN), 0.5 percent fixed wireless, and 0.1 percent satellite.\1\
---------------------------------------------------------------------------
\1\NTCA 2015 Broadband/Internet Availability Survey Report (2016),
NTCA--The Rural Broadband Association, Arlington, VA.
---------------------------------------------------------------------------
The growth in fiber deployment is remarkable given the regulatory
instability of recent years, with USF reforms and budget shortfalls
having challenged the business case for many deployments or undermined
the sustainability of networks already in place. Nonetheless, policies
that encourage sustainable future-proof networks--such as fiber--will
be most efficient in responding to consumer demand over the lives of
those networks, particularly when compared to short-term strategies
that focus on getting lower-speed broadband deployed quickly only to
find that consumer demands outpace the capabilities of such low-speed
networks in a few short years.
Due in no small part to increased fiber deployment, rural customers
have access to faster broadband speeds. Per last year's survey, 85
percent of NTCA members' customers can purchase broadband at speeds of
10 Mbps or higher. Seventy-one percent can now access speeds above 25
Mbps.
Eighty-two percent of Hill Country's customers have access to 10
Mbps service. The remaining 18 percent of customers are served by long
local loops that provide 1 to 6 Mbps service. We work with those
customers on an individual basis to find solutions to their broadband
needs. We anticipate that twenty-five percent of our customers will
have access to FTTH in the next 2 years. Seven percent are currently
part of a fiber build and will have access to FTTH by the end of 2017.
We have deep fiber penetration throughout our service territory that
allows us to provide more than the 10 Mbps to much of our customer
base.
And our customers are demanding more and more speed. In 2016, we
saw nearly 1,000 customers move from the basic 10 Mbps speed to a
higher-tier package. Due to this demand, we continue to employ new
technology in our FTTN and copper networks to meet demand, but also
continue to deploy fiber. Our vision is to reach our entire territory
with FTTH. The speed and sustainability of deployment, however, will
depend on both reasonable access to capital to finance construction and
the availability of USF support to make sure consumer rates on these
rural networks, once upgraded, are not astronomical and unaffordable.
Unique Rural Challenges
Deploying networks across wide swaths of rural Texas is not easy.
We face the need to cross hundreds or thousands of miles where the
population is sparse, and to deal with all kinds of terrain. We must
also address environmental and historical permitting concerns that can
delay projects and increase their already high costs. Then, where fiber
has already been built, we must maintain it over those thousands of
miles and ensure customers can use it--that means technicians who
travel all over our territory and customer service representatives
trained to deal with questions about router and device configurations
in ways that were unimaginable when we were just a ``telephone
company.''
And even the best networks in rural markets are dependent upon
``middle mile'' or long-haul connections to Internet gateways dozens or
hundreds of miles away in large cities. Reaching those distant
locations is expensive as well, and as our customers' bandwidth demands
increase, so too does the cost of ensuring sufficient capacity on those
long-haul fiber routes that connect rural America to the rest of the
world.
More Work to Do
And many parts of rural America, including many locations in our
serving area, still need fiber or other robust facilities. Fifteen
percent of NTCA member customers don't have access to even 10/1
broadband. In a country where the Federal Communications Commission
(FCC) has indicated that 90 percent of Americans already have
affordable access to 25/3 Mbps service and many urban consumers and
businesses benefit from 100 Mbps or Gigabit speeds, broadband access in
rural America remains far behind urban areas despite the best efforts,
innovation, and entrepreneurial spirit of companies like Hill Country
and other NTCA members.
Particularly when one considers that even where networks are
available many rural Americans pay far more for broadband than urban
consumers due to insufficient USF funding, it becomes apparent that the
job of connecting rural America--and, just as importantly, sustaining
those connections--is far from complete. The rural broadband industry
has a great story of success but also much more work to do.
The Role of Rural Utilities Service Funding
The Strength of RUS Experience
Deploying a communications network in a rural area requires a large
capital outlay due to the challenges of distance and terrain. The
number of rural network users (as compared with more densely-populated
urban areas) is too small to pay the costs of deployment and ongoing
operations through customer charges. USDA's Rural Utilities Service
plays a crucial role in addressing these rural broadband challenges
through its telecommunications programs that finance network upgrades
and deployment in rural areas.
Since the early 1990s, the RUS telecom programs have financed
advanced network plant at a net profit for taxpayers and helped deploy
state-of-the-art networks to rural Americans left behind by providers
unable or unwilling to serve low-population-density markets. With rare
exception, RUS, CoBank and RTFC are the primary lenders that small
rural providers can turn to for outside financing. Not only does RUS
help rural America remain connected, its Broadband Loan & Guarantees
program and traditional Telecommunication Infrastructure Loan &
Guarantees program make loans that must be paid back with interest--
creating a win/win situation for rural broadband consumers and American
taxpayers.
Hill Country's Partnership with RUS
Hill Country is well aware of the benefits of working with an
experienced rural telecom lender like RUS, having received an RUS
Broadband Infrastructure Program (BIP) grant/loan that helped upgrade
20% of our network connections, enabling broadband deployment to a much
larger geographic area in a much more timely manner than otherwise
would have been possible in the face of typical capital constraints.
The RUS financing package facilitated deployment of a 148 mile fiber
backbone designed to dramatically reduce subscriber loop length,
enabling 25 Mbps broadband access for many unserved and under-served
subscribers. Hill Country met all original project objectives and even
added an additional 26 miles of fiber backbone while maintaining the
overall project budget--exceeding what we originally set out to
accomplish in some of our most rural and challenging service areas. RUS
was a key partner in this endeavor, building upon a history of helping
small providers meet similar challenges of distance and population
density across the country for decades.
Farm Bill Considerations
The Farm Bill Broadband Loans & Loan Guarantees program was first
authorized in the 2002 Farm Bill, and each subsequent farm bill has
made extensive reforms with the goal of greater program accountability,
efficiency, and effectiveness. Two rounds of program reforms in less
than 15 years--the first of which was significantly delayed by the ARRA
BIP program's use of the Broadband Loan Program mechanism--means that
the Broadband Loan Program has been almost continuously ``under
construction'' since its inception, rendering the program inaccessible
to borrowers for long periods of time. While the program isn't perfect,
it may be helpful to simply let borrowers use the Broadband Loan
Program in current form and become familiar with it for a few years
before undertaking another extensive reform effort.
The Community Connect grant program is a useful complement to the
other RUS telecom programs with its focus on the niche of supporting
deployment in some of the most difficult areas to reach and serve.
Community Connect rounds out the RUS telecom portfolio. Rural providers
would welcome more resources for the RUS telecom portfolio, but would
oppose cutting all funds for one program to increase the size of
another, as the last Administration proposed to zero out Broadband
Loans in favor of Community Connect in its FY17 budget.
NTCA urges the Committee to continue to support the RUS Broadband
Loan program that is subjected to the farm bill reauthorization process
at or above current funding levels as you formulate recommendations.
Furthermore, we urge the Committee to continue its long history of
support for the Telecommunications Infrastructure and Community Connect
programs that are also vital to the ongoing deployment and maintenance
of advanced communications infrastructure throughout rural America.
The Broadband Opportunity Council (BOC), which includes USDA as a
member, released a report in September 2015 that recommended
authorizing more USDA programs to make grants and loans for broadband
infrastructure. The BOC's January 2017 progress report affirmed this
recommendation. While more resources for rural broadband deployment are
needed, involving more government entities and programs in broadband
financing should be undertaken cautiously to avoid duplicating efforts
and undermining a coherent, cohesive approach to financing and then
sustaining rural broadband networks.
Along these lines, we understand that it is current RUS policy to
avoid duplication of effort when financing broadband-capable
infrastructure, and we encourage the Committee to consider enshrining
this principle in law--that is, Congress should codify a prohibition on
USDA financing new fiber or other broadband-capable infrastructure
through any RUS or other USDA program where an existing network
deployed by a different carrier was also financed through a RUS or
other USDA program. This non-duplication provision should apply to all
USDA programs, and should also extend to preclude overbuilding of other
carriers' networks that receive USF High-Cost support as administered
by the FCC. It would be an utter waste of public resources if any USDA
resources (regardless of the program) go to finance the construction of
fiber or other communications network facilities in areas where another
USDA program or the FCC's USF program has already enabled the
deployment and operation of a network by another operator.
Finally, various permitting regulations present significant
obstacles to broadband deployment--indeed, the project financed by the
RUS grant/loan to Hill Country was delayed for about a year as we
waited on completion of different reviews. While permits serve an
important public purpose, we'd encourage streamlining Federal approval
processes to the extent possible, and to the extent that RUS can help
in standardizing processes with land-managing and property-managing
agencies and in improving timelines for historical preservation
coordination, that would be a significant help in speeding and reducing
the costs of deployment. Better, more coordinated sequencing of
environmental reviews and approvals is also important, so that
companies that are applying for financing do not need to expend
substantial resources and staff time up-front in pursuit of loans that
might not even be approved (which is a real deterrent to applications)
or for environmental showings that might only need to be repeated in a
few years once later phases of construction begin. Along these lines
and as a related matter, we also support permitting reforms as proposed
in Sen[.] Thune's MOBILE NOW Act or as adopted and applied to larger
projects in the FAST Act.
The Complementary Role of the FCC'S Universal Service Fund Programs
RUS Financing and USF Support Work in Concert
RUS lending programs finance the substantial up-front costs of
network deployment. By contrast, the USF High Cost Fund helps make the
business case for construction and sustains ongoing operations at
affordable rates. More specifically, USF by law aims to ensure
``reasonably comparable'' services are available at ``reasonably
comparable'' rates. Not to be confused or conflated, RUS capital and
ongoing USF support serve distinctly important, but complementary
rather than redundant, purposes in furthering rural broadband
deployment. The availability of USF--the ability to make sure that
consumers can actually afford to buy services on the networks once
built--is so essential to the RUS telecom loan calculus that
uncertainty in the Federal USF program in recent years has hindered
some of the success, momentum, and economic development enabled by the
RUS telecommunications programs.
USF Reform and the Under-Funded High Cost Program
NTCA has made significant efforts to seek some restoration of
regulatory certainty to the USF programs in the wake of reform debates
that stretched nearly a decade. In March 2016, the FCC adopted reforms
to the USF mechanisms that defined options for telcos to elect either a
``model-based'' USF support mechanism that would provide carriers with
additional support in exchange for incremental broadband buildout
obligations or a reformed ``non-model'' USF support mechanism that
would provide support to enable more affordable broadband rates for
rural consumers and businesses.
Unfortunately, even as the March 2016 order resolved some long-
running debates and took several important steps to more directly
orient the high-cost USF program toward broadband, the order did not
address a fundamental concern--the lack of sufficient funding under a
budget that effectively provides telcos with less revenue today than
they had prior to reforms adopted in 2011. And in the wake of reforms,
it has become increasingly apparent that USF programs are
insufficiently funded as many rural consumers face the prospect of
paying hundreds of dollars per month for standalone broadband services.
The New A-CAM Cost Model Option
To be clear, the FCC thankfully did provide additional funding in
the March 2016 order--$200 million per year--to help facilitate the
``model option'' as part of the reforms described above. These funds
will certainly help enable the expansion of broadband in areas where it
is lacking today. But demand for model support far exceeded supply,
confirming the insufficiency of a USF High Cost budget that was
otherwise held constant at 2010 support levels. In fact, even with the
additional $200 million in support, USF funding for the model remains
approximately $110 million per year short of demand, meaning that tens
of thousands of rural consumers will see lower speeds or no broadband
at all--precisely what the reforms were intended to alleviate. NTCA and
many other stakeholders are urging the FCC to provide full funding to
enable the business case for greater expansion of broadband.
The Non-Model USF Support Option
A new cost model for distributing USF support that lacks sufficient
funding is only part of the story. The reforms to the ``non-model'' USF
mechanisms also did not address the underlying problem of insufficient
funding. Due to the USF High Cost budget that has been flat for years,
the non-model mechanisms look to be under-funded in the amount of at
least $140 million this year (and perhaps much more over time). As a
result, the budget control adopted to cap the High Cost Fund will cut
an estimated ten percent of USF support this year on average for
companies like Hill Country--cutting recovery of costs that we have
already incurred in deploying networks and delivering services to
consumers. Moreover, the budget control can and will vary from period
to period, undercutting the kind of predictability that is called for
by law and needed when evaluating future investments.
Providing rural broadband won't leave a company with a cash
surplus, so the unpredictability and impact of the budget control
mechanism hits close to home. Hill Country's USF support was reduced by
approximately five percent in the last few months of 2016 and some
estimates indicate that the budget control could increase to perhaps
ten percent this year. This will translate into higher broadband prices
for consumers, because the only place we can turn to recover those
costs are our consumers. RUS programs are impacted in turn, because the
unpredictable nature of the level of the budget control hinders our
ability to plan for future investments in broadband networks.
Thus, as NTCA summarized in a recent filing with the FCC, ``while
much effort may have gone into rebuilding `the engine' of non-model USF
reforms, the ongoing lack of `gasoline in that engine' (in the form of
sufficient budget resources) risks rendering its operation inefficient
at best and utterly ineffective at worst.'' This budget crisis--
captured in the form of the new budget control mechanism--will deter
customer purchases of standalone broadband and ultimately undermine
further deployment, as small telcos will need to factor estimated
support reductions into future planning efforts and scale back
investments.
Right-Sized USF Budget Key to RUS Success
Just as RUS will need sufficient resources to help rural America
remain competitive, remedying this USF budget concern will be key to
the sustained delivery of affordable, high-quality broadband to
consumers that this Committee and many other Members of Congress hope
to see in rural America. At a time when the focus is increasingly on
deploying better infrastructure faster, the imposition of this budget
cap at 2010 levels translates to a contrary result of lower-speed
broadband to fewer locations at higher rates. The FCC has taken steps
to finally adopt and implement reforms as discussed above, but there is
still much more work to be done to make sure the reforms and programs
work as intended and that these cornerstones of access to capital
(especially RUS financing) and USF can once again operate in concert.
Rural Broadband Benefits the Entire U.S. Economy
Investing in rural broadband has far-reaching effects for both
urban and rural America, creating efficiencies in health care,
education, agriculture, energy, and commerce, and enhancing quality of
life of citizens across the country. A report released in April 2016 by
the Hudson Institute in conjunction with the Foundation for Rural
Service found that investment by rural broadband companies contributed
$24.1 billion to the economies of the states in which they operated in
2015.\2\ Of this amount, $17.2 billion was the direct byproduct of the
rural broadband companies' own operations while $6.9 billion was
attributable to the follow-on impact of their operations. In Texas, the
direct economic impact of rural telecommunications was over $1.3
billion with indirect impacts of nearly $720 million.
---------------------------------------------------------------------------
\2\``The Economic Impact of Rural Broadband'' (2016), The Hudson
Institute, Washington, D.C.
---------------------------------------------------------------------------
Rural Telecom a Boon to Urban Economies
The Hudson study also confirmed that while small telcos like Hill
Country produce a range of telecommunications services in rural areas,
much of the benefit goes to the urban areas where the vendors,
suppliers, and construction firms that rural telcos use are based. Only
$8.2 billion, or 34 percent of the $24.1 billion final economic demand
generated by rural telecom companies accrues to rural areas--the other
66 percent or $15.9 billion accrues to the benefit of urban areas.
Additionally, the report found that the rural broadband industry
supported nearly 70,000 jobs nationwide in 2015, including more than
6,300 jobs in Texas, both through direct employment and indirect
employment from the purchases of goods and services generated. Jobs
supported by economic activity created by rural broadband companies are
shared between rural and urban areas, with 46 percent in rural areas
and 54 percent in urban areas.
Immense Benefits for Rural Consumers and Communities
The direct and indirect economic impact of the investments and
operations of rural telecom providers don't tell the whole story. The
broader socioeconomic benefits of broadband for users cannot be
ignored. A Cornell University study, for example, found that rural
counties with the highest levels of broadband adoption have the highest
levels of income and education, and lower levels of unemployment and
poverty.\3\ A recent Pew Study further finds that among those Americans
who have looked for work in the last 2 years, 79 percent used online
resources in their most recent job search and 34% say these online
resources were the most important tool available to them.\4\
---------------------------------------------------------------------------
\3\``Broadband's Contribution to Economic Health in Rural Areas''
(2015), Community & Regional Development Institute, Cornell University.
\4\``Searching for Work in the Digital Era'' (2015), Pew Research
Center, Washington, D.C.
---------------------------------------------------------------------------
Access to healthcare is a critical issue for rural areas as well,
where the lack of physicians, specialists, and diagnostic tools
normally found in urban medical centers creates challenges for both
patients and medical staff. Telemedicine applications help bridge the
divide in rural America, enabling real-time patient consultations and
remote monitoring, as well as specialized services such as tele-
psychiatry. One study found that doctors in rural emergency rooms are
more likely to alter their diagnosis and their patient's course of
treatment after consulting with a specialist via a live, interactive
videoconference.\5\
---------------------------------------------------------------------------
\5\``Telemedicine Consultations and Medication Errors in Rural
Emergency Departments'' (2013), Center for Healthcare Policy and
Research and Department of Pediatrics, University of California Davis.
---------------------------------------------------------------------------
There is also a shortage of teachers in many areas of rural America
and those public school districts rely on high-speed connectivity to
deliver interactive-video instruction for foreign language, science and
music classes. For example, students in rural Minnesota can attend
online music classes offered through the MacPhail Center for Music in
Minneapolis.\6\ Broadband networks also enable farmers and ranchers to
use the Internet to analyze weather data, manage nutrient application,
map their crop yields, and adjust planting for the next season with
modern precision agriculture tools, and gain access to new markets.
Farmers are relying heavily on both wireless and wireline broadband
technologies, resulting in monthly data usage of 30 to 40 Gigabytes.\7\
---------------------------------------------------------------------------
\6\``Bringing Broadband to Rural Minnesota'' (2016), Center for
Rural Policy and Development, Mankato, MN.
\7\``Farmers Harvest Gigabytes with Broadband and Wireless
Technology'' (2016), CoBank Rural Infrastructure Briefings.
---------------------------------------------------------------------------
Retail e-commerce has benefited tremendously from sales in rural
America as well, where consumers may lack access to local retail
outlets, but through the availability of rural broadband networks, can
access a variety of shopping options. According to the Hudson
Institute, rural consumers generated $9.2 billion in online sales in
2015 and if all rural Americans had access to broadband networks, the
authors estimate that Internet sales would be $1 billion higher.\8\
---------------------------------------------------------------------------
\8\``The Economic Impact of Rural Broadband'' (2016), The Hudson
Institute, Washington, D.C.
---------------------------------------------------------------------------
Conclusion
Robust broadband must be available, affordable, and sustainable for
rural America to realize the economic, healthcare, education, and
public safety benefits that advanced connectivity offers. Small, rural
telecom providers and lenders such as RUS must have regulatory
certainty before they can justify greater investments in the networks
of the future, and providers like Hill Country need sufficient ongoing
USF support to avoid the prospect of charging rural consumers tens or
hundreds of dollars more per month to recover the costs of operating in
such rural and remote locations. And deploying broadband is only \1/2\
the battle--rural areas must remain served at reasonable rates if they
are to remain competitive.
Thus, the broader mission of universal service--and the economic
benefits it delivers locally and to the nation as a whole--requires the
resourcefulness and entrepreneurship of small businesses like Hill
Country, access to capital from programs like those offered by RUS, and
the availability of sufficient and predictable ongoing cost recovery
mechanisms like the USF program so that rural consumers and businesses
can indeed obtain services that are reasonably comparable in price and
quality to those available in urban America.

The Chairman. Thank you, Mr. Cook.
Mr. Duff.

STATEMENT OF JOHN DUFF, STRATEGIC BUSINESS DIRECTOR, NATIONAL
SORGHUM PRODUCERS, LUBBOCK, TX

Mr. Duff. Chairman Scott, Ranking Member Scott, on behalf
of National Sorghum Producers, I would like to thank the
Committee on Agriculture and this Subcommittee for the
opportunity to submit testimony on the next U.S. farm bill, and
implications for sorghum in renewable energy.
My name is John Duff. I serve as Strategic Business
Director for NSP, where I focus primarily on farm policy
analysis, and work with sorghum-based renewable energy
producers on policy and regulatory issues.
NSP represents U.S. sorghum farmers nationwide, and our
mission is to increase their profitability by ensuring sound
approaches to legislation and regulation. NSP greatly
appreciates the work put forth by this Subcommittee in
preparation for the next farm bill, and looks forward to
working with its Members to craft this vital farm policy.
My testimony, in particular, will focus on implications for
sorghum in renewable energy.
The High Plains produces the largest volume of sorghum, but
the crop is also grown from Georgia to California, and south
Texas to South Dakota. In 2016, 480 million bushels of sorghum
were produced in the U.S., with Kansas and Texas contributing
approximately 80 percent of this total. Sorghum uses \1/3\ less
water than corn, and tolerates heat much better than comparable
crops. These characteristics make it particularly well suited
for the semiarid High Plains where ground water declines
threaten local economies, often underpinned by renewable energy
or ethanol producers. Ethanol producers typically consume about
\1/3\ of the U.S. sorghum crop, and are on track to use 125
million bushels in 2017.
Since the 2008 Farm Bill was enacted, the U.S. renewable
energy industry has seen both incredible opportunities and
tremendous challenges. As with any new industry, many companies
have experienced only limited success, and setbacks have
sometimes seemed more common than growth. Through this decade
of change, sorghum has proven to be a constant for first-
generation and next-generation renewable energy producers. The
advantages are clear. Sorghum is a source of starch, sugar, and
cellulose all in a single crop. Its agronomic needs are well
known to U.S. farmers, and it is supported by a deeply
experienced seed industry, with roots in the 1950s upper Texas
Panhandle, where 85 percent of the world's sorghum seed is
still produced. Simply put, unlike other renewable energy
feedstocks, sorghum was built to last and is here to stay.
The 2008 Farm Bill recognized this potential and set up a
structure to reward ethanol producers for taking a risk on
feedstock such as sorghum. NSP firmly believes the resulting
incentives enabled ethanol producers to become the foundation
of the domestic sorghum market, with over $60 million being
used to bolster sorghum demand through the Advanced Biofuel
Payment Program. NSP strongly urges the Committee to continue
and strengthen this program through a more transparent payment
calculation process, and an addition of provisions that will
incentivize its new processes designed to increase overall
energy production.
As technology has evolved, so too have energy title needs.
While many programs authorized by the 2002 and 2008 Farm Bills
provided much-needed support during a time when little was
known about the commercial viability of many renewable energy
technologies, today's environment is significantly different.
Therefore, we strongly urge the Committee to consider combining
and updating programs to better suit the needs of the current
renewable energy industry. In summary, the next energy title
must focus more on incentivizing greater energy production by
proven market participants, than on de-risking unproven
technology development.
NSP believes sorghum will be a key part of our continuing
move toward greater energy independence. The Department of
Energy agrees, and has committed over $70 million to sorghum
research since 2015. The Department refers to sorghum as a
model feedstock, in large part because of the diverse nature of
the crop. Sorghum is a starch, sugar, and cellulose source all
in a single crop, and growth in the area of renewable energy
will benefit all U.S. sorghum farmers and ultimately all of
American agriculture.
Thank you, and I welcome any questions.
[The prepared statement of Mr. Duff follows:]

Prepared Statement of John Duff, Strategic Business Director, National
Sorghum Producers, Lubbock, TX
Introduction
On behalf of National Sorghum Producers, I would like to thank the
House Committee on Agriculture for the opportunity to submit testimony
on the next U.S. farm bill and implications for sorghum in renewable
energy.
My name is John Duff. I serve as Strategic Business Director for
NSP, where I focus primarily on farm policy analysis and work with
sorghum-based renewable energy producers on policy and regulatory
issues. NSP represents U.S. sorghum farmers nationwide, and our mission
is to increase their profitability by ensuring sound approaches to
legislation and regulation. NSP greatly appreciates the work put forth
by the Committee in preparation for the next farm bill and looks
forward to working with its Members to craft this vital farm policy. My
testimony, in particular, will focus on implications for sorghum in
renewable energy.
Industry Overview
The High Plains produces the largest volume of sorghum, but the
crop is also grown from Georgia to California and south Texas to South
Dakota. In 2016, 480 million bushels of sorghum were produced in the
U.S., with Kansas and Texas contributing approximately 80 percent of
this total. Sorghum uses \1/3\ less water than corn and tolerates heat
much better than comparable crops. These characteristics make it well-
suited for the semi-arid High Plains, where groundwater declines
threaten local economies often underpinned by renewable energy or
ethanol producers. Ethanol producers typically consume about \1/3\ of
U.S. sorghum production and are on track to use 125 million bushels in
2017.
Expand Opportunities for Renewable Energy Producers Using Sorghum
Since the 2008 Farm Bill was enacted, the U.S. renewable energy
industry has seen both incredible opportunities and tremendous
challenges. As with any new industry many companies have experienced
only limited success, and setbacks have sometimes seemed more common
than growth. Through this decade of change, sorghum has proven to be a
constant for first generation and next generation renewable energy
producers. The advantages are clear: Sorghum is a source of starch,
sugar and cellulose all in a single crop; its agronomic needs are well-
known to U.S. farmers; and it is supported by a seed industry with
roots in the 1950s upper Texas Panhandle, where 85 percent of the
world's sorghum seed is still produced. Simply put, unlike other
renewable energy feedstocks, sorghum was built to last and is here to
stay.
The 2008 Farm Bill recognized this potential and set up a structure
to reward ethanol producers for taking risks on feedstocks such as
sorghum. NSP firmly believes the resulting incentives enabled ethanol
producers to become the foundation of the domestic sorghum market with
over $60 million being used to bolster sorghum demand through the
advanced biofuel payment program. NSP strongly urges the Committee to
continue and strengthen the program through a more transparent payment
calculation process and an addition of provisions that will incentivize
new processes designed to increase overall energy production.
As technology has evolved so too have energy title needs. While
many programs authorized by the 2002 and 2008 Farm Bills provided much
needed support during a time when little was known about the commercial
viability of many renewable energy technologies, today's environment is
significantly different. Therefore, we strongly encourage the Committee
to consider combining and updating programs to better suit the needs of
the current renewable energy industry. In summary, the next energy
title must focus more on incentivizing greater energy production by
proven market participants than on de-risking unproven technology
development.
NSP believes sorghum will be a key part of our continuing move
toward greater energy independence. The Department of Energy agrees and
has committed over $70 million to sorghum research since 2015. The
Department refers to sorghum as a model feedstock in large part because
of the diverse nature of the crop: Sorghum is a starch, sugar and
cellulose source all in a single crop, and growth in the area of
renewable energy will benefit all U.S. sorghum farmers and ultimately
all of American Agriculture.

The Chairman. Mr. Greenwood.

STATEMENT OF HON. JAMES C. GREENWOOD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, BIOTECHNOLOGY INNOVATION ORGANIZATION,
WASHINGTON, D.C.

Mr. Greenwood. Chairman Scott, Ranking Member Scott, and
other distinguished Members of the Subcommittee, good morning.
Thank you for the invitation to testify today as we look ahead
to the next farm bill, and the strategies to support our
farmers and our local businesses.
Twelve years ago, after serving for 12 years in Congress, I
left a safe seat here in the House to lead the world's largest
trade association representing biotechnology companies. I would
like to note that I left undefeated and unindicted, by the way.
I did this because I believed deeply in the biotechnology
industry, and in our ability to affordably fuel, feed, and heal
this country and, indeed, the world.
Mr. Chairman, congratulations on your selection to lead
this Committee, and Mr. Ranking Member, welcome back.
I had the opportunity to be a Subcommittee Chairman during
my service on the Energy and Commerce Committee, under Speaker
Gingrich. These leadership posts don't always bring the
cameras, which isn't necessarily a bad thing these days, but
they do bring the opportunity to enact your ideas and to make a
real difference for the people who put you here.
I know Georgia's farmers are in good hands. I don't think
it is a coincidence that this Subcommittee and the USDA are now
led by public servants from a state that is on the cutting edge
of modern agriculture.
Georgia generates more than $8 billion a year in biobased
industrial activity. Only one state in the Union produces more,
and nationally, Georgia is ranked fourth in the number of
direct biobased industry jobs, with more than 80,000.
One of Georgia's most iconic companies, Coca-Cola, has
utilized the farm bill's energy title to become one of the
largest bioplastics end-users in the country. Their new bottle,
introduced in 2009, is made 30 percent from plants. To date,
Coca-Cola has produced more than 40 billion plant bottles. And
the PlantBottleTM technology is now being used in
polyester car interiors and souvenir cups, and Coca-Cola is
building new manufacturing facilities and creating made-in-the-
USA jobs through its plant PET technology collaborative.
That is just one example from one farm bill energy
initiative, USDA's BioPreferred Program, but actually, there
are 71 companies in Georgia benefitting from this program, from
biobased flooring companies in Dalton, to the world's leading
producer of pine chemicals in Savannah.
In my written statement, and in BIO's report that I have
submitted for the record, I highlight companies from every
state that are developing new technologies and products with
support from each of the farm bill energy title programs. We
should build on these programs and go forward, not backward.
If you would have asked me during my time in Congress what
is the only thing a Member can do for his constituents more
valuable than create jobs, I might have said create new
American industries full of high-paying jobs; jobs that will
help preserve our natural environment for our children and our
grandchildren. That is exactly the future we are building, and
the energy title of this farm bill is a big reason why.
According to USDA, the biobased industry contributes $393
billion to the U.S. economy annually, and supports 4.2 million
jobs, and the bioeconomy is adding hundreds of thousands more
jobs a year. The renewable fuel sector adds another 850,000
jobs, and $185 billion in annual economic output, and $46
billion in wages for our farmers, our workers, and our workers
according to an analysis from Fuels America. These numbers
would be a fraction of their current size without the energy
title. The programs, in toto, provide what all investors say
they need; a long-term, stable policy environment to help them
make investment decisions. That stability is especially
important in these tough times for our rural producers. We know
America's farmers today are facing severe economic pressures,
commodity prices are down, and so are net farm incomes. They
dropped 15 percent last year, and the USDA forecasts another
nine percent drop this year. The farm bill's energy programs
are an instrumental tool to help farmers weather this storm and
bounce back stronger. The demand for biomass gives farmers a
value-added product they can grow to offset low commodity
prices.
McKinsey and Company estimates $\1/4\ trillion in annual
global sales of biobased products. Here in the United States,
we have the people, the universities, the technology, and the
vision to lead the world in bio-processes and products.
Biofuels, renewable chemicals, and biobased products diversity
demand for crops and crop residues. Just as modern oil
refineries take a crude oil feedstock and produce many value-
added products, biorefineries take renewable feedstocks and do
the same. And the growing demand for employees to build and
operate these new biorefineries is another way we are
revitalizing rural communities.
This is the future. The choice we make in the farm bill is
whether or not we are going to lead it. In addition to boosting
farmer incomes, creating jobs, and revitalizing U.S.
manufacturing, the biobased economy is helping to offset the
impact OPEC has on our oil prices. In 2014, biobased products
replaced nearly 7 million barrels of oil. In 2015, renewable
fuels displaced an amount of gasoline equivalent to 527 million
barrels of crude. In other words, our industry saved us roughly
the volume of oil imported annually from Saudi Arabia and
Kuwait combined. BIO is proud to be a founding member of the Ag
Energy Coalition of trade groups, companies, and organizations
representing thousands of farmers and businesses across the
country. We are committed to developing all of the above
approach to supporting renewables, energy efficiency, and farm
and forest resources. To me, the economic case alone for these
new technologies is so strong and compelling that it warrants
the continuation and growth of this title, even if one did not
share my conviction that they are also critical to the health
of our planet.
Mr. Chairman, I look forward to working with this Committee
as we plot a course to capture and capitalize on this growing
market to harvest and manufacture sustainability. And thank you
for allowing me to use the time that the other witnesses left
on the table.
[The prepared statement of Mr. Greenwood follows:]

Prepared Statement of Hon. James C. Greenwood, President and Chief
Executive Officer, Biotechnology Innovation Organization, Washington,
D.C.
Introduction
The Biotechnology Innovation Organization (BIO) is the world's
largest trade association representing biotechnology companies,
academic institutions, state biotechnology centers and related
organizations across the United States and in more than 30 other
nations. BIO members are involved in the research and development of
innovative healthcare, agricultural, industrial and environmental
biotechnology products. Our members are working every day to solve the
greatest challenges facing society--whether it is finding a cure for
cancer, protecting the public against bio-terror threats, feeding
hungry people nutritious food, or generating renewable fuels, renewable
chemicals and biobased products. We support public policies, including
government funding for key agencies and programs that unleash our
members' scientific innovation potential and grow the bioeconomy. BIO
also is one of the founding members of the Agriculture Energy (Ag
Energy) Coalition, a coalition of trade groups, companies, and
organizations representing thousands of farmers and businesses across
the United States who are developing an ``all-of-the-above'' approach
to renewable energy, energy efficiency, and farm and forest resources.
Within its broad membership, BIO's member companies are developing
new agricultural and low-carbon feedstocks, industrial enzymes, and
biological catalysts for the conversion of biomass into advanced
biofuels, alternative jet fuels, renewable chemicals, and biobased
products. Utilizing the power of industrial biotechnology, companies
across the country are creating a robust biobased economy. Biobased
production encompasses a complex value chain, from agriculture through
the manufacture of consumer goods, that provides an alternative to the
petroleum-based value chain and that brings environmental, economic and
other benefits. The biobased economy can generate new markets for
agricultural producers, boost innovation in domestic manufacturing, and
stimulate sustainable economic growth. These companies are developing
plant biotechnologies that improve crop insect resistance, enhance crop
herbicide tolerance, and facilitate the use of more environmentally
sustainable farming practices. In animal agriculture, biotechnology is
used to genetically engineer animals to improve their suitability for
pharmaceutical, agricultural, and industrial applications.
The biobased economy and industrial biotechnology already
contribute to millions of jobs and hundreds of millions of dollars in
annual economic activity. And we are poised for accelerated growth in
the 21st century. The farm bill energy title can unleash this potential
growth, creating tens of thousands of more jobs in rural America and
promoting billions of dollars of additional economic activity.
Revitalizing Rural Economies
Much has changed since Congress passed the current farm bill, the
Agricultural Act of 2014.\1\ As [T]he Wall Street Journal noted last
month, American farmers and rural communities are hurting economically.
A multiyear slump in prices for corn, wheat and other farm commodities
brought on by a world-wide glut of grain is pushing many farmers into
debt. Net farm income dropped 15 percent to about $68 billion last
year, the lowest since 2009,\2\ according to the Agriculture
Department. It is expected drop another nine percent in 2017,\3\
extending the steepest slide since the Great Depression into a fourth
year. As incomes drop, the number of farms continues to decline; there
are now fewer than two million farms in America.
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\1\H.R. 2642, 113th Cong., Pub. L. 113-79 https://www.congress.gov/
113/plaws/publ79/PLAW-113publ79.pdf (2014) (enacted).
\2\Dow Jones & Company, Inc. All Rights Reserved. (Feb. 10, 2017).
Trade Punishment for Trump Voters. The Wall Street Journal. https://
www.wsj.com/articles/trade-punishment-for-trump-voters-1486686758.
\3\Newman, J., & McGroarty, P. (Feb. 8, 2017). The Next American
Farm Bust Is Upon Us. The Wall Street Journal. https://www.wsj.com/
articles/the-next-american-farm-bust-is-upon-us-1486572488.
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Federal lawmakers have worked over many years to craft policies in
the farm bill that minimize farm household income fluctuations caused
by volatility associated with agricultural production.\4\ As Members of
the Committee begin their work on the development of the next farm
bill, they should keep in mind that policies supporting and growing the
21st century biobased economy can help reverse the economic trends
farmers and rural communities are currently facing. Chief among these
policies is the farm bill energy title, which creates high-value
careers and new income streams for American farmers, accelerates the
commercialization of new technologies and products derived from
agricultural products, and supports construction of biorefinery
manufacturing facilities in rural communities. Conventional and
advanced biofuels, renewable chemicals, and biobased products made with
industrial biotechnology are helping diversify demand for crops and
crop residues. Just as modern oil refineries take a crude oil feedstock
and produce many value-added products, biorefineries will take
renewable feedstocks and make multiple products in the not-too-distant
future.
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\4\Good, K. (Feb. 28, 2017). USDA Report Examines Farm Household
Income Volatility. Farm Policy News. https://
farmpolicynews.illinois.edu/2017/02/usda-report-examines-farm-
household-income-volatility/.
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The Value of the Biobased Economy
During the 3 years of deliberations that led to the 2014 Farm Bill,
BIO and the Ag Energy Coalition advocated for a robust energy title
with mandatory funding to incentivize development and growth of the
biobased economy. Within Title IX of the last farm bill, the energy
title received $881 million in mandatory funds in 2014, representing
less than one percent of the overall farm bill budget. This small
amount of funding yields big results for the overall economy. According
to the U.S. Department of Agriculture (USDA), the number of jobs
contributed to the U.S. economy by the biobased products industry in
2014 was 4.2 million, up from 4.0 million in 2013. In addition to the
direct jobs created by the industry, the biobased economy generates a
jobs multiplier of 2.76, meaning for every 1,000 biobased products
jobs, 1,760 more jobs are supported in the United States.\5\ This
industry contributed $393 billion to the U.S. economy in 2014, up from
$369 billion in 2013.
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\5\Golden, J., Handfield, R., Daystar, J., & McConnell, E. (Oct.
2016). USDA: An Economic Impact Analysis of the U.S. Biobased Product
Industry. https://www.biopreferred.gov/BPResources/files/
BiobasedProductsEconomicAnalysis2016.pdf .
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This broad economic impact comes from biorefineries that are
commercializing a range of technology solutions to produce commodity
and specialty renewable chemicals as well as advanced biofuels.
Industrial biotechnology companies are pursuing renewable chemicals and
biobased materials because they can be commercialized at smaller scale
and they promise environmental benefits, stable costs, and novel
properties in comparison to fossil fuel-derived chemicals. Competition
to produce platform renewable chemicals provides manufacturers
assurance of a steadily available, high-quality supply of renewable
chemicals for consumer product applications.
These facilities are being built in rural communities near biomass
resources. The demand for biomass helps agriculture producers by giving
them a value-added product they can grow to offset low commodity
prices. The demand for employees to build and operate these
biorefineries helps to revitalize rural communities.
Development of these biorefineries can bring long-term economic
development to rural communities through the predicted rapid expansion
of renewable chemical production in the near future. McKinsey & Co.
estimates that there were $252 billion in global sales of biobased
products in 2012, with biofuels and plant extracts comprising more than
\1/2\. Sales of renewable chemicals represented nine percent of the
$2.820 billion in worldwide chemical sales in 2012. By 2020, McKinsey
expects biobased products to make up 11 percent of the $3.401 billion
global chemical market. Sales of biobased products would reach $375 to
$441 billion by 2020, with a compound annual growth rate of eight
percent over the preceding decade.\6\
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\6\Biotechnology Innovation Organization (BIO). Advancing the
Biobased Economy: Renewable Chemical Biorefinery Commercialization,
Progress, and Market Opportunities, 2016 and Beyond. https://
www.bio.org/sites/default/files/
BIO_Advancing_the_Biobased_Economy_2016.pdf.
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Gains in productivity associated with biotech crops also help grow
the American agricultural trade surplus because so many biotech crop
harvests are dedicated to foreign markets. In Fiscal Year 2015, U.S.
agricultural exports totaled more than $143 billion, contributing to a
$27.5 billion agricultural trade surplus. This is in part due to
biotechnology, which has contributed to a strong and steady growth in
the U.S. agricultural export market, particularly for corn and
soybeans. It is noteworthy that, according to the White House National
Bioeconomy Blueprint, published in 2012, U.S. revenues from biotech
crops totaled more than $75 billion. The investments by companies in
research, development and commercialization of these crops have
generated good jobs all across our country.
In addition to boosting farmer incomes, creating jobs, and
revitalizing U.S. manufacturing, the biobased economy is lessening our
dependence on foreign sources of petroleum. While the U.S. has
benefited in recent years from increased production of domestic oil and
gas, we are still unnecessarily impacted by the global price of oil and
those who control it. One need look no further than OPEC's conscious
decision 2 years ago to try to squeeze U.S. producers out of the
market, followed by OPEC's cut in production last fall. OPEC's actions
caused a ten percent increase in oil prices in 1 day, and prices
continued to climb to an 18 month high within a month. Biobased
products and renewable fuels are helping to offset the impact OPEC has
on our energy prices. In 2014 biobased products replaced about 6.8
million barrels of oil, while in 2015, renewable fuels displaced an
amount of gasoline equivalent to 527 million barrels of crude oil.
That's roughly the volume of oil imported annually from Saudi Arabia
and Kuwait combined.\7\
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\7\Urbanchuk, J. (Feb. 2016). ABF Economics: Contribution of the
Ethanol Industry to the Economy of the United States in 2015. http://
ethanolrfa.org/wp-content/uploads/2016/02/Ethanol-Economic-Impact-for-
2015.pdf.
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Whether the growth and benefits from this industry occur in the
United States will depend on supportive policies to help grow the 21st
century biobased economy. The 2014 Farm Bill energy title programs
spurred the development of this industry. To ensure the biobased
industry continues to expand in the United States, Congress must
improve upon the existing Title IX programs and provide mandatory
funding. This will help innovative U.S. companies continue to
commercialize advanced biotech processes. Putting homegrown
technologies to work converting domestic crops and residues to value-
added products can create high-quality rural jobs, spur economic
growth, and improve environmental health.
What follows are the existing programs contained within Title IX of
the 2014 Farm Bill, how the programs work, the jobs, facilities, and
products these programs have helped develop, and how BIO believes these
programs can be improved in the next farm bill.
Farm Bill Energy Title Programs
Section 9002 Biobased Markets Program, known as the
BioPreferred' Program.

Section 9003 Biorefinery, Renewable Chemical, and Biobased
Product Assistance Program (BAP).

Section 9005 Bioenergy Program for Advanced Biofuels.

Section 9007 Rural Energy for America Program (REAP).

Section 9008 Biomass Research and Development (BRDI).

Section 9010 Biomass Crop Assistance Program (BCAP).
Section 9002, the Biobased Market Program, or the
BioPreferred' Program
Managed by USDA, the goal of the BioPreferred program is to
increase the purchase and use of biobased products from agricultural
feedstocks. The BioPreferred' Program was created by the
2002 Farm Bill and reauthorized and expanded as part of the
Agricultural Act of 2014 (the 2014 Farm Bill). The program's purpose is
to spur economic development, create new jobs and provide new markets
for farm commodities. The increased development, purchase, and use of
biobased products reduces our nation's reliance on petroleum, increases
the use of renewable agricultural resources, and mitigates adverse
environmental and health impacts.\8\
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\8\USDA. What Is Biopreferred? https://www.biopreferred.gov/
BioPreferred/faces/pages/AboutBioPreferred.xhtml.
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BioPreferred' Program is transforming the marketplace
for biobased products through two initiatives: purchasing requirements
for Federal agencies and their contractors; and voluntary product
certification and labeling. Federal law, the Federal Acquisition
Regulation, and Presidential Executive Orders direct all Federal
agencies and their contractors to purchase biobased products in
categories identified by USDA through the BioPreferred'
Program. To date, over 14,000 biobased products in 97 product
categories (e.g., cleaners, carpet, lubricants, paints) listed in the
BioPreferred' Catalog qualify for mandatory Federal
purchasing. In Fiscal Year 2017, Federal agencies have committed to
include biobased product purchasing requirements in 84,433 contracts
totaling $453,150,168.
The BioPreferred' Program also drives growth of the
bioeconomy by helping drive consumer recognition of biobased products.
USDA is making it easier for consumers to identify biobased products
with the USDA Certified Biobased Product label. There are currently
more than 2,700 voluntarily labeled products: 1,700 of them are
consumer goods, 400 are renewable chemicals, and 600 are industrial
products.
Brand owners such as Procter and Gamble (P&G) on their Tide bottle;
General Mills on their cereal boxes; Unilever on their detergents; and
The Coca-Cola Company on their PlantBottleTM packaging, all
use USDA's label to show consumers the biobased content in their
products. Eventually, P&G intends to use only recycled or renewable
materials to make and package its consumer products. Wal-Mart has set
goals to sell only products that use renewable energy and produce zero
wastes. The BioPreferred' Program helps create this market
pull for renewable chemicals and biobased products and creates a
uniform process for companies interested in these technologies.
Recommendations for the Next Farm Bill
USDA should establish within the BioPreferred' Program's
voluntary labeling and procurement system a campaign to increase public
awareness and acceptance of renewable chemicals and biobased products.
The BioPreferred program also should develop an annual report both
auditing and tracking USDA's voluntary Certified Renewable Chemicals
and Biobased Product labeling program and showing procurement and sales
of biobased products by Federal agencies and their contractor's.
Additionally, USDA could work with United States Department of
Commerce in developing North American Industry Classification System
(NAICS) codes that identify renewable chemical and biobased product
manufacturers. USDA should explore combining its certified renewable
chemicals and biobased products labeling program with the Environmental
Protection Agency's Safer Choice label, providing consumers the ability
to identify products that are both certified biobased and safer for
human health and the environment.
Finally, we ask Congress to consider increasing mandatory funding
for this program to $10 million annually.
Section 9003 Biorefinery, Renewable Chemical, and Biobased Product
Assistance Program
The Biorefinery, Renewable Chemical, and Biobased Product
Manufacturing Assistance Program (BAP), also known as the Section 9003
Program, provides loan guarantees to assist in the construction of
advanced biofuels biorefineries. Consistent with BIO's past advocacy,
it was expanded to include renewable chemicals and biobased products
manufacturing facilities in the 2014 Farm Bill.\9\
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\9\USDA. Biorefinery, Renewable Chemical, and Biobased Product
Manufacturing Assistance Program. https://www.rd.usda.gov/files/fact-
sheet/RD-FactSheet-RBS_Biorefinery.pdf.
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This loan guarantee program enables manufacturers to access capital
for large-scale projects in rural communities. Without the loan
guarantee program, new innovative companies might never be able to pool
sufficient capital to commence development of a project in a rural
community with a small population. Section 9003 has enabled companies
to put steel in the ground for first-of-a-kind biorefineries. These
biorefineries are proven job and economic growth drivers for rural
communities.
Sapphire--Columbus, New Mexico
In 2011, under this program, USDA provided Sapphire Energy a $54.5
million loan guarantee to build a refined algal oil commercial
facility. Sapphire's ``Green Crude Farm'' in Columbus, NM, is an
example of how USDA funding and partnerships with the private sector
are helping to support the development of biorefineries. About a 4 hour
drive south of Albuquerque, roughly 1,700 Columbus residents live at
the southern edge of New Mexico and the United States. In the desert
scrub outside of Columbus the plant opened in May 2012 to produce
renewable algal oil. According to the company, more than 600 jobs were
created during the first phase of construction at the facility and
during operations the plant employs approximately 30 people.\10\ After
Sapphire received additional equity from private investors, it repaid
the remaining balance on its USDA-backed loan in 2013. The plant is
current being brought fully online to produce algae for human and
animal nutritional products. It is a measured and effective approach to
becoming a permanent form of nutritional oils and protein for the
world.\11\
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\10\Bio-Based World News. (Aug. 10, 2016). $250m USDA funding pool
to help bio-based chemicals and products seeks applications. https://
www.biobasedworldnews.com/250m-usda-funding-pool-to-help-bio-based-
chemicals-and-products-seeks-applications.
\11\Sapphire Energy, Inc. Algae Farm. (2015). http://
www.sapphireenergy.com/locations/green-crude-farm.html.
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Fulcrum Sierra Biofuels--Storey County, Nevada
Section 9003 is supporting development of the exciting field of
alternative jet fuels. In 2014, USDA closed on a loan guarantee to
Fulcrum Sierra Biofuels, LLC, to build a biorefinery to produce jet
fuel from municipal solid waste in Storey County, Nevada, approximately
20 miles east of Reno. Fulcrum will produce synthesis gas from 147,000
tons of municipal solid waste and catalytically convert it to synthetic
paraffinic kerosene/jet fuel through a proprietary technology. The
plant will be the first of what the company expects to be several bio-
jet fuel plants throughout the country. At the same time as USDA made
its loan guarantee, Cathay Pacific Airways announced investment in
Fulcrum Bioenergy and negotiated a long-term supply agreement for 375
million gallons of sustainable aviation fuel over 10 years. This would
represent about two percent of the airline's annual fuel
consumption.\12\
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\12\USDA. Fletcher, J. (Press Release No. 0195.14). USDA Announces
Loan Guarantee to Help Innovative Company Turn Waste Into Renewable Jet
Fuel. https://www.usda.gov/wps/portal/usda/usdamediafb?contentid=2014/
09/0195.xml.
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Biosynthetic Technologies--Texas
With Section 9003 expanded in 2014 to make renewable chemicals and
biobased products manufacturing facilities eligible to participate in
the program, Irvine, California-based, Biosynthetic Technologies, LLC,
received conditional approval from USDA for its loan guarantee
application. Biosynthetic Technologies is working with a rural lender
to finance the construction of a full-scale commercial manufacturing
plant in Houston that will produce 20 million gallons a year of its
oil-based ingredient for high-performance motor oils, industrial
lubricant products, and cosmetic ingredients. These biobased oils have
higher viscosity, thermal stability, and flash point than traditional
petroleum motor oils as well as existing synthetics. This new project
will create manufacturing jobs in the United States, strengthen the
agricultural sector, and help create environmentally friendlier
products that perform better.\13\
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\13\Business Wire. (Feb. 01, 2016). USDA Reserves Over $100 Million
in Loan Guarantee Funding for Biosynthetic Technologies. http://
www.businesswire.com/news/home/20160201005258/en/USDA-Reserves-100-
Million-Loan-Guarantee-Funding.
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Recommendations for the Next Farm Bill
The 2014 Farm Bill extended loan guarantee eligibility to renewable
chemicals and biobased products makers. However, due to a drafting
error when reconciling the differences between the House and Senate
versions of the 2014 Farm Bill, language was inadvertently deleted that
would have allowed stand-alone renewable chemical facilities to fully
participate in the program. Under USDA's current regulations, all
biorefinery projects must produce an advanced biofuel, even if the main
purpose of the project is to create renewable chemicals. As a result, a
number of renewable chemical producers are ineligible because it is too
costly or impractical for them to retrofit their processes to produce a
biofuel, in addition to a renewable chemical.
BIO urges the Committee to amend the language in Section 9003 to
ensure stand-alone renewable chemical facilities are eligible in the
next farm bill. BIO also requests the Committee work with USDA to
ensure timely implementation of the new rules that will come as a
result of the next farm bill to ensure USDA makes funding available in
a timely manner. Maintaining mandatory funding for this program is
crucial for its success in enabling companies to secure the financing
they need to commercialize biorefinery projects.
Section 9005 Bioenergy Program for Advanced Biofuels
This program encourages production of advanced biofuels, other than
corn starch ethanol. The policy goal is to create long-term, sustained
increases in advanced biofuels production. Under the last farm bill,
awards totaling $8.8 million were made through Rural Development to
biofuels producers, based on the amount of advanced biofuels produced
from renewable biomass. Feedstocks incentivized by this program include
crop residue, food and yard waste, vegetable oil and animal fat. The
program has promoted the development of wood pellets, biodiesel,
advanced and cellulosic ethanol, and biogas.\14\
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\14\USDA. Advanced Biofuel Payment Program. https://
www.rd.usda.gov/files/RD_AdvBiofuelsChart_2016.pdf.
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The return on investment (ROI) for new technologies, including
advanced biofuels, are important to driving investor interest. Many
advanced biofuels are still utilizing brand new technologies and
plants, so there is much to learn and improve. Initial investment costs
for these technologies and plants will improve with time, practice,
learning, and ultimately additional plants. Efficiencies across the
value chain--including biomass harvest and storage, engineering
improvements, construction learnings and regulatory approvals--must be
made in order to improve the economic outlook and certainty for the
ROI. Section 9005 funding helps investors in these new technologies
with the requisite ROI needed to proceed with constructing a new plant
or expanding capacity at an existing facility. Without Section 9005
mandatory funding, companies working on advanced biofuel technologies
have one less tool to support innovation and commercialization of the
cleanest fuels in the world. Current USDA and DOE funding programs help
advanced biofuels succeed; the industry cannot afford to be without one
of these programs.
Recommendations for the Next Farm Bill
It is critical the Committee maintain robust mandatory funding for
Section 9005 to help grow and expand the advanced biofuels industry
nationwide.
Section 9007 Rural Energy for America Program (REAP)
REAP has been a remarkably popular, successful, and constructive
program that supports every state and region and renewable energy and
energy efficiency technology. REAP provides benefits to the full
agricultural value chain, from producers to coops, to biotechnology and
clean technology companies operating across rural America. Nearly
13,000 projects in all 50 states have received awards since the 2008
Farm Bill, leveraging more than $3 billion in private investment. REAP
is one of agriculture's best ways of improving the nation's energy
infrastructure and resiliency.
The program has been instrumental in helping deploy biogas systems
throughout the rural economy allowing agricultural producers, through
the use of digesters, to make products from waste streams--manure and
crop residues--that would otherwise be viewed as an environmental
challenge. Farmers can now take these wastes streams and make on-farm
energy, nutrient-rich soil amendments, fertilizers, a renewable
replacement for natural gas, and even feedstocks for renewable
chemicals and bioplastics. The sale of all these products helps protect
the agricultural producer from uneven commodity prices.
REAP improves profit margins for farmers, ranchers, and rural small
businesses by cutting energy costs with modern energy efficiency and
renewable energy technologies. With REAP, businesses become more
efficient, resilient to energy market changes, and more energy
independent. Growing economic opportunities with proven energy
technologies excites rural citizens and communities and helps keep
younger generations in rural areas and in farming.
Recommendations for the Next Farm Bill
The program has been oversubscribed year after year; it should be
expanded both in terms of funding and scope in the next farm bill. For
example, REAP should be modified to make clear that varying
biomaterials projects are fully eligible for funding. In addition, BIO
and the Ag Energy Coalition would like to see improvements so that
under-served technologies like small-scale wind generation and biogas
are better served.
Section 9008 Biomass Research and Development (BRDI)
The Biomass Research and Development Initiative (BRDI)\15\ seeks to
foster significant commercial production of biofuels, biobased energy
innovations, development of biobased feedstocks, and biobased products
and processes, including cost-competitive cellulosic ethanol. To this
end the program provides competitive funding in the form of grants,
contracts, and financial assistance for research, development, and
demonstration of technologies and processes. Eligibility is limited to
institutions of higher learning, national laboratories, Federal or
state research agencies, private-sector entities, and nonprofit
organizations.\16\
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\15\USDA. (Feb. 26, 2015). Biomass Research and Development
Initiative (BRDI) https://nifa.usda.gov/funding-opportunity/biomass-
research-and-development-initiative-brdi.
\16\USDA CRS Report. https://www.everycrsreport.com/reports/
R43416.html#fn31.
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This program has afforded researchers across the country
opportunities to explore new techniques and feedstocks that will enable
the biotech industry to build facilities nationwide and create a true
biobased economy. Whether it is examining on-farm biomass processing in
Kentucky or co-treatment for low-cost fermentation of cellulosic
biomass in New Hampshire, this program is key to unlocking the
technical challenges of deploying these technologies nationwide.\17\
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\17\USDA NIFA Current Research Information System. http://
cris.nifa.usda.gov/cgi-bin/starfinder/
0?path=fastlink1.txt&id=anon&pass=&search=(gc=BRDI%20OR%20GC=RDFD)&for
mat=WEBTITLESG.
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Recommendations for the Next Farm Bill
It is critical the Committee maintain robust funding for BRDI. Cuts
in the appropriations process have led to smaller grants, limiting the
diversity of projects.
Section 9010 Biomass Crop Assistance Program (BCAP)
The Biomass Crop Assistance Program (BCAP) provides financial
assistance to owners and operators of agricultural and non-industrial
private forest land who wish to establish, produce, and deliver biomass
feedstocks.\18\ BCAP provides two categories of assistance: matching
payments and establishment and annual payments.
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\18\USDA BCAP. https://www.fsa.usda.gov/programs-and-services/
energy-programs/BCAP/.
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In fashioning the 2014 Farm Bill, Congress made a number of changes
to BCAP. Standing out among the changes was a cap on the program's
mandatory authorization level. The 2014 Farm Bill imposed for the first
time a $25 million cap per year in mandatory funding for FY 2014
through FY 2018.
This cap was due at least in part to concerns that arose in the
early years after BCAP was authorized--for example, that it could
heighten competition over eligible woody biomass, thus raising the
price of that material to the detriment of traditional users, such as
nurseries and others, and that the byproduct of paper production,
``black liquor,'' could qualify for Collection, Harvest, Storage, and
Transportation (CHST) matching payments. Such concerns have been
addressed or have become less acute.\19\
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\19\CRS R41296 Biomass Crop Assistance Program (BCAP): Status and
Issues. Jan. 12, 2015. https://www.everycrsreport.com/reports/
R41296.html.
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Despite the initial challenges of developing and implementing BCAP,
this remains a crucial program for developing the feedstocks necessary
for the biobased economy. The program's regionally appropriate biomass
feedstocks are key to the development of sustainable systems for
biofuels, renewable chemicals, and biobased products.
BCAP has incentivized nearly 1,000 growers and landowners farming
nearly 49,000 acres to establish and produce dedicated, non-food energy
crops for delivery to energy conversion facilities.\20\ In 2014 and
2015, USDA approved 209 contracts for matching payments of $15.8
million toward the collection or harvest of approximately 300,000 dry
tons of forest residues from National Forest Service and Bureau of Land
Management public lands. Forest residues are removed for the reduction
or containment of disease or insect infestation and reduction of fire
threat.\21\
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\20\Biomass Crop Assistance Program (BCAP) Qualified Biomass
Conversion Facilities (BCF's) FY 2017. https://www.fsa.usda.gov/Assets/
USDA-FSA-Public/usdafiles/Energy/BCAP%20Fa
cility%20Listing%20FY2017.pdf.
\21\USDA Resumes Incentives to Grow the Bioeconomy and Improve
Forest Health. https://www.fsa.usda.gov/news-room/news-releases/2016/
nr_20161110_rel_185.
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In 2016, $1 million was allocated toward the sign-up of 1,000 acres
of Miscanthus in project area 5 in Ohio and Pennsylvania\22\ and of
shrub willow for project area 10 in New York.23-24
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\22\Biomass Crop Assistance Program--Project Areas Numbers 2
through 5 Implemented in Arkansas, Missouri, Ohio and Pennsylvania
County Locations for New Giant Miscanthus Biomass Producers. https://
www.fsa.usda.gov/Internet/FSA_File/bcap_areas2_5_2011.pdf.
\23\Biomass Crop Assistance Program--Project Area Number 10.
https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/Energy/BCAP/
bcap_proj10.pdf.
\24\USDA: Feedstocks and the AJF Supply Chain the Broad Pict[ur]e,
Harry Baumes, Sep. 14, 2016. https://energy.gov/sites/prod/files/2016/
09/f33/baumes_alternative_aviation_fuel_work
shop.pdf.
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In the Miscanthus project, BCAP was critical in helping Aloterra
establish 5,000 acres of a perennial grass on cropland that was sitting
idle and underutilized in Northeast Ohio and Northwest Pennsylvania.
BCAP enabled local farmers to wait 3 years before earning income from a
harvest of this new perennial grass. Aloterra then leveraged the
program to bring an additional $20 million in private funds to build
two manufacturing facilities in Ashtabula County, Ohio. This region has
been heavily impacted by the opioid epidemic and manufacturing job
losses and badly needs good paying manufacturing jobs. Because of BCAP,
Aloterra has now created over 60 full-time jobs in the region and
brought a new cash crop to poor farmland that was idle. BCAP drives a
very powerful economic combination of farming and rural manufacturing.
Aloterra is now operating the only facility in North America turning
grass into food service packaging, and it is looking to expand this
model to several more states.\25\
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\25\Miscanthus: Cultivating a Brighter Future. http://
www.aloterrallc.com/.
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In northern New York State, the BCAP project has led to the
commercialization of shrub willow grown for as a source of renewable
energy. Eight landowners are now taking part. All of the willow biomass
grown will be used to produce renewable energy at facilities owned by
ReEnergy Holdings LLC in northern New York. The purchase of willow to
generate renewable energy will inject about $3 million into the local
economy over the course of the project.\26\
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\26\Extension BCAP Helps Commercialize Shrub Willow for Bioenergy
in Northern New York. Apr. 20, 2016. http://articles.extension.org/
pages/71099/bcap-helps-commercialize-shrub-willow-for-bioenergy-in-
northern-new-york.
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Recommendations for the Next Farm Bill
BCAP has the potential to be a huge benefit to the development of
the biobased economy and to agricultural producers looking for
additional income streams. We would encourage the Committee to provide
the program robust funding in the next farm bill. The key impediment to
BCAP's success has been the continual reduction of mandatory funds by
appropriators and delays by USDA in implementing the program.
We also would encourage the Committee to explore how BCAP can be
better utilized to improve forest health through reductions of
hazardous fuels. BIO supports expanding the eligibility of BCAP to
include energy sorghums (sweet sorghum, biogas and biomass sorghums)
and eligibility of energy sorghum for all of the payments once they are
restructured. Introduction of a parallel payment structure for annual
crops that remunerates for annual planting and annual retrieval is also
necessary for annual crops like sorghum. Rather than dividing payments
into establishment, maintenance and retrieval, a structure appropriate
for forestry and perennial crops.
Conclusion
Farm Bill energy title programs have been incredibly successful in
incentivizing the biobased economy. Because of the research, loans, and
grants provided by these programs, industrial biotechnology companies
are developing new feedstocks, industrial enzymes, and biological
catalysts for the conversion of biomass for the production of advanced
biofuels, alternative jet fuels, renewable chemicals, and biobased
products.
The industry is on the cusp of creating a robust biobased economy
through U.S. biobased production. This encompasses a value chain from
agriculture through the manufacture of consumer goods that provides a
cost-competitive alternative to petroleum's value chain and brings
environmental, economic and other benefits. This generates new markets
for agricultural producers, boosts innovation in domestic manufacturing
and exports, and stimulates sustainable economic growth. In turn,
because the inputs and technologies are domestically developed, this
sector will boost the incomes of America's farmers, revitalize rural
communities, create high-skilled jobs in the manufacturing sector, and
provide sustainable employment.
BIO and the Ag Energy Coalition are ready to serve as a resource to
the Committee in developing the energy title and look forward to
working with you during reauthorization of the farm bill.
Appendices
Editor's note: Due to the size of the appendices referenced, they
have been relocated to the end of the published hearing for Thursday,
March 9, 2017 for the Subcommittee on Commodity Exchanges, Energy, and
Credit, and are located on p. 170.

The Chairman. Congressman Greenwood, like most Members, you
never understood what the red light was for. That holds true
today. Thank you for your testimony.
I would like to remind Members that they will be recognized
for questioning in order of seniority for Members who were here
at the start of the hearing. After that, Members will be
recognized in order of arrival. I appreciate the Members'
understanding.
I now recognize myself for 5 minutes.
Commissioner Fox, an increase in rural opportunities and
narrowing the rural-urban divide is an essential purpose of
rural development programs. What should this Committee consider
as metrics to judge if we have been successful or not on that
effort?
Mr. Fox. Well, the Committee has to look at the SECD
Program (Strategic Economic and Community Development), which
was part of the 2014 Farm Bill. I mean that program was the
first time that we could go through multi-jurisdictional areas,
where counties could work together on economic development, you
could leverage, I think that is very important as we move
forward.
I just think that in rural America we can't afford to build
silos, we need to partner. And as an intergovernmental partner,
we need to partner with the Federal and the state to make
things happen in rural America.
The Chairman. Thank you.
Mr. Cook, in your testimony, you proposed a non-duplication
rule. I understand the value of this rule, preventing the
government from supporting the same service twice, and ensuring
borrowers have revenue to pay back their loans, but your rule
raises questions for me about what we do for rural residents
who are being served by Internet services that are inadequate
by today's standard, but built with RUS loan dollars that are
still being paid back.
Mr. Cook. Well, thank you.
The Chairman. Can we allow a potential competitor to take
out a loan to build out technically better services, or are
those residents resigned to the slow lane for the duration of
the loans that underwrote the system?
Mr. Cook. Thank you, Mr. Chairman. I certainly understand
that issue, and believe that one of the things that NTCA
believes, first and foremost, and certainly its member
companies like Hill Country, is that our utmost concern is
serving our end-user customers in rural America. Certainly, in
cases where there is an existing provider who has an RUS loan,
from the standpoint of assuring that the money is used
efficiently and effectively, and that there is not duplication
of support, we certainly believe it is wise that we are
spending taxpayer dollars to the most efficient way possible.
At the same time, as I said, we believe that the consumer
should be our utmost concern.
I think that in cases where there is another provider
wishing to provide support or service in an area that is
currently served by an existing RUS borrower, there should be a
process in place whereby that existing borrower can at least
prove-up their ability to provide service. And if it becomes
apparent that they are not doing what they are supposed to be,
and not abiding by their loan covenants, then we would agree
with you that another provider should at least be considered in
those cases.
The Chairman. Yes. Thank you.
Mr. Chastain, I know that the National Rural Electric
Cooperative Association members have been grappling with these
concerns too. I would invite you to weigh on that issue as
well.
Mr. Chastain. Well, I think what Mr. Cook said makes a lot
of sense. There are cases out there where, unfortunately, there
are some incumbent providers who do have RUS loans, who are not
providing adequate service. We have examples of that in several
places in Georgia. As a matter of fact, as you and Ranking
Member Scott are aware, the state legislature put in a rural
broadband study committee, chaired by Senator Steve Gooch and
Representative Don Parsons, specifically to address that issue
in rural Georgia.
What he said is correct. Either the incumbent providers who
have taken the money either need to be given the chance to step
up to the plate and prove that they can provide the adequate
service, but if they are not, there should be opportunities for
others who can come in to be able to provide that service.
Our view in Georgia is that rural broadband is absolutely
quickly becoming a critical piece of infrastructure for rural
communities. Rural communities, as you well know, have a lot of
challenges already, and not having access to rural broadband is
just one further kind of brick on their wagon, so to speak.
The Chairman. Thank you.
Mr. Duff, as we evaluate energy programs, how have they
made meaningful impacts on our rural economies, and do you
believe that these investments build self-sufficient
infrastructure to drive long-term economic activity? And if you
could be brief, I am down to about 20 seconds.
Mr. Duff. Yes, I will. Thanks for the opportunity to
comment.
The best example of the rural development impacts with the
energy title from the 2008 and 2014 Farm Bills would be Section
9005, the Advanced Biofuel Payment Program. As I said, it has
been a $60 million impact to ethanol plants in Kansas and
Texas, in order to incentivize greater use of feedstocks, like
sorghum, and that really had a direct impact on the buying
power of those facilities in local economies, particular where
groundwater declines are really threatening the way of life and
the way of farming in the High Plains.
I think that the opportunity that that has created for
feedstocks like sorghum in areas where the need is there has
had a very significant impact.
The Chairman. Thank you for that.
I now recognize my colleague from Georgia, the Ranking
Member, Mr. David Scott, for 5 minutes.
Mr. David Scott of Georgia. Thank you very much.
Mr. Chastain, you in your testimony brought up an
interesting comparison between electricity and broadband. And
let me first ask you, to your knowledge, there is no American
home today that is not connected with electricity. Am I safe in
saying that?
Mr. Chastain. Yes, sir, that is correct.
Mr. David Scott of Georgia. And am I safe in saying it
nearly took us 80 years to accomplish that task?
Mr. Chastain. Yes, sir.
Mr. David Scott of Georgia. I can vouch for that. I was
born in a rural area, and you can't get much more rural than
Aynor, South Carolina, in Horry County. We didn't have
electricity or running water, any of that, so I can relate.
Now, how do we compare that to broadband in terms of, we
know how important electricity was, but as we move now into
this high technology area, how do you compare that with the
need for broadband? Are not both at the same level?
Mr. Chastain. Yes, it is hard to compare, it is almost in
many ways an apples and oranges comparison, but there are some
similarities. We are obviously a very technology-driven
society, especially the younger members of our society. We all
probably have a cell phone or smartphone in our pockets.
Mr. David Scott of Georgia. Yes.
Mr. Chastain. And not just for quality of life, but for
business applications in rural America, broadband is going to
be increasingly important.
I worked most of my career in economic development trying
to recruit industry into rural Georgia, and it is a challenge
when there is inadequate broadband to get companies who work on
a global platform to be able to locate in some of these
communities. Even mom-and-pop entrepreneurial operations,
sometimes it makes it hard for them to compete. That is where
the comparison is similar, and that I do believe it is
something that we are going to have to look at as a nation as a
priority for infrastructure improvement to rural broadband. The
challenges Mr. Cook outlined very well, it is a Herculean
effort when it comes to financing these programs. My opinion
is, it is going to take some massive Federal programs to help
provide people the opportunity to do that.
Mr. David Scott of Georgia. Good. Thank you very much.
Now, Mr. Cook, I want to go to you. You mentioned in your
testimony this comparison in speed between rural America and
urban America. Could you refine that a bit? Exactly what are
you talking about there, how serious it is, and how can we
address this?
Mr. Cook. Thank you for the question. Yes, the
Communications Act, going back to 1934 and then updated in the
Telecommunications Act of 1996, in Section 254 it talks about
universal service. It is very clear that we as
telecommunications companies have been given a mandate that we
are to provide reasonably comparable services at reasonably
comparable rates. In other words, trying to equalize what is
available in rural America, as compared to what is available in
urban America. And that is something that the small telecos
that are represented by NTCA work very hard at every day, is
trying to make sure that rural America has the same level of
service that is available in urban----
Mr. David Scott of Georgia. And how far are we from that?
Are we there now or what do we need to do more of to make sure
that rural America and urban America are on the same level of
broadband capacity?
Mr. Cook. That is a great question. I believe about 80
percent, maybe a little bit more than 80 percent of the NTCA
member companies have deployed broadband services, and most of
those are between 80 and 85 percent deployed 10/1. We are in
good shape. We are certainly not through. We are working very
hard.
One of the things that we are really dealing with is an
insufficient USF fund.
Mr. David Scott of Georgia. Yes.
Mr. Cook. While we have seen increases to the E-Rate
Program and Lifeline over the last 7 years, we have been capped
on the USF fund. So that has definitely been an obstacle.
Mr. David Scott of Georgia. Okay. Thank you very much. My
time is running out, but, Mr. Greenwood, I have to get to you
because you have served in and out. You have served here with
us, and now you are out dealing with the reality. Could you
share with us what exactly we in Congress can do better and
more of to help the rural communities in acquiring this equal
balance between urban America, and do you believe that we are
doing enough in adequate funding or do we need to do more?
Mr. Greenwood. Well, thank you for the question,
Congressman.
First off, I would say that the energy title in the last
farm bill was about $881 million, and I would certainly
encourage you to improve upon that if possible. I know that is
a tough prospective, given the many competing interests for the
budget this year, but these programs are working, and they are
working well.
The second suggestion I would make, when it comes to the
RFS, is to do exactly nothing, to leave it as it is.
Mr. David Scott of Georgia. Yes.
Mr. Greenwood. This program was created in 2007, and has
been serving the country very well. We have been able to use
renewable fuels that, as I have said in my testimony, replace
enough energy to substitute for all the oil we get from Saudi
Arabia and Kuwait, it is better for the environment, it creates
jobs in the rural economy. And what is necessary is stability.
The investors invested in this program and in these plants on
the basis of a promise that Congress made when it passed the
law originally. Now, there is a lot of controversy around the
RFS, but my admonition in answer to your question would be to
let that program complete its course as originally intended.
Mr. David Scott of Georgia. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. The chair now recognizes Mr. Comer, from
Kentucky, for 5 minutes.
Mr. Comer. Thank you, Mr. Chairman.
My first question is for Mr. Cook. Do you know exactly, or
roughly, what percentage of rural America does not have
broadband access?
Mr. Cook. Mr. Comer, I can certainly get back to you with
that specific information. As I mentioned a little bit earlier,
I can speak for the NTCA member companies and tell you that in
terms of 10/1 broadband availability we are about 85 percent
deployed. Now, certainly, some areas have much greater than
that. We have a lot of member companies that are providing gig
service. We have a number that are providing the new FCC goal
of 25 meg down-speeds and 3 meg up-speed. We are doing quite
well in terms of some of the price cap areas. Larger companies
that historically have not done as great a job as the small
companies. That figure I don't have for you today, but
definitely there is probably more of an issue in those areas
where they have historically been served by the larger
carriers.
Mr. Comer. Right. Is there something that could be done in
this Congress, aside from more funding, for example,
deregulation, is there something that can be done to provide
more broadband capabilities in the rural areas?
Mr. Cook. Yes. That is a great question. Certainly, our top
issue really is the insufficiency of the current USF fund,
where the small companies right now are capped at about $2
billion annually. And again, we have seen increases in other
funds that are part of USF; namely, the E-Rate Program and
Lifeline Program, and we are in support of that, but at the
same time we are the underpinning of supporting those services.
And so we really believe that is the main issue is addressing
the insufficiency of the fund.
Mr. Comer. When I was in the Kentucky Legislature, this was
an issue, and some of the big companies would come in and say
if we would deregulate, that would get things going and help
the development of broadband. It really, to my knowledge,
hasn't happened yet, and I was just wondering because if there
were ever a time to deregulate, the 115th Congress would be the
window of opportunity to do that, if that is an option. When I
was traveling the First Congressional District, which is a
very, very rural district, campaigning and talking to people,
obviously, about what can be done to improve the economy, every
rural community in my districts, like the rural communities
that you all represent, many of the best and brightest young
people, when they graduate from high school, go off to college
and for whatever reason don't come back, primarily because they
don't oftentimes have the same opportunities. And when asking
the local leaders and the job creators what can be done in
Congress, more broadband, and investing in that type of
infrastructure would help rural communities attract better
jobs, next-generation-type jobs that would attract people and
create badly needed jobs in these rural communities.
I am going to switch to Mr. Fox. What do you think are the
best things that can be done in these rural communities to
attract good-paying jobs that would retain our best and
brightest young people in these rural communities, like where I
am from, that often don't come back home when they go off to
college?
Mr. Fox. Chairman Scott, Representative, thank you for the
question. I think broadband is top on that list.
Mr. Comer. Yes.
Mr. Fox. You send a young son or daughter off to college,
and they are used to great speeds, and do 4 years of college,
they are not coming back to speeds of 5/5, or 5/2, and that is
what I have on my farm.
Economic development and jobs always comes down to
infrastructure. Every time that I have a business that looks to
expand, or a new business is looking to come into our area,
there are three questions. One is roads. Do you have roads able
to bring trucks in? The second one would be freight. What have
you got for railroads? And the third one, and those three
questions will interchange, but what is the speed of your
broadband.
Mr. Comer. Right.
Mr. Fox. And if you can't take care of those three issues,
they are not coming and there are going to be no jobs. A few
years ago where we had local people working on a broadband
project, one of the facts that just startled me was a nursing
home administrator, and their people could put someone in an
ambulance, take them to a hospital 25 miles away, and the
ambulance could beat the records over the Internet service
because their Internet service was that slow.
Mr. Comer. Yes.
Mr. Fox. Broadband, with the guaranteed loans, because if
you look at most of the projects, they have a problem in that
3, 4, 5 year time frame. Once they get past 4 or 5 years, they
are pretty good, but if they can have some way to get a
guaranteed loan to help them through that, that is amazing.
Mr. Comer. Okay.
Thank you, Mr. Chairman.
The Chairman. The chair now recognizes Ms. Kuster, for 5
minutes.
Ms. Kuster. Thank you, Chairman Scott. I appreciate this
hearing on rural development.
I am from New Hampshire, and we spend a lot of our time
working in this space, rural development, and I was
particularly pleased in the 2014 Farm Bill, I had the
opportunity to offer an amendment that would support our rural
community colleges. Previously, community colleges had not been
included under the USDA farm bill rural development programs.
And we were able to open a whole new college campus in Lebanon,
New Hampshire, that will provide up to 500 students with access
to education in a rural community. And we did that through a
$1.6 million loan awarded by USDA Rural Development. It is
critically important, and infrastructure, and I agree with all
the witnesses about trying to bring young people back, or keep
people. We have an expression in New Hampshire, stay, work,
play, and we are trying to convince our young people to be
there.
I want to direct my question to Mr. Cook, because I am
particularly focused in on telecommunications, which is a big
problem for us throughout the state. I actually recently had a
forum with realtors, and in the southern part of the state near
Massachusetts, it is not far from a pretty populated area, but
they are unable to sell homes, $200,000, $300,000, $400,000
homes, because there is no broadband connection to the home.
I wanted to ask you, Mr. Cook, talked about the Broadband
Loan Program as being largely inaccessible because of program
reforms. Can you expand on this, what do you mean by
inaccessible, is USDA turning down applications, and how can
the program be improved, and do we need to make any changes to
the Universal Service Fund, or how should we go about this?
Because in the next farm bill I want to make sure that we make
it very easy to expand and get over that maybe 3 to 4 year hump
that Mr. Fox has referred to.
Mr. Cook. Thank you for the question. Yes, USF and the RUS
Programs are really closely tied, and so the meaning behind
that statement was really meant to address the issue that,
since the national broadband plan was announced back in late
2009, we have had much uncertainty introduced into the rural
telecom industry. There has been a lot of uncertainty about
what recovery companies would be able to get from the USF fund,
concerns about interior designer-carrier compensation, frankly,
just a lot of unknowns about what the revenue streams would
look like for rural companies.
As a result of that, we have seen a number of companies
over, again, probably the last 7 years not take advantage of
RUS programs as they used to, just because of this uncertainty.
That is certainly something that we would appreciate your
assistance with, going forward, and making sure that the USF
fund is sufficient. Also in terms of helping us try to
streamline some of the regulatory hurdles that we face today,
especially with respect to permitting. We have an appreciation
for the rules that RUS employs when it is looking to give us
grants and loans. At the same time, there are some process
improvements that can probably take place. I know with our
particular loan grant program at Hill Country, that we were
fortunate enough to work with RUS on, we lost about a year
period of time in deploying our network because of environment
permits that we were able to conduct the environments, but at
the same time it took a very long time to get those approvals
from RUS. And at the same time, we had certain departments
within RUS saying that they were going to rescind our money
because we hadn't yet spent it, and other areas within RUS
saying that we couldn't spend the money because the
environmentals, we had done too many, or that that hadn't been
completely approved at that point. From a process standpoint
that is something that we would appreciate your assistance
with.
Ms. Kuster. Well, I hope I can ask all of the witnesses to
offer your practical suggestions to the Committee, and I know
the bipartisan nature of the Members of this Subcommittee, and
we will be working on this section of the farm bill, and we
want to make sure we get it right so that we can improve access
to broadband communication throughout rural America. So thanks
very much.
I yield back.
The Chairman. Thank you, ma'am.
The chair now recognizes one of our new Members, Mr. Faso,
from New York.
Mr. Faso. Thank you, Mr. Chairman. It is a pleasure to have
the witnesses here today, and I appreciate all of their coming.
And, Congressman Greenwood, welcome to the Committee here
today.
I wanted to focus on rural water. And, Mr. Fletcher, the
New York Rural Water Association, Patricia Scalera and folks
that have worked in rural water are people that I have worked
with for many years in my prior tenure in the New York State
Legislature. And I noticed in your testimony you suggest
raising the cap. I think that you said raising the cap on water
projects and waste water programs to $20,000. If we did that,
would that affect the backlog, and would it impermissibly
increase the difficulty that some very small communities have
in getting access to these programs, because rural water on the
Circuit Rider Program, from my experience, have been terrific?
Mr. Fletcher. Thank you for the question.
Funding priority should still be given to smaller rural and
lower-income communities. Every state is provided a specific
allotment for the loan and grant program. If any state would
have obligated their funds to small rural utilities and had a
balance left, at that point then we could look at helping
slightly higher-populated communities that demonstrate a need
for the financing, but also is still rural in character.
Taylorville, where Congressman Davis hails from, and that
is where our state rural water office is, their population is
about 11,000, and with the current cap they are not eligible
for that funding.
Mr. Faso. Yes.
Mr. Fletcher. I think that would help these slightly larger
communities have access to the loan and grant program if funds
are available.
Mr. Faso. Well, thank you very much. I appreciate that.
And I am also going to be giving some testimony to the
Appropriations Committee later today. There is one of their
subcommittees on the Circuit Rider Program and, for instance,
on how important that is to the rural areas in my district. I
know sometimes when you are from New York State, people think
Manhattan. Well, upstate New York is a very rural area, in need
of much economic assistance.
And I wanted to turn also to Commissioner Fox. I noted in
your testimony you mentioned the Community Facilities Program
that was used to help, through loan and grant, construct a
hospital in your county. And I was wondering if you could just
elaborate for the Committee a bit on the ease with which you
were able to secure that assistance through that program, and
any suggestions or recommendations you might have about it,
because I have a very similar situation in a portion of my
district as well.
Mr. Fox. Chairman Scott, Representative, thank you for the
question.
Our Administration would say that it went quite well. Yes,
there is a process, but there has to be a process when being
fiscally responsible. We used $18.9 million, I believe, and it
was all loans, we had no grants. We had local money that we put
in, and our hospital foundation raised over $1 million to go
into the project. But it is a process that goes through. It is
the staff, and Rural Development staff in Minnesota, they are
great people. They are great people to work with, they help
through different programs, whether it is that one or the
reprogram. But it is a process, and you have to meet, go to the
table and be a partner at the table, and they will help you
through it, and it is a great process.
Mr. Faso. Thank you.
And last for Mr. Cook, broadband has been discussed here.
It is a big issue. We have the Middleburgh Phone Company in
Schoharie County, which I don't know if they are a member of
your association, but they have been very active in providing
expanded broadband coverage. I am just wondering, from your
vantage point and from your experience, is there a
technological leapfrogging that will allow us, through wireless
technology, to be able to accommodate much of the need that we
have for broadband in rural communities? I just wondered about
your perspective on this, because I do see this now being
heavily advertised by some of the companies in suburban New
York City, just south of my district, and I was wondering about
your perspective on that.
Mr. Cook. Yes, that is a great question. It is something
that we are constantly looking at is new technologies, ways
that we can more efficiently deploy broadband services, provide
faster speeds. One of the things that was included in my
testimony was this term future-proof, and really what we are
talking about there is not only providing the best available
service for the consumer today, but also providing long-term
solutions. When you look at the growth of broadband, and now
nationally you are looking at a median broadband speed of about
41 meg that is generally available across the nation. When you
look at the potential growth of that year over year of about 28
percent, it is not long before you realize that we are going to
be at gig-level services that customers are going to be
demanding.
So in terms of technology, right now, it really appears
that fiber is the best solution in most cases. And in terms of
wireless technology, certainly, there are some fixed wireless
technologies that we are using, and that other companies are
deploying, satellite is another example, in very remote areas
where that could be a solution. But in terms of trying to make
sure that we are doing the best thing for the consumer today
and in the near-term, but also what is most economical, so that
we are not having to go back and re-engineer the network and
pay for the same deployment again in just a few short matter of
years in order to keep up with capacity, we are really kind of
leaning towards fiber at this point.
Mr. Faso. Thank you.
The Chairman. Thank you. The chair now recognizes Mr. Soto,
from Florida, for 5 minutes.
Mr. Soto. [Audio malfunction in hearing room.] funds--thank
you, haven't gotten their share of Federal funds and felt left
behind. And so I appreciate the Chairman and Ranking Member
focusing on this.
In Florida I have seen everything from cowboys use cell
phones to communicate with each other, to WiFi and sensors
being used to determine when to harvest a crop. Technology is
very integrated in our agriculture in Florida.
And so I was wondering, with the lack of adequate broadband
and other communication infrastructure, if Mr. Cook or Mr.
Chastain can discuss what the current potential production loss
we have would be from the lack of these sorts of resources.
Mr. Cook. Well, I will address it from the standpoint of
reasonable comparable rates and service that we talked about
before. That is something that comes up a lot in discussions
about deploying broadband in rural America and the cost of
doing that. One of the things too that we hear a lot at the
state level is this general thought about urban areas
subsidizing rural areas. And, in fact, I would argue that you
can make that same argument in reverse, that rural areas in
many ways are subsidizing urban areas. And we don't see a farm
in downtown Minneapolis, you don't have a dairy farm in
downtown Dallas. Rural areas are extremely important, and
providing them the same level of service that is available in
urban areas is critically important, not only for the success
of those rural areas, and enabling those rural areas to compete
in a global economy, but also ensuring that urban areas are
well served by the rural areas. So it is a symbiotic
relationship.
To address more specifically your question in terms of cost
and availability, economically that is a great question. I
don't know if we have any specific facts about what that means
to the economy, but, obviously, it is very critical, especially
when you look at food supplies and the growing population
globally. It is expected by 2050 to be a 9.6 billion
population, and it is estimated that food production, in order
to keep up with that growing population, would need to improve
by 50 percent. And so a lot of that additional food production
will be supported by broadband applications, enabling farmers
to work more efficiently using IoT (Internet of Things)-type
technologies.
Mr. Soto. And on to my second question, it is to Mr.
Greenwood. You had mentioned about renewable energy, in Florida
we use bagasse, which is a byproduct of sugar to provide energy
for several towns in Florida. What areas do you think are
succeeding in using biofuel or other renewables across our
country, and what areas have a lot of potential but really
could use additional help to get them over the top?
Mr. Greenwood. Well, thank you for the question. The
beautiful thing about renewable fuels is that the feedstocks
are multiple. You mentioned biogas, right now there are
projects that USDA is considering that use for feedstocks the
following: vegetable waste, manure, algal biomass, nonedible
distillers, corn oil, soy oil, canola oil, almond, walnut
shells, and woody biomass, waste oils, high oleic soybean oil,
switchgrass sorghum, macadamia nutshells, and woody biomass. It
is basically a question of the science of it, and I am not a
scientist, basically, plants have evolved: if you look at corn,
for instance, corn evolved so that the seeds are highly
soluble, so that is how they germinate. But the cornstalks and
the leaves, and all of the kinds of the materials I just cited,
are cellulosic, and they evolved for rigidity and structure.
And so the challenge has always been how chemically, and using
other products, can we extract the energy from that cellulosic
material that is otherwise frequently gone to waste and has no
economic value. And so the biotechnology industry develops
enzymes and other products that allow us to break that down,
and including solid waste materials, and turn it into usable
energy.
Does that respond to your question, sir?
Mr. Soto. Yes. And just to correct the record, I was
referring to bagasse, which is a byproduct of the sugar
industry and used, rather than biogas. But thank you for
answering my question. I appreciate it.
Mr. Greenwood. Right.
Thank you, Mr. Chairman.
The Chairman. The chair now recognizes Mr. Davis, for 5
minutes.
Mr. Davis. Thank you, Mr. Chairman.
The hard part about serving on two different committees
sometimes is you have hearings at the exact same time. Forgive
me if I am redundant on any of the issues that I bring up.
But I would like to continue what my colleague, Mr. Soto,
was briefly mentioning, and especially with your response, I
would like to welcome one of our former colleagues, Mr.
Greenwood, here, and my friend. Obviously, where I come from in
Illinois, ethanol RFS is a major issue. As we move forward, you
mentioned cellulosic opportunities, what is the status right
now of moving ahead on more cellulosic opportunities to make
our homegrown fuels more secure?
Mr. Greenwood. Sure. Well, cellulosic ethanol is in
production at a commercial scale in multiple locations around
the country. The problem is that the uncertainty caused by the
RFS renewable volume obligations in 2014, 2015, and 2016 during
the Obama Administration, cost advanced cellulosic biofuels
industry over $22 billion in lost investment, much of which has
gone overseas.
I did say earlier that the most important thing Congress
needs to do is nothing, to leave the RFS alone and fulfill the
promise that Congress made to investors originally in 2005, and
expanded in 2007, that if they brought private capital to the
table, Congress would leave a stable policy in place for more
than 15 years. Second would be to maintain the farm bill energy
title. In particular, Section 9003, the Bio-Refinery Assistance
Program, and the Biomass Crop Assistance Program, or BCAP, to
help advance biofuel producers to secure the capital necessary
to build a biorefinery and assist farmers to produce the
feedstocks necessary for these facilities.
The Administration needs to deny the petition to change the
point of obligation under the law, keeping the 2015 RVO in
place, and set the 2018 RVO according to the law. We need to
bring these dollars back to the U.S., and policy stability is
the only way to make that happen.
Mr. Davis. Well, I couldn't agree more, Jim. I appreciate
your comments there.
One other quick question. The USDA has operated the BIP
Program over the last few years, and they have worked with
states to deploy distribution infrastructure, and as a result
we now have over 600 locations in 28 states throughout the
U.S., offering more opportunities for homegrown fuels for sale.
Can you offer your opinion on that program and how successful
it has been so far?
Mr. Greenwood. Well, the Biofuel Infrastructure Program as
referred to, BIP, has been a critical aid to retailers moving
higher blends of biofuels to the market. This is creating
critical space in the transportation fuel market for advanced
and cellulosic biofuels. The program is succeeding in helping
gas stations put infrastructure in place to deliver higher
volumes of biofuels.
As you mentioned, there are now 650 stations selling E15 in
28 states, 409 of these are BIP participants. It is expected to
be over 1,200 locations by year-end, and a vast majority of
these pumps also are selling E85. Major retailers selling or
committed to selling E15 include Sheetz, Come and Go,
Thorntons, Racetrack, Mineco, Murphy, USA, Mapco, Family
Express, Senex, and Protect Fuels. And this is going beyond the
Corn Belt, Florida, Georgia, North Carolina, and Texas are in
the top six states of pumps being deployed.
These retailers are making these investments because E15
sells 3 to 10 below regular gasoline, helping to bring in
more consumers.
I would like to add that E10 is approved and recommended
for all small and off-road engines. The distribution and use of
E15 is not mandatory, and it is not approved for use in small
engines like boats or lawnmowers. With E15 for sale at over 600
locations in 28 states, there has not been a single verified
report of E15 misfueling and engine damage.
Infrastructure investments are critical as we continue to
deploy higher demands of ethanol across the country, which is
also why we have the funding for the farm bill energy title as
important as it is for building out this industry.
Mr. Davis. Thank you. Thank you.
And, Mr. Fletcher, welcome from the great State of
Illinois. I know I don't represent the Nashville area, but I
appreciate what you have done. Actually, in my previous
position, I had a chance to work with your water company. And I
hear right before I got here you mentioned my hometown of
Taylorville, so I can't not ask you, give us anything that you
might not have been asked yet that you want to make sure that
the Committee understands that is important to rural water
systems in Illinois, please go ahead.
Mr. Fletcher. Thank you, Congressman.
I think pressing rural needs in Illinois, and also the
other rural communities in all the states, is the funding
through the Rural Development Waste Water Loan and Grant
Program. Rural Development has been working for 7 years with
this program. And I am sure you are aware that the last two
farm bills were able to fund hundreds of projects in less than
90 days. At that point, after the RD projects were done, it
erased the backlog for water and waste water projects in the
United States. And at this time, we have a $2.5 billion backlog
just after a few years after the RD program. I would give
priority to aging and deteriorating systems that are determined
to be beyond their useful life, or ones with the greatest
public health needs.
Second, our Circuit Rider Program that the Congressman from
New York mentioned a few minutes ago, that assistance to small
rural communities is essential to make sure that the water is
safe for everybody to drink, and they comply with all the
Federal regulations. I appreciate everything that you all do
for rural water.
Mr. Davis. Thank you.
Mr. Fletcher. Thank you.
Mr. Davis. Thanks for being here.
The Chairman. Before we adjourn, I would invite my Ranking
Member, Mr. David Scott, from my home state, to make any
closing remarks that he may have.
Mr. David Scott of Georgia. Sure. Well, thank you, Mr.
Chairman. I appreciate that.
And first of all, let me commend you for pulling together
this very, very important and very informative cast of these
six persons to testify before us this morning. Their testimony
was very accurate, it was thorough, and very helpful to us. And
I just want you all to go away from this meeting knowing that
this Subcommittee stands with you shoulder to shoulder to make
sure we provide you with the adequate funding that you need,
and let the people of America know that they get a return
benefit. Mr. Chastain, you mentioned $300 million that has been
brought back, and the roles that you play.
Thank you, Mr. Chairman. And we look forward to taking care
of your interests in the upcoming farm bill.
The Chairman. Gentlemen, I want to thank you for taking
time to come up here on behalf of the people that you
represent; the same people that we represent. And I want to
commit to you that this Subcommittee, and on behalf of the big
Chairman of the full Committee, will be working hand-in-hand
with you to make sure that you have the resources that you need
in the next farm bill to help those that both of us represent
in America. Again, thank you for coming to Washington and
testifying on behalf of our constituents.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional materials and supplementary written responses from
the witnesses to any questions posed by a Member.
This hearing of the Subcommittee on Commodity Exchanges,
Energy, and Credit is adjourned.
[Whereupon, at 11:26 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Hon. Austin Scott, a Representative in Congress
from Georgia and Hon. David Scott, a Representative in Congress from
Georgia
February 22, 2017

Hon. Donald J. Trump,
President,
United States of America.

Dear Mr. President:

On behalf of our respective organizations, which collectively
represent U.S. agricultural producers, rural businesses, rural
communities, and rural families, we are writing to ask your support for
rebuilding infrastructure in rural America.
We were very pleased to hear your comments about the importance of
rebuilding U.S. infrastructure. Those of us in rural communities have
seen our 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 your
Administration's comprehensive infrastructure renewal efforts.
American agriculture truly feeds the world and creates millions of
jobs for U.S. workers. 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 if we are to continue efficiently getting our agricultural
products to market. For example, \1/4\ 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
are in need of modernization. In addition, though, 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.
As you take office and begin addressing the nation's infrastructure
needs, we hope you will provide leadership to ensure that rural
America's needs are addressed. We stand ready to work with you and your
Administration to begin this important initiative.
Respectfully,

Agribusiness Michigan Bean Shippers Oklahoma Agribusiness
Association of Iowa Retailers Association
Agribusiness Council of Michigan Electric Oklahoma Agricultural
Indiana Cooperative Cooperative Council
Association
Agricultural and Food Michigan Soybean Oklahoma Association
Transporters Association of Electric
Conference Cooperatives
Agricultural Retailers Midwest Shippers Oklahoma Soybean
Association Association Association
Agriculture & Minnesota AgriGrowth Oklahoma Wheat Growers
Commodities Council Association
Transportation
Coalition
Alabama Rural Electric Minnesota Corn Growers Oregon Potato
Association of Association Commission
Cooperatives
Alaska Power Minnesota Farmers Union Oregon Wheat Growers
Association League
Alliance for I-69 Texas Minnesota Grain and Panhandle Peanut
Feed Association Growers Association
Almond Alliance of Minnesota Milk Pennsylvania Farm
California Producers Association Bureau
American Association of Minnesota Pork Pennsylvania Rural
Crop Insurers Producers Association Electric Association
American Cotton Mississippi Association Pennsylvania State
Shippers Association of Cooperatives Association of
American Dairy Mississippi Soybean Township Supervisors
Coalition Association
American Farm Bureau Missouri Corn Growers Rocky Mountain
Federation Association Agribusiness
Association
American Feed Industry Missouri Soybean Rural and Agriculture
Association Association Council of America
American Horse Council Montana Electric Rural Coalition/
Cooperatives' Coalicion Rural
Association
American Sheep Industry Montana Grain Growers Rural Development
Association Association Leadership Network
American Society of National Association of SE Minnesota Grain and
Farm Managers and Resource Conservation Feed Dealers
Rural Appraisers and Development Select Milk Producers,
Councils Inc.
American Soybean National Association of South Carolina
Association State Departments of Fertilizer and
Arkansas Electric Agriculture AgriChemical
Cooperatives Association
Arkansas Soybean National Association of South Carolina Peach
Association Towns and Townships Council
Association of National Association of South Dakota
Equipment Wheat Growers Association of
Manufacturers Cooperatives
Association of Illinois National Barley Growers South Dakota Corn
Electric Cooperatives Association Growers Association
Association of National Black Growers South Dakota Rural
Louisiana Electric Council Electric Association
Cooperatives
Association of Missouri National Cooperative South Dakota Soybean
Electric Cooperatives Business Association Association
Bongards Premium Cheese National Corn Growers Southern Peanut
Association Farmers Federation
California Association National Cotton Council Southwest Council of
of Winegrape Growers Agribusiness
Colorado Rural Electric National Council of Soy Transportation
Association Farmer Cooperatives Coalition
Cooperative Network National Family Farm State Agriculture and
Coalition Rural Leaders
Corn Refiners National Farmers Union Tennessee Electric
Association Cooperative
Association
Crop Insurance National Grain and Feed Tennessee Soybean
Professionals Association Association
Association
Empire State Potato National Grange Texas Ag Industries
Growers, Inc. Association
Empire State Water Well National Ground Water Texas Elective
Drillers' Association Association Cooperatives
Equipment Dealers National Latino Farmers Texas Grain and Feed
Association & Ranchers Trade Association
Farm Credit Council Association Texas Vegetation
Management
Association
Farmer Mac National Milk Producers The Electric
Federation Cooperatives of South
Carolina
Farmworker Association National Oilseed U.S. Canola
of Florida, Inc. Processors Association Association
Federation of Southern National Pork Producers U.S. Dry Bean Council
Cooperatives Rural Council U.S. Forage Export
Training and Research National Potato Council Council
Center
First District National Rural Economic U.S. Poultry and Egg
Association Developers Association Association
Florida Electric National Rural Electric United Egg Producers
Cooperatives Cooperative
Association Association
Georgia Electric National Rural Water United Fresh Produce
Membership Corporation Association Association
Golden State Power National Sorghum USA Dry Pea and Lentil
Cooperative Producers Council
Grain and Feed National Sunflower USA Rice
Association of Association
Illinois
Great Plains Canola Nebraska Corn Growers Utah Rural Electric
Association Association Association
I-14/Gulf Coast Nebraska Grain and Feed Virginia Agribusiness
Strategic Highway Association Council
Coalition
Idaho Consumer-Owned Nebraska Rural Electric Virginia Beef Industry
Utilities Association Association Council
Idaho Grain Producers Nebraska Soybean Virginia Cattlemen's
Association Association Association
Illinois Corn Growers Nevada Rural Electric Virginia Cooperative
Association Association Council
Illinois Fertilizer and New Mexico Rural Virginia Farm Bureau
Chemical Association Electric Cooperative
Association
Illinois Soybean New York Corn and Virginia FFA
Association Soybean Association Association
Indiana Corn Growers New York State Virginia Horse Council
Association Agribusiness
Associations
Indiana Electric New York State Virginia Poultry
Cooperatives Vegetable Growers Federation
Association
Indiana Soybean North American Millers' Virginia State
Alliance Association Dairymen's
Association
Institute for North Carolina Electric Virginia
Agriculture and Trade Cooperatives Telecommunications
Policy Industry Association
Iowa Association of North Carolina Ground Virginia Water Well
Electric Cooperatives Water Association Association
Iowa Corn Growers North Carolina Small Virginia, Maryland &
Association Grain Growers Delaware Association
Iowa Institute for Association of Electric
Cooperatives North Dakota Cooperatives
Iowa Soybean Association of Rural Washington Association
Association Electric Cooperatives of Wheat Growers
Kansas Association of North Dakota Corn Washington State
Wheat Growers Growers Association Potato Commission
Kansas Cooperative North Dakota Grain Water Systems Council
Council Dealers Association
Kansas Electric North Dakota Soybean Water Well Trust
Cooperatives Growers Association
Kansas Grain and Feed Northeast Agribusiness West Virginia Farm
Association and Feed Alliance Bureau
Kansas Soybean Northeast Association West Virginia FFA and
Association of Electric Agricultural
Cooperatives Education
Kentucky Association of Northeast Cooperative West Virginia Poultry
Electric Cooperatives Council Association
Kentucky Corn Growers NTCA--The Rural Western Peanut Growers
Association Broadband Association Association
Kentucky Soybean Ohio Agribusiness Wisconsin Agri-
Association Association business Association
Louisiana Association Ohio Corn and Wheat Wisconsin Corn Growers
of Cooperatives Growers Association
Louisiana Ground Water Ohio Dairy Producers Wisconsin Soybean
Association Association Association
Maryland Grain Ohio Farm Bureau Women Involved in Farm
Producers Association Federation Economics
Michigan Agri-Business Ohio Pork Council WTA--Advocates for
Association Rural Broadband
Ohio Rural Electric Ohio Soybean Wyoming Rural Electric
Cooperatives Association Association

CC:

Hon. Mitch McConnell,
Hon. Charles Schumer,
Hon. Paul Ryan,
Hon. Nancy Pelosi.
______

Supplementary Material Submitted by Hon. James C. Greenwood, President
and Chief Executive Officer, Biotechnology Innovation Organization
Appendices
Editor's note: Due to the size of the appendices submitted for the
Thursday, March 9, 2017 Subcommittee on Commodity Exchanges, Energy,
and Credit published hearing they have been relocated here.
appendix a
Advancing the Biobased Economy: Renewable Chemical Biorefinery
Commercialization Progress, and Market Opportunities, 2016 and
Beyond
2016 Biotechnology Innovation Organization
(BIO)
1201 Maryland Ave. SW
Suite 900
Washington, D.C. 20024
Introduction
A review of operating biorefineries displays a range of technology
solutions undergoing commercial development--beyond just advanced
biofuels--to produce commodity and specialty renewable chemicals.
Industrial biotechnology companies are pursuing renewable chemicals and
biobased materials because they can be commercialized at smaller scale,
as well as promise environmental benefits, stable costs and novel
properties in comparison to fossil fuel-derived chemicals. Competition
to produce platform renewable chemicals provides manufacturers
assurance of a steadily available, high-quality supply of renewable
chemicals for consumer product applications.
Analysts predict a rapid expansion of renewable chemical production
in the near future based on planned capacity expansion or new
construction. McKinsey & Co. estimates that there were $252 billion
(=204 billion) in sales of biobased products in 2012, with biofuels and
plant extracts comprising more than \1/2\. Sales of renewable chemicals
represented nine percent of the $2,820 billion (=2,281 billion) in
worldwide chemical sales in 2012. By 2020, McKinsey expects biobased
products to make up 11 percent of the $3,401 billion (=3,130 billion)
global chemical market. Sales of biobased products would reach $375-
$441 billion (=345-=406 billion) by 2020, with a compound annual growth
rate of eight percent over the preceding decade. Worldwide sales of
chemicals are expected to grow at four percent annually, overall. While
biofuels and plant extracts continue to comprise \1/2\ of the projected
sales of biobased products in 2020, McKinsey expects the highest growth
rates in sales of new biopolymers and renewable chemicals, biocatalysts
for industrial processes and biologic medicines, as well as biofuels.
Supportive polices will help grow the 21st century biobased
economy. The Renewable Fuel Standard (RFS), for instance, not only
helped stimulate innovation in biofuels, but also opened discussions
and policy development in renewable chemicals and biobased products.
The 2014 Farm Bill (The Agriculture Act of 2014) extended loan
guarantee eligibility to renewable chemicals and biobased products
producers, through Section 9003, the Biorefinery, Renewable Chemical,
and Biobased Manufacturing Assistance Program.
Other policy drivers include draft legislation, introduced in both
Federal chambers, creating tax incentives for production of or
investment in qualifying renewable chemicals. Spurred by the Federal
legislation, Iowa and Minnesota announced enactment of state-level
production tax credits for renewable chemicals that will speed capital
investment availability and commercialization. Additionally, draft
legislation introduced in the 114th Congress--the Master Limited
Partnerships Parity Act (MLP)--proposes to extend tax benefits
currently available only to the oil and gas industry to renewable
chemicals and biofuels producers. If enacted, the legislation will
provide renewable chemical producers access to low-cost capital and
attract investors and lower corporate stock tax liabilities.
Enactment of the Frank R. Lautenberg Chemical Safety for the 21st
Century Act, updating and revising the Toxic Substances Control Act
(TSCA), has favorable provisions for Class 2 renewable chemical
manufacturers who use renewable feedstocks. The new law could minimize
costly pre-commercial reviews, if the renewable chemical has already
been produced from fossil fuel feedstocks.
Background
The Economist magazine's Technology Quarterly edition for December
2015 heralded a ``golden age'' of material science, highlighting recent
developments in inorganic chemistry. The magazine utilized the
``materials genome'' as a metaphor for the pace of pre-commercial
innovation in the field. The industrial biotechnology sector should
welcome the analogy, especially as its list of commercial successes
grows. The industrial biotech sector has reached a stage where first-
of-a-kind biorefineries are paving the way for rapid commercialization
of new applications.
The National Science and Technology Council's Subcommittee on
Advanced Manufacturing, in an April 2016 report, titled Advanced
Manufacturing: A Snapshot of Priority Technology Areas Across the
Federal Government, identifies engineering biology and advanced
bioproducts manufacturing as technology areas of emerging priority. The
report estimates the size of the U.S. biobased economy at roughly $350
billion annually, citing a National Research Council roadmap to
accelerate advanced chemical manufacturing through industrial
biotechnology.
To document the progress and illustrate the growing potential for
biobased production of renewable chemicals, the Biotechnology
Innovation Organization's (BIO) Industrial and Environmental Section
has compiled a new body of data on established biorefineries. The data
includes descriptions of the technologies along with common
applications and measures of the market potential. And since the
renewable chemical sector seeks a level playing field in government
support and regulatory policies, the data includes the demographic and
economic impact of each biorefinery.
Biobased production holds many potential benefits for consumers,
including cleaner, more efficient manufacturing processes that
incorporate renewable ingredients in everyday products found in the
home. Delivering these benefits requires continued growth of the sector
to ensure that product manufacturers have a reliable, sustainable, and
scalable supply of renewable chemicals.
Renewable Chemical Processes at Demonstration and Pilot Scale
Coca-Cola, H.J. Heinz, Nike Inc., Ford Motors and Procter & Gamble
are cooperatively working to accelerate the development of 100 percent
renewable polyethylene terephthalate (PET), a common plastic used in
packaging materials such as bottles, footwear, apparels and automobile
fabrics. Coca-Cola currently markets PlantBottleTM with
renewable ethylene glycol, which makes up as much as 30 percent of the
plastic bottle. Coca-Cola Company has partnered with Virent, Gevo and
Avantium and, similarly, Suntory Holdings has partnered with Anellotech
to develop renewable para-xylene to replace petroleum terephthalic
acid. These strategic partnerships have demonstrated the feasibility of
a 100 percent renewable PET bottle.
A potential alternative to PET is polyethylene furanoate (PEF).
Avantium has commercialized 100 percent biobased PEF resin, which is
made from the company's patented biobased 2,5 furandicarboxylic acid
(FDCA) combined with plant-based monoethylene glycol (MEG). Avantium is
currently producing FDCA at a 40 metric ton per year pilot plant in
Geleen, Netherlands. Avantium plans to start commercial production of
FDCA and PEF at 50,000 ton per year plant in 2017 and announced its
intention to establish a joint venture with BASF in the production and
marketing of FDCA.
A few companies have focused efforts on producing C5 and C6 sugars
as a feedstock for other companies to produce biofuels and renewable
chemicals. Renmatix is operating a demonstration-scale Feedstock
Processing Facility in Rome, New York, to supply its Integrated
Plantrose Complex, based in Atlanta, where it converts the processed
woody biomass to cellulosic sugars. Sweetwater Energy is securing
financing to build a biorefinery at Mountain Iron, Minnesota, which
will convert 51,000 tons of timber to sugars and lignin. Sweetwater has
also leased space at Eastman Business Park in Rochester, New York, to
produce alcohols from cellulosic sugars. Similarly, American Process
has developed GreenPower+ process technology, which produces low-cost,
mixed cellulosic sugars from biomass.
Several companies are currently piloting production of adipic acid,
which is a precursor to nylon and can be used in coatings and
detergents. Rennovia is currently operating a pilot project at the
Johnson Matthey Process Technologies R&D Center in Stockton, England,
converting biobased glucaric acid to adipic acid. Verdezyne is
operating a pilot production facility in Carlsbad, California. And,
BioAmber has formed a partnership with Celexion to produce adipic acid
from succinic acid. Genomatica of Carlsbad, California, began efforts
in 2014 to commercialize biobased production of adipic acid and other
nylon intermediates.
At least one company has commercialized production of
polyhydroxyalkanoate (PHA), a polymer that can be blended into various
plastic applications. Metabolix's current range of Mirel PHA
copolymers are produced by fermentation, using specially engineered
microorganisms that bioaccumulate the inert polymer. The PHA is co-
polymerized with PVC to make a stronger and more flexible plastic.
Metabolix uses contract manufacturing to produce Mirel; the company's
partners are currently ramping up pilot production to run at nameplate
capacity for 2016.
Two companies, Cargill and Novozymes, have partnered since 2008 to
demonstrate biobased production of 3-hydroxypropionic acid (3-HPA),
which is a precursor to acrylic acid. Acrylic acid is polymerized and
used as an absorbent in diapers and hygiene products as well as in
coatings, adhesives, carpets, and fabrics. The traditional
petrochemical process for 3-HPA synthesis is achieved through the
oxidation of propylene, a product of crude oil refining. Under the
partnership, Cargill is operating a pilot scale production plant
fermenting 3-HPA and converting it to acrylic acid. Cargill acquired
Colorado based OPX Biotechnologies and its proprietary fermentation-
based process for 3-HPA.
Renewable Chemical Commercialization Successes
One of the earliest renewable chemicals to be successfully
commercialized is 1,3-propanediol (1,3-PDOTM), a chemical
building block for nylon and emollients used in cosmetics, coolant and
fibers for the production of high-end carpets. DuPont Tate & Lyle has
operated a 63,500 metric ton per year biorefinery in Loudon, Tennessee,
since late 2006. The company markets the diol for industrial uses as
Susterra' propanediol.
One biobased process has been commercialized and another process is
being scaled up to produce propylene glycol (1,2-propanediol), which
can be used as a building block for saturated and unsaturated
polyesters, a humectant or a food preservative. ADM began production of
propylene glycol in March 2011 at a 100,000 metric ton per year
facility in Decatur, Illinois, that uses glycerin as a feedstock in a
catalytic process. More recently, Metabolic Explorer and UPM have
formed a joint venture to demonstrate monopropylene glycol via
fermentation of sugar at a facility in Clermont-Ferrand, France.
Another of the earliest renewable chemicals to be commercialized is
polylactic acid (PLA), which was truly a tipping point for renewable
chemicals. PLA is commonly used in food wrap and utensils and can be
made into textile fibers. Since 2003 Nature-Works has produced PLA at a
facility in Blair, Nebraska, with name plate capacity of 300 million
pounds (140,000 metric tons). NatureWorks markets the product as Ingeor
biopolymer. Corbion more recently announced that it will build a
biobased PLA plant with an annual capacity of 75 kilotons and expand by
25 kilotons per year its existing lactide plant in Rayong Province,
Thailand.
Several companies have commercialized biobased routes to succinic
acid, a building block chemical that replaces petroleum-based maleic
anhydride in polyesters, alkyd resins, polyurethanes, plasticizers and
solvents. Companies that are currently producing succinic acid include
Myriant, which is operating a 13,600 metric ton per year facility in
Lake Providence, Louisiana. BioAmber piloted its biobased process for
succinic acid at a 3,000 metric ton facility in Pomacle, France, and is
now producing 17,000 metric tons per year in Sarnia, Ontario, Canada.
Reverdia, a joint venture between DSM and Roquette, has built a 10,000
metric ton per year facility in Cassano Spinola, Italy. And Succinity,
a joint venture between BASF and Corbion, is due to start up a 25,000
metric ton per year facility in Barcelona, Spain.
One company has commercialized a biobased route to 1,4-butanediol
(BDO), which is a building block in the production of tetrahydrofuran
(THF), which is an intermediate for spandex and other performance
polymers, and polybutylene terephthalate (PBT) resins, which are used
for engineering plastics. BASF has licensed direct fermentation
technology developed by Genomatica and secured rights to commercially
produce up to 75,000 metric tons per year of renewable 1,4-BDO. To
date, BASF reports producing volumes for its downstream customers to
test and at a purity comparable to petrochemical-based 1,4-BDO for use
in commercial applications. BASF is also producing and offering
polytetrahydrofuran (PolyTHF) made from renewable 1,4-BDO.
Multiple competitors are also commercializing biobased routes to
iso-butanol and n-butanol. Iso-butanol can be used as an oxygenate and
octane-enhancing fuel additive while n-butanol is used as a solvent and
intermediate in paints, coatings, printing inks, adhesives, sealants,
textiles and plastics. In addition, iso-butanol can be cyclized to
para-xylene, the precursor to terephthalic acid; Gevo is
commercializing a process based on this chemistry. Green Biologics,
which focuses on n-butanol for chemical markets, is currently refitting
a 21 million gallon ethanol plant in Little Falls, Minnesota, with
plans to begin commercial production of n-butanol and acetone during
2016. Butamax has completed phase 1 of its retrofit of a 50 million
gallon ethanol plant in Lamberton, Minnesota, and projects completion
of phase 2 for production of iso-butanol in 2016. The company in early
2016 petitioned the U.S. Environmental Protection Agency (EPA) to
approve its production and feedstock technology for iso-butanol as an
advanced renewable fuel. Gevo retrofitted an ethanol biorefinery in
Luverne, Minnesota, and is targeting production of up to 1 million
gallons of iso-butanol and 17 million gallons of ethanol in 2016. The
facility is registered with EPA as Agri-Energy LLC to produce renewable
fuels. Intrexon, located in the San Francisco Bay Area, began operation
of a pilot plant to produce iso-butanol in early 2016.
Multiple companies have researched and developed biobased
production routes for isoprene, which when polymerized is used in
synthetic rubber applications for footwear, mechanical instruments,
medical appliances, sporting goods, and most extensively as
polyisoprene in rubber tires. But only one company is currently
producing commercial quantities. Using its bacterial fermentation
platform, GlycosBio has built its first commercial facility in southern
Malaysia to supply the Southeast Asian region with up to 40,000 tons of
bioisoprene annually. DuPont Industrial Biosciences and Goodyear
developed a fermentation process for gas-phase capture of isoprene, and
have demonstrated a prototype tire using the bioisoprene monomer.
Ajinomoto has already successfully manufactured bioisoprene at a
laboratory scale using a fermentation process, and Bridgestone has
successfully produced polyisoprene rubber using the material. Michelin
is also working with Amyris Biotechnologies to develop liquid-phase
bio-isoprene using farnesene--a 15 carbon isoprenoid--as a building
block. Amyris has begun commercialization of this new, renewable
isoprene. Zeon, Yokohama Rubber, and RIKEN, Japan's national R&D
agency, expect to commercialize a process for synthesizing isoprene
from biomass in 2020. Aemetis now owns Zymetis' proprietary aerobic
marine organisms, (Saccharophagus degradans 2-40) that will enable the
company to produce bio-isoprene and other renewable chemicals.
One company, Itaconix Corporation, has commercialized fermentation
technology, using Aspergillus, to produce itaconic acid, a building
block for adhesives and sealants, finishing agents, paint and coating
additives, detergents and cleaners, absorbents and dispersants.
Itaconic acid can replace banned chemical phosphates in detergents.
Itaconix operates a large-scale production facility in Stratham, New
Hampshire, marketing a growing line of itaconic acid applications and
polyitaconic acid. Itaconix recently announced its acquisition through
merger by UK based Revolymer plc, a specialty chemical company.
Another company has commercialized a biobased process for aliphatic
diacids, a building block for polyurethanes and polyamides. Elevance
Renewable Sciences is producing InherentTM C18 diacid, also
known as octadecanedioic diacid (ODDA) at a biorefinery in Gresik,
Indonesia, using the company's proprietary olefin metathesis
technology.
And at least one company is producing commercial quantities of
levulinic acid, a renewable specialty chemical building block for
coatings, flavors/fragrances, polymers, detergents. Traditional
petrochemical process of producing levulinic acid is from maleic
anhydride; this process is expensive, limiting its use to low-volume
applications such as fragrances and food additives. At larger, lower-
cost production volumes, levulinic acid can replace bisphenol A (BPA)
as a plasticizer. GFBiochemicals is currently expanding levulinic acid
production capacity, from 2,000 to 8,000 metric tons by 2017, at a
facility in Caserta, Italy.
Market Potential for Renewable Chemicals
A number of recent studies provide estimates of the current value
of renewable chemical production, which overall represent a small
percentage of the worldwide chemical market. Production is expected to
grow most rapidly in Asia in response to the region's demand for
products, supply of biomass raw material and favorable policies. Future
value is dependent on the price of competing fossil-based chemicals,
the price of oil, and a somewhat unpredictable policy environment.
Robert Carlson, writing in Nature Biotechnology in 2016, estimates
that the U.S. industrial biotechnology industry revenues reached $105
billion at a growth annual rate of 12 percent, and renewable chemicals
contributed $66 billion.
A report by the U.S.-based Biomass Research and Development Board
estimates that the U.S. share of the biobased economy is approximately
$50 billion (=46.9 billion). More than \1/4\ million U.S. workers are
employed in the industry.
The nova-Institute of Germany more recently examined the biobased
polymer segment of the industry, which represented about $12.8 billion
(=10 billion) or five percent of biobased product sales in 2013.
Production capacity for biobased polymers is growing at a 20 percent
compound annual growth rate, with 3.5 million metric tons produced in
2011 and 5.1 million metric tons in 2013. The nova-Institute projects
production capacity to reach 17 million metric tons by 2020. Biobased
polymers currently represent a two percent share of the overall 256
million metric ton market for polymers (up from 1.5 percent of the 235
million metric ton market in 2011). By 2020, the 17 million metric tons
of biobased polymers are expected to represent four percent of a 400
million metric ton market. The strongest growth in market demand for
biobased polymers will be in food packaging and utensils, according to
the nova-Institute. Production capacity for biobased polyethylene
terephthalate (PET) is projected to grow from 600,000 metric tons in
2013 to 7 million metric tons in 2020, leading the group of polymers.
Based on planned capacity, nova-Institute projects similar expansion in
production of biobased polyhydroxyalkanoates (PHA), and strong growth
in production of polylactic acid (PLA) and biobased polyurethanes
(PUR).
Lux Research based in Boston has also projected growth in the
renewable chemical market through 2018. Their estimate includes the
biobased polymer sector as well as intermediates--such as biobased
succinic acid or adipic acid--and renewable specialty chemicals--such
as farnesene or terpenes. Based on announced capacity construction, Lux
expects biobased production capacity for intermediate chemicals to
reach 2.9 million metric tons in 2018, reflecting an 11 percent
compound annual growth rate; specialty chemical capacity is perhaps a
quarter the size of the intermediate market. Lux Research projects
leveling off of production capacity for polymers, due to the low prices
of oil and natural gas. But renewable specialty chemicals continue to
represent a profitable market opportunity.
Potential Advantages for Consumer Product Applications
Renewable chemicals have been recognized for more than a decade as
having environmental, economic, and performance advantages when
compared to fossil fuel-based chemicals. Biotech routes to chemical
production are inherently consistent with the principles of green
chemistry.
In 2004, the U.S. Department of Energy (DOE) published a report,
Top Value-Added Chemicals from Biomass, acknowledging that biobased
processes are often faster and more energy efficient production routes
than petrochemical processes. Reduction of time and energy inputs
potentially can be translated into cost reductions, providing
manufacturers an economic benefit. Further, renewable chemical
production processes use raw material resources more efficiently and
have less environmental impact overall than petrochemical production.
The improvement potentially can save manufacturers material handling
and regulatory compliance costs. Additionally, biomass is less volatile
in price than fossil resources, which have characteristic boom and bust
production cycles. Long-term stability in prices for renewable
chemicals provide product manufacturers the ability to plan production
well in advance and provides hedging.
A few years later, in 2007, the U.S. Environmental Protection
Agency (EPA) published a report, Bioengineering for Pollution
Prevention, recognizing that industrial biotechnology used in biobased
processes and in renewable chemical production can reduce carbon
emissions via many of the same attributes recognized by DOE--namely,
improved process efficiency, the displacement of fossil fuels and
petroleum-based materials, and the creation of closed loop industrial
systems that eliminate waste. EPA recognized that these innate
characteristics of biotech and biobased processes prevent waste and
reduce derivatives, which closely match the principles of green
chemistry. Since the introduction of EPA's Presidential Green Chemistry
Challenge in 1996, \1/3\ of all awards have gone to industrial
biotechnology or biobased processes. Consumer demand for
environmentally conscious products continues to rise.
More recently, in April 2016, the White House Office of Science and
Technology Policy released a report on Advanced Manufacturing: A
Snapshot of Priority Technology Areas Across the Federal Government.
This roadmap emphasizes that growth of the biobased economy is
dependent on advanced biobased manufacturing and engineering biology.
According to the roadmap, synthetic biology foundries hosted by Federal
Government efforts will promote the commercial development of new
renewable chemicals via faster and cheaper methodologies that use
appropriate design of microorganisms.
Most producers of renewable chemicals can demonstrate comparable
performance as drop-in replacements for petroleum-based chemicals. A
few applications demonstrate improved performance. To cite one example,
Avantium's PEF has superior properties to PET in drink bottle
applications, including a higher barrier to oxygen, carbon dioxide and
water. These properties can extend product shelf life and reduce
production costs for beverage producers. PEF's carbon footprint is 50-
70 percent lower compared to PET.
Conclusion
Consumer product manufacturers have indicated that they are eager
to use renewable chemicals in formulations in order to meet consumer
demand for environmentally preferable products. The main challenge
producers have cited for adoption of renewable chemicals is their
ability to secure reliable, competitive supplies for large-scale
product applications. Providing sufficiently large-scale supplies of
drop-in renewable chemicals for some applications may require multiple
manufacturers who adhere to common standards for chemical purity and
quality.
Some renewable chemicals--such as succinic acid and PLA--are
already being produced commercially by multiple, competing companies
and could potentially have commodity applications. A few additional
renewable chemicals--such as butanol and isoprene--are approaching the
same status. Several other renewable chemicals are being produced at
commercial levels by a single company--such as 1,3-propanediol,
propylene glycol and some diacids--with production tailored to niche
product markets.
Many additional companies are scaling up and demonstrating new
renewable chemical technologies. And in some cases, there are multiple
companies competing to reach commercial scale. Forming partnerships
with consumer product manufacturers or larger mid-market chemical
producers--who can provide off-take agreements or capital investment in
some form--is a common strategy for emerging companies commercializing
new renewable chemicals. Ensuring that consumers receive the
environmental, economic and performance benefits of renewable chemicals
requires an integrated effort across this entire production value
chain.
Agrivida
Medford, MA
Number of employees: 40
Agrivida, Inc. Is Delivering The Next Generation Of Enzyme Solutions.

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Above: Agrivida founder Michael Raab and U.S. Secretary of
Energy Steven Chu, Medford, MA.
Biorefinery Classification: Commercial Plant
Key Facts
Feedstock: Grain, lignocellulosic biomass and sugar

Agrivida's GraINzyme technology is an expression platform
for making recombinant or synthetic proteins in grain and other
plant tissues. Using GraINzyme' technology, Agrivida
is commercializing a series of enzyme and protein products that
are produced and delivered in grain. These initial products
target the animal nutrition industry and improve feed
conversion, yields, and the efficiency of food production.
Partnerships and Financing
In 2014, Agrivida entered a trait development collaboration with
Precision BioSciences to use Directed Nuclease EditorTM
(DNE) technology. In 2015, Agrivida completed a $23 million Series D
financing led by Cultivian Sandbox Ventures, joined by an affiliate of
Maschhoff Family Foods, ARCH Venture Partners, Middleland Capital and
existing investors Kleiner Perkins Caufield & Byers, DAG Ventures,
Bright Capital Partners, Gentry Venture Partners, Northgate Capital,
Prairie Gold and private investors.
About: Agrivida is developing and commercializing solutions that
are the next evolutionary step in animal nutrition, using the plant as
a factory to produce and deliver highly differentiated agricultural and
nutritional products.
Product applications: Animal health and nutrition; grain, food and
feed processing; first and second generation biofuels and biobased
chemicals; industrial enzymes for a variety of industries.
Potential market size: Animal nutrition enzymes represent an $850
million market. With increased food demand, sales of animal feed
enzymes are expected to exceed $1.8 billion by 2020.
Technology: Agrivida's INzyme' technology is a
biological ``off-on'' switch engineered into enzymes to control their
activity. Enzymes can be engineered with self-splicing peptides, called
inteins, and produced in grain, green plants, fermentation microbes, or
other hosts in a ``dormant'' form, where they accumulate in high
concentrations. The enzymes are reactivated ``on command'' using a
selected, controlled change in temperature or pH at a precise time,
maximizing their value in the process or application.

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American Process
Atlanta, GA
Number of employees: 100
American Process Is Commercializing GreenPower+ For Ethanol.

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Above: AVAP Demonstration Plant, Thomaston, GA.
Biorefinery Classification: Demonstration Plant
Key Facts
Thomaston, GA Integrated demonstration plant forGreenPower+,
AVAP and Bioplus

Alpena, MI Demonstration pre-commercial GreenPower+ plant--
succesfully completed demonstration--currently furloughed

Feedstock: Any woody or agricultural residue biomass
Partnerships and Financing
American Process is privately owned by a joint venture of GranBio
and TRLLC. API has formed partnerships with Green Tech America and
Valmet. American Process sponsors biorefinery research consortiums at
the Empire State Paper Research Institute, North Carolina State
University, and TEKES, Finnish Funding Agency for Technology and
Innovation. It directly commissions biorefinery research projects at
Georgia Institute of Technology, University of Maine, and Michigan
Technological University.
About: American Process Inc. (API) specializes in the development,
demonstration and commercialization of GreenPower+, AVAP and Bioplus
technologies for the commercial production of cellulosic ethanol,
cellulosic sugars and nanocellulose from biomass.
Product applications: Cellulosic ethanol, cellulosic sugars,
nanocellulose.
Potential market size: Transparency Market Research reports that
the global biofuels market was valued at $168.18 billion in 2016 and is
projected to reach $246.52 billion by 2024.
Technology: GreenPower+ is a patented technology suite for
producing low-cost mixed cellulosic sugars from biomass hemicelluloses
and cellulose in co-production mode. These sugars are fermented to
ethanol. AVAP technology produces low-cost clean cellulosic sugars
from biomass cellulose--and ethanol from the hemicelluloses--in a
stand-alone facility. Bioplus technology produces highly functional,
hydrophilic and hydrophobic nanocellulose fibrils or crystals, in gel
or dried form.

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Amyris
Emeryville, CA
Number of employees: 400
Amyris, Inc. Is Producing Farnesene.

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Above: Brotas, Sao Paulo, Brazil Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Brotas, Sao Paulo, Brazil

1.2 million liters

Feedstock: Sugarcane juice
Partnerships and Financing
With Total--Amyris launched in 2010 an ongoing research and
development collaboration to accelerate the deployment of farnesene for
the production of renewable jet fuel. In 2014, following regulatory
approvals, Amryis began to commercialize its renewable jet fuel.
With Firmenich--Amryis developed a technology to produce
sustainable, cost-effective ingredients for the flavors and fragrances
(F&F) industry and have successfully produced its first fragrance oil.
About: Amyris delivers high-performance renewable products across a
wide range of consumer and industry segments. Our products offer
customers a way to reduce environmental impact with No Compromise in
performance or availability.
Product applications: Flavors, fragrances, cosmetics, detergents,
fuels, lubricants, performance materials and biopharmaceuticals.
Potential market size: The personal care business represented $25
million of 2015 revenue and is expected to contribute $40 million of
2016 revenue. Amyris expects existing collaboration and supply
agreements to generate over $200 million in revenue through 2020 from
the company's flavors and fragrances partners.
Technology: Through synthetic biology, Amyris is able to engineer
the metabolic pathways of sugar, so that it can design microbes,
primarily yeast, and use them as living factories in fermentation
processes to convert plant-sourced sugars into target molecules. Amryis
uses proprietary high-throughput processes to create and test thousands
of yeast strains a day in order to choose those yeast strains that are
most efficient and scalable for industrial production.

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Anellotech
Pearl River, NY
Number of employees: 23
Anellotech, Inc. Is Producing Benzene, Toluene And Xylenes.

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Above: Anellotech's TCat-8TM development and
testing unit for converting biomass to BTX.
Biorefinery Classification: Pilot Plant
Key Facts
Pearl River, NY

Feedstock: Biomass (wood, corn stover, sugarcane bagasse)
and other non-food agricultural products

Anellotech's new, fully-integrated development and testing
facility (TCat-8TM) is currently under construction
and will be operational in 2016. This continuous unit will
confirm the viability and suitability of the process for scale-
up and generate data needed to design commercial Bio-TCat
plants. The TCat-8 unit was jointly designed by Anellotech and
its R&D partner IFP Energies nouvelles (IFPEN) and will use a
novel catalyst under joint development by Anellotech and
Johnson Matthey.
Partnerships and Financing
IFP Energies nouvelles (IFPEN) is our process development and
scale-up partner. Johnson Matthey is our catalyst development and
commercial catalyst supply partner. Axens is our partner for
industrialization, commercialization, global licensing and technical
support. In November 2015, Anellotech Inc. announced an equity
investment of $7 million from a new, strategic investor.
About: Anellotech is a green innovation and technology company
developing an efficient process for producing biobased aromatic
chemicals (BTX) from non-food biomass. We use proprietary thermal
catalytic biomass conversion (Bio-TCatTM) technology to
provide sustainable chemical building blocks as an alternative to
identical fossil-derived counterparts.
Product applications: Polyester, (polyethylene terephthalate or
PET), polystyrene, polyurethane, nylon, styrene butyl rubber (SBR),
acrylonitrile butadiene styrene (ABS) and other polymers, which are
used to produce beverage bottles, clothing, carpeting, automotive
components, and a broad range of other household and industrial
products.
Potential market size: The global market for benzene, toluene and
xylenes was approximately $130 billion in 2014.
Technology: Through Bio-TCatTM technology, non-food
biomass is rapidly heated in a fluid-bed reactor and the resulting
gases are immediately converted into hydrocarbons by a proprietary,
recirculating zeolite catalyst. Biobased BTX, which is identical to
petroleum-derived counterparts, can be further purified, separated and
converted into a broad range of plastics using existing commercial
technologies and industry infrastructure.

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BASF Corporation
Florham Park, NJ
Number of employees: 17,471 in North America

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Above: Grain processing facility.
Biorefinery Classification: Commercial Plant
Key Facts
In addition to its own manufacturing facilities, BASF
secures contract manufacturing relationships with qualified
third parties possessing sufficient fermentation capacity to
meet commercial production requirements.

For example, BASF has an important partnership with Fermic, which
operates a U.S. FDA cGMP approved fermentation and synthesis
facility and has a large fermentation plant in a suburb of
Mexico City.

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About: BASF Enzymes LLC is a wholly owned subsidiary of BASF
Corporation located in San Diego, CA. It is a recognized pioneer in the
development and commercialization of high-performance enzymes for use
in industrial processes.
Our interdisciplinary, international research and development teams
work at several BASF sites: Ludwigshafen (Germany), Tarrytown (New
York, United States) and San Diego (California, United States).
Product applications: BASF sells enzymes developed using its unique
patented R&D capabilities, harnessing the power of nature to satisfy
the needs of the global market. Key markets are: human and animal
health and nutrition, home care, grain processing, oilfield solutions,
and pulp and paper.
Technology: Genetic expression libraries are constructed and
quickly screened using automated and high-throu[gh]put robotic
technologies. BASF uses patented, state-of-the-art gene evolution
capabilities--suite of DirectEvolution' technologies--that
make possible rapid optimization of proteins at the DNA level.
White Biotechnology develops and refines methods to use
microorganisms, enzymes and cells to produce chemical and biochemical
products. For thousands of years, people have been harnessing natural
chemical processes to produce food, medicines and other products.
Today, rapid technological progress in the life sciences is leading to
innovative ways to use nature's variety for completely new
applications.
BASF White Biotechnology uses natural synthesis techniques to
develop products such as vitamins, food and feed supplements, chiral
compounds, and pharmaceutical and agricultural intermediates. These
techniques can increase efficiency and reduce raw materials, energy
requirements and carbon emissions as compared to conventional chemical
processes.
BioBased Technologies LLC
Rogers, AR
Number of employees: 15
BBT Strives To Reduce The Use Of Nonrenewable Ingredients By
Integrating Renewable Ingredients.
Biorefinery Classification: Commercial Plant
Key Facts
Fountain Inn, SC

Dalton, GA Laboratory

Feedstock: Soybean oil

100 percent Woman-owned small business.

Collaborates with customers to create sustainable products
that reduce costs while adding value.

Multiple U.S. and international patents.

Ample manufacturing capacity with room for growth.

Agrol is cost competitive compared to other traditional
polyols.

We enable sustainability . . . through partnerships.
Partnerships and Financing
Agrol and Agrol Diamond have been approved to use the U.S.
Department of Agriculture certified biobased product label. The label
indicates that the products have been independently certified to meet
USDA BioPreferredTM program standards for biobased content.
About: BioBased Technologies is an innovative leader in renewable
chemistry and the maker of Agrol, a line of USDA Certified Biobased
polyols. Agrol polyols are made from farm-grown plants and are
suitable for all polyurethane applications as a substitute for
petrochemicals in the making of products.
Product applications: Agrol, commercialized in 2005, is used in
lubricants, building products, furniture, bedding, automotive foams and
parts, adhesives, agricultural products, carpet backings, industrial
coatings and printing inks.
Technology: Agrol polyols have a high bio-content and are made
from plant-based ingredients, including soy and cashew nuts. Using a
patented oxidation process, Agrol' can be used in various
polyurethane applications with properties ranging from semi-flexible to
semi-rigid. Qualities such as low acid number, mild odor and light
color make Agrol' polyols ideal replacements for petroleum-
based polyols. Custom blends are also available.

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BIO-CAT/BIO-CAT Microbials
Troy, VA; Shakopee, MN
Number of employees: 15
BIO-CAT/BIO-CAT Microbials Is Producing Enzymes.

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Above: Shakopee, MN Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Shakopee, MN
Partnerships and Financing
BIO-CAT launched in 1988. BIO-CAT purchased AMS in 2004 and renamed
it BIO-CAT Microbials. Facilities were updated, new fermentation
equipment was purchased and larger blenders were added.
About: BIO-CAT offers a wide range of products, from single enzymes
to multi-enzyme blends. BIO-CAT Microbials is an innovator in the field
of biological solutions for a broad range of emerging and existing
markets and industries.
Product applications: Detergent and other cleaning products, animal
nutrition and aquaculture, food and beverage ingredients, dietary
supplements, septic and drain care, waste treatment.
Potential market size: The potential market for industrial enzymes
is 6.2 billion by 2020 according to Markets and Markets.
Technology: Enzymes can be produced from animal, bacterial, fungal,
yeast and plant sources. They can be Kosher, Halal, and GRAS or
industrial grade. They come in dry and liquid form.
Bacillus is a specific type (genus) of bacteria which grow
aerobically (with oxygen) and to some extent anaerobically (without
oxygen) and forms spores.
Bioresource International
Research Triangle Park, NC
Number of employees: 17
Bioresource International, Inc Is Producing Enzymes.
Biorefinery Classification: Pilot Plant
Key Facts
Research Triangle Park, NC

Feedstock: Poultry waste
Partnerships and Financing
BRI has signed a marketing agreement with Jubilant Life Sciences,
an integrated pharmaceutical and life sciences company, for marketing
and distribution of selected feed enzyme products in South Asia. BRI
has signed an agreement with ilender Corp. for the distribution and
marketing of selected feed enzyme products in Latin American countries.
About: A global biotechnology company specializing in the research,
development and manufacture of enzyme feed additives that help poultry
and swine producers optimize animal nutrition.
Product applications: Versazyme has become the leading protease in
the global animal nutrition market. Valkerase is an enzyme that
improves the processing of feathers and the quality of feather meal.
BRI's newest product, XylamaxTM, is an intrinsically thermo-
stable xylanase that delivers consistent all-around performance in
nutrient release and absorption, total energy availability, and feed
conversion rate. To quickly test animal feed on site to confirm the
presence of Xylamax, the company has developed XylaQuickTM,
a qualitative in-feed calorimetric kit.
Potential market size: Animal nutrition enzymes represent an $850
million market. With increased food demand, sales of animal feed
enzymes are expected to exceed $1.8 billion by 2020.
Technology: Dr. Shih's 1980s research and development of a
thermophillic digester to generate power from poultry waste led to his
discovery of keratinase, an enzyme that digests the keratin protein
found in feathers. Further research proved that keratinase could also
improve digestibility of animal feed.
Biosynthetic Technologies
Irvine, CA
Number of employees: 10
Biosynthetic Technologies Is Producing Biosynthetic Base Oil.

Above: Baton Rouge, LA Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Baton Rouge, LA

Feedstock: Organic fatty acids found in plant oils
Partnerships and Financing
Biosynthetic Technologies holds exclusive rights to patented USDA
technology that converts fatty acids found in plant and animal oils
into high-performance synthetic oils. Biosynthetic Technologies is
funded in part by multiple Financial Times Global 500 companies. For
more information, visit Biosynthetic.com.
About: Biosynthetic Technologies (BT) manufacturers a renewable
high-performance lubricant base oil that exceeds the toughest
performance standards, even in challenging applications like motor oil.
BT has received ILSAC GF-5 certification on both SAE 5W-20 and 5W-30
grade passenger car motor oil formulations using its Biosynthetic Base
Oil. These formulations have also been certified by the American
Petroleum Institute (API) to exceed the requirements of the most recent
service category issued by API's Lubricants Group, the API SN
``Resourcing Conserving'' designation.
Product applications: Passenger car motor oil (PCMO); Marine
lubricants; Small engine oil (2T/4T); Hydraulic fluid; Wind turbine;
Refrigeration/compressor oil; Food-grade lubricant grease; Dielectric
(transformer) fluid; Metalworking fluid; Gear oil; Bar and chain oil;
General purpose lubricant; Plastics.
Potential market size: 1 billion gallons per year.
Technology: Biosynthetic Technologies (BT) manufactures a
revolutionary new class of biobased synthetic molecules that are made
from organic fatty acids found in plant oils.

Blue Marble Biomaterials
Missoula, MT
Number of employees: 80
Blue Marble Biomaterials Is Producing Specialty Chemicals--Sulfur
Compounds, Thioesters, Esters, Specialty Offerings, Extract & Oils.

Above: Bitterroot Valley of Montana Plant.
Biorefinery Classification: Pilot Plant
Key Fact
Bitterroot Valley of Montana

Feedstock: Organic material (biomass): food co-products,
spent brewery grain, spent coffee and tea, algae, milfoil,
agricultural silage, wood chip
Partnerships and Financing
In the fall of 2010, Blue Marble was awarded the Regional Woody
Biomass Utilization Grant by Montana's Department of Natural Resources
and Conservation. Innovate Montana is a public-private partnership, led
by the Governor's Office of Economic Development working in
collaboration with Montana's business community. Their goal is to
highlight innovative businesses like Blue Marble Biomaterials that are
advancing the state's economy by creating quality jobs.
About: Our mission is to replace petroleum-based chemicals with
fully sustainable, zero carbon specialty chemicals.
Product applications: Natural flavours and fragrances.
Potential market size: In 2014, the world's ten largest specialty
chemicals segments accounted for 61 percent of the market, reported
IHS. Markets and Markets projects that specialty chemicals will reach
$470 billion by 2020.
Technology: Patented processes utilize plant material and managed
ecosystems of bacteria to produce complex chemical compounds. We refine
our compounds using green chemistry processes. Its proprietary AGATE
system uses cellulosic, lignin, and protein based biomass to produce
target products. Uses non-GMO polyculture fermentation and extraction.
Blue Marble is working with researchers at the University of
Montana to develop natural algal products using patent-pending algae
strains, growth systems, and extraction technologies.

Calysta
Menlo Park, CA
Number of employees: 50
Calysta Is Developing FeedKind Protein, Alcohols, Esters, Oxides And
Olefins.

Above: FeedKind.
Biorefinery Classification: Commercial Plant
Key Facts
Menlo Park, CA

Feedstock: Methane

In January 2016, Calysta received a conditional award of up
to 2.8 million Exceptional Regional Growth Fund
(eGRF) grant subject to due diligence from the UK Government to
develop a Market Introduction Facility in northern England to
develop a production process for FeedKind' protein.
FeedKind is approved for sale in the European Union. In June
2014, Calysta announced it has successfully fermented methane
into lactic acid, under a research collaboration with
NatureWorks. Lactic acid is the building block for NatureWorks
Ingeo lactide intermediates and polymers.
Partnerships and Financing
In February 2016, Calysta announced $30 million in Series C funding
with Cargill, the Municipal Employee Retirement System (MERS) of
Michigan and Old Westbury Global Real Assets Fund LLC. In January 2015,
Calysta completed of a Series B financing round totaling $10 million,
led by Walden Riverwood Ventures, a venture firm focused on investing
in core technology companies globally, and Aqua-Spark, a Netherlands-
based firm focused on sustainable aquaculture investments.
About: Calysta creates high-value nutrition products and industrial
materials by converting energy-rich methane into sustainable building
blocks for life.
Product applications: Fish and livestock nutrition products,
industrial materials and consumer products. FeedKind'
protein is a natural, safe, non-GMO, sustainable fish feed ingredient
to reduce the global aquaculture industry's use of fishmeal.
Potential market size: Specialty.
Technology: Calysta is converting novel feedstocks to high value
sustainable products using synthetic biology. Calysta is developing
Biological Gas-to-Chemicals' and Biological Gas-to-
Liquids' platforms and Biological Gas to FeedTM
and Biological Gas to FuelTM fermentation platforms. These
platforms create valuable cost and performance advantages over current
gas conversion processes without competing for food, land or water.
FeedKind' is produced using methanotrophs, natural organisms
that consume methane from multiple sources, including anaerobic
digestion and municipal solid waste, as their energy source.

Biobased products are made from renewable biomass, oils or other
carbon waste streams, including waste stack gases. Renewable chemicals
are the building blocks for biobased products.
Cellana, LLC
Kailia-Kona, HI
Number of employees: 20+
Cellana, LLC Is Producing Algae Oils, Proteins/Carbohydrates And
Biomass.

Above: Kailua-Kona, HI Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Kailua-Kona, HI

12+ tons per year, current capacity

Feedstock: Algae
Partnerships and Financing
Cellana has rec[ei]ved multiple large grants from the U.S.
Departments of Energy (DOE) and Agriculture (USDA). Cellana has entered
into a commercial-scale off-take agreement with Neste, the world's
leading supplier of renewable diesel and jet fuel, for Cellana's
ReNewTM Fuel biocrude oil for fuel applications.
About: Cellana is a leading developer of algae-based bioproducts
for sustainable nutrition and energy applications.
Product applications: Algae-based bioproducts such as Omega-3
nutritional oils, Aquaculture/animal feeds, human foods and fuels.
Potential market size: $4 billion Omega-3 oils, $9 billion
aquaculture feeds, $1 trillion fuels/chemicals, $100 million whole
algae products for aquaculture hatcheries, cosmetics, & functional
foods.
Technology: Cellana's patented production system, called
ALDUOTM, is unique in that it couples large-scale
photobioreactors (PBRs) with open ponds in a two-stage process. Open
ponds, which are very cost-effective, have historically been limited by
contamination from undesirable algae strains (weeds) or grazer
organisms (pests). PBRs are generally unable to produce algae at an
acceptable cost for commodity applications. ALDUOTM
minimizes the footprint of PBRs & maximizes the footprint of the open
ponds, in order to minimize overall cost & minimize risk of
contamination. By operating the PBRs in semi-continuous mode to provide
inoculum for the open ponds, which are operated in batch mode, Cellana
has successfully grown more than ten strains of algae at commercial
yields w[i]thout pesticides or herbicides.

The Coca-Cola Company
Atlanta, GA
Number of system employees: >700,000
The Coca-Cola Company Produces PlantBottleTM Packaging, The
First-Ever Fully Recyclable Pet Plastic Beverage Bottle Made Partially
From Plants.
Biorefinery Classification: Commercial Plant
Key Facts
Feedstock: Sugarcane
Partnerships and Financing
In June 2012, Coca-Cola, Ford, Heinz, Nike and Procter & Gamble
formed the Plant PET Technology Collaborative to accelerate development
of products made entirely from plants. The PlantBottleTM
technology has also been applied beyond beverage bottles. Coca-Cola now
has developed partnerships with the Ford Motor Company to use the
PlantBottleTM technology for polyester car interiors, and
SeaWorld' Parks & Entertainment (as well as other theme
parks and zoos), to introduce a refillable souvenir cup made with
PlantBottle technology.
About: The Coca-Cola Company is the world's largest beverage
company, refreshing consumers with more than 500 sparkling and still
brands and more than 3,800 beverage choices.
Product applications: PET packaging and materials.
Potential market size: PlantBottleTM packaging accounts
for 30 percent of the company's packaging volume in North America and
eight percent globally, some seven billion bottles annually, making The
Coca-Cola Company a large bioplastics end-user.
Technology: Coca-Cola introduced PlantBottleTM
Technology in 2009 as the first recyclable PET plastic bottle made
partially from plants. Since then, more than 40 billion
PlantBottleTM packages have reached the market in over 40
countries, saving more than 845,000 barrels of oil. The company's goal
is to adopt the PlantBottleTM packaging (which consists of
30 percent plant-based material) for all of its new PET plastic bottles
in the future. To achieve this objective, Coca-Cola is partnering with
other companies to expand technology and build manufacturing facilities
around the world.

Corbion
Amsterdam, Netherlands
Number of employees: 1,673
Corbion Is Producing Lactide Monomers And Polymers, 2,5-
Furandicarboxylic Acid, And Succinic Acid.

Above: Blair Manufacturing Facility, Blair, NE.
Biorefinery Classification: Commercial Plant
U.S. Production Facilities
Blair Manufacturing Facility, Blair, NE

Dolton Manufacturing Facility, Dolton, IL

East Rutherford Manufacturing Facility, East Rutherford, NJ

Grandview Manufacturing Facility, Grandview, MO

Totowa Manufacturing Facility, Totowa, NJ

Tucker Manufacturing Facility, Tucker, GA
Partnerships and Financing
In 2011, Corbion signed a partnership agreement with Perstorp; and
in 2015 jointly announced development of a new lactide
(PURALACT' B3) caprolactone co-polymer (CapaTM)
for use in hot melt adhesive applications.
In 2013, Corbion and BASF established the 50/50 joint venture,
Succinity GmbH, to produce high-quality succinic acid based on
renewable resources.
In 2015, Corbion and MedinCell established a 50/50 joint venture,
CM Biomaterials, to supply biobased copolymers for controlled-release
drug delivery. The joint venture will sell the co-polymers to MedinCell
partners who license the MedinCell technology (BEPOTM).
About: Corbion is the global market leader in lactic acid, lactic
acid derivatives, and lactides, and a leading company in emulsifiers,
functional enzyme blends, minerals, and vitamins.
Product applications: The company delivers high performance
biobased products made from renewable resources and applied in global
markets such as bakery, meat, home and personal care, packaging,
pharmaceuticals and medical devices, automotive, coatings and
adhesives. Its products have a differentiating functionality in all
kinds of consumer products worldwide.
Potential market size for bioplastics: Global bioplastics
production capacity is set to increase from around 1.7 million tonnes
in 2014 to approximately 7.8 million tonnes in 2019, according to
Institute for Bioplastics and Biocomposites.
Technology: Corbion has an established technology platform based on
over 80 years of fermentation experience. Corbion leads the way in
lactic acid as well as in cutting-edge emulsification technology and
functional blending capability. Drawing on the deep rooted application
and market knowledge that has been built up over decades, Corbion works
hand in hand with our customers to make our technology work for them.
With the construction of a 75 kiloton per year PLA plant in Rayong
Province, Thailand, Corbion is moving one step in the value chain.

The Dow Chemical Co.
Midland, MI
Number of employees: 49,495
The Dow Chemical Company Is Producing Ethanol, Plasticizers, Polyols.
Biorefinery Classification: Commercial Plant
Key Facts
U.S. Gulf Coast

Feedstock: Soy

DOW's Santa Vitoria, Minas Gerais, Brazil integrated
alcohol-chemical complex uses sugarcane as a renewable
feedstock for the production of ethanol. The mill has the
capacity to convert 2.7 million tons of sugarcane into 240,000
cubic meters of hydrous fuel ethanol per harvest year.
Partnerships and Financing
BioVinylTM flexible vinyl compounds incorporate
phthalate-free DOW ECOLIBRIUMTM Bio-Based Plasticizers,
which are manufactured using plant byproducts by Dow Electrical and
Telecommunications, a business unit of The Dow Chemical Company. Under
a Joint Collaboration Agreement, Teknor Apex has the exclusive right to
market in North America flexible vinyl compounds containing DOW
ECOLIBRIUMTM Bio-Based Plasticizers in consumer and
industrial products, automotive components, certain medical devices,
and certain wire and cable uses.
About: The Dow Chemical Company is a diversified, worldwide,
manufacturer and supplier of products, used primarily as raw materials
in the manufacture of customer products and services.
Product applications: Flexible packaging, hygiene and medical
markets, adhesives and sealants.
Potential market size: The global market for adhesives and sealants
is expected to reach $43,195.5 million by 2020, according to a 2014
study by Grand View Research, Inc.
Technology: RENUVATM Renewable Resource Technology
breaks down natural oil and functionalizes it, then uses a distinct
process to polymerize the molecules into designed polyols with control
of functionality and molecular weight for greater quality and
consistency.
DuPont
Wilmington, DE
DuPont Is Developing Platforms For Biofuels, Food Ingredients,
Materials And Chemicals.

Above: DuPont Cellulosic Ethanol, Nevada, IA.
Biorefinery Classification: Commercial Plant
Key Facts
DuPont Cellulosic Ethanol Nevada, IA

30 million gallons per year

Feedstock: Corn stover

Partnerships
In 2016, DuPont and Archer Daniels Midland announced a method for
producing furan dicarboxylic methyl ester (FDME) from fructose. One of
the first polymers under development utilizing FDME is polytrimethylene
furandicarboxylate (PTF).
About: DuPont has been bringing world-class science and engineering
to the global marketplace in the form of innovative products,
materials, and services since 1802.
Product applications: Animal nutrition, food, detergents, textiles,
carpets, personal care, biobased materials and biofuels.
Technology: DuPont integrates proven strengths in chemistry,
materials science and engineering with cutting-edge biology, augmenting
or replacing chemical transformations with biological ones. DuPont's
biobased materials reduce the use of petroleum while improving
performance. DuPont is leading the world in meeting growing biofuel
needs.
By adding modern science and knowledge to nature's own material,
DuPontTM Danisco' food enzymes bring added value
and previously unattainable functionalities to many food products. They
help extend shelf life, optimize production, add texture, ensure
quality consistency and reduce costs--gains that in turn enable
customers to reduce water use, energy consumption and waste.
POWERFlex', an enzyme solution developed for tortilla
baking, reduces the stickiness of dough and gives tortillas long-
lasting freshness and improved flexibility. Enzymes also support health
and wellness by promoting the digestion of milk lactose, starch,
proteins, fats and oils.
DuPont offers a wide range of liquefaction, saccharification and
isomerization products to customers in the wet milling industry, backed
by our applications laboratories in the U.S., China and Europe.
Experienced DuPont professionals provide technical support to optimize
the production of HFCS, high dextrose and high maltose syrups. This
enzyme technology also contributes to energy, water and chemical
reduction by increasing dry solids, reducing process temperatures and
pH adjustments and improving filtration efficiencies.
DuPOnt Tate & Lyle Bio PRODUCTS
Loudon, TN
DuPont Tate & Lyle Bio Products Is Producing 1,3 Propanediol.

Above: Loudon, TN plant.
Biorefinery Classification: Commercial Plant
Key Facts
The global headquarters and production facility for DuPont
Tate & Lyle Bio Products is located in Loudon, TN.

The plant started production in 2006 and has a current
capacity of 140 million pounds per year.

Feedstock: Glucose from corn wet milling operation.
Partnerships and Financing
DuPont Tate & Lyle Bio Products is a joint venture between DuPont,
a global science company, and Tate & Lyle, a world-leading renewable
food and industrial ingredients company. DuPont and Tate & Lyle jointly
funded the plant with total investment of $100 million.
Awards
2003 EPA Presidential Green Chemistry
2007 ACS Heroes of Chemistry
2009 ACS-BIOT Industrial Biotechnology
2010 State of Tennessee Governor's Award for Trade Excellence
About: DuPont Tate & Lyle Bio Products provides natural and
renewably sourced ingredients that enhance product performance.
Product applications: 100 percent biobased 1,3 propanediol is used
to produce fiber grade polyester polymer for residential and commercial
carpets, apparel and automotive mats and carpets. In addition the
Zemea' brand of 1,3 propanediol is found in cosmetics,
personal care, food, flavors, laundry, cleaning and pharmaceutical
products. The Susterra' brand is targeted for industrial
applications such as heat transfer fluids, deicing, polyurethanes,
paints, coatings and inks.
Technology: Under exact temperatures and conditions, a patented
microorganism functions as a bio-catalyst, converting sugar into 1,3
propanediol. The deactivated microorganism is separated from the broth,
along with unfermented sugars, salts and water. The material is then
refined to remove any trace quantities of water and other byproducts.
The resu[lt]ing product is highly purified 1,3 propanediol ready for
commer[ci]al use.

Copyright 2016 DuPont Tate & Lyle Bio
Products. All rights reserved. Zemea',
Susterra' and the Circle Logo are registered
trademarks of DuPont Tate & Lyle Bio Products Company, LLC.
EcoSynthetix
Burlington, ON, Canada
Number of employees: 50
EcoSynthetix Is Producing Ecosphere' Biopolymers And
Ecomer' Biomonomers.

Above: Eco[S]ynthetix, Burlington, Ontario.
Biorefinery Classification: Commercial Plant
Key Facts
Centre of Innovation, Burlington, Ontario, Canada.
Production sites in Tennessee and The Netherlands.

Partnerships and Financing
The company has established a number of academic and government
funding partnerships to support its research and development
activities. EcoSynthetix is a public company trading on the Toronto
Stock Exchange (TSX: ECO). For further details, visit us at
ecosynthetix.com.
About: EcoSynthetix is a renewable chemicals company specializing
in biobased materials used as inputs in a wide range of end products.
Our commercial biobased products exhibit similar performance
characteristics compared to non-renewable products that they replace,
often at reduced total systems cost.
Product applications: Binders and modifiers for key global markets,
including: paper & paperboard, building and construction, personal
care, and others.
Potential market size: $60 billion of synthetic polymers.
Technology: EcoMer' is the flagship product family of
functional engineered biopolymers that are patented and exclusively
available from EcoSynthetix. These products represent a class of highly
efficient binders derived from renewable materials which can cost-
effectively displace traditional synthetic binders in a number of
significant market applications, including coated paper and paperboard,
building products such as wood composites and insulation, and others.

Edeniq
Visalia, CA
Number of employees: 30
Edeniq Is Producing Cellulosic Sugars.

Above: Visalia, CA Plant.
Biorefinery Classification: Pilot Plant
Key Facts
Visalia, CA

Feedstock: Corn stover, sugarcane bagasse

The PATHWAY Platform has been licensed for commercial
production of cellulosic biofuel from corn kernel fiber. Edeniq
has announced commercial licenses for its PATHWAY Platform with
Pacific Ethanol, Flint Hills Resources, Siouxland Energy, and
Aemetis.

Edeniq is partnering with Usina Vale to build a
demonstration plant at Usina Vale's sugar mill in Brazil to
convert sugarcane bagasse to cellulosic ethanol
Partnerships and Financing
Department of Energy program funded $20 million of Edeniq's $25
million cellulosic ethanol pilot plant; with nearly $4 million from the
California Energy Commission (CEC).
Edeniq is a privately held company. Edeniq and Aemetis have
announced a planned merger to close in the third quarter 2016.
About: Edeniq is a biorefining and cellulosic technology company.
Edeniq delivers integrated process innovations that unlock sugars.
Product applications: Technology to produce cellulosic ethanol from
corn kernel fiber at existing ethanol plants using Edeniq's
CellunatorTM pretreatment and cellulases.
Technology: Edeniq combines a mechanical pretreatment (Cellunator)
process with enzymatic hydrolysis to efficiently and cost-effectively
break down structural plant materials into cellulosic sugars. Edeniq's
PATHWAY Platform integrates enzymes with the Cellunator and
SmartFlowTM Technology for water and lignin recovery to
allow for conversion of corn kernel fiber into cellulosic sugars and
ethanol. PATHWAY produces up to 2.5 percent cellulosic ethanol; a
15,000 gallon per year plant could produce 375 gallons per year of
cellulosic ethanol.

Elevance Renewable Sciences
Woodridge, IL
Number of employees: 100
Elevance Renewable Sciences, Inc Is Producing Ethylene.

Above: Woodridge, IL Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Woodridge, IL

Feedstock: Plant-based oils like soybean, canola, palm,
mustard and jatropha or algae
Partnerships and Financing
Elevance has a collaboration with Genting Plantations Berhad
through Genting Integrated Biorefinery Sdn Bhd (GIB). The collaboration
will build a 240,000 megaton (MT) biorefinery in the Palm Oil
Industrial Cluster (POIC) in Lahad Datu, Sabah, Malaysia. Versalis, the
chemical subsidiary of Eni, has licensed Elevance technology to build a
biorefinery at Porto Maghera, Italy.
Elevance and Wilmar International Limited formed a joint venture
that operates a world-scale biorefinery in Gresik, Indonesia, based on
Elevance's technology. The commercial-scale manufacturing facility
capacity is 180,000 MT per year.
About: Elevance is a high-growth company that creates novel
specialty chemicals from renewable feedstocks by using a proprietary,
Nobel Prize-winning technology called olefin metathesis. With olefin
metathesis, Elevance helps enable its customers to deliver everyday
products that exceed the performance of existing products while leaving
a smaller environmental footprint.
Product applications: Personal care, detergents, cleaners,
polymers, lubricants and oilfield chemicals.
Potential market size: The outputs from Elevance's production
process are relevant to markets valued well in excess of $200 billion.
The specialty chemicals market is estimated at $176 billion. The
oleochemical market was $38 billion in 2010. The intermediate olefin
market was $7 billion in 2008.
Technology: Olefin metathesis chemistry, a groundbreaking catalyst
technology, allows carbon atoms in natural oils to ``swap'' places,
enabling new chemical compounds and manufacturing processes.

Evolva
Reinach, Switzerland
Number of employees: 116
Evolva Is Producing High-Value Specialty Ingredients.

Above: Evolva fermenter.
Biorefinery Classification: Commercial Plant
Key Fact
Feedstock: Baker's yeast
Partnerships and Financing
The partners in the BioPreDyn project are developing software tools
to facilitate metabolic engineering by the use of computer-based cell
models. The PROMYS project has a duration of 4 years and a total EU
funding of =7.2 million (CHF 8.9 million), of which Evolva's share is
9.8 percent. The PROMYS project is part of the European Commission's
7th Framework Programme for Research (``FP7''). Evolva's role in the
project will be to construct a yeast that is able to produce high
yields of a taste modulating ingredient.
About: Evolva is a pioneer and global leader in sustainable,
fermentation-based approaches to ingredients for health, wellness and
nutrition.
Product applications: Evolva's products include stevia,
resveratrol, vanillin, nootkatone and saffron
Potential market size: $91.2 billion by 2020, according to Markets
and Markets.
Technology: We have an array of technologies that allow us to
rapidly insert and express tens to hundreds of genes in billions of
individual yeast cells in a highly combinatorial fashion. This allows
us to explore large numbers of gene combinations and hence find those
gene combinations that are necessary to biosynthesise a given
ingredient. Funded by the Innovative Medicines Initiative, The CHEM 21
project (Chemical Manufacturing Methods for the 21st Century
Pharmaceutical Industries) brings together six pharmaceutical
companies, five SMEs and research groups eight other universities from
the UK and Europe.

ForeLight
Chicago, IL
Number of employees: 6
ForeLight Is Producing Algae Biomass.

Above: Algae bioreactor with IllumesisTM lighting.
Biorefinery Classification: Pilot Plant
Key Facts
Chicago, IL

Feedstock: Algae

ForeLight's production facility is located in the University
Technology Park on the Chicago campus of the Illinois Institute
of Technology (IIT).
Partnerships and Financing
Privately held.
About: ForeLight's advanced artificial light bioreactor enables
unparalleled control over the growth of algae, cyanobacteria and other
photosynthetic organisms, offering a stable, cost-effective solution to
the biomass production needs of the life sciences, material sciences
and biological research & diagnostics fields.
Product applications: Fore[L]ight, Inc. provides fluorescent
biomarkers. ForeLight's patented IllumesisTM lighting and
growth platform is accelerating the potential application of indoor
agriculture/aquaculture for the food, beverage, nutraceutical, cosmetic
and other industries.
Technology: Allophycocyanin (APC) is a highly soluble fluorescent
phycobiliprotein isolated from the cyanobacteria Arthrospira platensis.
R-Phycoerythrin (R-PE).
Genomatica
San Diego, CA
Number of employees: 100
Genomatica, Inc. Is Producing 1,4-Butanediol, Butadiene,
Hexamethylenediamine, Caprolactam And Adipic Acid.

Above: Adria, Italy Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Adria, Italy

30 kilotons per year

Feedstock: Strategic relationships with Tate & Lyle for
dextrose sugar, M&G for sugars from cellulosic biomass, and
Waste Management for C1s.

Genomatica and DuPont Tate & Lyle Bio Products Company, LLC
(DT&L) produced more than 5 million pounds (over 2,000 metric
tons) of BDO by direct fermentation using conventional sugars
as feedstock in 2012.
Partnerships and Financing
Under a joint venture agreement, Novamont is converting an existing
facility in Adria, Italy to use Genomatica's BDO process to produce
approximately 40 million pounds of BDO per year. In April 2013,
Versalis and Genomatica announced an agreement to create a joint
venture for butadiene. In December 2013, Braskem and Genomatica
announced a joint development agreement for butadiene. Braskem
anticipates funding Genomatica's development work; will allocate
Braskem R&D resources; and fund the construction of pilot and
demonstration-scale plants.
About: Genomatica delivers new manufacturing processes that enable
its partners to produce the world's most widely-used chemicals from
alternative feedstocks, with better economics and greater
sustainability than petroleum-based processes.
Product applications: BDO is used in plastics, solvents, electronic
chemicals and elastic fibers for the packaging, automotive, textile,
and sports and leisure industries. Butadiene is a key raw material for
tires, engineering polymers and latex products.
Potential market size: The 1,4-Butanediol market will be worth
$8.96 billion by 2019. Hexamethylenediamine, caprolactam and adipic
acid have a total market of over $18 billion per year.
Technology: Guided by a genome-scale metabolic model, we engineered
the E. coli host to enhance anaerobic operation of the oxidative
tricarboxylic acid cycle. The organism produced BDO from glucose,
xylose, sucrose and biomass sugar streams.

Gevo
Englewood, CO
Number of employees: 91
Gevo Is Producing Isobutanol, Ethanol And High-Value Animal Feed.

Above: Luverne, MN Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Luverne, MN

20 billion gallons per year

Feedstock: Corn

Gevo currently operates a biorefinery in Silsbee, Texas, in
collaboration with South Hampton Resources Inc., to produce
renewable jet fuel, octane, and ingredients for plastics like
polyester.
Partnerships and Financing
Gevo has a marquee list of partners including The Coca-Cola
Company, Toray Industries Inc. and Total SA, among others.
About: Gevo' is a leading renewable chemicals and
advanced biofuels company. We are developing biobased alternatives to
petroleum-based products using a combination of synthetic biology and
chemistry.
Product applications: Isobutanol has broad market applications as a
solvent and a gasoline blendstock that can help refiners meet their
renewable fuel and clean air obligations.
Potential market size: The global isobutanol market is expected to
reach $1.18 billion by 2022. The feed additives is projected to reach
$21.8 billion by 2020.
Technology: Gevo's proprietary integrated fermentation technology
platform (GIFT'), which has been designed to produce low-
cost renewable isobutanol, consists of two elements: A proprietary
yeast biocatalyst, which converts sugars derived from multiple
renewable feedstocks into isobutanol, and a proprietary separation unit
which is designed to bolt onto existing ethanol facilities.

GFBiochemicals
Milan, Italy
Number of employees: 50
GFBiochemicals Americas Is Producing Levulinic Acid Derivatives, Like
Esters And Ketals.

Above: Golden Valley, MN Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Golden Valley, MN

Caserta, Italy

3 million lbs per year

Commercial under development, potentially at Laskin Energy
Park in Hoyt Lakes, MN.
Partnerships and Financing
GFBiochemicals is owned by private investors.
About: GFBiochemicals is the main producer of levulinic acid at
commercial scale directly from biomass.
Product applications: Pharma, personal care, flavors and
fragrances, resins and coatings, cleaners, plasticizers, nylon, fuel
additives.
Potential market size: $40 billion annually.
Technology: Thanks to its proprietary technology, levulinic acid is
produced through a one-step process directly from a wide range of
cellulosic feedstock and GFBiochemicals offers a combination of high
product yields, high productivity, concentrated process streams and
efficient recovery. Produced at an industrial scale levulinic acid is
cost competitive and can also successfully address many performance-
related issues attributed to petroleum-based chemicals and materials.
Levulinic acid was recognized by the U.S. Department of Energy as one
of the top biobased platform chemicals of the future.

Green Biologics
Ashland, VA.
Number of employees: 78 (in U.S. operations)
Green Biologics Is Producing 100 Percent Biobased, Renewable N-Butanol
And Acetone.

Above: Little Falls, MN P[la]nt.
Biorefinery Classification: Commercial Plant
Key Facts
Little Falls, MN 30,000 tonnes per yearFeedstock: Corn

Emmetsburg, IA. 40,000 liter demonstration
Partnerships and Financing
GBL was founded in Oxford, England in 2003 and moved to its current
location in Milton Park near Abingdon in 2005. On January 1, 2012, GBL
merged with ButylfuelTM Inc., a Gahanna, Ohio company
founded in 1991.
GBL has raised well over $100 million in equity financing from
investors and venture capital firms including Sofinnova Partners, Swire
Pacific Limited, Capricorn Venture Partners, Oxford Capital Partners,
ConVergInce Holdings, the Carbon Trust and Morningside Group.
Additional venture debt financing was provided by Tennenbaum
Capital Partners (TCP). In 2014, GBL received a $500,000 grant from the
Minnesota Agricultural Department to support the engineering for
repurpose of their advanced fermentation facility in Little Falls, MN.
www.greenbiologics.com.
About: Green Biologics Ltd (GBL) is developing and commercializing
technologies to produce renewable chemicals that reduce GHG emissions,
create rural jobs and deliver a sustainable value chain for a global
green economy.
Product applications: n-Butanol is used in paints and coatings, and
as an intermediate in the production of household, institutional, and
industrial products as well as plasticizers, esters and amines. Acetone
is used extensively as a solvent in paints, coatings, adhesives, inks,
plastics and polymers, personal care and food applications.
Potential market size: The global market for n-butanol was
estimated at 3,802.5 kilotons in 2012. According to Markets to Markets
consultancy, the global n-butanol market is expected to reach $9.4
billion by 2018, with year-over-year growth exceeding 4.4 percent.
Technology: We use microbial engineering and synthetic biology
tools to continually expand our robust library of Clostridium microbial
strains, which are used as biocatalysts as part of our Advanced
Fermentation Process (AFP)TM.

Heliae
Gilbert, AZ
Number of employees: 130
Heliae Is Currently Producing High-Value Products Derived From
Microalgae. Heliae Produces Supplement Grade Astaxanthin And A Number
Of Agricultural Products At Commercial Scale.

Above: Gilbert, AZ Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Gilbert, AZ

1 billion gallon per year

Feedstock: Microalgae and other underdeveloped biological
platforms

Heliae offers technology and facility development services,
contract research and manufacture, and maintains a robust
pipeline of materials and human/animal health products.

In an effort to support the growth of algae as a sustainable
resource, Heliae provides a full range of facility development services
around the world. Such projects may range in scope, scale and
production potential.
Partnerships and Financing
Heliae led a joint venture--named Alvita Corp.--with Japan-based
Sincere Corporation, a waste management and recycling company, in the
development of a commercial algae production facility in Saga City,
Japan. Construction of the facility began in 2015 and Alvita's
astaxanthin product is targeted for market in Japan by the end of 2016.
Heliae continues research partnerships with Schott glass, Evodos
Separation Technology, and a number of universities and companies.
Heliae is privately held.
About: Heliae' is a platform technology company using
sunlight and low-cost carbon feedstocks to produce a wide range of
high-value products from microalgae and similar emerging biological
systems, with a long term vision of producing a sustainable source of
high-quality, low-cost protein, materials, and related products.
Product applications: Human and animal health, agriculture,
aquaculture, materials and technology services.
Potential market size: The current market value of commercially
used carotenoids (such as astaxanthin) is estimated at nearly $1.5
billion (2014) and is projected to reach $1.8 billion in 2019 at a CAGR
of 3.9 percent. The soil treatment market is valued at $24.1 billion
and is estimated to grow at a CAGR of 8.5 percent through 2020. The
biological products in agriculture market was estimated at $3 billion
in 2013 with a 3 year CAGR of 15 percent. Nutritional chemicals for the
animal health market are estimated to reach nearly $4 billion in 2016,
with a CAGR between 3.2 and 4 percent. By 2020, the aquaculture feed
market is expected to reach $381.9 million. The global biomaterials
market is forecast to grow to an estimated $130.57 billion by 2020 at a
CAGR of 16 percent.
Technology: While experts in phototrophic microalgae production,
Heliae's mixotrophic algae production platform sets it apart from the
industry. Mixotrophy is a hybrid of known phototrophic and
heterotrophic models, which decreases capital costs, improves
contamination control and increases productivity and product
optionality.
Itaconix
Stratham, NH
Number of employees: 15
Itaconix Corporation Produces A Growing Line Of Novel Polymers That
Ut[i]lize The Unique Functionality Of Itaconic Acid To Meet Customer
Needs For Safer Chemicals.
Biorefinery Classification: Commercial Plant
Key Facts
Stratham, NH

In 2009, we established a large-scale production facility.

Feedstock: Corn
Partnerships and Financing
In 2009, Itaconix, in partnership with the University of Maine and
UMass Lowell, received a $1.8 million research grant from the U.S.
Department of Energy and U.S. Department of Agriculture through the
Joint Biomass Research and Development Initiative.
In 2014, Itaconix received a Phase II SBIR grant from the National
Science Foundation for the development of biobased latex resins.
In 2015, Itaconix signed a collaboration agreement with a leading
chemical company for the development and worldwide marketing of certain
Itaconix polymers.
About: Itaconix Corporation is a biobased specialty chemicals
company developing highly functional polymers from itaconic acid that
achieve three essential objectives--safety, performance and
sustainability.
Product applications: Itaconix' DSPT for hard water
conditioning in consumer, agricultural, and industrial uses;
Itaconix' VELASOFTTM for skin/hair conditioning
in shampoos and skin products; Itaconix' XDPT for dispersing
minerals; Itaconix' ZINADORTM for odor
neutralization; Itaconix' TSIT for anti-scaling;
Itaconix' CHTT for spotting/filming prevention in automatic
dishwashing; Itaconix' BIOBINDTM for binding in
coatings and adhesives; Itaconix' SAP for adsorption in
diapers and feminine care.
Potential market size: The estimated U.S. market for current
Itaconix products is $16 billion.
Technology: Itaconix's PURITACTM technology platform
covers processes, compositions, and applications for polymers of
itaconic acid. Itaconic acid is produced by fermentation with
Aspergillus terreus using carbohydrates such as corn. The initial
technology was developed by Dr. Yvon Durant, the company's CTO and co-
founder, while at the University of New Hampshire.
Joule Unlimited
Bedford, MA
Joule Unlimited Is Producing Ethanol, Diesel.

Above: Hobbs, NM plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Hobbs, NM

Feedstock: CO2, sunlight
Partnerships and Financing
Joule is privately held and has raised approximately $200 million
in funding to date. The company was founded within Flagship
VentureLabsTM.
About: Joule has pioneered a CO2-to-fuel production
platform, effectively reversing combustion through the use of solar
energy. The company's platform applies engineered catalysts to
continuously convert waste CO2 directly into renewable fuels
such as ethanol or hydrocarbons, for diesel, jet fuel and gasoline.
Product applications: Fuel.
Potential market size: Over $1 trillion.
Technology: Each module of the SolarConverter system contains
Joule's tailored catalysts (a modified cyanobacterium), non-potable
water and micronutrients. Waste CO2 is pumped in from an
industrial emitter or pipeline. The CO2 keeps the catalysts
in motion, maximizing their exposure to sunlight to drive
photosynthesis. Charged from the sunlight, the catalysts consume the
CO2 and continuously produce and secrete the fuel or
chemical molecules into the liquid medium. The medium circulates
through a separator that filters the end product, which is sent to a
central plant for final separation and storage. The process occurs
continuously for numerous weeks before the module is flushed and
reinoculated on a staggered basis.
LanzaTech
Chicago, IL
Number of employees: 140
LanzaTech Is Producing Ethanol, 2,3-Butanediol, 1,3-Butadiene, Acetic
Acid, Isopropanol, And Isobutylene.
Biorefinery Classification: Commercial Plant
Key Facts
LanzaTech Freedom Pines Biorefinery, Soperton, GA

Feedstock: Biomass (including MSW) synthesis gas, industrial
waste gases, biogas

Partnerships and Financing
Led by Mitsui & Co., in 2014, the $112 million Series D round
included new investors New Zealand Superannuation Fund, Siemens Venture
Capital, CICC Growth Capital Fund I, L.P. and Khosla Ventures, Qiming
Venture Partners, K1W1 and the Malaysian Life Sciences Capital Fund.
LanzaTech has global partnerships across multiple sectors and along the
supply chain, from steel, chemicals, aviation and banking.
About: LanzaTech's biological carbon recycling technology opens up
new resources for making low-carbon chemicals and fuels. LanzaTech
presents a `carbon smart' future where you can choose where the carbon
in your products comes from.
Product applications: Styrene-butadiene rubber, plastics, textiles,
resins, polyeurethane, adhesives, solvents, coatings, paints, fuels,
de-icers, cosmetics, pharmaceuticals, personal care, and food.
Potential market size: The global butadiene market is over 12
million megatons per year (MTA). The global acetic acid market is 16
million MTA. The global IPA market is 2 million MTA, with a value of
$2.5-$3.5 billion.
Technology: Using microbes (Clostridium autoethanogenum) that
ferment gases (rather than sugars), carbon-rich waste gases and
residues are transformed into useful liquid commodities.

Manus Bio
Cambridge, MA
Number of employees: 10
Manus Bio's First Chassis Produces Terpenoids.

Above: Cambridge, MA lab.
Biorefinery Classification: Pilot Plant
Key Facts
Feedstock: Glucose and glycerol
Partnerships and Financing
$25 million in non-dilutive funding from early adopting customers,
NSF SBIR Phase I grant ($150,000) in January 2013, NSF STTR Phase I
grant ($225,000) in June 2014, NSF SBIR Phase I grant ($225,000) in
June 2016.
About: Manus Bio recreates plant processes in microorganisms to
produce natural ingredients through fermentation. Manus Bio's microbial
platform has been optimized to convert inexpensive sugar sources into
rare and expensive products, providing a low-cost, sustainable, and
environmentally friendly source for many ingredients used in our daily
lives.
Product applications: Flavors, fragrances, food ingredients,
sweeteners [nutraceuticals], cosmetic actives, biopesticides,
agrochemicals, and pharmaceuticals.
Potential market size: Flavors and fragrances ($2 billion),
sweeteners ($2 billion), biopesticides ($4 billion), nutraceuticals
($1.5 billion), cosmetic actives ($2.2 billion), agrochemicals ($100
billion), and pharmaceuticals ($60 billion).
Technology: Manus Bio merges three core disciplines--metabolic
engineering, protein engineering, and systems biology--in order to
quickly and efficiently generate microbes that produce a variety of
plant-based ingredients. The patented microbial platform has been
optimized for high yield of a common precursor pathway, thus making it
simple to pursue new products. The use of modular, reconfigurable, and
plug-and-play tools and components further shortens the path to
commercialization for new ingredients. In essence, Manus Bio has
created an efficient BioAssemblyLineTM for the low-cost and
sustainable production of an array of high value natural products.

Matrix Genetics
Seattle, WA
Number of employees: 29
Matrix Genetics Is Producing Enhanced Products From Spirulina.
Biorefinery Classification: Pilot Plant
Key Facts
South Lake area near Seattle, WA

Feedstock: Cyanobacteria
Partnerships and Financing
Matrix has announced two partnerships, one with a multinational
energy company for biofuels research and one with Proterro in the area
of enhanced nutrition. Avista Development is the venture arm of Avista
Corp., an energy company involved in the production, transmission and
distribution of energy as well as other energy-related businesses.
About: Matrix Genetics, LLC is a biotechnology company focused on
producing high value products from algae. Our state-of-the-art,
synthetic biology platform is the most cost-efficient method to create
customized organisms with a range of traits to meet the needs of the
fuel, food and feed industries.
Product applications: Pigments, feed enzymes, vaccines, fuels.
Potential market size: Matrix is pursuing multiple markets, from
the $100 million blue pigment market to the billion dollar feed enzyme
market.
Technology: Matrix has developed world-class capabilities in
directing carbon flux in algae to products of interest, including
pigments, proteins, oils, anti-oxidants and specialty chemicals. Matrix
is also the first to develop tools to precisely modify the genome of
Spirulina, one of the few algae grown commercially at large scale.
Spirulina has Generally Recognized as Safe (GRAS) status, allowing
quick access to product opportunities in the food, beverage and
enhanced nutrition categories. This ability to engineer strains to
produce products of interest is the basis of the Company's technology
and differentiates us from our competitors.

MBI
Lansing, MI
Number of employees: 11
MBI International Is Commercializing Afex (Ammonia Fiber Expansion), A
Transformational Biotechnology That Sustainably Expands Our Capacity To
Supply Both Food And Energy While Improving Economic Resilience For
Rural Communities Around The World.

Above: AFEX Pilot Plant, Lansing, MI.
Biorefinery Classification: Pilot Plant
Key Facts
AFEX Pilot Plant

Lansing, MI

Feedstock: Corn stover, wheat straw, rice straw, switchgrass
Partnerships and Financing
MBI and MSU have been collaborating under a strategic framework
through which MBI serves as a technology development and
commercialization partner for promising biobased technologies.
About: Established in 1981, MBI is closely affiliated with Michigan
State University (MSU) and a wholly owned subsidiary of the MSU
Foundation. MBI serves as a biotech hub, a technology development and
commercialization partner for promising biobased technologies.
Technology: MBI is also licensing patented technologies for the
production of biobased fumaric and succinic acid.

Meredian Bioplastics
Bainbridge, GA
Number of employees: 70
Meredian Is Producing NodaxTM Medium-Chainlength
Polyhydroxyalkanoates (MCL-PHA).
Biorefinery Classification: Demonstration Plant
Key Facts
Bainbridge, GA

20,000 liters

Feedstock: Fatty acid feedstocks

In late March, 2014, Tate & Lyle validated the replication
of the proprietary process.
Partnerships and Financing
Working in partnership with sister companies Danimer Scientific and
AgroCrush, Meredian creates bioplastic feedstock from cold pressed
canola oil. U.S. Government loan programs for businesses, such as those
offered by the USDA--Rural Development and the U.S. Department of
Treasury--New Market Tax Credit programs.
About: Meredian Bioplastics, a subsidiary of Meredian Holdings
Group, makes commercial grade PHA using world-class production systems,
offering a scalable, durable, and cost effective material that reduces
manufacturing dependence on non-renewable, diminishing resources.
Product applications: In March, 2014, NODAXTM received
FDA approval for food contact applications. The PHA produced at MHG is
also Vincotte Certified to biodegrade within 12 to 18 weeks in six
different mediums including anaerobic, soil, freshwater, marine,
industrial and home composting.
Potential market size: PHA market consumption will grow from an
estimated 10,000 megatons (MT) in 2013 to 34,000 MT by 2018, with a
CAGR of 27.7 percent from 2013 to 2018.
Technology: Meredian purchased the intellectual property that forms
the basis of its bioplastic technology from Procter & Gamble in 2007,
and has continued to improve the patent portfolio with key
international and North American patents.

Metabolix
Woburn, MA
Number of employees: 70
Metabolix, Inc Is Producing Polyhydroxyalkanoate Polymers (PHAs).

Above: PHA coploymer material.
Biorefinery Classification: Commercial Plant
Key Facts
Contract production

50,000 pounds per month

Feedstock: Industrial sugars
Partnerships and Financing
Metabolix is working with customers across a range of applications
for specialty PHA applications. We are targeting PHA to improve
performance and/or reduce costs in material systems such as PVC and
PLA, and in applications requ[i]ring improved performance, biocontent,
biodegradability and other attributes where PHAs can provide unique
[functional] benefits.
About: Metabolix, Inc. is an innovation-driven specialty materials
company focused on delivering high-performance biopolymer solutions to
customers in the plastics industry.
Product applications: Developmental film grades based on amorphous-
PHA (a-PHA) modified PLA. PHA additives in PVC systems improve
permanence in durable applications. Biobased paper coatings based on
PHA possess excellent barrier properties to water and grease and are
compatible with the re-pulping operations typically used to recycle
paper and corrugated cardboard. Plastic microbeads with PHA biopolymer
materials that are biobased and marine degradable.
Potential market size: According to the Freedonia Group, the total
additives market for PVC is approximately 7 million metric tons per
annum. The property modifier and process aid segment of the current
global PVC market is approximately 3.5 billion pounds and an aggregate
market value of approximately $6 billion annually.
Technology: Metabolix has developed proprietary microbial strains
to produce target PHA co-polymers. We have also developed fermentation
technology and a novel recovery process to recover high purity
specialty PHA biopolymers.

Micromidas
Sacramento, CA
Number of employees: 31
Micromidas Is Producing Furans.

Above: Sacramento, CA Plant.
Biorefinery Classification: Pilot Plant
Key Facts
Sacramento, CA

500 kilograms per day

Feedstock: Waste paper, cardboard, wood chips
Partnerships and Financing
Micromidas has raised $40 million to date.
About: Micromidas is building a chemical platform to produce both
existing and new furanic and aromatic chemicals, polymers and resins
using a wide variety of cellulosic biomass and carbohydrates, including
wood and wood refuse, pulp and paper sludge, corn, corn byproducts,
corn stover, sugarcane bagasse, empty palm fruit bunches and other
glucan sources.
Product applications: Furans are readily derivatized to produce
monomers, plasticizers, or renewable (but chemically identical)
variants of commodity chemicals such as paraxylene.
Potential market size: Globally, 35 million metric tons of
paraxylene are consumed each year, mostly used to make polyester for
fabric. It is a $50 billion global market.
Technology: The Micromidas process is a non-fermentation, non-
gasification, chemical-only process that selectively produces a furan
intermediate from any feedstock containing cellulose or hemicellulose.

Modular Genetics
Woburn, MA
Number of employees: 6
Modular Genetics, Inc Is Producing An Acyl Glutamate Surfactant.

Above: Biorefinery, Bacillus strain, electronic circuit,
flasks (clockwise from top left).
Biorefinery Classification: Pilot Plant
Key Fact
Feedstock: Sugar from corn or woody material
Partnerships and Financing
Modular Genetics has shown that its surfactant can be produced from
sugar derived from rice hulls--a byproduct of rice production. This
technology was funded through the NSF Small Business Innovation
Research Program. Unilever is testing the new surfactants.
About: Modular Genetics, Inc. is a sustainable chemistry company
utilizing advanced technology in synthetic biology to produce specialty
chemicals that are cost competitive, provide superior performance and
are environmentally friendly.
Product applications: Detergents, wetting agents, emulsifiers and
foaming agents.
Potential market size: The global surfactants market is estimated
to register a CAGR of 5.4 percent by volume and 5.8 percent by value
from 2014 to 2019. The global surfactants market is projected to reach
22,802 kilotons by volume and $40,286 million by 2019.
Technology: Modular Genetics, Inc.'s automated gene engineering
system, CombiGenixTM, can synthesize, modify and recombine
genes to create novel recombinant DNA molecules by the thousands. By
linking CombiGenixTM to sophisticated, proprietary protein
design tools and high-throughput screening, Modular has created an
automated platform for the evolution of proteins with enhanced
functions. Modular has engineered Bacillus subtilis strains to convert
cellulosic sugar into a surfactant consisting of a fatty acid linked to
an amino acid.

Myriant Corporation
Quincy, MA
Number of employees: 150
Myriant Corporation Is Producing Succinic Acid (1,4-Butanedioic Acid),
Acrylic Acid, Lactic Acid, Muconic Acid, And Fumaric Acid.

Above: Lake Providence, LA Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Lake Providence, LA

30 million pounds of bio-succinic acid

Feedstock: Sorghum grain and sorghum grits

With our partner ThyssenKrupp Uhde, we successfully scaled
and achieved commercial production of bio-succinic acid at
Uhde's biotech commercial validation facility in Leuna,
Germany.
Partnerships and Financing
Myriant is a subsidiary of PTT Global Chemical Public Company
Limited, Thailand's largest and Asia's eighth largest chemical company.
Our Lake Providence Commercial Facility is partially funded through a
$50 million cost sharing award from the United States Department of
Energy (DOE), and a $25 million Business and Industry (B&I) Loan
Guarantee from the United States Department of Agriculture (USDA).
Myriant has partnered with Johnson Matthey--Davy Technologies (JM Davy)
to demonstrate that our bio-succinic acid can be utilized in JM Davy's
process as a direct replacement for maleic anhydride.
About: Myriant is a global leader innovating and commercializing
biobased chemical intermediates.
Product applications: Plastics, textile fibers, coatings.
Myrifilm' Zero-VOC Coalescing Solvent.
Potential market size: Succinic acid represents a $7.1 billion
market.
Technology: Myriant uses a single-step, anaerobic fermentation
process that enables higher productivity and yield than other bio-
production processes. Our team of scientists and researchers
accomplishes this by developing proprietary biocatalysts--
microorganisms, including E. coli, bacillus, streptomyces,
corynbacterium, and yeast, with altered metabolic pathways--designed to
produce our target bio-chemicals from a variety of feedstocks.
NatureWorks, LLC
Minnetonka, MN
Number of employees: 130
NatureWorks, LLC Is Producing Polylactic Acid (PLA).

Above: Blair, NE Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Blair, NE

300 million pounds (150,000 metric tons) of Ingeo biopolymer

Feedstock: Corn
Partnerships and Financing
NatureWorks is an independent company invested in by Cargill and
PTT Global Chemical, who recently announced a $150 million investment
in NatureWorks.
About: NatureWorks is the first to offer a family of commercially
available biopolymers derived from 100 percent annually renewable
resources with cost and performance that compete with petroleum-based
packaging materials and fibers.
Product applications: Polymer--food service, packaging, textiles,
apparel, durable goods. Ingeo bioplastic
Potential market size: According to a report by Markets and
Markets, by 2020 the Lactic Acid Market will be worth $3.82 billion and
the Polylactic Acid Market will be worth $5.16 billion.
Technology: Microorganisms convert the sugar into lactic acid
through fermentation. A two-step process transforms the lactic acid
molecules into rings of lactide. The lactide ring opens and links
together to form a long chain of polylactide polymer. This is the
process of polymerization.
Neol Bio
Granada, Spain
Number of employees: 35
Neol Bio Is Producing Tailor-Made MicroBIOil, Oleochemicals.

Above: Neol Bio's Pilot Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Aoiz, Navarra, Spain, Center for Second Generation Biofuels
(CB2G) of CENER, the Spanish National Renewable Energy Centre.

Neol Bio has developed the process and the microorganisms to
produce high-value, tailor-made oils in its R&D centers in
Granada, Spain, and validated on a large scale at demonstration
plants.
Partnerships and Financing
Neol Bio is a company listed at the Spanish Alternative Market.
About: Neol Bio develops economically viable bioprocesses, reducing
the use of chemical contaminates and assessing agricultural and
industrial waste, thus using advanced techniques in molecular biology,
bioprocess engineering and industrial microbiology.
Product applications: Very long chain fatty acids (arachidonic,
erucic, gondoic and nervonic) have a wide industrial use in cosmetics,
lubricants and as additives for plastics.
Potential market size: The global market for oleochemicals is
valued at around $30,000 million per year with an estimated annual
growth of six percent.
Technology: MicroBiOilTM is a platform to produce high
added value oils and microbial derived oleochemicals from renewable
sources. MicrobiOilTM facilitates the production of oils
through sustainable processes, using industrial byproducts (such as
crude glycerin) or organic residues (such as wheat straw or sugarcane
bagasse).
All processes and micro-organisms used have been fully developed by
Neol Bio and are protected by world-wide patents.

Newlight Technologies
Costa Mesa, CA
Newlight Technologies Is Using Greenhouse Gas To Produce
AircarbonTM Polyhydroxyalkanoate (PHA) Thermoplastic.

Above: Newlight California Facility.
Biorefinery Classification: Commercial Plant
Key Facts
Feedstock: Air and captured methane-based farm carbon
emissions.
Partnerships and Financing
In June 2016, Newlight signed a 20 year master off-take agreement
with Vinmar International, Ltd.
Under the terms of the off-take agreement, Vinmar will initially
purchase and Newlight will sell 1 billion pounds of AirCarbon PHA,
including 100 percent of AirCarbon PHA from Newlight's planned 50
million pound per year production facility for 20 years. The contract
will also cover 100 percent of the output from a 300 million pound per
year AirCarbon production facility and a 600 million pound per year
AirCarbon production facility for a total of up to 19 billion pounds
over 20 years.
In October 2016, Newlight signed a supply, collaboration, and
production license with IKEA, wherein IKEA will use Newlight's
AirCarbon technology to produce up to 10 billion pounds of AirCarbon
for use in IKEA home furnishings.
About: Newlight is a sustainable materials company dedicated to
using carbon sequestration technology to produce clean, high-
performance materials that reduce cost, maintain or improve
performance, and capture carbon on a market-driven basis.
Product applications: AirCarbonTM can be used in
extrusion, blown film, cast film, thermoforming, fiber spinning, and
injection molding applications, replacing fossil-fuel based
polypropylene, polyethylene, ABS, polystyrene, and TPU.
Technology: First, concentrated greenhouse gas emissions such as
biogas are directed into Newlight's patented conversion reactor. Next,
those carbon emissions are combined with air and Newlight's
biocatalyst, which pulls oxygen out of air and carbon and hydrogen out
of methane. Finally, carbon, oxygen, and hydrogen are re-assembled to
form a long chain thermopolymer.

Novomer
Waltham, MA
Number of employees: 50
Novomer Has Two Technology Platforms And Is Producing Acrylic Acid,
Other C3 And C4 Drop-In Chemicals And Converge'
Polypropylene Carbonate (PPC) Polyols.

Above: Houston, TX Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Houston, TX

2,000 megatons per year

Feedstock: Waste CO2. propylene oxide, waste CO
and ethylene oxide

Novomer has scaled up the production of Converge polyols
using a contract manufacturer in Houston, Texas.
Partnerships and Financing
Novomer has numerous industry partnerships and a broad array of
financial and strategic investors. The company received a 3 year $25
million U.S. Department of Energy Award in 2010. The DOE Advanced
Manufacturing Office awarded the company an additional $5 million
grant. Novomer rec[ei]ved $400,000 from the NSF to make CO2
based polymers and $475,000 from NYSERDA to support development of a
continuous production process for CO2 polyols.
About: Novomer is a leading materials company commercializing a
family of low-cost, high-performance, sustainable polymers and
chemicals.
Product applications: Rigid and flexible foams, coatings,
adhesives, sealants, elastomers, diapers, paints and high-performance
plastics.
Potential market size: Novomer estimates these product markets
represent more than $40 billion per year.
Technology: Novomer is commercializing two platforms, one that uses
waste CO2 as a raw material to produce a family of polyols
for use in polyurethane applications and another that uses waste CO to
produce C3 and C4 drop-in chemicals (acrylic acid). The foundation for
these platforms results from catalyst research completed at Cornell
University. The CO2 technology platform combines waste
CO2 with commodity Epoxides (currently Propylene Oxide (PO))
to form a family of novel polymers that contain up to 50 percent by
weight CO2.

Novozymes, NA
Franklinton, NC
Number of employees: 1,326
At Novozymes It Begins With Enzymes And Microorganisms.

Above: Franklinton, NC Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Milwaukee, WI (Production, Marketing, Sales since 2011)

Franklinton, NC (Production, Administration since 1979)

Houston, TX (Production, Marketing, Sales since 2012)

Davis, CA (R&D since 1992)

Ottawa, Canada (Production, Marketing, Sales since 2013)

Salem, VA (R&D, Production since 2001)

Watertown, SD (Production, Marketing, Sales since 2013)

Saskatoon, Canada (R&D, Marketing, Manufacturing since 2007)

San Francisco, CA (R&D since 2013)

Blair, NE (Production since 2009)
Product Launches 2015
Pulp and paper xylanase
Novozymes Secura'
Protease for automatic dishwashing
Novozymes Liquozyme' LpH
Novozymes Extenda'
Novozymes Avantec' Amp

About: Rethink Tomorrow: Novozymes is the world leader in
biological solutions. Together with customers, partners and the global
community, we improve industrial performance while preserving the
planet's resources and helping build better lives. As the world's
largest provider of enzyme and microbial technologies, our
bioinnovation enables higher agricultural yields, low-temperature
washing, energy-efficient production, renewable fuel and many other
benefits that we rely on today and in the future.
Technology: Enzymes are proteins that act as catalysts. When one
substance needs to be transformed into another, nature uses enzymes to
speed up the process. Our customers use enzymes as catalysts in the
manufacture of a wide variety of products, including ethanol, sugar,
beer and bread, where the enzymes are not part of the end product.
Enzymes are also used directly in products such as laundry detergents,
where they help remove stains and enable low-temperature washing.
Like enzymes, many microorganisms have natural properties that can
be put to use in a variety of processes. In our strategic BioAg
Alliance, Novozymes is working on microorganisms that will give the
world's farmers a new biological toolkit for increasing yields and
protecting crops.

Nucelis, LLC
San Diego, CA
Number of employees: 20
Nucelis LLC Is Producing Squalane, Ergosterol, Vitamin D2.

Above: San Diego, CA Plant.
Biorefinery Classification: Pilot Plant
Key Facts
San Diego, CA

400 liters of fermentation capacity

Feedstock: Sugar
Partnerships and Financing
Cibus Global, Ltd., a cutting-edge technology firm and leader in
the area of gene editing, acquired Nucelis LLC in January 2014.
Nucelis, which had been established as an independent entity in
December 2010, is now an independent operating unit of Cibus.
About: Nucelis, LLC is a leading metabolic engineering company
leveraging its proprietary precision gene editing technology and
integrated fermentation development platform (RTDSTM), to
develop and deliver premium, biobased and sustainable specialty
products for the personal care, food ingredients, and flavor and
fragrance markets.
Product applications: Squalane is a high value, clear oil compound
used in cosmetics, pharmaceuticals, and specialty lubricants.
Ergosterol is a provitamin to vitamin D2. Vitamin
D2 has a variety of applications as a food supplement.
Potential market size: The squalene and squalane market is expected
to grow to $177.06 million at a CAGR of 10.3 percent in terms of value
from 2014 to 2019.
Technology: Nucelis has leveraged the versatility of its Rapid
Trait Development System (RTDSTM) platform for the
production of its lead product, Vitamin D2. Nucelis' Vitamin
D2 represents a non-animal source with unmatched purity and
performance, at price points that make it the obvious source for all
Vitamin D2-based formulations. Nucelis Vitamin D2
is currently for sale, with commercial samples available upon request.
In addition, Nucelis is commercializing a high purity squalane product,
and a unique formulation of squalene and natural oils for use in
personal care products.
One key feature of the RTDS platform is its flexibility in
optimizing any existing fermentation-based production process. Nucelis
can customize a solution for all partners seeking to improve production
efficiencies. For those partners who participate in GM-sensitive
markets, Nucelis can engineer valuable improvements while maintaining
the non-GM status of the production strain. The impact is a clear path
to improved process productivity and increased economic value.
Phycal
Highland Heights, OH
Number of employees: 50
Phycal Is Producing Algal Oil.

Above: Wahiawa and Kalaeloa, HI Plant.
Biorefinery Classification: Pilot Plant
Key Facts
St. Louis, MO research facility

Feedstock: Algae
Partnerships and Financing
The Department of Energy has awarded Phycal more than $27.2 million
in Federal funding for the further exportation of algae based biofuel.
As part of its program to promote beneficial reuse of carbon dioxide,
the Department of Energy awards companies funding to create green
solutions to carbon dioxide problems.
About: Phycal, Inc. is developing an integrated system for
producing renewable biofuels and their co-products from algae. The
biofuels include renewable ``green'' drop-in jet fuel and diesel,
straight vegetable oil, fuel oil blends (e.g., for industrial boilers),
and others. Co-products could include proteins, methane, hydrogen,
animal or human nutritional products, and others.
Product applications: Fuels.
Potential market size: $99 billion in 2014.
Technology: HeteroboostTM is an algae ``feedlot'' that
uses mature algae from the open ponds and increases lipid content by
introducing fixed carbon in a closed system, such as inedible sugar and
glycerol, which dramatically increases algal productivity.

Phytonix
Asheville, NC
Number of employees: <10
Phytonix Corporation Is Producing N-Butanol.

Above: Black Mountain, NC lab.
Biorefinery Classification: Pilot Plant
Key Facts
Black Mountain, NC

Feedstock: Carbon dioxide
Partnerships and Financing
Phytonix has several strategic partnerships, including: Uppsala
University (Sweden) and South Dakota State University.
About: Phytonix Corporation (``Phytonix'' or ``Px'') is an
industrial biotechnology company producing sustainable chemicals
directly from carbon dioxide. Phytonix's objective is to be the global
leader in bio-safe, direct solar chemicals and fuel production
utilizing carbon dioxide as the sole feedstock and energy from the Sun.
Product applications: Industrial chemical market and fuels.
Potential market size: Biobutanol is a valuable industrial chemical
intermediate with a existing $10 billion global market growing at 13
percent CAGR.
Technology: Phytonix has developed engineered cyanobacterial
species that secrete n-butanol in a significantly carbon-negative,
photosynthetic process. Phytonix commercial facilities will be a
modular and scalable system consisting of soft-sided vessels called
phytoconvertersTM, where the cyanobacteria will grow.
POET
Sioux Falls, SD
Number of employees: 1,500
POET Is Producing InvizTM Zein And VoilaTM Corn
Oil.

Above: Project Liberty, Emmetsburg, IA.
Biorefinery Classification: Commercial Plant
Key Facts
POET Footprint: 27 corn ethanol biorefineries, one
cellulosic ethanol biorefinery

Total capacity: 1.7 billion gallons per year

Feedstock: Corn, corn stover

Partnerships and Financing
In partnership with Royal DSM of the Netherlands, POET-DSM Advanced
Biofuels opened a commercial-scale ethanol plant in Emmetsburg, Iowa--
dubbed ``Project LIBERTY''--in September of 2014. Project LIBERTY's
feedstock is corn crop residue--cobs, leaves, husk and some stalk.
About: POET, one of the world's largest ethanol producers, is a
leader in biorefining through its efficient, vertically integrated
approach to production.
Product applications: Films, packaging, adhesives, edible coatings
and glazes, plastics, rubber, asphalt paving additives, and high-energy
additive to feed rations.
Technology: Our patented raw starch hydrolysis process, named BPX,
converts starch to sugar with a proprietary blend of enzymes, while
other ethanol producers use a jet cooker to break down starch with
heat. BPX reduces energy use in the plant by eight to 15 percent and
increases yield by 0.10 to 0.15 gallons per bushel. After years of
development, we brought the process to commercial scale production in
2004 and it is now deployed in all of our biorefineries.
Proterro
Bronxville, NY
Proterro, Inc Is Producing Industrial And Food Grade Sugars, Organic
Acids And Amino Acids.

Above: Orlando, FL Plant.
Biorefinery Classification: Pilot Plant
Key Facts
Orlando, FL

Feedstock: CO2, sunlight, water and nutrients
Partnerships and Financing
Proterro was founded in 2008 and is backed by Battelle Ventures,
Braemar Energy Ventures, Cultivian Sandbox Ventures and Middleland
Capital.
About: Proterro is a biotechnology company that converts waste
CO2 into valuable products under license agreements with our
partners. Our technology utilizes cyanobacteria in a patented, fully
integrated production system to produce cost-competitive products for
partners in the global food, feed, and energy industries.
Product applications: Fermentation to fuels and other chemicals;
food and nutritional ingredients.
Potential market size: $44 billion.
Technology: Proterro's patented two-step technology platform
provides maximum flexibility in creating products that are tailored to
our partners' needs. We modify cyanobacteria to produce molecules
designed to our partner's specifications. Then we efficiently produce
high-yield organisms in a unique solid state bioreactor.
Provivi
Santa Monica, CA
Number of employees: 8
Provivi, Inc Is Producing Olefins.
Biorefinery Classification: Pilot Plant
Key Fact
Santa Monica, CA
Partnerships and Financing
Provivi was founded in 2013 based on biocatalysis technology
developed at the California Institute of Technology (Caltech) which has
since become a licensor, shareholder, and research collaborator.
In September 2014, Provivi signed an enzyme distribution agreement
with Strem Chemicals, Inc., a manufacturer of specialty chemicals for
research and development, granting Strem distribution rights for
research quantities of Provivi's carbene/nitrene transferase enzymes
that will feature in the new C/N Transferase Screening Kit.
About: We are developing biopesticides for agriculture, commercial,
household, and public health pest management.
Product applications: Chiral pesticides.
Potential market size: The global agrochemical market is predicted
to reach $223 billion in 2015.
Technology: Included in our arsenal of biocatalyts are ones that
catalyze the transfer of carbenes, nitrenes, and oxenes to olefins and
carbon-hydrogen bonds, thus installing important functional groups
(e.g., cyclopropanes, amines, alcohols, epoxides, sulfoxides,
sulfoximines, and ethers) that feature in various chiral pesticides.
For example, we have developed the most active catalyst ever reported
for olefin cyclopropanation, a key reaction in the synthesis of a
variety of pesticides. Provivi has an exclusive license from Caltech
for this technology platform.
PureVision Technology
Fort Lupton, CO
PureVision Technology Is Producing Cellulosic Sugar.

Above: Hemp feedstock at Ft. Lupton, CO Plant.
Biorefinery Classification: Pilot Plant
Key Facts
Ft. Lupton, CO

Half-ton per day

Feedstock: Hemp
Partnerships and Financing
PureVision Technology LLC is targeting to raise $10 million in an
A-round equity financing during 2015. Use of proceeds include working
capital to advance and complete three pre-commercialization programs
(corn stover, wheat straw and industrial hemp), intellectual property
development, patent filings, and pre-development costs to support
PureVision's first commercial demonstration biorefinery. A-Round
investors are entitled to a preferred return on their investment.
About: PureVision Technology is a biorefining R&D company
developing and licensing technology packages for the lowest cost
production of sugars, lignin and pulp from diverse non-food biomass to
industries manufacturing biobased products.
Product applications: Fermentation to fuels and other chemicals
Potential market size: TechNavio's analysts forecast the global
cellulosic ethanol market to grow at a CAGR of 53.3 percent over the
period 2013-2018.
Technology: PureVision's latest technology breakthrough rapidly
converts diverse cellulosic biomass into fermentable sugars in less
than 1 hour without the use of enzymes or concentrated acids. The
company's rapid hydrolysis technique has the flexibility of producing
separated or mixed concentrated sugars. Experimental proof-of-concept
of the company's rapid hydrolysis chemistry has been completed
successfully at the Ft. Lupton laboratories.
Renewable Energy Group, Inc. REG Life Sciences, LLC
Ames, IA; South San Francisco, CA
Number of REGI employees: >700
REG Life Sciences LLC Is Developing High-Value Fatty Acid Derivatives.

Above: REG Life Sciences Biorefinery. Okeechobee, FL.
Biorefinery Classification: Demonstration Plant
Key Facts
REG Life Sciences Biorefinery. Okeechobee, FL

Feedstock: Corn sugars, crude glycerin, cane sugars and
biomass hydrolysate
Partnerships And Financing
REG Life Sciences has partnered with ExxonMobil for the development
of cellulosic sugars as a fermentation feedstock for biofuel
production.
About: REG Life Sciences is a wholly-owned subsidiary of Renewable
Energy Group established in 2014 to harness the power of industrial
biotechnology to produce renewable chemicals, fuels and other products.
Product applications: Fragrances, polymers, and surfactants.
Potential market size: The global market for natural fatty acids
reached $18.3 billion in 2014 and is expected to grow at a compound
annual growth rate of 7.1 percent to $25.7 billion for 2014-2019. The
global market for fragrances was worth roughly $11 billion in 2015.
Sales of polymers reached $112 billion in 2015 in the U.S., up three
percent from 2014. The global market for surfactants was $25-$30
billion in 2015, with a volume of around 15 million megatons, expected
to grow at a CAGR of approximately five percent through 2020 to $32-$40
billion.
Technology: Combining the natural efficiency of microbial fatty
acid metabolism with novel engineered biosynthetic pathways, REG Life
Sciences engineers industrial microorganisms to selectively convert
renewable feedstocks to target end-product compounds. These products
range from difficult-to-produce ``drop in'' and value-add replacement
compounds to completely new structures with diverse chemical
functionalities and applications. The flexibility of the platform
technology and ability to design, construct, and evaluate processes
efficiently from lab to commercial scale has enabled a growing pipeline
of renewable chemical products.
Renmatix
King of Prussia, PA
Number of employees: 85
Renmatix Is Producing Cellulosic Sugars, Omno Polymers And Crystalline
Cellulose

Above: Integrated Plantrose Complex (IPC), Kennesaw GA.
Biorefinery Classification: Demonstration Plant
Key Facts
Integrated Plantrose Complex (IPC), Kennesaw, GA

3 dry tons of biomass to sugar per day

Feedstock: Woody biomass, agricultural residues, energy
crops, municipal solid waste, and additional plant material

Renmatix acquired a 56,000\2\ manufacturing facility in
Rome, NY. The new Feedstock Processing Facility (FPF) opened on
April 20, 2015, as the third U.S. location for Renmatix. This
move creates a secure supply for Renmatix and its development
partners at the IPC in Kennesaw, GA, where the second step in
production of Plantro' sugars is performed.
Partnerships and Financing
Renmatix has publicly disclosed joint development agreements with
BASF, UPM, and Total. As announced in 2015, Total will utilize
Renmatix's proprietary Plantrose process with specific feedstocks to
extract sugar for use in production of biobased products of strategic
interest to Total. Existing Renmatix investors, including BASF and
Kleiner Perkins Caufield & Byers, joined Total in the initial tranche
of a Series D fundraise.
About: Renmatix's proprietary Plantrose' Process
pioneers the use of supercritical hydrolysis to break down non-food
biomass quickly, using no significant consumables.
Product applications: Fermentation or catalytic conversion to
biochemicals and biofuels or direct utilization of coproducts as
produced.
Potential market size: TechNavio's analysts forecast the global
cellulosic ethanol market to grow at a CAGR of 53.3 percent over the
period 2013-2018.
Technology: The water-based Plantrose' Process consists
of two core steps. The first is fractionation of biomass and separation
of the remaining solids, which contain cellulose and lignin. The second
is cellulose hydrolysis of the pretreated solids under elevated
conditions utilizing supercritical water, or water at higher
temperatures and pressures, as the primary solvent. The company won the
20th Annual Presidential Green Chemistry award in 2015 for its work in
harnessing water as a new solution to the difficult problem of
economically extracting cellulosic sugar from biomass.

Rennovia
Santa Clara, CA
Number of employees: 50
Rennovia, Inc.'s First Targets Are Glucaric Acid, Adipic Acid, 1,6-
Hexanediol, Hexamethylenediamine (HMD).

Above: Stockton, England Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Stockton, England

Feedstock: Sugars

In July 2015, Johnson Matthey Process Technologies and
Rennovia announced the on time start-up of the first phase of
an integrated mini-plant for production of glucaric acid from
glucose, using jointly developed technology. Construction of
the second phase or production of adipic acid from glucaric
acid is ongoing.

Operation of the mini-plant will provide the engin[ee]ring data
for the design of commercial scale manufacturing plants. The
miniplant is located at the Johnson Matthey Process
Technologies R&D Center in Stockton, England.
Partnerships and Financing
Rennovia strategic partners and investors include Archer Daniels
Midland (ADM)--the No. 1 global corn processor, leading sugar feedstock
supplier and established manufacturer of bio based ADM Evolution
ChemicalsTM--and Johnson Matthey--a $10 billion global
catalyst and process technology and catalyst development partner and
commercial cata[ly]st supplier for the Rennovia glucaric and adipic
acid process.
About: Rennovia Inc. is a specialty chemical company focused on
breakthrough catalysts and processes for the cost-advantaged production
of chemicals from renewable feedstocks.
Product applications: Nylon-6,6, polyurethanes, and specialty
chemicals.
Potential market size: Nylon-6,6 engineering polymers and fibers
markets are approximately 2.5 million metric tons (5.5 billion pounds)
per year, predicted to grow at three to four percent CAGR to 2022.
Global polyurethane markets for adipic acid, HMD, and 1,6-HDO total
approximately 900,000 metric tons (2 billion pounds) per year,
predicted to grow at about four to five percent CAGR to 2020.
Additional addressable markets for glucaric acid are predicted to be
greater than 350,000 metric tons (770 million pounds) per year.
Technology: Rennovia employs its high-throughput catalyst synthesis
and screening technology infrastructure to identify new heterogeneous
catalysts for cost advantaged production of biobased specialty
chemicals:
Rennovia's Glucaric and Adipic Acid Production from Glucose

Rennovia's 1,6-HDO and HMD production from Glucose

Reverdia
Geleen, Netherlands
Number of employees: 40
Reverdia Is Producing Sustainable Succinic Acid.

Above: Cassano Spinola, Italy Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Cassano Spinola, Italy

10,000 tonnes per year

Feedstock: Glucose
Partnerships and Financing
Business Model: Reverdia captures value though product sales and
technology licensing.
Reverdia is a joint venture between Royal DSM, the global Life
Sciences and Materials Sciences company, and Roquette Freres, the
global starch and starch-derivatives company. Reverdia has many
[partnerships] in place, including: (i) distributor partnerships with
Helm and Omnia, (ii) codevelopment partnerships with Proviron and
Covestro, (iii) consortia like BioSuccInnovate. Many other partnerships
exist but have not been published in the public domain.
About: Reverdia is dedicated to be the global leader in the market
for sustainable succinic acid, focusing on market development by
establishing partnerships with direct and indirect customers, building
on customer needs and Reverdia's strengths.
Product applications: Bio-polymers (e.g., Polybutylene succinate,
PBS), polyurethanes, coatings.
Potential market size: The global market for succinic acid is
expected to grow from 0 kilotons in 2015 to 700 kilotons in 2025 and
will be mainly driven by bio-succinic acid for new biobased polymer and
material applications.
Technology: Reverdia uses low pH yeast technology rather than
bacteria to produce biobased succinic acid.
Reverdia's low pH yeast fermentation process has best-in-class
carbon performance as demonstrated by the published cradle-to-gate LCA
by the University of Utrecht.

Rivertop Renewables
Missoula, MT
Number of employees: 33
Rivertop Renewables, Inc Is Producing Sodium Glucarate.

Above: Rivertop's production facility at DTI, Danville, VA.
Biorefinery Classification: Commercial Plant
Key Facts
Rivertop's production facility at DTI, Danville, VA

9 million dry pounds [18 million pounds wet] of sodium
glucarate.

Feedstock: Sugars, sugar and alcohols

Commercial production at DTI: Riose' detergent
builder, a sugar-derived chelant that meets high performance
standards and enables lower total formulation cost for
dishwasher and laundry detergents. WaterlineTM
corrosion inhibitors and descaling agents designed to be high-
performing, low-cost alternatives to phosphates for water
treatment. Headwaters' biodegradable inhibitors that
enable highway departments to reduce the costly corrosive
impacts of de-icing brines to roads, bridges and vehicles.
Partnerships and Financing
About: Merging proven science with renewable resources, Rivertop is
improving the performance, sustainability and cost of end-products with
innovative, new-to-market solutions.
Product applications: Chelants and corrosion inhibitors for
consumer products (like detergents) and industrial uses (water
treatment & road deicing).
Potential market size: $50 billion. $9 billion for detergent
ingredients. $2.8 billion for cooling towers.
Technology: Rivertop's oxidation platform utilizes all of the
carbon atoms from the glucose feedstock and adds oxygen weight,
resulting in more pounds of product than feedstock input. This improved
process enables the mass production of versatile, high-value renewable
chemicals, including sodium salts of glucaric acid. The technology was
first developed at the University of Montana.

Royal DSM
Heerlen, Netherlands
Number of employees: 25,000
Royal DSM Is Mastering Microbes And Enzymes To Create Sustainable
Solutions.
Biorefinery Classification: Demonstration Plant
Key Facts
DSM Biotechnology Center, Delft, Netherlands, and Shanghai,
China

Feedstock: Biomass
Partnerships and Financing
In January 2012, DSM announced the POET-DSM Advanced Biofuels, LLC,
joint venture with U.S.-based POET to commercially demonstrate and
license cellulosic ethanol derived from corn crop residue.
In May 2011, DSM and the French company Roquette Freres formed the
Reverdia joint venture to build a commercial scale plant for the
production of biobased succinic acid, the first non-fossil feedstock
derived chemical building block for a broad range of applications, from
packaging to footwear.
About: Royal DSM is a global science-based company active in
health, nutrition and materials. By connecting its unique
competenc[i]es in life sciences and materials sciences, DSM is driving
economic prosperity, environmental progress and social advances to
create sustainable value for all stakeholders simultaneously.
Product applications: Biofuels, food and nutrition, advanced
materials.
Technology: DSM uses its biological sciences competenc[i]es to
find, make, and apply microbes and enzymes to create more sustainable
processes, ingredients and building blocks for new products. These
competenc[i]es specifically help to engineer and characterize enzymes
and microbial strains in detail up to the molecular level; to assess
their performance under application conditions; and to develop data and
computation-driven model systems for building efficient ``design-build-
test-learn'' engineering cycles.
Sapphire Energy
San Diego, CA
Number of employees: 150
Sapphire Energy Is Producing Algae Nutritional Oils.

Above: Las Cruces, NM Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
100 acre algae farm; modules at strategic global sites

Feedstock: Algae
Partnerships and Financing
Sapphire Energy is supported by a world-class syndicate of
investors, including a recent funding round from a Chinese investor and
previous investments from ARCH Venture Partners; The Wellcome Trust;
Cascade Investment, LLC; Venrock; and Monsanto. Sapphire has
relationships with a variety of academic and industrial partners for
commericalization such as MATRIC (Mid-Atlantic Technology, Research and
Innovation Center) in West Virginia.
About: Sapphire's world-leading technology uses sunlight,
CO2, seawater, non-arable land, nutrients, and novel strains
of algae in outdoor ponds to produce biomass for processing into a
range of consumer products. Sapphire's clean technology is presently
undergoing expansion to a variety of global sites ideally suited for
highproductivity and maximal environmental sustainability.
Product applications: Fuel, feed, food, dietary supplements and
pharmaceuticals.
Potential market size: Varies by market.
Technology: Developed at the University of California, San Diego.

Senomyx
San Diego, CA
Number of employees: 90
Senomyx, Inc Is Producing Complimyx' Brand Of Flavor
Ingredients, Which Include Sweetmyx, Savorymyx', And
Bittermyx' Offerings.

Above: San Diego, CA Plant.
Biorefinery Classification: Commercial Plant
Key Facts
San Diego, CA

Senomyx flavors and flavor boosters are produced in
accredited food manufacturing facilities using the highest
quality ingredients.
Partnerships and Financing
PepsiCo funds research to identify and develop novel sweet taste
ingredients, including both boosters and natural sweeteners. PepsiCo
has exclusive licensed rights in non-alcoholic beverages on a worldwide
basis during the research funding period. Firmenich has collaborated
with Senomyx and continues to provide research funding in the area of
sweet taste for use in food products on a global basis. Ajinomoto, Co.,
Inc. currently markets products in several Asian markets that contain a
Senomyx savory ingredient. Nestle has commercialized a Senomyx flavor
ingredient in Southeast Asia.
About: Senomyx is using proprietary taste science technologies to
discover, develop, and commercialize new flavor ingredients that
havebenefits for consumers and consumer products manufacturers.
Product applications: Flavoring.
Potential market size: The global flavor and fragrance market is
rising with an annual growth rate from five to six percent valued at an
estimated $23.9 billion in 2013.
Technology: With an advanced understanding of human taste bud
science, precise screening platforms and taste testing, Senomyx has
developed a process that mimics the natural function of the taste bud
and enables discovery of new flavors that boost the taste of sweeteners
and other flavors in foods and allow for the reduction of sugar and
high fructose corn syrup.
Sirrus, Inc.
Loveland, OH
Number of employees: 15
Sirrus Is Commercializing 1,1-Disubstituted Alkene Monomers.
Biorefinery Classification: Demonstration Plant
Key Facts
Loveland, OH

5 kilogram per hour

Feedstock: Malonic acid, formaldehyde
Partnerships and Financing
Sirrus has announced agreements with Elmer's Products, Inc. and Sun
Chemical. Additionally, Sirrus has four additional unannounced
partnerships drawing on Sirrus' unique technology to provide benefits
in coating and adhesive application. Sirrus has raised more than $35
million from blue chip investors including Braemar Energy Ventures and
Arsenal Ventures and strategic investors including General Motors
Venture and Mitsui Ventures.
About: Sirrus advances manufacturing technology through chemistry
relating to the synthesis, stabilization, activation and formulation of
a unique and reactive class of monomers commonly known as methylene
malonates.
Product applications: Adhesives, sealants, coatings and resins.
Potential market size: The global demand for reactive intermediates
is valued at greater than $1 billion, with formulated reactive
intermediates valued at >$200 billion.
Technology: Sirrus has developed a novel intermediate chemical
platform based on 1,1-disubstituted alkene monomers that will allow
many current manufacturing processes to be completed faster with less
energy and reduced solvent. Chemilian products have one alkene group
with the potential to have a wide variety of substituent terminal or
functional groups that can be used to make tunable molecular weight
polymers. Forza products contain multiple alkene groups allowing cross-
linking for the development of polymers exhibiting high strength as
well as thermal and chemical resistance.

Solegear
Vancouver, BC, Canada
Number of employees: 12
Solegear Is Producing Proprietary Bioplastic Materials:
Polysole' & Traverse'.

Above: Vancouver, BC Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Vancouver, BC

Feedstock: Sugarcane, non-food grade corn, and/or sugarbeets

Commercialization-focused business model:

Proprietary Formulation--value we can build on.

Collaborative R&D--benefit from the highest expertise.

Outsourced supply chain and tolled manufacturing--
lowers costs, increases flexibility.

Pull-based sales and inventory--customer demand drives
development.
Partnerships and Financing
Solegear works in partnership with major brands, retail customers
and innovative plastic manufacturers. Partnerships include r-pac
international, Columbia Plastics, Ex-Tech Plastics and TEQ.
Since going public in 2015, the Company has raised over $3.5
million in equity and receives ongoing research funding from the
Government of Canada.
About: Solegear is an advanced materials firm that develops,
produces and distributes high-performance bioplastics--plastics made
from plants, not petroleum.
Product applications: Consumer goods and packaging.
Potential market size: $35 billion.
Technology: Green Chemistry--Proprietary biopolymer with maximum
biobased content and no hazardous chemicals.

Succinity GmbH
Dusseldorf, Germany
Succinity GmbH Is Producing Succinic Acid.

Above: Montmelo, Spain Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Montmelo, Spain

10,000 metric tons

Feedstock: Glycerol, glucose, sucrose

The plant is located at the Corbion Purac Montmelo site.
Partnerships and Financing
BASF and Corbion Purac have been conducting research on biobased
succinic acid under a joint development agreement since 2009, before
registering Succinity GmbH in August 2013.
Projected market growth will be driven partially by legislative
initiatives and partially by brand owners reacting to changed consumer
needs with differentiated products that focus on improved ecological
footprints.
About: Succinity is a joint venture between BASF and Corbion Purac
for the production and commercialization of biobased succinic acid with
the name Succinity'.
Product applications: Bio-polymers (e.g., Polybutylene succinate
[PBS]), polyurethanes, coatings.
Potential market size: The global market for succinic acid was
around 40 kilotons in 2015 and is expected to grow with >10 percent
CAGR in the coming years.
Technology: Feedstock is fermented based on the bacterium [B]asfia
succiniciproducens. Basfia has a naturally high yield for the
production of succinic acid and allows the flexible usage of various
feedstocks, such as glycerol and C5/C6 sugars. Using an innovative
closed-loop downstream process, Succinity Gmbh is able to produce high-
quality biobased succinic acid efficiently, without major waste
streams. The result is a highly pure product that is an attractive
alternative to petrochemically derived succinic acid and an attractive
raw material for several applications, such as bioplastics.

Sweetwater Energy
Rochester, NY
Number of employees: 29
Sweetwater Energy Is Producing Cellulosic Sugar.

Above: Rochester, NY Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Rochester, NY

2 megaton feedstock input per day

Feedstock: Mixed hardwoods

The company's first commercial facility will be constructed
in Northern Minnesota and will produce hardwood-derived
cellulosic sugar and clean lignin that will then be fully
processed into final market-ready products: 4.1 million gallons
of industrial alcohol, 550,000 gallons of subfuel grade
alcohol, and over 6,000 metric tons of industrial activated
carbon. Sweetwater's wood-based industrial alcohol and
activated carbon compete directly on price with the incumbent
feedstocks.
Partnerships and Financing
Sweetwater has received a $30 million loan guarantee and incentives
package from the State of Minnesota for our first commercial project
(total project CAPEX of $54 million) and is currently actively in their
Series B to raise an additional $100 million to cover the remaining
capital for the first two commercial facilities.
About: Sweetwater Energy owns ground-breaking, patented technology
that will be economically disruptive for the chemicals, fuels and
advanced materials industries.
Product applications: Biochemicals, biofuels, bioplastics and
advanced packaging and construction materials.
Potential market size: $105 billion.
Technology: Sweetwater's technology efficiently processes low-cost,
sustainable biomass, such as wood and agricultural residues, into two
platform products: highly fermentable cellulosic sugar and clean lignin
fiber. Sweetwater's technology converts 95 percent of available sugar
in biomass feedstocks, including all C5 and C6 sugars. The technology
that we now own significantly outperforms each of the previous systems
that we thoroughly tested in terms of sugar yield, inhibitor profile,
ethanol yield, clean lignin that can actually be processed into
something beyond fuel. Further, our highly scalable hardware has been
reliably proven in heavy industrial duty in multiple industries
worldwide.

Syngulon
Liege, Belgium
Number of employees: 3
Syngulon Is Developing Bacteriocin Technology.
Biorefinery Classification: Pilot Plant
Partnerships and Financing
Syngulon is a start-up, founded in 2013, incubated by Walloon
incubator for engineering sciences (WSL). Syngulon is part of a Horizon
2020 consortium financed by the EU on the industrial applications of
the microalgae.
About: Syngulon is developing original genetic technologies to
improve the efficiency of microorganisms (also called microrefineries)
involved in industrial bioproduction.
Product applications: Green chemical production organisms.
Technology: A pressing concern with microbial systems is that re-
engineered microbes may escape and produce undesirable effects on the
environment. To address this biosafety issue, multiple mechanisms for
constraining microbial replication and horizontal gene transfer have
been proposed, including the use of host-construct dependencies such as
selection using toxin-antitoxin pairs, conditional plasmid replication
or the requirement for a specific metabolite for bacterial function. A
need for efficient genetic firewall design is presented including new
selection genetic circuit using bacteriocins gene platform. Syngulon
proposes an innovative genetic firewall to boost fermentation.

Synthetic Genomics
La Jolla, CA
Number of employees: >200
Synthetic Genomics, Inc Serves Three Distinct End Markets: Research,
Bioproduction, And Applied Products.
Biorefinery Classification: Pilot Plant
Key Facts
SGI's Research offerings, commercialized through its
subsidiary SGI-DNA, are revolutionizing biotechnology with
next-generation genomic solutions, including the world's first
DNA printer.

Bioproduction expertise extends across various production
hosts: phototrophic, heterotrophic, viral, mammalian and fully
synthetic.

Applied Products include vaccines, biologics and
therapeutics, human nutrition, biofuels and biobased chemicals,
crops.
Partnerships and Financing
SGI develops its applied products, typically in strategic
partnerships with leading global organizations, across a variety of
industries. Examples include algae based biofuels (with ExxonMobil),
sustainable crops (with Monsanto), nutritional supplements (with ADM to
commercialize Omega-3 DHA oil from algae), vaccines (with
GlaxoSmithKline and Sequiris), non-GMO food proteins, and
transplantable organs (with United Therapeutics).
About: Synthetic Genomics (SGI) is a leader in the field of
synthetic biology, an emerging science that is at the intersection of
biology and engineering, requiring the integration of evolutionary,
molecular, and systems biology, biophysics, machine learning, and
genetic engineering. SGI utilizes its foundational intellectual
property in this rapidly evolving field in combination with expertise
in core disciplines such as bio-discovery, -informatics, and -
processing, software engineering, analytical chemistry, fermentation,
and advanced cell engineering, to design and build biological systems
to solve global sustainability challenges.
Technology: Synthetic Genomics combines advanced genomics
capabilities, such as Gibson Assembly Method, and proprietary microbial
cell lines obtained through worldwide discovery to develop biobased,
consumer friendly products that are sustainable and economically
advantaged.

TerraVia
South San Francisco, CA
Number of employees: 200
TerraVia Holdings, Inc Is Producing Algae-Based Oils And Ingredients.

Above: Solazyme Bunge Renewable Oils, Sao Pa[u]lo State,
Brazil.
Biorefinery Classification: Commercial Plant
Key Facts
Peoria, Illinois and Sao Pa[u]lo State, Brazil

Feedstock: Dextrose and sucrose

Solazyme Bunge Renewable Oils began commercial production in
Brazil in May 2014. The facility has some of the world's
largest aerobic fermenters and a nameplate capacity of 100,000
metric tons of oil per year.
Partnerships and Financing
TerraVia formed a joint venture with Bunge Limited in 2012 that
established the production facility as well as multiple jointly funded
developed programs. In 2015, they expanded the JV to commercialize
algae-based oils and ingredients globally. TerraVia also has a history
of collaboration with Unilever in order to produce sustainable oils for
personal care products. In 2016, the two companies announced a
multiyear supply agreement for algae-based oils.
About: TerraViaTM is a next-generation food, nutrition
and specialty ingredients company that harnesses the power of algae,
the mother of all plants and [E]arth's original superfood, to deliver
much needed innovation and sustainable solutions to the food industry.
Product applications: Food, aquaculture, animal nutrition and
personal care.
Potential market size: Signed $200 million multi-year deal with
Unilever for algae-based oils in 2016.
Technology: TerraVia's algae-based platform is transforming our
food system by bringing together better nutrition and great taste,
along with economic and environmental sustainability. The company has
spent over a decade unlocking the power of algae to find and develop
vital food, nutrition, and specialty ingredients: healthy oils and
fats, proteins, fibers and micronutrients. The company also
manufactures a range of specialty personal care ingredients for key
strategic partners.
Verdezyne
Carlsbad, CA
Number of employees: 65
Verdezyne, Inc Is Developing Technology To Produce Dodecanedioic Acid
(DDDA), Adipic Acid, Sebacic Acid.

Above: Carlsbad, CA Plant.
Biorefinery Classification: Commercial Plant
Key Facts
Malaysia

30 million pounds per year of diacids

Feedstock: Fatty acids isolated from soy, palm kernel,
coconut and other plant-based oils

Drop in renewable replacements for petrochemicals
Partnerships and Financing
Verdezyne has raised $66 million in equity capital, plus MYR $250
million in project finance to fund construction of a plant in Bio-
XCell's premier biotechnology and ecosystem park in southern Malaysia.
With construction scheduled to commence in 2016, the plant will be
capable of producing approximately 30 million pounds of diacids per
year.
About: Verdezyne is a privately owned industrial biotechnology
company that is leveraging the power of biology to produce chemicals
from renewable, non-food sources.
Product applications: Nylon or other polymers for use in a variety
of applications including: engineering resins, automotive parts,
athletic apparel, carpeting and toothbrush bristles.
Potential market size: DDDA for nylon 6,12, is a $200 million per
year market growing 5.4 percent annually. Sebacic acid for nylon 6,10
is a $400 million per year market growing 5.5 percent annually. Adipic
acid for nylon 6,6 and thermoplastic polyurethanes is a $6 billion
annual market growing 4.6 percent annually.
Technology: Verdezyne has developed a proprietary platform that
uses engineered yeast to metabolize multiple non-food-based renewable
feedstocks and isolate a number of widely-used, high-value chemicals.
The industrially robust production yeast used has two chromosome copies
(diploid), which provides the stability of genetic redundancy compared
with bacterial systems which have one chromosome (haploid).

Virent
Madison, WI
Number of employees: 37
Virent Is Producing Direct Replacement Fuels And Chemicals.

Above: Madison, WI Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Madison, WI

10,000 gallons per year

Feedstock: Beet sugars

Several products have been produced at demonstration scale
and validated with industrial leaders including renewable
gasoline, jet fuel and diesel fuel; bio-paraxylene for
polyester beverage packaging and fibers.
Partnerships and Financing
Partnerships with Cargill, Royal Dutch Shell, Honda, Tesoro, and
Coca-Cola Company. In 2011, Virent received up to $13.4 million from
the Department of Energy to convert corn stover to jet fuel.
About: Using patented catalytic chemistry, Virent converts soluble
biomass-derived sugars into products identical to those made with
petroleum, including gasoline, diesel, jet fuel, and chemicals used for
plastics and fibers.
Product applications: Fuels, aromatic chemicals.
Technology: Virent's BioForming' process provides a true
biorefinery capable of producing multiple products from various
feedstocks using heterogeneous catalysts common to the petroleum and
catalyst industry. Virent's products are drop-in equivalents to their
petroleum counterparts, but with a significantly reduced carbon
footprint. The Virent catalytic process is similar to processes in the
refining and petrochemical industry and is more readily scalable than
other types of biobased technologies. The flexible product slate allows
for optimization in response to shifting market opportunities between
fuels and chemicals production. Virent's process can work with a
variety of feedstocks including ethanol, sugars, and lignocellulosic
materials from wood, corn and bagasse.
xF Technologies
Albuquerque, NM
Number of employees: 16
xF Technologies Is Producing Furoates.

Biorefinery Classification: Pilot Plant
Key Facts
Albuquerque, NM

10,000 gallons/year

Feedstock: Biomass feedstock agnostic (compatible with
cellulosic biomass, sugars and starches). Alcohol feedstock
flexible (process utilizes ethanol, methanol, butanol, diols,
polyols, etc.).
Partnerships and Financing
xF is seeking customers interested in testing and commercially
utilizing its products.
xF is a venture backed company interested in strategic investment
or additional venture capital.
About: xF Technologies Inc. is a renewable products company thathas
developed a proprietary process to convert biomass into
novelpetrochemical replacements.
Product applications: Solvents, anti-microbial inhibition agents,
plasticizers for polymers and bioplastics, fragrance carriers for
personal care, coalescing aids for coatings; gasoline and diesel
oxygenates.
Potential market size: The global solvents market has been
estimated to be worth $35 billion according to a 2014 report by Markets
and Markets.
Technology: xF Technologies has created a chemical platform that
combines a biomass derived intermediary with an alcohol or a diol to
create a broad range of high value renewable chemicals. It is a two-
step, low cost thermochemical process that first generates a sugar
derivative called CMF (5-chloromethyl furfural) followed by a catalytic
step to convert the CMF into a finished product. In the first step,
hydrochloric acid (HCl) is used to break down the feedstock into C6
sugars that are subsequently converted into CMF. This reaction occurs
via a non-catalytic proprietary process that operates at about 100 C
and 7 atm of pressure.

ZeaChem
Lakewood, CO
Number of employees: 26
ZeaChem Is Producing Acetic Acid, Ethyl Acetate, Ethanol.

Above: Boardman, OR Plant.
Biorefinery Classification: Demonstration Plant
Key Facts
Boardman, OR

1,500 megatons per year (MTPY) of acids from 5,000 dry MTPY
of ligno cellulosic woody biomass or 20,000 MTPY acids from
132,000 MTPY of sugarbeets

Feedstock: Feedstock flexible. Lignocellulosic feedstocks
demonstrated to date include hardwoods, softwoods, wheat straw,
corn stover, sugarcane bagasse, rye grass, banagrass, and
sugarbeet pulp. Advanced feedstocks demonstrated to date
include sugarbeet and corn syrup.

ZeaChem's commercialization plan includes an expansion of
the existing assets to enable commercial volume production at
the same location.
Partnerships and Financing
Privately funded. Investors include Firelake Capital Management,
PrairieGold Ventures, Sustainable Conversion Ventures, and Leaf
Resources Limited. ZeaChem currently operates its demonstration
biorefinery as a technology institute. Third parties who come and work
at the demo plant are able to accelerate scale up of their technology
at a fraction of the cost to building a new plant.
About: ZeaChem Inc. develops biorefineries capable of producing
advanced chemicals and fuels, using its own proprietary technology as
well as that of its partners.
Product applications: ZeaChem's two and three carbon based products
are the chemical building blocks in many applications including paints,
solvents, PET, pharmaceuticals, food preservatives, and absorbents.
Potential market size: $1 trillion.
Technology: ZeaChem's C2 Platform uses a combination of
fermentation and conventional chemical synthesis pathways to produce
acetic acid, acetate esters, and ethanol. Its C3 Platform changes the
microorganism used for fermentation, resulting in a slate of analogous
three-carbon products such as propionic acid, propionate esters,
propanol, propylene, and propylene derivatives.

Appendix A. Renewable Chemical Companies
------------------------------------------------------------------------
Company Product
------------------------------------------------------------------------
AB Enzymes GmbH Enzymes
ADM Citric Acid; Ethanol; 2,5-
Furandicarboxylic Acid (FDCA);
Glycerin; Lecithin; Polyols;
Propylene Glycol (1,2-propanediol);
Sorbitol; Soy Methyl Ester;
Starches; Sugars; Vegetable Oils
(Canola, Cottonseed, Linseed,
Soybean); Xanthan; Waxes
Advanced Biocatalytics Corporation Surfactants
Agrivida, Inc. Enzymes
Ajinomoto Amino Acids; Isoprene
Akzo Nobel Acetic Acid; Acetone; n-Butanol;
Epichlorohydrin; Fatty Acids
American Process Cellulosic Sugar; Nanocellulose
Amyris, Inc. Farnesene; Isoprene
Anellotech, Inc. Benzene; Toluene; Xylene
Arbiom Glucose; Lignin; Xylose
Arkema Fatty Acids and Esters; Polyamides;
Polyphthtalamide (PPA)
Arzeda 1,3-Butadiene; Enzymes; Levulinic
Acid
Ava Biochem 2,5-Furandicarboxylic Acid (FDCA); 5-
Hyroxymethylfurfural (5-HMF)
Avantium Alkoxymethyl-Furfural;
Furandicarboxylic Acid (FDCA);
Methyl Levulinate; Mono-Ethylene-
Glycol (MEG)
Barentzymes Enzymes
BASF Enzymes LLC 1,4-Butanediol (1,4-BDO); Enzymes;
Polytetrahydrofuran (PolyTHF)
Bioamber Adipic Acid; 1,4-Butanediol (1,4-
BDO); Succinic Acid
Biobased Technologies Polyols
Biobtx Terephthalic Acid
BIO-CAT/BIO-CAT Microbial Enzymes
Biocatalysts Enzymes
BIO-ON Polyhydroxyalkonate (PHA)
Bioresource International, Inc. Enzymes
Biosynthetic Technologies Biosynthetic Oils
Blue Marble Biomaterials Acetic Acid; Acrylic Acid; Butyric
Acid; Caproic Acid; Butyl Butyrate;
Dimethyl Sulfide; Ethyl Butyrate;
Ethyl Thioacetate; Ethyl
Thiobutyrate; Ethyl Thiopropionate;
Lactic Acid; 3-Mercapto-Butanone; 3-
Mercapto-Pentanone; 5-Methyl
Furfuryl Mercaptan; Methyl
Thioacetate; Methyl Thiobutyrate;
Propionic Acid; S-Propyl Acetate;
Propyl Butyrate; Propyl Hexanoate;
Propyl Propionate; Propyl
Thioacetate; Thiobutyric Acid;
Thiopropionic Acid; Thioacetic Acid
Borregaard Ethanol; Cellulosic Sugars; Lignin
Braskem Butadiene; Ethanol; Ethylene;
Isoprene; Propylene; Polyethylene;
Polypropylene
Calysta Lactic Acid; Methane
Cargill Citric Acid; Ethanol; Glucaric Acid;
Glycerin; 3-Hydroxypropionic Acid;
Isoprene; Lactic Acid; Itaconic
Acid; Lecithins; Maltodextrins;
Palm Oils; Polyols; Sorbitol;
Sugars; Starches; Triglycerides;
Xanthan Gum
Cathay Industrial Biotechnology DC11 (Undecanedioic Acid); DC12
(Dodecanedioic Acid); DC13
(Brassylic Acid); DC14
(Tetradecanedioic Acid); DC15
(Pentadecanedioic Acid); DC16
(Hexadecanedioic Acid); 1,5-
Pentamethylene Diamine
Celanese Cellulose Diacetate
C-Lecta Enzymes
Cellana LLC Biodiesel; Omega-3-Oils
Cellucomp Cellulose Nano-Fibers
Codexis Enzymes
Cool Planet Energy Systems Biocarbon; Hydrocarbon
Corbion 2,5-Furandicarboxylic Acid (FDCA);
Lactic Acid; Polylactic Acid (PLA);
Succinic Acid
Covestro Pentmethylene Diisocyanate;
Waterborne Polyurethanes
Croda Ethylene Oxide; Non-ionic
Surfactants
Deinove Carotenoids; Muconic Acid
DuPont Enzymes; 2,5-Furandicarboxlic Acid
(FDCA); Isoprene; Polyesters
DuPont Tate & Lyle Bioproducts 1,3 Propanediol
Earth Energy Renewables Fatty Acids (C2-C8)
Eastman Chemical Company Cellulose Acetate; Cellulose Acetate
Butyrate; Cellulose Acetate
Propionate; n-Butanol
Ecosynthetix Starch Vinyl Emulsions; Starch-Vinyl
Polymers
Edeniq Cellulosic Sugars
Elevance Renewable Sciences, Inc. Ethylene; C10+ Hydrocarbons from
Olefin Metathesis; Esters from
Olefin Metathesis
Emery Oleochemicals Aliphatic Esters; Polyols
Enerkem Ethanol; Methanol
Epygen Enzymes
Evolva Nootkatone; Resveratrol; Saffron;
Stevia; Vanillin
Evonik Amino Acids; Enzymes
Forelight Astaxanthin; Omega-3s; Phycocyanin
Genomatica, Inc. Adipic Acid; Butadiene; 1,4-
Butanediol (BDO); Caprolactam;
Hexamethylenediamine
Gevo iso-Butanol; Butene; Ethanol;
Isooctane; p-Xylene
GFBiochemicals Levulinic Acid
Global Bioenergies Butadiene; Isobutene; Propylene
Glycosbio Isoprene; Lactic Acid; Omega 3 Fatty
Acid; Triglycerides
Grain Processing Corporation Corn Syrup; Maltodextrins; Starches
Green Biologics Acetone; n-Butanol
Green Life CAN, LLC Polyalphaolefins; Polyolesters
Greenlight Biosciences Fatty Acids; Pyrimidines; Ribose
Heliae Astaxanthin; Proteins
Ingredion Corn Oil and Proteins; Dextrose;
Maltodextrins; Polyols; Starches
Intrexon 1,4-Butanediol; iso-Butanol;
Farnesene; Isoprene
Invista Adipic Acid; Adiponitrile (ADN); 1,3-
Butadiene; 2,3-Butanediol (BDO);
Polyamide (Nylon 6,6)
Itaconix Corporation Itaconic Acid; Polymers of Itaconic
Acid
Joule Unlimited Diesel; Ethanol
Kiverdi Citrus Oil; Omega-7 Oils; Sugars
Kraton Performance Polymers Fatty Acids; Pine Oils; Pine Pitch;
(Arizona Chemical) Rosin Acids; Sulphate Turpentine;
Tall Oil
LanzaTech Acetic Acid; 1,3-Butadiene; iso-
Butylene; 2,3-Butanediol, Ethanol;
iso-Propanol
Leaf Resources LTD Cellulosic Sugars
Logos Technologies Rhamnolipids
Lygos Malonic Acid
Mango Materials Polyhydroxyalkonate (PHA)
Manus Biosynthesis Terpenoids
Matrix Genetics Spirulina Derived Products
MBI International Fumaric Acid; Succinic Acid
Mercurius Biorefining Ethyl Formate; Ethyl Levulinate;
Formic Acid; Furfural
Meredian Bioplastics Medium Chain Length
Polyhydroxyalkanoates (MCL-PHA)
Metabolic Explorer Glycolic Acid; L-Methionine; 1,2
Propanediol; 1,3 Propanediol
Metabolix, Inc. Acrylic Acid; Gamma-Butyrolactone;
Butanediol; Polyhydroxyalkanoates
(PHAS)
Micromidas Aromatics; Furanics
Modern Meadows, Inc. Collagen
Modular Genetics, Inc. Acyl Glutamate Surfactant
Myriant Corporation Acrylic Acid; Fumaric Acid; Lactic
Acid; Muconic Acid; Succinc Acid
NatureWorks, LLC Polylactic Acid (PLA)
Neol Biosolutions SA Arachidonic Acid; Erucic Acid;
Gondoic Acid, Nervonic Acid
Neste Isoalkanes; Propane; Vegetable Oils
Newlight Technologies Polyhydroxyalkanoates (PHA)
Novomer Acrylic Acid; Butanediol;
Polypropylene Carbonate Polyols;
Succinic Acid
Novozymes Enzymes
Nucelis LLC Squalane; Ergosterol; Vitamin D
Oakbio Inc. n-Butanol; Polyhydroxyalkanoate
(PHA)
Photanol Erythritol
Phycal Algae Oils; Biodiesel
Phytonix Corporation n-Butanol
Plaxica Lactic acid
Poet Cellulosic Ethanol; Corn Oil
Byproducts; Sugar
Praj Matrix Lignin; Pentose and Hexose Sugars
Proterro, Inc. Amino Acids; Sugars
Provivi, Inc. Olefin Chiral Pesticides
PTT Global Chemical (PTTGC) Butanediol; Lactic Acid; Polylactic
Acid; Succinic Acid,
PureVision Technology Cellulosic Sugar
Renewable Energy Group, REG Life Fatty Acids
Sciences LLC
Renmatix Cellulosic Sugars
Rennovia Adipic Acid; Glucaric Acid; 1,6-
Hexanediol; Hexamethylenediamine
Reverdia Succinic Acid
Rivertop Renewables, Inc. Sodium Glucarate
RHO Renewables, Inc. Trans-Cinnamic Acid;
Methylcyclohexane; 3-Methylanisole;
Styrene; Toluene; p-Xylene
Roquette Gluconic Acid; Isosorbide;
Isosorbide Polymers; Sodium
Gluconate; Starch; Succinic Acid;
Proteins
Royal DSM Alkyd Resins; Cellulosic Ethanol;
Carotenoids; Enzymes; Polyamides;
Polyester Elastomer (Castor Oil
Based); Succinic Acid
Sabic Polyethylene (PE); Polypropylene
(PP)
Sapphire Energy Algae Nutritional Oils
Senomyx, Inc. Artificial Flavors
Sirrus 1,1-Disubstituted Alkene Monomers
Solegear Polylactic Acid (PLA)
Solix Algredients Astaxanthin
Solvay Acetone; n-Butanol; Cellulose
Acetate; Epichlorohydrin; Glycerin;
Guar Gum; Surfactants; Vanillin
Stora Enso Lignin; Sugars
Succinity GmbH Succinic Acid
Sweetwater Energy Cellulosic Sugars
Sylvatex Micro-emulsion Additive for Inverse
Micelles
Synthezyme Enzymes; (omega) Hydroxy Fatty
Acids; Polyesters; Surfactants
Swissaustral Biotech SA Enzymes; Microbial Biobank
Tate & Lyle Corn Syrup, Starch, and Oil; Citric
Acid and Other Acids; Distiller
Grain; Ethanol, Gluten; Waxy Corn
The Coca-Cola Polyethylene Terephthalate (PET)
The Dow Chemical Company Ethanol; Plasticizers; Polyols
Terravia Algae Oils for Specialty
Applications
United Catalyst, LLC Sugars from Cellulose Hydrolyzing
Imprinted Polymers (CHIPs)
Verdezyne, Inc. Adipic Acid; Dodecanedioic Acid
(DDDA); Sebacic Acid
Virent Aromatic Mixtures; Benzene; p-Xylene
White Dog Labs Acetone; iso-Butanol; n-Butanol;
Butyrate; iso-Propanol
xF Technologies 5-Chloromethyl Furfural; Furoate
Esters
Zeachem Acetic Acid; Ethanol; Ethyl Acetate;
Ethylene Glycol
Zuchem Mannitol; Monosaccharides;
Oligosaccharides for Pharmaceutical
and Nutritional; Xylitol
------------------------------------------------------------------------

Appendix B. Strain Development Technology Companies
------------------------------------------------------------------------
Company Product
------------------------------------------------------------------------
Aequor Inc. Engineered Marine Microbe for
Antifouling and Antibiofilm
Caribou Bioscience Precision Cell Engineering
Chain Biotechnology LTD Develops Microbial Hosts (chassis)
for Engineering Anaerobic Bacteria
DNA2.0 Gene Synthesis--Tools Provider
Enevolv, Inc. Engineers Microbes: Bacteria, Yeast,
Algae
GEN9 Gene Synthesis
Ginkgo Bioworks Engineers Microorganisms
Greenlight Biosciences Cell-Free Bioprocessing Technology
Molecular Assemblies DNA Synthesis
Muse Biotechnologies Inc. Strain Engineering
Oligos Biotech Engineering Fungus
Pareto Biotechnologies Polyketide Pathways
Syngulon Bacteriocin Engineering
Synpromics Synthetic Promoters for Gene
Expression
Synthetic Genomics Advanced Genomics--Microbial Cell
Lines; DHA Omega-3; Astaxanthin
Teselagen Combinatorial Gene Design and
Editing
Twist Bioscience Gene Synthesis on Silicon
Zymergen Strain Improvement
------------------------------------------------------------------------

BIO Industrial & Environmental Section Member Companies

Aequor, Inc., Epygen Labs FZ LLC, Poet, LLC, Sioux
Oceanside, CA Dubai, United Arab Falls, SD
Agrivida, Inc., Emirates POET-DSM Advanced
Medford, MA Genencor A Danisco Biofuels LLC, Elgin,
Amyris, Inc., Division, Palo Alto, IL
Emeryville, CA CA Praj Matrix--The
Anellotech, Inc., Pearl Evolva, Allschwil, Innovation Center,
River, NY Switzerland Pune, Maharashtra,
Arzeda, Seattle, WA India
BASF Corp., Florham Genomatica, Inc., San Primordial Genetics
Park, NJ Diego, CA Inc., San Diego, CA
Bayer Corporation, GranBio, Sao Paulo, ProteoNic BV, Leiden,
Tarrytown, NY Brazil Netherlands
Biobased Technologies, Green Biologics, Proterro, Inc., Ewing,
LLC, Rogers, AR Gahanna, OH NJ
BioFiber Solutions Green Life Can LLC, Las Renmatix, King Of
International, Inc., Vegas, NV Prussia, PA
Seal Beach, CA Heliae, Gilbert, AZ Rennovia, Inc., Santa
Clara, CA
Biosynthetic Intrexon Corp., Reverdia, Geleen,
Technologies, Irvine, Germantown, MD Netherlands
CA
Calysta, Menlo Park, CA Itaconix Corp., RHO Renewables, Inc.,
Stratham, NH Oakland, CA
Cellana LLC, Kailua LanzaTech, Skokie, IL Sapphire Energy, Inc.,
Kona, HI San Diego, CA
ChemDiv, Inc., San Matrix Genetics, Succinity Gmbh,
Diego, CA Seattle, WA Dusseldorf, Germany
Corbion, Amsterdam, MBI International, Syngulon, Gosselies,
Netherlands Lansing, MI Belgium
DEINOVE, Grabels, Metabolix, Inc., Synthetic Genomics,
France Cambridge, MA Inc., La Jolla, CA
DNA2.0, Newark, CA Modular Genetics, Inc., TerraVia, South San
Woburn, MA Francisco, CA
DSM, NV, Heerlen, Monsanto Co., Saint The Coca-Cola Co.,
Netherlands Louis, MO Atlanta, GA
DuPont Corp., Muse Biotechnologies, The Dow Chemical Co.,
Wilmington, DE Inc., Boulder, CO Midland, MI
Earth Energy NatureWorks, LLC, Verdezyne, Inc.,
Renewables, LLC, Minnetonka, MN Carlsbad, CA
Bryan, TX
Elevance Renewable NexSteppe, South San xF Technologies,
Sciences, Inc., Francisco, CA Albuquerque, NM
Woodridge, IL Novozymes, Bagsvaerd, ZeaChem, Inc.,
Denmark Lakewood, CO
Enevolv, Inc., Nucelis LLC, San Diego, Phytonix Corp., Black
Cambridge, MA CA Mountain, NC

BIO Industrial & Environmental Section Governing Board

Alan Shaw, Ph.D., I&E Neil Goldsmith, Chief Stephan B. Tanda,
Section Chair, Executive Officer, Managing Board, Royal
President & Chief Evolva DSM
Executive Officer,
Calysta
Tjerk de Ruiter--I&E Jennifer Holmgren, Jamie Levine, Chief
Section, Vice Chair, Ph.D., Chief Executive Executive Officer,
Chief Executive Officer, Lanzatech Sapphire Energy, Inc.
Officer, Corbion
John Melo, President & Joseph Shaulson, Roger Wyse, Ph.D.,
Chief Executive President & Chief (non-voting) Founder,
Officer, Amyris, Inc. Executive Officer, Spruce Capital
Metabolix, Inc. Partners
Markus Pompejus, Ph.D., Adam Monroe, President, Jonathan S. Wolfson,
VP White Novozymes, Americas Chief Executive
Biotechnology, Regions, Novozymes Officer, TerraVia
Research North America
BASF Corporation
Mark Jones, Ph.D., Anna Rath, President & Miki Knutzen, Global
Executive External Chief Executive Program Director,
Strategy & Officer, Nexsteppe, PlantBottle, The Coca
Communications Inc. Cola Company
Director, Dow Chemical
Company
Eli Ben Shoshan, Doug Berven, Vice
Director--Strategy, President, Corporate
Business Development, Affairs, Poet, LLC
Mergers &
Acquisitions, DuPont
Industrial Biosciences

appendix b
The Biobased Economy: Measuring Growth and Impacts
March 2017

Industrial biotechnology empowers the biobased economy,
enhances a broad variety of industries and creates potential
for new products.

The biobased economy is poised for accelerated growth, with
an abundance of cost-competitive feedstocks, commercial success
of pioneer products, and ongoing investment in innovative
research.

The United States could capture a fair share of projected
worldwide growth of the biobased economy with effective state
and Federal policy support.

By utilizing the power of industrial biotechnology companies around
the globe are creating a robust biobased economy. In the biobased
economy, companies use microbial systems, fermentation and other clean
tech methods to manufacture sustainable products from agricultural
biomass, municipal waste and other low-carbon feedstocks. Biobased
production encompasses a value chain from agriculture through the
manufacture of consumer goods that provides an alternative to
petroleum's value chain and brings environmental, economic and other
benefits. The biobased economy can generate new markets for
agricultural producers, boost innovation in domestic manufacturing, and
stimulate sustainable economic growth. The biobased economy and
industrial biotechnology are poised for accelerated growth in the 21st
century; Federal and state policies can unleash this growth by
identifying and supporting all segments of the value chain.
Industrial biotechnology--which is at the center of the biobased
economy, as shown in Figure 1 below--generates economic opportunity,
investment and employment in:

agriculture, especially through the development of new crops
and new uses for crop residues and waste;

biorefining of food and feed ingredients for the grocery
manufacturing industry;

biofuel production;

renewable chemical and biobased polymer production, which
impacts cosmetics, textiles, personal care and other consumer
product sectors;

bioprocesses used in pharmaceutical and other manufacturing;

nutritional ingredients as well as flavors and fragrances;
and

enzymes, which are used in household cleaners, laundry
detergents, and food processing.
Figure 1: The Biobased Economy

Industrial biotechnology is sometimes viewed as a subset of the
petrochemical industry, since industrial biotech processes are more
sustainable and can be paired with or replace traditional chemical
processes in the production of a final product. But industrial
biotechnology impacts many different industries and creates potential
for new products and materials that are not possible or cost-efficient
with traditional chemistry.
An increasing number of studies and market analyses measure the
economic impact of the industrial biotechnology sector and the biobased
economy. Rob Carlson of Biodesic, Inc., estimates that the industrial
biotechnology sector generated more than $105 billion in direct revenue
in 2012.\1\ Carlson draws his estimate from a review of the total
revenue for the biofuels, renewable chemicals, enzymes and biobased
polymers industries, controlling for the costs of the non-biotech
sectors. He also notes that the overall economic impact from this
direct revenue is likely to be ten to 15 percent larger.
---------------------------------------------------------------------------
\1\Carlson, R. Estimating the biotech sector's contribution to the
U.S. economy. Nature Biotechnology, 34, 247-255, (2016). doi:10.1038/
nbt.3491.
---------------------------------------------------------------------------
USDA's BioPreferred' Program commissioned a report to
Congress and a follow up study of the economic impact associated with
the roughly 20,000 biobased products recognized by the program. The
analyses include agriculture and forest products that are not directly
impacted by industrial biotechnology, but exclude biofuels, food
ingredients and bioprocess applications that are not part of the
program. The resulting studies found that between 2013 and 2014, the
industry's direct revenue grew from $125.75 billion to $127 billion.
The total economic impact of U.S. biobased production grew from $369
billion to $393 billion.\2\ Because biofuels and food ingredients are
excluded, the economic impact of the entire industrial biotechnology
sector is significantly larger.
---------------------------------------------------------------------------
\2\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell, T.E.
An Economic Impact Analysis of the U.S. Biobased Products Industry.
Washington, D.C.: USDA BioPreferred Program, 2016.
---------------------------------------------------------------------------
Figure 2 below maps a selection of projections and estimates of the
economic impact of industrial biotechnology from industry analysts and
market watchers. While each study may include or exclude different
parts of the biobased economy, all analysts agree that the overall
global industry and the various subsectors--biofuels, renewable
chemicals, enzymes and biobased polymers--are poised for accelerated
growth during the first \1/2\ of the 21st century.
Figure 2: Biobased Economy and Sector Projections

Worldwide production of biobased products--including biofuels,
renewable chemicals, and biobased polymers--is projected to grow from
approximately $203.3 billion in 2015 to $400 billion by 2020 and $487
billion by 2024.\3\ The United States is well-positioned to capture a
large share of that projected growth, due to investments made today in
first-of-a-kind production capacity, innovative research and
development, as well as employment and training of U.S. workers.
---------------------------------------------------------------------------
\3\Grand View Research. ``White Biotechnology Market Analysis By
Product (Biofuels, Biomaterials, Biochemicals, Industrial Enzymes), By
Application (Bioenergy, Food & Feed Additives, Pharmaceutical
ingredients, Personal Care & Household Products) And Segment Forecasts
To 2024.'' San Francisco: October, 2016. McKinsey & Co. ``Bio-based
chemicals are gradually gaining their share of the global chemicals
market.'' Boston: Feb. 2016.
---------------------------------------------------------------------------
Similar to assessments of the chemical industry, projections of
future growth in industrial biotechnology and biobased manufacturing
are built on the abundance and favorable costs of renewable feedstocks,
the successful commercialization of pioneer products, and new
investments in production capacity. In contrast to traditional
industries, though, expectations for industrial biotechnology's future
potential are heightened by the exponential growth in discovery of
biological processes. The intensifying pace of research and development
in biotechnology, new developments in synthetic biology and gene
editing, and recent experience in engineering commercial scale
industrial biotech processes augment projections for accelerated
economic growth in the field.

Between 2010 and 2015, investors pumped nearly $9.2 billion
into the industrial biotechnology sector.

Between 2010 and 2015, investors pumped nearly $9.2 billion into
the industrial biotechnology sector, primarily in renewable chemicals
and biobased polymers. The funding came from a variety of sources,
including private equity and some public investment. But the majority
of the investment and financing--$5.3 billion (57 percent)--came from
venture capital.\4\ Venture capital investments primarily target
research and development of new technologies, and synthetic biology
startups have garnered the largest share in recent years.
---------------------------------------------------------------------------
\4\Oh, V. ``Show Me the Money: Where is Venture Capital Placing
Bets in Bio-based?'' Boston: Lux Research, Dec. 5, 2016.
---------------------------------------------------------------------------
Another significant source of investment came from partnerships and
private equity investments to launch new commercial-scale industrial
biotech processes. BioAmber is operating a commercial scale facility in
Sarnia, Ontario, Canada to produce biobased succinic acid, which is a
building block for polyesters used in fabrics. Myriant is operating a
similar facility in Louisiana. Green Biologics has started production
in Minnesota of n-butanol, which is a solvent used in many consumer
product. Novamont is producing biodegradable plastics at scale in
Italy. New partnerships include Genomatica's with BASF to produce
butanediol, which can be used in polyesters and cosmetics; Avantium's
with Coca-Cola to produce polyethylene furoanate for plastic drink
bottles; and Novvi's with Chevron to produce biobased lubricants for
automotive applications.\5\ The commercial success of pioneer renewable
chemical producers encouraged these additional equity investments.
---------------------------------------------------------------------------
\5\Molchanov, P. ``Clean Tech Primer 2017.'' St. Petersburg, FL:
Raymond James & Assc. January 2017.
---------------------------------------------------------------------------
Continued growth of the biobased economy will benefit rural America
by creating new markets for biomass. The U.S. farm sector continues to
increase crop productivity--achieving higher yields with relatively
fewer inputs--even as crop prices decline. The U.S. Department of
Energy has conducted regular analyses of agricultural, forestry, waste,
and algal biomass, determining that there is a cost-competitive supply
sufficient to displace 30 percent of U.S. petroleum consumption.\6\ The
abundance of price advantaged feedstocks makes the biobased product
sector an attractive investment opportunity. It can also help to
support farm sector earnings, which have been falling with lower
commodity prices.\7\
---------------------------------------------------------------------------
\6\U.S. Department of Energy. 2016. 2016 Billion-Ton Report:
Advancing Domestic Resources for a Thriving Bioeconomy, Volume 1:
Economic Availability of Feedstocks. M.H. Langholtz, B.J. Stokes, and
L.M. Eaton (Leads), ORNL/TM-2016/160. Oak Ridge National Laboratory,
Oak Ridge, TN. 448p. doi: 10.2172/1271651.
\7\USDA Economic Research Service. 2017 Farm Sector Income
Forecast. Feb. 9, 2017. https://www.ers.usda.gov/topics/farm-economy/
farm-sector-income-finances/farm-sector-income-forecast/.
---------------------------------------------------------------------------
Figure 3: Job Multipliers for Various Sectors of Industrial
Biotechnology

In addition to added value for farm production, the biobased
economy can generate spillover employment opportunities in engineering,
construction and transportation. According to the USDA
BioPreferred' Program report mentioned above, there are 1.53
million U.S. workers directly employed in the biobased product industry
as of 2014. The industry also creates employment in other industries,
such as transportation and feedstock supply, as illustrated in Figure
3. Every direct job in the biobased product industry creates 1.76 jobs
in other industries. In a separate study specifically of the biotech
industry, TEConomy calculates that every direct bioscience industry job
creates 5.5 additional jobs elsewhere in the economy. For workers in
the agricultural feedstock and chemicals sector of the biotech
industry, which includes biofuel producers, the multiplier is as high
as 18.4 additional jobs for every direct job.\8\
---------------------------------------------------------------------------
\8\TEConomy/BIO. The Value of Bioscience Innovation in Growing Jobs
and Improving Quality of Life. Washington, D.C.: Biotechnology
Innovation Organization, 2016.
---------------------------------------------------------------------------
The biobased economy is poised for ongoing growth, building on the
success of pioneering commercial-scale industrial biotech projects. The
potential for growth has attracted billions in venture capital,
strategic investments and partnerships. The United States is well-
positioned--with abundant biomass resources and innovative research and
development in industrial biotechnology--to capture a favorable share
of future biobased economy growth and employment. Effective state and
Federal policy is needed to unleash continued investment and growth.
Among the most important Federal policies supporting the biobased
economy are those in the farm bill's energy title. Since 2002, the
quinquennial farm bill has included energy programs that have
effectively supported development of new markets for agriculture and
capital formation for rural communities. As Congress Members begin work
on the next farm bill, they should strengthen these effective programs
and provide mandatory funding. The BioPreferred' program, as
mentioned, has helped the U.S. agriculture sector generate $393 billion
in economic activity and 4.22 million jobs. The Biorefinery, Renewable
Chemical, and Biobased Product Manufacturing Assistance Program ensures
that institutional lenders serving rural communities have sufficient
capital to back large-scale biorefineries. This program will enable
banks to join the venture capital and equity investments in industrial
biotechnology and renewable chemical production, which will revitalize
U.S. manufacturing, create jobs and improve U.S. economic
competitiveness. Congress should create a clear path forward for farm
bill energy programs to enable U.S. technology producers to unleash
innovation and ensure rural communities share in economic growth.
appendix c
An Economic Impact Analysis of the U.S. Biobased Products Industry

2016
Acknowledgments
The U.S. Department of Agriculture (USDA) BioPreferred'
Program commissioned this report. The conclusions and recommendations
are those of the authors and have not been endorsed by the USDA. We
wish to thank Ms. Marie Wheat, Industry Economist and Ms. Kate Lewis,
BioPreferred Program Analyst, for their guidance and insights. We also
appreciate the assistance, editing, and oversight of Amec Foster
Wheeler Environment & Infrastructure, Inc.--prime contractor and
specifically the support of Mr. Charles Hester, Ms. Elizabeth Lewis,
Ms. Jennifer Chu, Ms. Beatrice Smith, and Ms. Caroline Tapscott from
the Durham, NC office. Dr. Art Werner was a great asset as well, and we
are grateful for his help.
We also wish to thank the dedicated students at the Duke Center for
Sustainability & Commerce:

Ms. Schuyler Ms. Shuvya Ms. Katherine
DeBree Arakali Hurrell
Ms. Maurita Ms. Amanda Ms. Devon
Denley Gibson Bonney
Ms. Lili Pita

In addition, the authors are grateful to the following
organizations for providing guidance and insights, without which this
report would not have been possible:

American Eastman North
Chemical Society Chemical Company Carolina
Biotechnology Center
American Enviva Patagonia,
Cleaning Institute Inc.
Agricultural Ford Motor Penford
Utilization Research Company Products Co.
Institute (AURI) Green POET, LLC
Biologics Ltd.
BASF General Motors Procter &
Corporation Company Gamble
Bayer AG IO Seventh
Sustainability Generation, Inc.
BioAmber, Inc. Johnson and Society of
Johnson the Plastics Industry
BioFiber Lanzatech Tecnon
Solutions OrbiChem
International
Biotechnology Lenovo Tetsis
Innovation
Organization
The Bureau of Lux Research, Tyton
Labor Statistics of Inc. BioEnergy Systems
the U.S. Department of Michigan United
Labor Biotechnology Soybean Board
Institute
The Coca-Cola Myriant U.S. Forest
Company Corporation Service
ConVergInce NatureWorks Verdezyne,
Advisers LLC Inc.
Cotton Nike Walmart
Incorporated Stores, Inc.
Deere & Novozymes Yulex
Company Corporation
Dow Chemical DuPont
Company

We appreciate Ms. Beatrice Smith creating the maps using
ArcGIS' software by Esri. ArcGIS' and
ArcMapTM are the intellectual property of Esri and are used
herein under license. Copyright Esri. All
rights reserved. For more information about Esri' software,
please visit www.esri.com.
About the Authors
Jay S. Golden
Contact: Jay.Golden@Duke.edu

Dr. Jay Golden is Director of the Duke Center for Sustainability &
Commerce and a faculty member in the Division of Earth & Ocean Sciences
at the Nicholas School of the Environment; Dr. Golden has a secondary
appointment in Civil & Environmental Engineering at the Pratt School of
Engineering at Duke University.
His research covers sustainable systems and production consumption
systems of Earth resources using systems and lifecycle modeling.
Current areas of focus include risks and resiliency resulting from
increased industrialization of terrestrial-based resources, rapid
urbanization, and the interactions with environmental, economic, and
social drivers. Dr. Golden received his Ph.D. in Engineering from the
University of Cambridge, and his Master's degree in Environmental
Engineering and Sustainable Development from a joint program of the
Massachusetts Institute of Technology and the University of Cambridge.
He also holds a Professional Mastery of Project Management Certificate
from Stanford University, an MLE in Higher Education from Harvard, and
has a B.A. degree in Management.
In 2009, Dr. Golden was presented the Faculty Pioneer Award by the
Aspen Institute for his leadership in the field of sustainability
education & research, and he was named by Ethisphere as one of the 100
Most Influential People in Business Ethics. He was appointed to the UN
Lifecycle Management Task Force, and he was named an AT&T Industrial
Ecology Fellow. Dr. Golden founded and co-directed the Sustainability
Consortium and consults for companies around the world.

Robert Handfield
Contact: robert_handfield@ncsu.edu

Dr. Robert Handfield is the Bank of America University
Distinguished Professor of Supply Chain Management at North Carolina
State University and Director of the Supply Chain Resource Cooperative.
He also serves as Faculty Lead for the Manufacturing Analytics Group
within the International Institute of Analytics, and he is on the
Faculty for the Operations Research Curriculum at N.C. State
University.
Dr. Handfield is the Consulting Editor of the Journal of Operations
Management, one of the leading journals in the field of supply chain
management, and he has written several books on supply chain
management. In 2013, he led a global study on Global Logistics Trends
and Strategies for BVL International and wrote a report entitled
`Future Buy: The Future of Procurement,' which was published by KPMG.
He has published extensively on sustainable supply chain management
in the Journal of Supply Management, Business Strategy and the
Environment, and the European Journal of Operations Research. In 2013,
he also conducted studies on global supply chain sustainability with
the German nonprofit logistics organization, BVL International, and he
received funding in 1998 from the National Science Foundation to study
Environmentally-Friendly Manufacturing.

Jesse Daystar
Contact: Daystar@Duke.edu

Dr. Jesse Daystar is the Assistant Director at the Duke Center for
Sustainability & Commerce at Duke University. Dr. Daystar has a Ph.D.
and M.S. in Forest Biomaterials as well as a B.S. in Chemical and
Biomolecular Engineering and a B.S. in Pulp & Paper Engineering from
North Carolina State University. Dr. Daystar leads research and
consulting in aspects of product sustainability, biomaterials,
biochemicals, and bioenergy focused on identifying environmental
tradeoffs, environmental and technical risks, and environmental
impacts. This research and consulting has produced publications,
sustainability and chemical engineering tools, and certifications for
clients including Eastman Chemical, Cotton Incorporated, the USDA, and
the DOE.
Drawing on skills in Life Cycle Assessment, sustainability
strategy, chemical engineering, paper and pulp engineering, and supply
chain logistics & strategy, Daystar develops sustainability solutions
through pragmatic research and applied industrial solutions. His
experience includes sustainable chemical process development and
efficiency management program development with the National Council for
Air and Stream Improvement, Mead WestVaco, Pesco-Beam Environmental
Solutions, and Kemira Chemical.

Brandon Morrison
Contact: Brandon.Morrison@Duke.edu

Dr. Brandon Morrison earned his Ph.D. in Earth and Ocean Sciences
from the Nicholas School of the Environment at Duke University. His
dissertation research examined the sustainability implications of the
industrialization of the Earth's resources. He utilized lifecycle-
modeling techniques in order to analyze the environmental impacts of
utilizing biological feedstocks for energy production.
Dr. Morrison graduated from Franklin & Marshall College with his
B.S. in Environmental Science and earned his Master of Environmental
Management degree from Duke University.

Eric McConnell
Contact: eric.mcconnell@ncsu.edu

Dr. Eric McConnell is an Assistant Professor in the Department of
Forest Biomaterials, College of Natural Resources, at North Carolina
State University. Dr. McConnell is also a Wood Products Specialist with
the North Carolina Cooperative Extension Service. He received his B.S.
in Forest Management from Louisiana Tech University and his Masters and
Ph.D. degrees from Mississippi State University in Forest Products and
Forest Resources respectively.
Dr. McConnell's research has focused on input-output modeling of
the forest products industry, timber, and lumber price trends, and the
typologies of production forestry clientele. His Extension program
provides information to clientele and stakeholders regarding wood
technology, wood products sustainability criteria, economic impacts,
and industrial trends. Dr. McConnell's professional service includes
contributing to the Forest Products Society, the Society of American
Foresters, and the Society of Wood Science and Technology.
Table of Contents
Acknowledgements
About the Authors
Executive Summary
Glossary of Terms

I. Introduction

A. The USDA BioPreferred' Program
B. About this Report

II. Industry Overview

A. Overview of the Changes from 2013 to 2014
B. Factors Shaping the Biobased Products Industry
C. Biobased Products Industry Growth Forecast

C1. Case Study: NatureWorks
C2. Case Study: BASF
C3. Case Study: Eastman Chemical Company
C4. Case Study: DuPontTM
C5. Case Study: The Coca-Cola Company
C6. Case Study: POET
C7. Case Study: Verdezyne
C8. Case Study: Green Biologics

III. State Overviews

A. State Incentives and Policies
B. State Statistics
C. National and State Facts Sheets

C1. Case Study: Michigan Biotechnology Institute
C2. Case Study: Agricultural Utilization Research
Institute (AURI)

IV. Environmental Benefits

A. Economic Input-Output LCA
B. Objectives and Methodology
C. Results Overview
D. Limitations

V. Recommendations
List of Figures

Figure 1: Key Findings of the U.S. Biobased Products Industry
in 2014
Figure 2: Total Employment and Value-Added to the U.S.
Economy from the Biobased Products Industry in 2014
Figure 3: Direct Jobs Contributed by the Biobased Products
Industry in Each State and the District of Columbia in 2013
Figure 4: Direct Value-Added Contribution in Each State by
the Biobased Products Industry in 2013
Figure 5: Total Employment and Value-Added to the U.S.
Economy from the Biobased Products Industry in 2014
Figure 6: Key Findings of the U.S. Biobased Products Industry
in 2014
Figure 7: Crude Oil and Natural Gas Price Volatility
Figure 8: Direct Jobs Contributed by the Biobased Products
Industry in Each State and the District of Columbia in 2013
Figure 9: Direct Value-Added Contribution in Each State by
the Biobased Products Industry in 2013
Figure 10: Gasoline Use Avoided by Biobased Products
Manufactured in the United States
Figure 11: Greenhouse Gas Emissions Avoided by Biobased
Products Manufactured the United States

List of Tables

Table 1: Top 10 States for Direct Jobs in the Biobased
Products Industry in 2013
Table 2: Top 10 States for Direct Value-Added in the Biobased
Products Industry in 2013
Table 3: Overview of State Policies and Incentives for
Biobased Products Development
Table 4: Top 10 States for Direct Jobs in the Biobased
Products Industry in 2013
Table 5: Top 10 States for Direct Value-Added in the Biobased
Products Industry in 2013

List of Appendices

Appendix A: The Economic Input-Output Model (IMPLAN)
Appendix B: Products Participating in the
BioPreferred' Program by Category--2016
Appendix C: States Ranked by Direct Jobs in the Biobased
Products Industry--2013
Appendix D: States Ranked by Direct Value-Added by the
Biobased Products Industry--2013
Appendix E: Number of Companies Participating in the
BioPreferred Program, Direct Jobs, and Direct Value-Added in
Each State (Alphabetical)
Executive Summary
This report was prepared for the U. S. Department of Agriculture
(USDA) BioPreferred' Program as a follow-up to the 2015
report to the Congress of the United States mandated in Section 9002 of
the 2014 Farm Bill (the Agricultural Act of 2014; P.L. 113-79).\1\ The
conclusions and recommendations in this report are those of the
authors, and have not been endorsed by USDA. The report seeks to
provide information on the following contributions of the biobased
products industry in the United States:
---------------------------------------------------------------------------
\1\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell, T.E.,
An Economic Impact Analysis of the U.S. Biobased Products Industry: A
Report to the Congress of the United States of America, A Joint
Publication of the Duke Center for Sustainability & Commerce and the
Supply Chain Resource Cooperative at North Carolina State University,
2015.

(i) Changes in value-added and jobs between 2013 and 2014 for the
---------------------------------------------------------------------------
national biobased products industry;

(ii) The value-added and jobs contributed by the biobased products
industry for all 50 states and the District of Columbia in
2013;

(iii) Changes and updates to the domestic biobased products
industry, including case studies of advances and
innovations;

(iv) The quantity of petroleum displaced by biobased products; [and]

(v) Policy recommendations.

Established by the Farm Security and Rural Investment Act of 2002
(2002 Farm Bill) and strengthened by the Food, Conservation, and Energy
Act of 2008 (2008 Farm Bill) and the Agriculture Act of 2014 (H.R. 2642
2014 Farm Bill), the USDA BioPreferred Program is charged with
transforming the marketplace for biobased products and creating jobs in
rural America. The Program's mandatory Federal purchasing initiative
and voluntary labeling initiative have quickly made it one of the most
respected and trusted drivers in today's biobased product marketplace.
Private and government purchasers now look to the USDA BioPreferred
Program to ensure that their purchases are biobased. Beginning in 2005
with its first designations of six product categories, the Program has
now designated 97 product categories representing approximately 14,200
products on the market today. With the Federal Government spending
about $450 billion annually on goods and services, there is an
incredible opportunity to increase the sale and use of biobased
products as required by Federal law. Executive Order 13693, Planning
for Federal Sustainability in the Next Decade, increases Federal agency
accountability for achieving biobased purchasing requirements.\2\
---------------------------------------------------------------------------
\2\The President, ``Executive Order 13693--Planning for Federal
Sustainability in the Next Decade'', Federal Register, accessed April
2015, https://www.federalregister.gov/articles/2015/03/25/2015-07016/
planning-for-federal-sustainability-in-the-next-decade.
---------------------------------------------------------------------------
Although there have been several studies on the contributions of
the biobased products industry to the European and global economies,
this report is the first to examine and quantify the effects of the
U.S. biobased products industry on each state and the District of
Columbia. The report provides a snapshot of available information and a
platform upon which to build future efforts as more structured
reporting and tracking mechanisms are developed.
As detailed in this report and similar to the 2015 report, we
undertook an updated approach to gathering information on the biobased
products industry. A broad spectrum of government, industry, and trade
association representatives involved in the biobased products industry
were interviewed in order to gain a better understanding of the
challenges and the future growth potential for biobased products. Data
were collected from government agencies and published literature on the
biobased products industry. We also conducted extensive economic
modeling using IMPLAN modeling software, which was initially developed
by the U.S. Forest Service to analyze and trace spending through the
U.S. economy and to measure the cumulative effects of that spending on
the U.S. economy. The IMPLAN model tracks how dollars spent in one
sector of the economy result in increased spending in other sectors of
the economy because of those dollars, creating waves of economic
activity (the ``economic multiplier'' effect). IMPLAN uses national
industry data and county-level economic data to generate a series of
multipliers, which, in turn, estimate the total implications of
economic activity as direct, indirect, and induced effects. The
spillover effect can be calculated from these results by adding the
indirect and induced effects. A contribution analysis was conducted to
assess the effects of specific biobased sectors of the U.S. economy.
The seven major sectors chosen here to represent the biobased
products industry's contribution to the U.S. economy are:

Agriculture and Forestry.

Biorefining.

Biobased Chemicals.

Enzymes.

Bioplastic Bottles and Packaging.

Forest Products.

Textiles.

The USDA's definition of biobased products excludes the energy,
livestock, food, feed, and pharmaceutical industries, so they have been
excluded from this report as well.
Figure 1 shows that the total contribution of the biobased products
industry to the U.S. economy in 2014 was $393 billion in value-added
and 4.223 million jobs. Every 1,000 jobs in the biobased industry
supported 1,760 additional jobs in other parts of the economy. Figure 2
shows these numbers broken down into direct effects and spillover
effects. The 1.528 million jobs directly supported by the biobased
industry supported 2.695 million indirect and induced jobs. Similarly,
the $127 billion in value-added from sales by the biobased products
industry generated another $266 billion in indirect and induced sales.
Figure 1: Key Findings of the U.S. Biobased Products Industry in 2014

Figure 2: Total Employment and Value-Added to the U.S. Economy from the
Biobased Products Industry in 2014

In the 2015 report, we highlighted states with particularly high
concentrations of activity in the biobased products industry using
location quotients (relative comparisons of direct jobs in each state
to the national average for the biobased products industry). In this
2016 report, Section III provides fact sheets that detail jobs and
value-added contribution by the biobased products industry for all 50
states and the District of Columbia. Figure 3 shows the direct number
of jobs supported by the biobased products industry for each state and
the District of Columbia in 2013. The direct number of jobs by state is
also listed in Appendix C. Table 1 lists the ten states with the most
direct jobs in the biobased products industry. Similarly, Figure 4
shows the direct value-added by the biobased products industry in each
state and the District of Columbia, while Table 2 lists the ten states
with the highest direct value-added by the biobased products industry.
Figure 3: Direct Jobs Contributed by the Biobased Products Industry in
Each State and the District of Columbia in 2013\3\
---------------------------------------------------------------------------
\3\Esri, TomTom, Department of Commerce, Census Bureau, U.S.
Department of Agriculture (USDA), National Agricultural Statistics
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16,
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.

Table 1. Top 10 States for Direct Jobs in the Biobased Products Industry
in 2013
------------------------------------------------------------------------
Rank State Direct Jobs
------------------------------------------------------------------------
1 California 145,080
2 North Carolina 90,040
3 Texas 88,680
4 Georgia 80,520
5 Pennsylvania 71,360
6 Wisconsin 68,250
7 Ohio 52,930
8 New York 52,300
9 Alabama 49,650
10 Florida 47,690
------------------------------------------------------------------------

Figure 4: Direct Value-Added Contribution in Each State by the Biobased
Products Industry in 2013\4\
---------------------------------------------------------------------------
\4\Esri, TomTom, Department of Commerce, Census Bureau, U.S.
Department of Agriculture (USDA), National Agricultural Statistics
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16,
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.

Table 2. Top 10 States for Direct Value-Added to the Biobased Products
Industry in 2013
------------------------------------------------------------------------
Rank State Direct Value-Added
------------------------------------------------------------------------
1 California $9,862,930,000
2 Georgia $8,237,608,000
3 Texas $6,828,425,000
4 Pennsylvania $6,522,151,000
5 North Carolina $6,437,140,000
6 Wisconsin $6,252,403,000
7 Alabama $4,977,941,000
8 Tennessee $4,429,804,000
9 Ohio $4,276,668,000
10 South Carolina $4,227,162,000
------------------------------------------------------------------------

The original report sought to answer six questions:

(i) The quantity of biobased products sold

While there is no database that tracks the quantity of biobased
products sold, the USDA BioPreferred Program's database currently
includes over 20,000 biobased products. This database contains a
limited number of forest products or traditional textile fiber
products, as these products were only included in the Program recently.
Therefore, we estimate that the actual number of biobased products on
the market is dramatically higher than the number in the BioPreferred
Program's database. In terms of jobs and value-added contributed, the
forest products sector alone more than doubles the estimates for the
remainder of the biobased products industry. Thus, 40,000 would be a
conservative estimate of the total number of existing biobased
products. The data required to estimate the total number of individual
``units'' of biobased products that have been sold are not available.
However, the total value-added from direct sales of biobased products
in 2014 was estimated to be $127 billion (Figure 2).

(ii) The value of biobased products

The total value-added contribution to the U.S. economy from
biobased products was $393 billion in 2014, the most recent year for
which data are available (Figure 2).

(iii) The quantity of jobs contributed

The biobased products industry directly supported 1.53 million jobs
in 2014 and through spillover effects, supported 4.22 million total
jobs throughout the economy in the United States (Figure 2).

(iv) The quantity of petroleum displaced

The use of biobased products reduces the consumption of petroleum
equivalents by two primary mechanisms. First, chemical feedstocks from
biorefineries have replaced a significant portion of the chemical
feedstocks that traditionally originate from crude oil refineries.
Biorefineries currently produce an estimated 150 million gallons of raw
materials per year that are used to manufacture biobased products.
Second, biobased materials are increasingly being used as substitutes
for petroleum-based materials, which have been used extensively for
many years. An example of this petroleum displacement by a biobased
material is the use of natural fibers in packing and insulating
materials as an alternative to synthetic foams, such as Styrofoam. In
this report, the research team utilized newly available data and
scientific literature which, when modeled, estimate petroleum
displacement of up to 6.8 million barrels in 2014.

(v) Other environmental benefits

While only limited lifecycle analyses of the production of biobased
products have been conducted, the key environmental benefits of
manufacturing and using biobased products are (1) reducing the use of
fossil fuels and (2) reducing the associated greenhouse gas (GHG)
emissions. The previous paragraph presents an estimate of the petroleum
displacement associated with the biobased products industry. We also
estimated the GHG emission reductions associated with the production of
biobased products as alternatives to petroleum-based products. This
number was not calculated for the 2015 report and is presented here for
the first time. A literature review showed that there are a wide range
of GHG reductions resulting from the use of biobased products as an
alternative to petroleum-based products. Using the upper range of GHG
emissions reductions potential, the analysis indicates that up to 10
million metric tons of CO2 equivalents may have been reduced
in 2014. Given the increasing interest in and use of biobased products,
it is essential to conduct additional analyses of their potential
impacts on water quality, water use, land use and other environmental
impact categories.

(vi) Areas in which the use or manufacturing of biobased products
could be more effectively used, including identifying any
technical and economic obstacles and recommending how those
obstacles can be overcome

A wide range of both near-term and long-term opportunities exists
that the government and biobased products industry members can pursue
to advance the biobased products industry. Congress should continue to
advance the biobased products industry for National Security and
Domestic Industrial Strength by enacting a short-term production tax
credit, investment tax credits, and master limited partnerships for
biobased product manufacturers to help level the playing field with
petroleum-based products. Congress should also direct the U.S.
Department of Commerce to work with USDA to develop NAICS codes that
describe companies in the biobased products industry. Suggested avenues
for promoting the biobased products industry also include funding the
USDA BioPreferred Program at the levels similar to its counterparts to
increase the visibility of the USDA Certified Biobased Product label,
and expansion of other related USDA programs. Additionally, members of
the biobased products industry should work together to solve the
challenges facing their industry.
As noted above, in addition to collecting data from published
sources and collecting government statistics, we interviewed
organizations in the biobased products industry to understand the
dynamics, drivers, and challenges that will affect the continued growth
of the industry. We conducted the interviews with personnel in the
following organizations, institutes, and companies:

Agricultural Eastman Patagonia,
Utilization Research Chemical Company Inc.
Institute Enviva Penford
Products
American Ford Motor POET, LLC
Cleaning Institute Company
American Green Procter &
Chemical Society Biologics Ltd. Gamble
BASF General Motors Seventh
Corporation Company Generation, Inc.
Bayer AG Johnson and Society of
Johnson the Plastics Industry
BioAmber, Inc. Lanzatech Tecnon
OrbiChem
BioFiber Lenovo Tetsis
Solutions
International
Biotechnology Lux Research, Tyton
Innovation Inc. BioEnergy Systems
Organization
The Bureau of Michigan United
Labor Statistics of Biotechnology Soybean Board
the U.S. Department of Institute U.S. Forest
Labor Myriant Service
Corporation
The Coca-Cola NatureWorks Verdezyne,
Company LLC Inc.
ConVergInce Nike Walmart
Advisers Stores, Inc.
Cotton North Carolina Yulex
Incorporated Biotechnology Center Corporation
Deere & Novozymes
Company
Dow Chemical DuPont
Company

The report includes case studies of the development, manufacture,
and use of biobased products by the following organizations:

NatureWorks DuPont Green
LLC Biologics Ltd.
BASF The Coca-Cola Agricultural
Corporation Company Utilization Research
Eastman POET LLC Institute
Chemical Company
Michigan Verdezyne,
Biotechnology Inc.
Institute

Glossary of Terms
Biobased: Related to or based on natural, renewable, or living
sources.
Biobased chemical: A chemical derived or synthesized in whole or in
part from biological materials.
Biobased content: The amount of new or renewable organic carbon in
a material or product as a percent of the material or product's total
organic carbon. The standard method ASTM D6866 is used to determine
this amount.
Biobased product: A product determined by USDA to be a commercial
or industrial product (other than food, feed, or fuel) that is:

(1) Composed, in whole or in significant part, of biological
products, including renewable domestic agricultural
materials and forestry materials; or

(2) An intermediate ingredient or feedstock.

Biobased products industry: Any industry engaged in the processing
and manufacturing goods from biological products, renewable resources,
domestic or agricultural or forestry material. The USDA excludes food,
feed, and fuel when referring to the biobased products industry.
Bioeconomy: The global industrial transition of sustainably
utilizing renewable aquatic and terrestrial resources into energy,
intermediates, and final products for economic, environmental, social,
and national security benefits.
Biomass: Material derived from recently living organisms, which
includes plants, animals, and their byproducts. For example, manure,
garden waste, and crop residues are all sources of biomass. It is a
renewable energy source based on the carbon cycle, unlike other natural
resources, such as petroleum, coal, and nuclear fuels.\5\
---------------------------------------------------------------------------
\5\Khan, F.A., Biotechnology Fundamentals: Second Edition, (Boca
Raton: CRC Press, 2015), 336.
---------------------------------------------------------------------------
Biobased plastics: Plastics derived from renewable biomass sources,
such as vegetable oil and cornstarch. In contrast to conventional
plastics that utilize petroleum-based products as raw material,
biobased plastics utilize biomass, which can be regenerated, as their
raw material.
Biobased polymers: Polymers produced by living organisms that form
long chains by the interlinking of repeating chemical blocks. Common
biobased polymers in nature are cellulose in the cell walls of plants
and polysaccharides such as starch and glycogen.
Biorefining: Process of production of heat, electricity, fuel, or
chemicals from biomass. For example, production of transportation fuel
such as ethanol or diesel from natural sources, such as vegetable oil
and sugarcane.
Byproduct: Substance, other than the principal product, generated
because of creating a biofuel. For example, a byproduct of biodiesel
production is glycerin and a byproduct of ethanol production is
distiller's dried grains with solubles.
Cellulose: Fiber contained in the leaves, stems, and stalks of
plants and trees. Cellulose is the most abundant organic compound on
[E]arth.\6\
---------------------------------------------------------------------------
\6\The Biofuels Handbook, ed. J.G. Speight (London: RSC Publishing,
2011), 524.
---------------------------------------------------------------------------
Contribution analysis: The economic effect of an existing sector,
or group of sectors, within an economy. The results define to what
extent the economy is influenced by the sector(s) of interest.
Co-product: Product that is jointly produced with another product,
which has a value or use by itself. For example, paraffin wax is a co-
product during the refining of crude oil to derive petroleum products.
Direct effects: Effects generated by the industry of interest
through employment, value-added, and industrial output to meet final
demands.
EIO-LCA: Economic input-output life cycle assessments quantify the
environmental impact of a sector of the economy.
Emissions: Gases and particles that are released into the air or
emitted by various sources.\7\
---------------------------------------------------------------------------
\7\U.S. Environmental Protection Agency (EPA), ``Air Pollution
Emissions Overview'', U.S. EPA, accessed June 2016, https://
www3.epa.gov/airquality/emissns.html.
---------------------------------------------------------------------------
Employment: Considered in this report as full and part-time jobs in
a sector.
Enzyme: A protein that catalyzes or increases the rate at which
chemical reactions occur in living organisms.\8\
---------------------------------------------------------------------------
\8\Alberts B, Johnson A, Lewis J, et al., Molecular Biology of the
Cell (New York: Garland Science, 2002), http://www.ncbi.nlm.nih.gov/
books/NBK26911/#A466.
---------------------------------------------------------------------------
Ethanol: Produced from fermenting any biomass that contains a high
amount of carbohydrates. It is typically made from starches and sugars
but advanced generation technologies allow it to be made from cellulose
and hemicellulose.\9\
---------------------------------------------------------------------------
\9\International Energy Agency (IEA), ``Glossary'', IEA, accessed
May 2016, http://www.iea.org/aboutus/glossary/e/.
---------------------------------------------------------------------------
Forestry materials: Materials derived from the practice of forestry
or the management of growing timber.\10\
---------------------------------------------------------------------------
\10\U.S. Government Publishing Office (GPO) Electronic Code of
Federal Regulations (e-CFR), Title 7 CFR part 3201.2, e-CFR, accessed
June 2016, http://www.ecfr.gov/cgi-bin/text-
idx?SID=c2eba5045067ce569f1d820d6d77b694&mc=true&node=se7.15.3201_12&rgn
=div8.
---------------------------------------------------------------------------
Genetically Modified Organism (GMO): An organism (i.e., plants,
animals, or microorganisms) whose genetic material (DNA) has been
altered in a way that does not occur by mating or natural
recombination.\11\
---------------------------------------------------------------------------
\11\World Health Organization, ``Food Safety'', World Health
Organization, accessed June 2016, http://www.who.int/foodsafety/areas--
work/food-technology/faq-genetically-modified-food/en/.
---------------------------------------------------------------------------
IMPLAN: Originally developed by the U.S. Forest Service and
currently owned and operated by IMPLAN Group LLC (Huntersville, NC).
The IMPLAN database and software system can be used to measure the
economic effects of a given change or event in a region.
Indirect effects: The result of all sales by the industry of
interest's supply chain.
Induced effects: The changes produced from the purchasing of goods
and services by households because of changes in employment and/or
production levels.
Intermediate ingredient or feedstock: A material or compound that
has undergone processing (including thermal, chemical, biological, or a
significant amount of mechanical processing), excluding harvesting
operations. It is subsequently used to make a more complex compound or
product.\10\
Location Quotient: The measure of the concentration of an industry
in a state, relative to the national average concentration of that
industry.
NAICS: Acronym for the North American Industry Classification
System. A classification system for grouping businesses by similarity
of production process.
Output: An industry's gross sales, which includes sales to other
sectors (where the output is used by that sector as input) and those to
final demand.
PET: Polyethylene terephthalate.
PLA: Polylactic acid.
Production Tax Credit (PTC): A tax credit that provides a company
with financial support based on their production. PTCs can be offered
by the Federal Government or a state government, and can be refundable,
partially refundable, or nonrefundable.
Qualified biobased product: A product that is eligible for the
BioPreferred' Program's mandatory Federal purchasing
initiative because it meets the definition and minimum biobased content
criteria for one or more of the 97 product categories designated for
this initiative.
Renewable chemical: A monomer, polymer, plastic, formulated
product, or chemical substance produced from renewable biomass.
Sector: Unique field of firms that is a portion of the U.S. economy
defined by NAICS.
Spillover: Used in the economic modeling in this report to define
Employment and Value-Added resulting collectively from indirect and
induced activities.
Subsector: Field of firms that produce a specialized product.
Total effect: The sum of the effects of all sales generated by all
sectors, supply chains, and influence of employees spending within the
study region. The sum of the direct, indirect, and induced effects.
Type I multiplier: The sum of direct effect plus indirect effect
divided by the direct effect.
Type Social Accounting Matrix (SAM) multiplier: The Type SAM
multiplier considers portions of value-added to be both endogenous and
exogenous to a study region. It is the sum of the direct, indirect, and
induced effects divided by the direct effect. Type SAM multipliers are
generally the preferred multipliers used in input-output analysis.
USDA Certified Biobased Product: A biobased product that meets the
BioPreferred' Program's criteria to display the USDA
Certified Biobased Product certification mark.
Value-Added: Composed of labor income, which includes employee
compensation and sole proprietor (self-employed) income, other property
type income (OPI), and taxes on production and imports, less subsidies
(TOPI).

OPI in IMPLAN includes corporate profits, capital
consumption allowance, payments for rent, dividends, royalties,
and interest income.

TOPI primarily consist of sales and excise taxes paid by
individuals to businesses through normal operations.

A sector's value-added is its contribution to the study
area's Gross Regional Product.
I. Introduction

A. The USDA BioPreferred' Program
The USDA BioPreferred Program is charged with transforming the
marketplace for biobased products and creating jobs in rural America.
It was established by the Farm Security and Rural Investment Act of
2002 (2002 Farm Bill) and strengthened by the Food, Conservation, and
Energy Act of 2008 (2008 Farm Bill), and the Agriculture Act of 2014
(H.R. 2642 2014 Farm Bill). The Program's mandatory Federal purchasing
initiative and voluntary USDA Certified Biobased Product label have
quickly made it one of the most respected and trusted drivers in
today's biobased marketplace. Visit www.BioPreferred.gov for more
information.
Strategic Goals
The mission of the BioPreferred Program is to facilitate the
development and expansion of markets for biobased products. To
accomplish this mission, the Program has two broad strategic goals: (1)
to advance the markets for biobased products and (2) to increase the
purchase of biobased products government-wide. As of June 2016, there
were approximately 20,000 products in the BioPreferred Program's
database.
Mandatory Federal Purchasing
Private and public purchasers now look to the USDA BioPreferred
Program to ensure that their purchases are biobased. Beginning in 2005
with its first designations of six product categories, the Program has
now designated 97 product categories that include approximately 14,200
products that are in the mandatory Federal purchasing initiative. The
Program offers purchasers of biobased products an independent
assessment of the product's biobased content using a universal
standard.\12\ By providing a central product registry through its
online catalog, accessible at www.BioPreferred.gov, the BioPreferred
Program enables purchasers to find and compare products, such as
cleaners, lubricants, and building materials, from all participating
manufacturers. This encourages manufacturers to compete to provide
products with higher biobased content.
---------------------------------------------------------------------------
\12\American Society for Testing and Materials (ASTM)
International, ``ASTM D6866-16. Standard Test Methods for Determining
the Biobased Content of Solid, Liquid, and Gaseous Samples Using
Radiocarbon Analysis,'' ASTM International, accessed April 2015, http:/
/www.astm.org/Standards/D6866.htm.

Voluntary Consumer Label
In February 2011, USDA introduced the BioPreferred Program's
voluntary label to the consumer market. To date, more than 2,700
products have been authorized to display the USDA Certified Biobased
Product label, and the number of applications continues to increase.
With a web-based application process, the BioPreferred Program makes it
simple for manufacturers to apply for the label and track their
applications. The Program's partnership with ASTM International ensures
quality control and consistent results.
Executive Order 13693, Planning for Federal Sustainability in the Next
Decade
With the Federal Government spending about $450 billion annually on
goods and services, there is an extraordinary opportunity to increase
the sale and use of biobased products as required by Federal law.
Executive Order 13693, ``Planning for Federal Sustainability in the
Next Decade''\13\ increases Federal agencies' accountability for
purchasing biobased products in each of the 97 designated product
categories. Federal agencies are directed to establish annual targets
for the number of contracts awarded that include biobased products in
these categories. The dollar value of biobased products is required to
be reported under those contracts. Federal agencies are also directed
to ensure that contractors submit timely annual reports of their
biobased purchases.
---------------------------------------------------------------------------
\13\The President, ``Executive Order 13693--Planning for Federal
Sustainability in the Next Decade'', Federal Register web site,
accessed April 2015, https://www.federalregister.gov/articles/2015/03/
25/2015-07016/planning-for-federal-sustainability-in-the-next-decade.
---------------------------------------------------------------------------
B. About this Report
To date, the availability of data quantifying the biobased products
industry in the United States has been very limited. Consistent with
the 2015 report, a three-pronged approach to gather information was
taken for this report. A broad spectrum of representatives of
government, industry, and trade associations involved in the biobased
products industry were interviewed to understand the challenges and
future growth potential for biobased products. Information was also
collected from government agencies and published literature on biobased
products. IMPLAN's economic databases were used to analyze and trace
spending through the U.S. economy and measure the cumulative effects of
that spending.\14\
---------------------------------------------------------------------------
\14\IMPLAN, ``IMPLAN'' Computer Software, IMPLAN Group LLC, http://
www.implan.com.
---------------------------------------------------------------------------
IMPLAN is an economic impact modeling system that uses input-output
analysis to quantify the economic activities of an industry in a given
region. Impacts or contributions to the region are expressed in terms
of dollars added to the economy and the number of jobs produced. IMPLAN
models are ready-made using benchmark data from various government
sources and non-survey techniques to create regional input-output
tables. The time and money savings advantages provided by non-survey
techniques must be balanced with the limitation of introducing
potential error into local accounts. The inaccuracies of individual
cells, though, do not necessarily compromise the overall holistic
portrait a regional table can provide of an economy's interactions.
Users do have the ability to override any presented data when locally
collected information is deemed superior.
When examining the economic contributions of an industry, IMPLAN
generates four types of indicators:

Direct effects: effects of all sales (dollars or jobs)
generated by a sector.

Indirect effects: effects of all sales by the supply chain
for the industry of interest.

Induced effects: A change in dollars or jobs within the
study region that represents the influence of the value chain
employees' spending wages in other sectors to buy goods and
services.

Total effect: the sum of the direct plus spillover (indirect
effect and induced effect).

A Type Social Accounting Matrix (SAM) multiplier was used in
determining the overall monetary contribution or jobs supported by an
industry sector. The Type SAM multiplier accounts for the direct,
indirect, and induced effects on employment and value-added. Appendix A
describes the IMPLAN modeling framework in detail.
The greatest limitation of the findings in this report relates to
the percentages of biobased sectors within the larger economic sectors,
such as biobased chemicals within the chemical industry. To provide
conservative estimates of the biobased products sectors, we
consistently utilized percentages at the lower end of the ranges we
modeled. As discussed in the recommendations section, the authors of
this report strongly emphasize the need to develop specific industrial
sector (North American Industry Classification System/NAICS) codes so
that the biobased products industry's activities can be tracked more
effectively and accurately.
This report is intended to serve as a platform for greater
understanding and tracking of the progress of the bioeconomy in the
United States.
Section II provides an updated overview of the industry based on a
search of the literature and interviews of industrial members,
governmental agency personnel, members of non-governmental
organizations (NGOs), and academics during 2015 and 2016. Also in
Section II, there are case studies of eight companies that are engaged
in different parts of the biobased products industry.
Section III begins with an overview of the state initiatives and
policies that support the development of the biobased products industry
at the state level. The most substantial new element of our report is
the inclusion of in-depth analyses and economic modeling of all 50
states and the District of Columbia regarding their activities related
to the biobased products industry. Section III provides this state-by-
state value-added contributions and jobs associated with the biobased
products industry. There are also two case studies of organizations
active in the biobased products industry at the state level.
Environmental considerations related to the biobased products
industry are discussed in Section IV, where an overview of the GHG
reduction benefits derived from the utilization of biological
feedstocks in lieu of non-renewable feedstocks is provided.
Section V of this report explores various recommendations put
forward to expand the domestic biobased products industry.
Appendix A describes the economic modeling framework using IMPLAN.
Appendix B lists the product categories used by the BioPreferred
Program to classify biobased products as well as the number of products
grouped in each category. Appendix C ranks states by the number of
direct jobs contributed by the biobased products industry. Appendix D
ranks states by the direct value-added contribution from the biobased
products industry. Appendix E contains an alphabetical listing of the
states with their direct jobs, direct value-added contribution, and
number of companies participating in the BioPreferred Program.
II. Industry Overview
This section provides an overview of the biobased products industry
from 2013 to 2014. There is first a focus on some of the key metrics
used for measuring the biobased products industry--jobs and value-added
contribution. This is followed by a discussion of some of the biggest
factors influencing the biobased products industry. The focus then
shifts to the future with a forecast of where the biobased products
industry is headed. This section closes with case studies of eight
companies at the forefront of the biobased products industry.
A. Overview of the Changes from 2013 to 2014
Figure 5 shows the contributions of the biobased products industry
to employment and GDP in the United States in 2014. When compared to
the 2013 results (presented in the previous study),\15\ the direct
value-added contribution of the biobased products industry grew by 0.2
percent. Year to year percent changes in direct value-added were
measured using Producer Price Index for all commodities to account for
inflation. The direct jobs contribution to the U.S. economy from the
biobased products industry grew 0.5 percent from 2013 to 2014. Figure 6
shows the growth in total jobs and total value-added to the biobased
products industry from 2013 to 2014.
---------------------------------------------------------------------------
\15\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell,
T.E., An Economic Impact Analysis of the U.S. Biobased Products
Industry: A Report to the Congress of the United States of America, A
Joint Publication of the Duke Center for Sustainability & Commerce and
the Supply Chain Resource Cooperative at North Carolina State
University, 2015.
---------------------------------------------------------------------------
Figure 5: Total Employment and Value-Added to the U.S. Economy by the
Biobased Products Industry in 2014

Figure 6: Key Findings of the U.S. Biobased Products Industry in 2014

The biobased products industry experienced steady growth from 2013
to 2014. The growth in the direct value-added was smaller than the
growth in the total value-added. This contributions-based total value-
added growth is predicated on the strengthening of inter-industry
linkages between the biobased products industry and other parts of the
U.S. economy.
The steady growth of the biobased products industry is particularly
impressive given that the price of oil dropped to roughly \1/2\ its
January 2014 price by December 2014. Many biobased products are in
direct competition with petroleum-based products. One would expect that
as the price of oil decreased and petroleum-based products became
relatively cheaper, the biobased products industry would see a decrease
in demand for the products that compete with petroleum-based products.
The growth in the biobased products industry proves that the industry
is robust and diverse enough to grow even in the face of a sharp
decrease in oil prices. It is likely that the biobased products
industry will experience even greater growth when the cycle of low oil
prices turns around.
Interviews conducted for this report indicate that pricing pressure
from petroleum-based products resulted in challenges to profitability,
but, in spite of that, revenue and jobs increased and the biobased
products industry expanded.
It is apparent that growth is occurring increasingly in specialty
sectors (see the Eastman Chemical Company case study for an example).
The methodology used to create this report involved scaling the outputs
from IMPLAN using estimates of the biobased portion of each sector from
the 2015 study. This limited the ability to measure the growth of
specialty sectors. For example, the 2015 study estimated that 0.28
percent of all plastic bottles and packaging produced in the U.S. was
made with biobased materials. The focus of this study was to provide a
state-by-state analysis of the biobased products industry, so the
authors kept the original 0.28 percent estimate for this report. It is
very reasonable to assume however, that the biobased products share of
the plastic bottles and packaging market increased from 2013 to 2014,
so using the 0.28 percent estimate provides conservative growth
estimates. It is inappropriate to draw conclusions from the biobased
products industry growth rate without recognizing that the market share
of biobased products may be increasing, which is not reflected in the
growth rate presented in the report. Including the change in the
percentage of biobased products' market share would provide additional
granularity that would enable a more meaningful analysis and
understanding of the shifts in specific sectors of the biobased
products industry.
B. Factors Shaping the Biobased Products Industry
The key factors that influence the biobased products industry are
identified below. These factors reflect a challenging environment for
the biobased products industry, but they also include several
encouraging signs that suggest the industry is poised to grow in the
next decade.
1. Oil Prices
Figure 7 shows the volatility in oil and natural gas prices over
the past 16 years. When the price of oil is high, we expect the demand
to increase for biobased chemicals that can be used as replacements for
petroleum because they become relatively cheaper. The highly cyclical
nature of oil prices suggests that prices have reached a low and are
beginning to increase again The price was in the $40 to $50 per barrel
range in the summer of 2016. As oil prices increase, the barriers to
biobased ethanol producers using first- and second-generation
feedstocks will decrease. Currently, producers are struggling to
survive with the existing profit margins and they are receiving very
low payments for their products, regardless of whether the products are
used as additives or as fuels. This has made the business environment
very challenging.
Figure 7: Crude Oil and Natural Gas Price Volatility

U.S. Energy Information Administration (EIA) a, ``Natural
Gas: Henry Hub Natural Gas Spot Price'', U.S. EIA, accessed 6/
6/16, https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm.
U.S. EIA b. ``U.S. Crude Oil First Purchase Price'', U.S.
EIA, accessed 6/6/16, https://www.eia.gov/dnav/pet/hist/
LeafHandler.ashx?n=pet&s=f000
000__3&f=m.

Low margins tend to diminish investment in future business, so it
is more important than ever to take a long-term view of this
technology. Government incentives seeking to encourage investments in
these technologies are critically important at this time because it is
virtually certain that the outlook for these technologies will be more
favorable from the long-term perspective.
As oil prices increase, large companies are increasingly focused on
making more investments in the biobased chemicals sector and enhancing
their production capacity in this sector. This is evident in the on-
going mergers of Dow Chemical and DuPont to produce a division focused
on biobased technologies, as well as other investment strategies in the
works at BASF, Bayer AG, Eastman Chemical Company, and other leaders in
the chemical industry.
We project that oil prices will not remain low for an extended
period. The expected increases in oil prices will have a positive
impact on the biobased products industry because often, the overall
investments made in petrochemical plants and in biobased product
development come from the same companies and investors. Even though
many view the two industries as competitors, there are strong ties
between them.
Investors, as well as the public, sometimes think that biobased
products cost more than their petroleum-based counterparts do. Several
third-party studies have been conducted, and the results support the
contention that biobased products sequester carbon and have more
favorable LCAs than non-biobased products. In fact, a 2015 Argonne
National Laboratory report indicated that all biobased products they
research that have a fossil-based counterpart exhibited reduced cradle-
to-grave GHG emissions reductions ranging from 27% to 86%.\16\
Additionally, life cycle assessment models that incorporate biogenic
carbon storage show even higher environmental performance.\17\ Our
interviews suggest that industry executives are beginning to understand
how efficient the chemical transition from sugar to plastic is, and
these processes should become cost competitive when they are scaled up.
However, to achieve this, biobased product producers must collaborate
with investors who have a long-term view and who will invest in
efficient facilities and eventually find their functional fit in the
marketplace.
---------------------------------------------------------------------------
\16\Dunn, J., Adom, F., Han, J., and Snyder, S. ``A Life Cycle
analysis of Bioproducts and Their Conventional Counterparts in
GREETTM'', Argonne National Laboratory, last updated 9/30/
15, https://greet.es.anl.gov/publication-bioproducts-lca.
\17\Pawelzik, P., Carus, M., Hotchkiss, J., Narayan, R., Selke, S.,
Wellisch, M., Weiss, M., and Patel, M.K. ``Critical aspects in the life
cycle assessment (LCA) of bio-based materials--Reviewing methodologies
and deriving recommendations'', Resources, Conservation and Recycling
73 (2013): 211-228.
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2. Second-Generation Biobased Feedstocks
First-generation feedstocks are the easiest to utilize and the most
common. They are derived from food components such as vegetable oil,
sugars, grains, and animal fats. Second generation feedstocks are from
non-food biomass: waste, woody or highly cellulosic sources, and
agricultural byproducts, which are referred to as lignocellulosic
biomass.
One of the key insights gained from our interviews indicated that
the level of investment for second-generation biofuels and feedstocks
has diminished significantly. Many of the company representatives with
whom we spoke have been working to reduce the cost of a commercially
viable plant, but the slow start of the second-generation technologies
has resulted in less capital available for investments in equipment.
A second reason for the slow start of production using second-
generation feedstocks is the global uncertainty regarding the projected
demand for second-generation fuels. Few of the industries that use
these fuels expect demand to increase enough to influence the adoption
of biobased products. There is a need to develop a better understanding
of the potential and real impacts of government policies on the
biobased industry, especially on biobased chemicals. As the numbers of
collaborations and co-development activities continue to increase, it
is apparent that the stimuli for these activities are investments and
the perceived success of second-generation technologies that produce
biofuels. However, rather than investing in a new facility, it may be
more practical to use existing systems for the production and
collection of feedstocks rather than developing new systems. After
years of effort, there are also indications that other feedstocks, such
as algae, are becoming more practical for higher value chemicals.\18\
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\18\Savage, S., ``Replacing Petro-chemicals With Bio-Based
Alternatives. Can We Do It?'', Forbes, last modified 4/23/16, http://
www.forbes.com/sites/stevensavage/2016/04/23/replacing-petro-chemicals-
with-bio-based-alternatives-can-we-do-it/#6218f036378a.
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Our discussions with the manufacturers of several major brands
suggest that they prefer using first-generation feedstocks because
there is no efficient pathway and supply chain for cellulosics. Taking
the woody stems of plants and trying to convert them into carbon sugar
costs a lot more and takes more effort than using first-generation
feedstocks. Sugar is the most efficient feedstock in terms of the
acreage required to grow product biobased feedstocks, and, until this
changes, there is uncertain growth in second-generation feedstocks.
3. New Applications for Enzymes
Enzymes are used in detergents in the textile sector to break down
proteins, starches, and fatty stains in the finishing of fabrics.
Enzymes also are used in several other industrial sectors, such as pulp
and paper. An innovation in the enzymes sector is the use of symbiotic
microorganisms to improve the yields of agricultural products.
Generally, the enzymes sector is undergoing stable, moderate growth
driven by various businesses, including manufacturers of household care
products and laundry detergents. Enzyme companies traditionally
acquired very large accounts in end-use packaged goods, which allowed
them to make investments in innovations with a specific application in
mind. However, now enzymes are being used to improve biobased products
and companies are seeking to collaborate with smaller, more nimble
companies to drive new product innovation.
One of the differentiators of the enzyme sector is that, even with
low revenue growth, returns are improved by optimizing production based
on biological efficiencies as well as capital investments, such as
purchasing new fermenters. Enzyme companies can select organisms that
have better biological efficiencies and can improve them over time
through genetic engineering. The ability to improve without capital
upgrades is an important characteristic of the enzyme sector, but may
not provide advantages over chemical plant and petroleum refinery
processes, which can also be improved with new catalysts or alterations
to operational conditions, without major capital expenditures.
4. Federal Government Purchasing
One key to stimulating growth and participation in the biobased
products industry is a reliable and robust purchasing commitment from
the Federal Government. The USDA BioPreferred' Program,
which includes procurement preferences within the Federal Government
and voluntary labeling, provides a key way to inform the public. The
Program has been remarkably successful, despite a funding setback when
the 2008 Farm Bill expired. Interest in the Program from companies
producing biobased products is growing and the number of products
participating in the Program is increasing. The entire Federal
Government should follow the example set by USDA and ensure that
biobased products are given preference whenever possible in the
procurement process.
There is a general lack of awareness from the public regarding
biobased products, as is the case in some parts of the Federal
Government outside USDA. Non-fuel biobased products are virtually
unknown to the people along the supply chain, including wholesale and
retail distributors, Federal Strategic Sourcing Initiative contract
holders (sellers), Federal buyers, and most importantly, American
consumers. Awareness in the private sector is of particular importance
because purchasing biobased products is a matter of choice. If the
Federal Government becomes a reliable customer, these products will be
produced and distributed efficiently, demand will be met, and the
industry will thrive. If manufacturers assume the risk of producing
biobased products in response to the requirements of the Federal
Government, the government, in turn, should support these products and
help ``jump start'' this industry. One executive noted that the non-
fuel biobased products industry is in the early stages of evolution,
and as such, products in this industry are ``custom made'' for the
Federal Government. That executive believes that, in light of this,
these types of products should be supported by the government.
Our interviews also led us to believe that the Federal Government's
ability to gain traction in the acquisition community relative to the
purchase of biobased products and services is in a nascent stage. This
is not due to any lack of effort on the part of the USDA; rather, it is
due to a lack of widespread awareness within the General Services
Administration and Federal agencies, including the Department of
Defense (DOD) regarding the availability and use of biobased products.
One company executive remarked that, while the USDA Certified
Biobased Product label is important, he/she believes it is not
providing the level of market benefit and impact at the consumer level
that it was believed would emerge. Furthermore, from this executive's
perspective, the extent to which DOD mandated purchasing of biobased
products is driving demand for these products within the traditional
chemical industry is not clear.
Another executive emphasized that there is a lack of top-down
Federal policy on using biobased products, which makes it difficult for
industry leaders to commit to long-term investment, given that there is
no indication that investment will be supported. According to this
executive, there is a lot of support for biofuels, but there has not
been an equal level of support for biobased materials until recently.
For example, legislation has been written around biofuels, creating
investment tax credits for biofuels, but not for biobased products.
Thus, without investment from a big firm, there is no assurance that
biobased products will be supported. This executive believes that a
solid value proposition is essential to access the capital needed in
order for the biobased industry to grow.
5. Biobased Product Innovation and the Need to Consider Supply Chain
Impacts
To innovate in the biobased products industry, companies must
consider the factors that affect supply chain integration and consider
incentives to build in the United States. Petrochemical supply chains
are highly integrated and the pathways for plastics are already
reasonably well established and understood. However, the biobased
chemicals supply chain is a combination of the chemical and
biotechnology fields. The creation of an efficient supply chain
requires investment and education, both within the industry and the
consumer base. Many of these supply chain challenges are related to
reaching a revenue break-even point that will support investments in
the infrastructure that must be built for this emerging industry.
Education within the industry is essential to help biotechnology
scientists understand the dynamics of the chemical industry. The people
who run some of the new start-up biobased companies have no experience
in the traditional petrochemical industry. Many rely on consultants and
market studies to make their decisions and they do so without
understanding the nature of the overall chemical sector supply chain.
Some individuals point to the fact that there is a huge end market but
they neglect to emphasize that 70 percent of that market is already
captive to downstream conversion processes. When chemical companies
decide which chemical to produce, they already have downstream
applications in mind, ensure that the products they produce are cost
effective, and can beat out competitors.
However, when a new product is introduced into the biobased
chemicals sector, there is sometimes less of a clear downstream
application in mind and sustainable options are not always immediately
accepted into the supply chain. The decision to introduce a biobased
chemical product is often made without understanding the macro-level
issues in the chemical market, such as understanding the end users'
technical specifications, volume requirements, environmental and
regulatory requirements, and controlled-substance issues. This lack of
understanding can cause otherwise highly innovative companies to fail.
To prevent the recurrence of this situation, companies producing
biobased chemicals should hire people from the both the chemical and
biotechnology fields. Comprehensive knowledge and consideration of the
factors involved in operating a business in the chemical sector helps
insure profitability.
6. Emerging Education
Education is emerging to address food versus fuel and GMO
misconceptions. Many of the organizations interviewed for this report
noted that the food versus fuel debate remains an inhibitor to market
growth, based on consumers' misperceptions concerning this issue. In
addition, many consumers will not buy products that are derived from
GMOs. Many biobased products fall into this category, as it is
difficult to trace whether the feedstocks used to make the biobased
products come from GMO or non-GMO sources, and even in cases where the
feedstocks can be traced, the distribution and processing and of the
feedstocks frequently mixes GMO and non-GMO feedstocks.
The origin of this debate goes back to the 1990s, when some NGOs
were fighting against the push of companies selling genetically
modified crops into European markets. Some NGOs campaigned against
GMOs, and as a result, many consumers became sensitized to genetically
modified ingredients. Even when biobased companies purchase non-GMO
corn to send to the mills that provide them with sugar, many of the
mills are part of a larger biorefinery campus, which makes it
impossible to segregate non-GMO feedstocks. Although many European
brands accept the idea that offsets, such as wind power, used by these
facilities are enough to cancel out the use of GMOs, many North
American retailers and manufacturers do not feel that these offsets are
enough to cancel-out the use of GMOs.
In fact, many large European brands point to the fact that
sugarcane and corn are the most efficient plants to use for biobased
products and second-generation feedstocks, such as wood stems, take a
lot more effort and are much more costly to utilize. Second generation
feedstocks have encountered limited growth in the market, but there are
concerns that the release of GHGs globally may cancel the benefits of
our domestic renewables policy. The link between the use of domestic
crops for biobased products rather than as a food source has almost no
correlation with the changes in the patterns of land use worldwide;
nevertheless, it is a concern that some people express in the ``food
versus fuel'' debate. In actuality, the United States is using fewer
acres for corn than it did 10 years ago, but the public perception is
that a higher percentage of corn being used to make ethanol means there
is less land available for food production, which simply is not true.
7. Production Credits and Financing Incentives
Investments by large chemical companies are focused on biobased
chemicals facilities, but production credits and financing incentives
are needed to create U.S.-based facilities. After a somewhat rocky
start following the expiration of funding from the 2008 Farm Bill, the
BioPreferred Program had a good level of support in the 2014 Farm Bill.
The administrative regulatory rules are well developed, particularly
for the Biorefinery Assistance Program. Previously, this rule was
strictly for advanced biofuels, whereas the current iteration expanded
the program to include biobased products and renewable chemicals. This
has led to the development of a framework for assessing the biobased
products economy. However, this framework also requires that the public
and private sectors be made aware of the fact that biobased products
are not in stand-alone facilities; rather, they are part of a large
supply chain that begins with biorefineries. In the past, if a
biorefinery produced anything other than biofuels, it did not qualify
for farm bill benefits, but this has changed.
The Biomass Crop Assistance Program (BCAP) is an extremely
important part of the farm bill. For members of the farming community
to grow cellulosic, non-food crops, they need assurance that they can
make money by doing so. Some biomass crops require a planting lead-time
of 1 to 5 years, and this program now provides an assured market with
mandatory funding.
Cellulosic ethanol was the initial focus of the BCAP, but the first
wave of cellulosic technologies were disappointing. The second-
generation cellulosic biofuels have a PTC that expires on December 31,
2016, but currently, they are receiving a tax credit. There is a
possibility that a PTC linked to a flexible format based on the
specific business plan would be very beneficial. This is currently in
the works for the biofuels and renewable chemicals sectors. This tax
credit is available to the oil and gas industry through Master Limited
Partnerships (MLPs) and the credit is related to how business partners
and business liabilities are defined. MLPs may be made available to
renewable energy companies.
The Environmental Protection Agency (EPA) is developing general
frameworks for carbon accounting. Currently, carbon accounting with low
carbon fuel standards does not treat biobased carbon feedstocks as
neutral; however, many in the biobased industry believe they should be.
This long-term iterative framework could take years to resolve. Those
in the industry hope that the framework will incorporate a credit for
biobased feedstocks that are converted into biobased chemicals.
Many of the investments in the biobased products industry are being
made by large chemical companies, and these companies are going through
many mergers and acquisitions. These companies include Bayer/Monsanto,
National Chemicals (China)/Syngenta, and Dow/DuPont. These mega-mergers
will result in companies that will have many more resources to invest
in biobased products and that have a longer capitalization timeline.
However, there are major challenges for emerging companies that are
often small start-ups without significant capital. Without a partner to
provide the required financial resources, it may be difficult to
interest investors in a 5 year planning horizon. The length of time
required to develop a product is a function of the available
infrastructure and the fact that the biobased products industry and the
biofuels industry are closely connected. Currently, there is a lack of
infrastructure for the value chain that extends from biofuels to
biobased products, and biobased products do not have a public policy
driving the front end of the value chain. This is an enormous roadblock
to growth in the biobased economy.
Another legislative challenge has to do with EPA's regulations that
are in place to standardize fuel. The regulations were intended to
assure people that their vehicles would run properly when they buy
fuel. The central focus of EPA's regulations in this area has been to
standardize fuels with the intent of reducing emissions. However, EPA's
standardization effort is focused primarily on gas derived from
petrochemical sources rather than renewable sources. The assumption is
that any biobased fuels that are added to fossil fuels must comply with
the standards for fossil fuels. This has created a challenge for
biobased fuels, making it more difficult to use them in flex-fuel
vehicles, which are designed to operate primarily with 15 percent
ethanol in the fuel mixture, imposing a cap on the growth of the
market. The current challenge is how to go about getting approval for a
higher level of renewable fuels for all vehicles. Various companies,
including POET, are working on these problems with the automotive
industry. The next-generation fuel for vehicles must meet these
regulatory constraints because, currently, they are impeding the growth
of the renewables market.
The biopolymer sector has experienced tremendous technology
development over the last decade, with the United States leading these
advancements. However, for production capacity, the sector is still in
its nascent stage. The opportunity and the danger for the United States
is whether the construction of biopolymer plants over the next 5 to 10
years and the full range of their associated facilities and jobs will
predominantly be located in the United States or elsewhere, where
feedstocks and the cost of production can be cheaper. For example,
companies identified as the ``hot leaders'' in the biobased products
industry, such as Verdezyne, are building facilities in Malaysia,
because of the vision and financial support of the country's
government. It is clear that certain governments and emerging economies
are offering incentives to convince companies to invest there in an
effort to ensure their country's long-term, sustainable growth.
Southeast Asia, Europe, and Brazil are establishing regional hubs of
industrial biobased products. Good examples of companies facing this
issue are Verdezyne and Green Biologics, both of which have pursued a
dual approach of sourcing outside and inside the United States based on
local government support.
The businesses that will survive most easily in the biobased
products industry are those that emerge from creatively designed
collaborations. This means carefully selecting a pathway, carefully
assessing and minimizing the risks associated with that pathway, and
appointing leaders who are creative, smart, and spend money wisely, as
they go forward. This is the basic path forward for this industry, all
the way from feedstock suppliers and treatment technologies, to
downstream building block technologies and sustainable materials that
are converted into higher value chemicals. Partners along the end-to-
end supply chain will need to work together to design these supply
chains, with a given end product in mind, and the total end-to-end cost
to serve the customer must be used to drive cost targets for those
enterprises along the way. This may involve larger companies
collaborating with smaller companies that have new and innovative
ideas.
One example of successful use of PTCs is in Iowa. Iowa also has
identified biobased products as a targeted growth industry for the
state and has advocated for a biobased production credit to be
established.\19\
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\19\Willett, B. and Hrdlicka, J., ``The Case for a Renewable
Biochemical Production Tax Credit'', Iowa Biotechnology Association,
2016.
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Interviews suggest that a renewable chemical PTC would be
fundamental to the ultimate location decision in or outside Iowa for
new projects. Iowa has invested more in biobased manufacturing capital
assets than any other state. The state invested $61 million in the
ethanol industry. This money will be returned to the state though taxes
and increased economic activity. The payback from income taxes alone
would take just 2 years. The payback period is only 1 year if we assume
that eight percent of the economic activity is returned in taxes.\20\
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\20\Cultivation Corridor, ``Biobased Chemicals: The Iowa
Opportunity,'' Cultivation Corridor, last updated 1/14/16, http://
www.cultivationcorridor.org/assets/pdf/Iowa-Biobased-Chemicals-Full-
Report.pdf.
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The success of the biobased products industry depends on its
ability to function at a large enough scale to be competitive with the
petrochemical industry. Being competitive does not require that
biobased products industry be the size of the petrochemical industry,
but it cannot simply be a series of small plants scattered around a
landscape. Moreover, many of the chemicals produced through
fermentation that go into biobased products happen to be competing in
commodity markets. Producers should think clearly about focusing on
specialty markets, with products that have unique performance
characteristics, based on conversion of biobased commodity chemicals
into specialized chemicals through chemical synthesis. Specialty
biobased chemicals can be produced in this manner at a total cost of
production that is lower than the variable cost of production of
petrochemically derived chemicals, which allows them to grow and
compete.
An executive interviewed argued that producers of biobased products
must adapt to the market they are in, and to do this, they must
understand their product on every level. This executive continued,
adding that it is important to understand the performance of the
molecules that make up a product and how they blend with other
ingredients; it is important to be able to target the right
applications through innovation and understand the commercial impacts
of a product. According to this executive, having a deep understanding
of their products allows biobased producers to be more adaptable than
big commodity players.
Our interviews regarding PTCs also lead us to believe that short-
term incentives are sorely needed. Several companies with U.S.-
developed biobased technologies are looking for locations to build new
facilities. Some countries provide incentives to build these types of
facilities, but incentives for them are absent in the United States.
Given the intense international competition at this historic point, the
companies we interviewed are exploring all global options for expansion
projects, which includes taking into account political leadership and
market push and pull policies.
Investment in the biobased products industry remains strong.
However, continued growth can be bolstered by the development of a
strong end user market as well as growth in production credits to help
launch the industry.
C. Biobased Products Industry Growth Forecast
A recent forecast stated the following: ``One of the bright spots
in American manufacturing is the petrochemical industry, which produces
chemicals used to make everything from car tires to fertilizer to
fabrics. According to the American Chemistry Council (ACC), chemical
companies have committed $153 billion in new investment in production
in the United States over the next decade.''\21\ Given the growth in
the petrochemical investment sector as a whole, it is also likely that
some growth will be seen in the biobased chemical sector investment as
part of overall increased investment in the chemicals sector. Indeed,
interviews we conducted with university centers that focus on piloting
new biobased chemical technologies indicated that the university
centers are seeing strong demand for their services, an indicator of
the increasing number of emergent technologies, especially in the pilot
stage. (See the MBI case study in section III.) The ACC estimates that
growth in the chemicals sector will create more than 800,000 permanent
jobs, paying an average salary of over $69,400 and generating more than
$322 billion in annual economic output.
---------------------------------------------------------------------------
\21\Hoium, T., ``4 Reasons Why Falling Oil Prices Are Worse Than
You Think'', The Motley Fool, last modified 12/5/15, http://
www.fool.com/investing/general/2015/12/05/4-reasons-why-falling-oil-
prices-are-worse-than-yo.aspx.
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However, if the price of oil stays low for an extended period,
projects may be delayed or cancelled, which would result in fewer
manufacturing jobs being supported in the U.S. In addition, the number
of gas field jobs would decrease, because less natural gas is needed
for domestic manufacturing.
Despite the current low price of oil, we project that the biobased
products industry in the United States will exhibit steady growth over
the next 5 years. The rationale for this projection is the following
trends evident in our interviews:

The major focus of the leaders in the biobased products
industry is on innovation and differentiation of products.

Oil prices are increasing, which will make biobased products
more competitive.

There will continue to be growth in enzyme-related
industries.

Federal purchasing policies are becoming more focused on
biobased products.

A wave of emerging innovations is targeting the biobased
products industry.

Investments by large chemical companies are focused on
biobased chemical facilities.

We also identified several steps that must be taken to overcome
factors that challenge the growth of the biobased products industry:

Production tax credits (PTCs) must be extended beyond
biofuels to include biobased products.

Further legislation is required to support the biobased
products industry.

Financial incentives are needed to promote the construction
and operation of more U.S.-based facilities.

States need to provide resources to support the growth of
the biobased products industry, which is very important because
currently there are insufficient pilot plants to foster
innovation.

Further efforts to integrate the biobased products
industry's supply chain are needed.

Increased education is needed to help address the ``food
versus fuel'' myth and the ``no-genetically modified organisms
(GMOs)'' faction, leading to increased understanding of and
growth in the biobased products industry.
C1. Case Study: NatureWorks

Ingeo-based products by Natur-tec.

NatureWorks began as a joint venture between Cargill (a large
private agricultural products company) and Dow (a chemical, plastic,
and agricultural products company). Cargill had done a lot of
development work on high-end products using biological feedstocks and
expressed interest in forming a company focused on creating a
carbohydrate products economy. The Cargill-Dow joint venture included a
154,000 ton facility in Nebraska to transform carbon sugars
(cornstarch) into lactic acid, which is a key building block for
biobased products. The lactic acid produced on an industrial scale was
used as a monomer to produce several different polymers, including 20
different grades of plastic.
One product, polylactide (IngeoTM), is used primarily by
the packaging markets. The product has properties similar to PET and is
a clear plastic that is used in drinking bottles, plates and cups,
flexible film packaging, computer housings, baby wipes, apparel, covers
for cellphones, and many other products. Ingeo produces 75 percent less
GHGs and uses 50 percent less non-renewable energy than traditional
plastics, such as PET and polystyrene (PS).
Identifying the right applications for Ingeo was a challenge.
NatureWorks' Director of Public Affairs, Steve Davies, explained that
NatureWorks understands that there is not a green premium for biobased
products, so a product's performance must be superior to what is
already on the market. Mr. Davies went on to say that after about 10
years of studying the properties of Ingeo, NatureWorks now knows where
the material works well and where it does not.
For example, NatureWorks determined not to use Ingeo to make
plastic bottles because the material is technically ``breathable'', and
the water it contains can evaporate. However, it is excellent for
packaging leafy greens, as Ingeo allows a longer shelf life for the
product.
Mr. Davies also emphasized that understanding the fundamentals and
cost of what one is selling is important. There is a wide spectrum of
biobased plastics, from hard (PET) to soft (polyethylene for trash
bags), and everything in between. It is also important to look at the
ratio of the pounds of sugar required to produce a pound of plastic.
For PLA, 1.25 pounds of sugar produces 1 pound of plastic. Biobased PET
requires a ratio of 3 pounds of sugar to 1 pound of plastic. Mr. Davies
explained that there is constantly a need to make tradeoffs and
consider the cost-effectiveness and characteristics of one plastic
versus another, as PLA is better for some applications, while PET is
better for others. Mr. Davies argued that materials must be cost-
effective, and this point is often lost in discussion.
NatureWorks works with hundreds of partners that produce biobased
products. They are also expanding, and a petrochemical company based in
Thailand has invested as an equity partner, due to their large export
of cane sugar. There are plans to build a new biorefining facility in
Thailand near the source of feedstocks, as well as plans to expand the
Nebraska facility due to the increasing demand.
There is significant interest in certain product sectors, including
replacing PET clamshell packaging, using Ingeo for packaging yogurt at
Danone, and in other food-packaging areas. Ingeo is cost neutral, but
it performs better and has a smaller carbon footprint, and this has
become a winning combination for many manufacturers.
Another important element of food packaging is where the packaging
ends up. Many people discard packaging and do not consider what happens
to it after that. What if all of the food packaging could be composted?
The ``killer value proposition'' is to render the entire value stream
compostable by using PLA-based food packaging. Packaging for food
products is one of the biggest opportunities on the horizon for
NatureWorks, but there are enormous barriers. The conventional plastics
industry may never be replaced, and other than milk jugs and water
bottles, most plastics are not recycled.
Mr. Davies noted the importance of the Three Ps: Performing the
right function at the right price and meeting the customer's
preference, in that order. If a product is performing better than the
alternative and it is priced competitively, then it follows that
consumers will prefer it.
C2. Case Study: BASF

Source: BASF. Three BASF scientists in laboratory in
Tarrytown, New York.

Biotechnology is a key component of the German chemical company
BASF. It has the potential to manufacture products more efficiently
than conventional chemical processes and it can produce new products
inaccessible using conventional synthesis approaches. BASF uses
biobased-based methods of fermentation and biocatalysis to manufacture
various products, such as chiral compounds, enzymes, and specialty
ingredients for the personal care industry.
In February 2012, BASF opened a new biotechnology and microbiology
research center in Tarrytown, New York. In the new laboratory,
scientists from a number of disciplines, including material scientists,
biologists, polymer scientists, molecular biologists, and chemists, are
working together to develop more efficient biotechnological production
processes.
These researchers are also working to develop new antimicrobial
products for medical technology, hygiene, and health care. The use of
metabolic engineering, targeted metabolism modification, can enhance
the efficiency of the microorganisms that are used in these production
processes.
In 2013, BASF acquired Verenium, an enzyme company based in San
Diego, CA. Using proprietary and patented genomic technologies,
Verenium extracts microbial DNA directly from collected samples to
avoid growing microbes in a laboratory. Then, Verenium mines its
collection of microbial genes, which number in the billions, using
high-throughput screening technologies designed to identify unique
enzymes as candidate products. In making these investments, BASF
demonstrated its unmitigated belief in the strength of the biobased
products industry. Now, BASF is working to integrate the Verenium
technology into its business portfolio.
For example, BASF produces a biobased product known as
polytetrahydrofuran 1000 (PolyTHF), which is used in outerwear,
sportswear, and swimsuits. PolyTHF mainly is used as a chemical
building block for thermoplastic polyurethane, which is used to make
parts of ski boots and skates, shoe soles, and instrument panel `skin'
for automotive applications. It also is used to make hoses, films, and
sheathing for cables and as a component of thermoplastic polyether
esters and polyether amides. Other applications include cast
elastomers, which are used, for example, in the production of wheels
for skateboards and inline skates.
PolyTHF is derived from 1,4-butanediol (BDO), which BASF produces
under license from Genomatica.\22\ Although it is biobased, it is a bit
more expensive than petroleum-based BDO. Cost of materials is a key
issue that BASF always must consider. It is very important to evaluate
customers' and brand owners' opinions of biobased products versus
conventional products, particularly when the biobased products may be
marginally less cost effective.
---------------------------------------------------------------------------
\22\BASF, ``BASF now offers bio-based PolyTHF'', BASF, last updated
3/5/15, https://www.basf.com/en/company/news-and-media/news-releases/
2015/03/p-15-163.html.
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BASF is committed to biobased feedstocks, and to this end, in 2015,
BASF expanded the scope of its license agreement with Genomatica. Using
Genomatica's patented process, BASF produces BDO from renewable
feedstocks in a large production facility. Under the expanded license
agreement, BASF can produce up to 75,000 tons of renewable BDO per
year, while Genomatica will continue to advance its patented process
technology. Today, BASF produces more BDO than any other company, and
it has the capability of producing this product in multiple locations.
BDO is a versatile monomer, which can be used in the manufacture of
many other chemicals. As such, BASF views BDO as an increasingly
important product in its portfolio.\23\
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\23\BASF, ``BASF and Genomatica expand license agreement for 1,4-
butanediol (BDO) from renewable feedstock'', BASF, last updated 9/24/
15, https://www.basf.com/eg/en/company/news-and-media/news-releases/
2015/09/p-15-347.html.
---------------------------------------------------------------------------
BASF recognizes that a core unknown underlying the future of the
biobased products industry is customers' perceptions. BASF's goal is to
produce products to sell to customers in the most economical and
sustainable way possible. The Company has invested in extended LCAs for
many of its technologies, which involves exploring the various
technological pathways to produce any given product. For some products,
there are clearly huge advantages for chemical processes over
fermentation. New chemical and fermentation processes are being
developed, and these studies will continue.
Markus Pompejus, Vice President of Research, noted that
biotechnology is the only pathway for certain products, especially
those that involve enzymes. BASF invests in research to examine
internal pathways for the production of chemicals in integrated
production facilities rather than in isolated facilities, which allows
it to produce at a more efficient scale in its major production sites
in Europe and China.
BASF does not let the low price of oil detract the company from its
long-term view. Mr. Pompejus pointed out that technology in isolation
is not a strategy. According to Mr. Pompejus, a strategy involves
questions concerning the best ways to produce products, i.e., ways that
are economically and environmentally optimal, and this involves
evaluating barriers and tradeoffs. One of the most important issues in
this industry is the lack of ability to predict the decisions that the
government will make. Legislation that varies depending on who is in
Congress can cause disruptions in long-term strategies. Predictability
in legislation is a factor that supports the long-term approach to
investments in biobased technology.
BASF is committed to collaborating with universities and small
companies to conduct research. Mr. Pompejus emphasized that biobased is
not about taking a wait-and-see attitude. He went on to explain that
BASF has made a strong R&D commitment to industrial biotech with the
full understanding that there is not a premium just because a product
is sustainable and that these materials must be produced at the same
cost level as non-biobased materials, or, alternatively, provide an
extra form of value. Mr. Pompejus observed that there is no chemical
that is a ``pure'' drop-in, as there are always performance
differences. A monomer produced by fermentation is not a drop-in for a
petroleum-derived material, as there always will be downstream
processes that must adapt when the switch is made from a chemical raw
material to a fermented chemical. The downstream impacts must always be
considered. This is true even for a 99 percent pure chemical produced
in two different ways. The minor side effects on the downstream process
may cause it to perform in a somewhat different way.
Mr. Pompejus added that sometimes the process has to be changed,
and familiarity with the whole supply chain allows BASF to do that
internally.
C3. Case Study: Eastman Chemical Company

Using cellulose from wood pulp or cotton linters, Eastman Kodak
developed cellulose nitrate, which was used in the film that launched
the movie entertainment industry. An unfortunate property of cellulose
nitrate film was that the heat from the projector's lamp often ignited
it. This led to the development of cellulose acetate film, also known
as ``safety film'', which became the industry standard by 1948. Because
cellulose acetate film degraded over time, polyester film began to
replace it in 1970. Polyesters, which are composed of mixed esters,
also are used for filter media and coatings, with the latter producing
a very clear, mirror-like image. The Eastman Kodak Company was the
major producer of film for cameras prior to the digital camera era,
when digital cameras virtually eliminated the Kodak film brand. The
management of the Company understands how technology and the
competitive ecosystem can change an entire industry in a very short
period. In 1994, Eastman Chemical split off from the original Eastman
Kodak Company.
Today, Eastman Chemical is one of the largest producers of
cellulose acetate, which is used in a wide variety of applications,
including pharmaceuticals, adhesives, automotive products, coatings,
polishes, and food packaging.
Dr. Stewart Witzeman, an organic chemist who has been at Eastman
for more than 30 years, noted that, to be successful, biotechnology
requires a focus on techno-chemical analyses and on the ability to
involve the multiple factors that impact innovation decisions. Eastman
has made a specific strategic decision to focus on specialty materials
rather than commodities. To support this decision, the Company
established a group to develop innovation models that can balance the
price of a barrel of oil versus corn and gas prices, capital costs, and
feedstock prices. The models also consider the total lifecycle of
feedstocks and products in relation to customers' needs.
Because Eastman is the only producer of mixed cellulose esters, the
team focuses on how additional investments can drive the right market
outcomes. For example, Eastman shut down its butanol facility when it
became clear that the Company could not compete with the production of
this chemical through petrochemical pathways. Strategically, it also
was clear that adding butanol capacity was not consistent with the
Company's direction in focusing on specialty materials.
The Company continues to drive innovation related to biobased
products around a line of products focused on enzymatic analysis, some
of which are biobased. For example, its GEMTM technology is
focusing on the ingredients of sustainably manufactured cosmetic
products. The Company's web site states ``Sustainability . . . is
embedded in everything we do. It's about balance.''\24\ Guided by the
U.S. EPA's ``Twelve Principles of Green Chemistry'', GEMTM
technology uses enzymes and closely controlled manufacturing conditions
to eliminate high temperatures, strong acids, and unwanted byproducts,
while using less energy than conventional manufacturing processes.\25\
Eastman's adhesives also include many natural products, such as its
rosin resins, derived from the sap in tree stumps.
---------------------------------------------------------------------------
\24\Eastman, ``Sustainability: Embedded in everything we do'',
Eastman, accessed May 2016, http://www.eastman.com/Company/
About_Eastman/Our_Stories/Pages/Embedding_Sustain
ability.aspx.
\25\Eastman, ``Eastman GEMTM technology'', Eastman, accessed May
2016, http://www.eastman.com/Company/GreenProcess/Pages/
Overview.aspx?utm_source=GEM%20Tech
nology%20landing%20page&utm_medium=GEM%20Technology%20landing%20page&
utm_campaign=GEM%20Technology%20landing%20page.
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In all of these cases, biobased feedstocks contribute to the
improved performance of these products. Dr. Witzeman emphasized that
Eastman focuses on superior performance at a competitive price and
pointed to chemicals, such as PLA, that have had some performance
problems over the years. He noted that many start-ups are able to
identify a biobased material, but struggle with articulating the market
application. Dr. Witzeman went on to say that having an innovation
without a clear value proposition from the outset is a recipe for
failure.
To overcome this problem, Dr. Witzeman asserted that companies
should not focus on innovations that are an adjacency or a minor
adjustment to a current product or material. Rather, to be truly
groundbreaking, companies must begin with market analysis at a macro
level: understand the competition and the pain points that exist in the
market. They can then begin to determine what is required to solve
those pain points and explore that with customers. Based on customer
feedback, companies can then decide if they have something that is
worth pursuing.
C4. Case Study: DuPontTM

DuPont has a long history of research and innovation in the
biobased products industry and is focusing on the innovative
manufacturing of products made from biobased feedstocks. Its most
successful product to date, Sorona', was developed as a
polymer and is currently used extensively in the carpet and apparel
sectors. The Company also has invested in research on emerging
technologies using plant-based feedstocks to produce new products.
A Global Marketing Manager of Biomaterials from DuPont commented on
some of the leading challenges facing the biobased products industry:
From my perspective, one of the things that the commercial biobased
industry as a whole is challenged with is the idea of getting consumers
to recognize and pay for the value that sustainability offers them and
society overall. The default for most consumers is to think short-term
and buy the product that is the least expensive to do the job without
regard to its longer-term impact on the environment. One of the ideas I
believe we have to embrace is that sustainability and our need to make
conscious consumer choices about living sustainably will become an
increasingly bigger part of our daily lives. But to economically
compete in a sustainable world, we need to have higher performing
products, allowing companies to extract value for that differentiated
performance while using renewably-sourced feedstocks to achieve these
product attributes. We want to do the right thing, but a higher level
of awareness and value recognition is needed in the consumer base.
Another challenge to the biobased products industry concerns
starch-based versus plant-based feedstocks. Plant-based feedstocks,
such as agricultural waste or purposefully grown crops, can be used for
biobased products, but because the supply chain and technologies for
these feedstocks are still not well developed, the costs are still
excessive. Therefore, the industry must continue to build on the
success of the grain-based and starch-based agricultural inputs that
already provide significant advantages in terms of GHG reductions,
economic benefits to rural economies, and reducing our reliance on
fossil fuels.
DuPont aims to create sustainable solutions for the masses, not
just for those who can afford to pay a green premium. They believe that
biobased product technology should be designed to benefit the greatest
number of people. DuPont has a strong research program that is focused
on developing other value-added polymers based on biotechnology and
renewable feedstocks.
According to our interview, this means extending the amount of
renewable feedstocks that can be produced sustainably by using biomass
consisting of the residual, non-food parts of current food crops, as
well as other non-food crops. These types of feedstocks also include
industrial waste like woodchips and the skins and pulp from fruit
pressing.\26\ This, in turn, will require greater collaboration between
entities to co-develop new technologies that are the products of two
different complementary capabilities.
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\26\Inderwildi, O.R. and King, D.A., ``Quo vadis biofuels?'',
Energy & Environmental Science 2, no. 4, (2009): 343-346, doi: 10.1039/
B822951C.
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A good example is the case of Sorona' (produced from
Bio-PDOTM manufactured by DuPont Tate & Lyle). This product
is sold primarily for fiber applications, including apparel,
residential carpets and rugs, commercial carpets, and automotive
carpets, mats, and interiors.\27\ The research into Bio-
PDOTM began with the realization by Tim Gierke, Research
Manager at DuPont Central Research & Development, that 1,3-propanediol
(PDO) has three carbons and that three-carbon and six-carbon forms are
prolific in nature. A team of DuPont scientists and engineers
collaborated with polymer experts to discuss the possibility of
producing PDO using biological processes. This led to a research
project that lasted over a decade and that eventually resulted in a
biological process that could produce the quantities of PDO required
for a commercially viable product.
---------------------------------------------------------------------------
\27\DuPont, ``The Manufacturing Process of Bio-PDOTM and
Bio-Based Fibers'', DuPont, accessed 6/2/16, http://www.dupont.com/
products-and-services/fabrics-fibers-nonwovens/fibers/brands/dupont-
sorona/articles/how-dupont-sorona-is-made.html.
---------------------------------------------------------------------------
Next, DuPont scientists partnered with scientists from Genencor, an
industrial biotech company that later was acquired by DuPont, to
develop an organism that could use the glucose from cornstarch to
produce PDO. They also developed a proprietary fermentation process
that included meticulous cleaning and distillation to produce a pure
form of Bio-PDOTM.
Then, a commercial scale, $100 million dollar Bio-PDOTM
plant was built in Loudon, TN, as a joint venture between DuPont and
Tate & Lyle. Today, railcars full of corn arrive at the Tate & Lyle wet
mill where glucose is produced from cornstarch and pumped from the wet
mill to the Bio-PDOTM production facility, where
microorganisms are added to the glucose. Five nine-story-tall
fermenters are filled with glucose that contains the organisms. The
organisms excrete Bio-PDOTM, forming a broth that is
separated and distilled, producing 99.97 percent pure Bio-
PDOTM. The remaining 0.03 percent is primarily water. The
Bio-PDOTM is loaded into rail cars and shipped to customers
who use it to make a variety of products.
One of these products is Sorona'. Carpeting made with
Sorona' offers durability that is equal to or better than
nylon carpeting, and it provides crush resistance and resilience. In
addition, carpeting made with Sorona' is naturally
permanently stain-resistant: the resistance is built into the fibers
and does not diminish with time or use as occurs with topical
treatments. Apparel made with Sorona' has exceptional
softness, strength, quick drying time, and stretch and recovery
characteristics. As a result, the sales of this product have increased
in the various markets every year since its introduction.
There are several important points that should be emphasized
evident in this case study:

The timeline for product development was about 10 years,
which is longer than most. This is clearly indicative of the
need for longer-term planning horizons, because biotechnology
research often requires multiple iterations to produce
compounds with the required characteristics, and then, the
required process technology must be developed.

DuPont found it important to envision and consider the end-
to-end supply chain for a new product to be commercialized.
Tate & Lyle had a technology that was suitable for the
development of Bio-PDOTM that DuPont could use. If
it had been necessary for DuPont to initiate the development of
a new technology for this purpose, the project would have had a
lower probability of success.

From commercial and marketing perspectives, the performance
characteristics of Sorona' carpet and apparel are
unique, in that the product outperforms PET or nylon products
based on several attributes in these categories.
Sorona' continues to gain market share in
competition with these products, and it has sustained its
performance advantages over them.

These issues form an important set of ``lessons learned'' that
researchers and manufacturers of biobased products should consider.
Some of the key questions for executives to consider include the
following:

1. From a market standpoint, does the technology serve a specific
market need? What volume can be produced? Specialty
products are certainly attractive since niche markets tend
to have higher margins. However, companies should also
consider the broader market and ask (1) whether their
technology can address a larger, broader market and (2)
what it will take that larger market to use their
technology.

2. What complications will be involved in setting up the supply
chain for the technology? What does the capital footprint
look like for this technology? Is there a drop-in solution
that exists within a current asset, and, if so, can a
partnership or joint venture be established to utilize this
capacity? This can make the difference between a $20 to $30
million capital investment to expand a facility and the
$350 million typically required to build a new plant.

3. If the capital assets result in an acquisition, is the
acquisition complementary to what the company already has
in its portfolio. If so, would it help diversify the
company and result in improving what the company already
has?

4. Is the sustainable product using truly renewable materials?
Often, this issue is overlooked, and it requires an
understanding of many complicated issues. For instance,
will it fall into the perceived ``food versus fuel'' issue,
is the site itself sustainable, and how does it participate
in the renewable materials cycle?

These issues require significant strategic insight and discussion
during product development and scientific research targeting processes.
A holistic approach is required, and all factors, such as markets,
supply chains, and sustainability requirements, that come into play as
the scenario for a new biomaterial evolve must be considered.
Recently, DuPont announced an intended merger with Dow with a
subsequent plan to split into three separate companies. This activity
will result in a large ``specialty'' company that has a significant
interest in the biobased products industry. Future technology platforms
include emerging biomaterials for various markets, such as paper and
personal care, and fibers to replace existing products with biobased
products.
C5. Case Study: The Coca-Cola Company

When Coca-Cola set out be more sustainable, it recognized from the
outset that the entire end-to-end lifecycle of a beverage bottle had to
be considered. Biobased feedstocks are used to make the
PlantBottleTM packaging, and on the back end, when the
consumer is through with it, the bottle can be recycled or repurposed.
This can help keep the CO2 the biobased feedstocks removed
from the atmosphere sequestered inside these products, rather than
released back into the atmosphere.
Coca-Cola's PlantBottleTM is made from 30 percent plant-
based materials and 70 percent traditional, petroleum-based materials.
Because the end product is still PET plastic, the
PlantBottleTM package delivers the same performance as PET
plastic bottles made from fossil fuels (e.g., shelf life,
recyclability, weight, chemical composition, appearance), but it
reduces potential CO2 emissions. PET plastic is made up of
two components: MEG (mono-ethylene glycol), which makes up 30 percent
of the PET by weight and is made from plants, and PTA (purified
terephthalic acid), which makes up the other 70 percent.
Coca-Cola is exploring the development of furanic building blocks
from plant-based sugars, under the name YXY. These furanics building
blocks are the basis of next-generation, plant-based plastics and
chemicals. Avantium, the company producing these furanic compounds, is
focusing its efforts on using the YXY technology as a catalytic process
to convert sugars to 2,5-furandicarboxylic acid (FDCA), a biobased
alternative to terephthalic acid (TA). FDCA can be used to produce the
polyester polyethylene-furanoate (PEF), a 100 percent biobased material
that could replace PET in large markets, such as bottles, fibers, and
film. Coca-Cola is working with Avantium, Danone, Gevo, and Virent to
support the scale-up of Avantium's plant-based PEF. Virent's chemical
allows the remaining 70 percent of the bottle to be plant-based.
PlantBottleTM packaging is available to consumers in
more than 40 countries and, to date, the Company has produced over 40
billion bottles. This is a large, critical mass of PET that is used in
a number of leading brands, such as Simply Orange, Minute Maid, Gold
Peak Tea, Dasani, and SmartWater. Biobased PET is predominantly used
for the packaging of carbonated soft drinks, which accounted for more
than 75 percent of the market in 2013. The increasing consumption of
beverages in the emerging markets of Brazil, Russia, India, China, and
South America are expected to drive the growth of the biobased PET
market. Coca-Cola has committed to promoting the use of biobased PET in
packaging, which is expected to have a major impact on market growth in
the near future.\28\ The feedstock for PlantBottleTM
packaging is sugarcane from Brazil, and it is moving toward cost parity
with PET derived from crude oil. Coca-Cola sees a pathway for
PlantBottleTM technology to emerge as the dominant PET
option in the end, especially since oil prices are expected to
increase.
---------------------------------------------------------------------------
\28\Grand View Research, ``Bio-Based Polyethylene Terephthalate
(PET) Market By Application (Packaging (Bottles), Technical, Consumer
Goods), And Segment Forecasts To 2020 Is Expected To Reach 5,800 kilo
tons By 2020'', last updated 12/1/14, https://globenewswire.com/news-
release/2014/12/01/687467/10110349/en/Bio-Based-Polyethylene-
Terephthalate-PET-Market-By-Application-Packaging-Bottles-Technical-
Consumer-Goods-And-Segment-Forecasts-To-2020-Is-Expected-To-Reach-5-
800-kilo-tons-By-2020.html.
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Coca-Cola's has an on-going effort to take the 70 percent non-
renewably-sourced portion of the bottle, and move it towards a 100
percent biobased resin. The Company is slowly making headway towards
this goal.
There are three driving forces behind Coca-Cola's decision to
create and use the 100 percent PlantBottleTM package.

1. Sustainability and carbon capture. The response from consumers
was overwhelmingly positive concerning
PlantBottleTM packaging. The Company has also
made significant strides in better communicating the
technology used to create the PlantBottleTM to
its consumers, distributors, and partners.

2. Cost and line-of-sight around competitive elements. This came
about as the cane sugar feedstocks in Brazil proved to be
cost-competitive. Coca-Cola also needed to prove that the
sugarcane was being grown on arable land, was not competing
for land or water with other crops, and that the byproducts
from sugar extraction were not being wasted.

3. Top-line growth and brand differentiation.
PlantBottleTM packaging has become a core
element differentiating Coca-Cola beverages, especially
with consumers' growing focus on sustainability. Coca-Cola
has collaborated with the World Wildlife Fund to form a
consortium that includes brands, such as Nestle, Danone,
Unilever, Ford, P&G, Nike, and others, to set guidelines
and industry standards that prevent others from jumping in
with green washing claims or creating confusion.

Michael Knutzen, Global Program Director for
PlantBottleTM, indicated that Coca-Cola is the largest
biobased PET buyer. According to Mr. Knutzen, Coca-Cola views itself as
a catalyst for the industry to increase use of renewable materials, and
it is working with its partners to do so. Mr. Knutzen went on to say
that Coca-Cola is sharing their technology with other companies so they
can all benefit from the PET supply chain that Coca-Cola is creating.
Mr. Knutzen remarked that one of the benefits Coca-Cola would like
to see is for the polymer sector to enjoy the same benefits that the
Renewable Fuel Standard (RFS) provides to biofuels. It is easier to
incorporate ethanol into biofuels than to make plastic out of ethanol.
Furthermore, fuel companies tend to have limited partnerships that
provide tax benefits, while buyers of renewable plastics are not
eligible for the same benefits.
C6. Case Study: POET

POET stared when Jeff Broin and his family bought a foreclosed
ethanol plant in Scotland, South Dakota. POET has since grown from a
single, small refinery into one of the largest producers of ethanol and
other biorefined products in the world. The success of the first
enabled POET to operate more than 25 production plants and form a
vertically integrated business system with several business entities.
In addition to biofuels, POET produces a variety of products, including
Dakota Gold distiller's grains, VoilaTM corn oil, and
INVIZTM zein. The Company is also focusing on the
development of natural, renewable food sources and alternatives to
petrochemicals. The Company has ``an integrated business model that
combines technology development with expertise in construction,
operations, risk management, and marketing''.\29\
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\29\POET, ``Company At a Glance'', POET, accessed August 2016,
http://www.poet.com/at-a-glance.
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POET is also on the forefront of encouraging the switch to a
bioeconomy. The RFS has largely pushed the United States toward
blending renewable fuel with transportation fuel. To diversify, the
Company has moved into animal feed, which is another emerging market
due to the trend towards higher protein diets. POET is also working on
developing cellulosic ethanol, with a ramp up of a 25 million gallon
cellulosic plant. It is working to use corn to power its cellulosic
operations, and feeding an adjacent corn ethanol plant with leftover
raw materials.
POET has patented a unique technology using a raw starch hydrolysis
process, called BPX, which converts starch to sugar with a proprietary
blend of enzymes, whereas other ethanol producers use a jet cooker to
break down starch with heat. BPX reduces the energy requirement in the
plant by eight to 15 percent and increases the yield by 0.10 to 0.15
gallon per bushel. After years of development, the process was ramped
up to commercial-scale production in 2004, and it is currently used in
all of POET's biorefineries. The EPA recognizes BPX as an advanced corn
ethanol technology under the second RFS regulations.
POET is working on the branding of their products. The American
Petroleum Institute's (API's) press releases beginning in the mid-2000s
were initially supportive of the RFS and of biofuels in general.
However, as the production of biofuels has increased and has become
more of a competitive threat, the petroleum industry has become less
supportive. To educate the public and change this perception, POET has
focused on three key messages related to biofuels and biobased
products: biofuels are clean burning, based on renewable materials, and
emit fewer toxic compounds than gasoline. The Company also recognizes
that additional work is required to support public views concerning
GMOs and to counter false conjectures related to the food versus fuel
debate. One Company executive noted that the biobased products and
biofuels industries have the potential to replace the petroleum
industry, and loosely supported conjectures could hamper this
potential. Rigor and focus are needed on these issues and the academic
community can play a big role in this regard. The POET executive
believes that rigorous analytical study on this subject will show the
actual environmental impacts of both sources of fuel. The API must face
the facts that there will be more fuel-efficient vehicles on the roads
and that there will be increased competition from renewable fuels.
While the Corporate Average Fuel Economy (CAFE) standards cannot be
changed, surpassing the competition is always an option. When this
option is exercised, there should be strong efforts to ensure that the
public receives the right message.
C7. Case Study: Verdezyne

Verdezyne is a global manufacturer of industrial chemicals that has
developed technology for producing a range of chemical intermediates
via fermentation of renewable feedstocks, primarily byproducts of fatty
acids. The Company has developed a proprietary platform for engineering
yeast to metabolize multiple non-food-based renewable feedstocks and
produce a number of widely used, high-value chemicals.
Verdezyne's first commercial plant in southern Malaysia is expected
to produce its first commercial product, biobased dodecanedioic acid
(DDDA), by the end of 2017. DDDA is a valuable intermediate used to
produce high performance nylon 6,12; polyester resins; adhesives; and
powder coatings. DDDA is used in many other applications as well,
including, polyester polyols, adhesives, corrosion inhibitors, and
coatings. Verdezyne uses a yeast platform to produce DDDA from low-
cost, plant-oil feedstocks. DDDA is traditionally produced from
butadiene using a multi-step petrochemical-based process.
Recently, Verdezyne was awarded the Bloomberg New Energy Pioneer
Award as one of the 50 Hottest Companies in the Advanced Bioeconomy.
The candidates were assessed using the following three criteria:
potential scale, innovation, and momentum. Verdezyne also recently
received the 2016 Small Business Award at the Presidential Green
Chemistry Challenge Awards.
Jenna Ngian, who joined Verdezyne in January 2015 as Vice President
of Global Sales and Supply Chain, has over 25 years of experience in
sales, marketing, product management, supply chain management,
operations, and business process reengineering for leading chemical
companies, including DuPont and INVISTA. Prior to joining Verdezyne,
she was leading product management at Genomatica, where she worked to
create brand reputation and brought supply chain expertise to the
commercialization of the Genomatica's products. Her experience working
in the traditional chemical industry was important for moving into the
field of biobased products.
Ms. Ngian's perspective is based on her work at both traditional
chemical companies and biobased chemical companies. One very important
key difference between the two is financing. According to Ms. Ngian,
financing is more than just an important issue--it is the biggest
issue. The financing options available to a company can differ
depending on the company's size. Most large chemical companies self-
fund their expansions and other needs from equity or debt since they
have relatively good access to financial markets, but smaller biotech
companies must depend on funds from their external partners. Because
the technology development cycle usually takes a long time, venture
capital or development partners often become impatient, and many
companies deplete their available resources before they reach the proof
of technology or commercialization stages. Ms. Ngian believes that the
government needs to play a bigger part in developing this industry, as
do many other countries in the world except the United States. The
implication is that the U.S. Government should be more like the
governments of other countries who have played bigger roles in
developing this sector.
The field of biotechnology is rapidly changing due to many
different factors. First, the productivity of sequencing and synthesis
has increased at an exponential rate. The cost of genome sequencing in
2001 was $100 million per sequence. By 2007, it was $10 million and in
2016, it is $1,000, which is only 0.01 percent of what it was 9 years
ago. By 2020, it is expected to decrease to a penny. The cost of
synthesis also has decreased to less than 0.6 percent of its base cost
15 years ago.\30\ The biotechnology field is very different from other
traditional members of the chemical sector, a fact that has made
Verdezyne's strategy successful.
---------------------------------------------------------------------------
\30\Timetoast, ``History of Biotechnology'', Timetoast, accessed 7/
25/16, https://www.timetoast.com/timelines/history-of-biotechnology--3.
---------------------------------------------------------------------------
The second major change can be observed by studying the history of
biotechnology. After the structure of DNA was discovered in 1953, the
development of many other genome-related discoveries followed, such as
gene expression, sequencing, and cloning. Decades later, these
developments provided the basis for significant technologies the
biobased industry now uses. Advancements in tools, methodologies, and
digital technology have also aided in progressing this field. For
example, at the onset of World War II, the United States and its allies
lost access to the natural rubber supply from Southeast Asia. To
prevent vulnerability due to the loss of this important material, the
U.S. Government provided support for multiple large rubber companies
working together to find a solution. With the sponsorship of the U.S.
Government, the companies were able to pool their technologies,
intelligence, and resources to produce general-purpose synthetic rubber
at a commercial scale.\31\
---------------------------------------------------------------------------
\31\American Chemical Society, ``U.S. Synthetic Rubber Program'',
American Chemical Society, accessed 7/25/16, http://www.acs.org/
content/acs/en/education/whatischemistry/landmarks/
syntheticrubber.html.
---------------------------------------------------------------------------
This situation shows how biobased technologies emerged from a
direct shortage in the market. Today, we are faced with a similar need:
support for biobased product manufacturing, which should receive
greater investment support from the government; the need, in this case,
is driven by climate change and the need for sustainable materials.
The third major change is the environmental movement, which began
in the 1970s with the first Earth Day, the Clean Air Act, the Clean
Water Act, and others. The movement was further spurred by social and
environmental issues, including climate change, food security, and
major pollution events. However, business-led sustainability platforms
did not gain popularity until the mid-2000s. The launch of the Global
Social Compliance Programme in 2006 emphasized that social and
environmental sustainability must be a collaborative effort among
companies to drive positive change and that business efficiency along
the supply chain is essential. More recently, the concept of corporate
responsibility is driving a much greater focus on reducing the carbon
footprint, using renewable materials, and conducting product LCAs.
The rapid decreases in the cost of biotechnology; the speed of
commercially available tools, processes, and technologies that are much
more efficient than before; and the increasing awareness of social and
environmental concerns indicate the speed at which the biotechnology
world is changing. As a result, massive growth in this field is
expected over the next 10 years. However, some short-term barriers are
already apparent.
A barrier that stands in the way of progress is the lack of an
established supply chain. The petrochemical supply chain is well
established, with pipelines, storage facilities, and dedicated refining
facilities that were created along with the supporting regulatory and
legal infrastructure. Instead, the biobased chemicals sector must deal
with the daunting challenge of combining two long-established, separate
supply chains: the agriculture and chemical supply chains.
Verdezyne is an excellent example of how a chemical company
executive can make a difference in a new biobased chemicals company by
addressing the issues associated with the integration of supply chains.
The Company targeted many different nylons, such as nylon 6,6 and nylon
6,10, and nylon 6,12, which impart high functionality, stability, and
resistance. Premium nylons command a higher price, and are used in
coatings, adhesives, and in automotive products, such as fuel hoses.
The decision to build the production facility in Malaysia was based
partly on funding sources. In 2005, the Malaysian Government
established the National Biotechnology Policy (NBP) that sought to turn
the biotechnology field into one of the key economic drivers in the
nation with the goal of contributing five percent of the nation's GDP
by 2020. The Malaysian Biotechnology Corporation (BiotechCorp) was
given the responsibility for executing the objectives of the NBP. As
such, it provided financial assistance and developmental services to
facilitate and accelerate the growth of biobased companies. It also
sought to create a conducive environment for promoting international
investments in the biobased industry in Malaysia. These initiatives
offered Verdezyne significant tax incentives, funding as much as the
equivalent of $60 million U.S. dollars at favorable interest rates and
access to plentiful sources of sugarcane feedstocks. Some individuals
feel the U.S. Government should provide similar incentives to drive a
similar level of support for building the required infrastructure to
support the domestic development and application of technology within
U.S. borders.
Verdezyne's product is identical to DDDA derived from
petrochemicals. It is a ``drop in'' like many others, but it has been
recognized in the industry as having the highest quality and the lowest
color, which may or may not generate a small premium in the market
price. Ms. Ngian noted that while Verdezyne has identified a niche
market where there are not many DDDA players, Verdezyne always strives
to be competitive.
C8. Case Study: Green Biologics

Green Biologics grew out of two different companies that eventually
came together to become what it is today. Edward Green, an ethanol
fermentation expert, founded Green Biologics in England in 2003 to
advance technologies for the production of renewable chemicals and
biofuels, such as butanol. In an article for Chemical & Engineering
News, Green Biologics' Chief Technology Officer, Tim Davies recalled
that there was a lot of buzz around biofuels and funding for research
at that time. Green Biologics thought higher alcohols might be useful,
so they began applying methods of biology, metabolic engineering,
biochemistry, fermentation, and process engineering to reinvent the
acetone-butanol-ethanol (ABE) fermentation process.\32\
---------------------------------------------------------------------------
\32\Bomgardner, M. M, ``Green Biologics Pursues A Biobased Meeting
Of The Minds'', Chemical & Engineering News, last updated 6/25/15,
http://cen.acs.org/articles/93/i26/Green-Biologics-Pursues-Biobased-
Meeting.html?h=816950987.
---------------------------------------------------------------------------
Green Biologics later began working with existing ABE plants in
China, allowing the plants to use a strain of a butanol-producing
microbe called Clostridium from its library of modified microbes to
advance their existing processes. Mr. Joel Stone, who is the former
President of Green Biologics' U.S. operations, remarked that Green
Biologics was able to leverage the capability of the Chinese plants
while using their own, more efficient organism. This, coupled with
design capability for distillations systems designed in collaboration
with the Chinese, resulted in a technology operating at commercial
scale and generated sales for Green Biologics.
As Green Biologics grew its presence in Europe and Asia, an Ohio-
based company called Butylfuel was formed by David E. Ramey and Thomas
Grote. Like Green Biologics, Butylfuel's focus was on creating
renewable chemicals and biofuels, and the company built a 40,000 L
pilot fermentation plant to do so. In 2012, Green Biologics and
Butylfuel merged, extending the company's operational presence to the
United States. The newly merged Green Biologics shifted its emphasis to
renewable chemicals, which, according to Mr. Stone, was because butanol
as a chemical had a sizable market, and Green Biologics anticipated
that there would be biobased demand.\33\
---------------------------------------------------------------------------
\33\Bomgardner, M. M, ``Green Biologics Pursues A Biobased Meeting
Of The Minds'', Chemical & Engineering News, last updated 6/25/15,
http://cen.acs.org/articles/93/i26/Green-Biologics-Pursues-Biobased-
Meeting.html?h=816950987.
---------------------------------------------------------------------------
With the new company, the executives began efforts to de-risk their
processes and eliminate duplication of effort across strain
development, technology development, and other areas. As they continued
to build the demonstration plant in the United States, it became clear
that the economics of the ethanol market were not looking positive, and
there were many distressed ethanol plants. This led to the idea that,
after the demonstration plant was constructed, it would be best to
avoid investing in a new plant, but to invest in and convert a
distressed-asset plant instead.
Thus, Green Biologics found a smaller scale plant in Minnesota that
would not work as an ethanol plant--because it did not have the scale
of 100 million gallons a year, but it could produce 20 million gallons
a year, which was ideally suited for what Green Biologics needed. The
capital expense was reasonable, and, from an engineering standpoint, it
was scalable to move from a demonstration plant to a commercial plant.
A ``creative deal'' was negotiated, whereby Green Biologics entered
into an agreement with a purchase option, using a monthly fee for up to
1 year, and an exercise option to close on the price of the facility in
12 months. This allowed the Company to ``prove out'' the technology
moving from a demonstration plant. The deal was supported further by a
grant from the State of Minnesota's Agricultural Department, which
helped with the initial engineering work required for the plant. From a
``de-risking'' standpoint, this allowed the capital costs to be
validated and effectively financed. Green Biologics exercised its
option and took possession of the facility in December 2014. This led
to additional engineering work, and, despite the incredibly difficult
financial investment climate for biobased products in 2015, Green
Biologics was able to raise over $76 million in funds in 2015. Squire
Pacific was brought in as a new venture capital investor.
Several lessons from this experience are worth noting. Green
Biologics started as a butyl fuel company, believing that it could
successfully license the technology. It eventually moved to specialty
line, butanol, which occurred through close collaboration, a frugal
investment strategy, partnering between two companies with a similar
set of leadership strategies, and a slow, but steady, scale-up from the
bench, pilot, and demonstration phases to a full, commercial plan. This
was achieved by spending a lot less than the hundreds of millions of
dollars that other companies had spent.
III. State Overviews
A. State Incentives and Policies
In 2012, the Obama Administration announced The National Bioeconomy
Blueprint, which outlined steps that agencies would undertake to drive
the advancement of the bioeconomy.\34\ The Federal Government sees
enormous potential in the nation's abundant natural resources, capacity
for emerging and advanced technologies, entrepreneurial spirit.\35\ To
realize both the immense potential of the bioeconomy and the important
role that policy plays in championing the process, one can look to the
emergent wood pellet subsector within the southeastern United States.
---------------------------------------------------------------------------
\34\White House, ``National Bioeconomy Blueprint'', White House,
last updated April 2012, https://www.whitehouse.gov/sites/default/
files/microsites/ostp/national_bioeconomy_blueprint_april_2012.pdf.
\35\Biomass Research and Development Board, ``Federal Activities
Report On The Bioeconomy,'' Biomass Research and Development Board,
last updated February 2016, http://biomassboard.gov/pdfs/
farb_2_18_16.pdf.
---------------------------------------------------------------------------
The success of the wood pellet subsector illustrates the importance
of regulatory support. The Renewable Energy and Energy Efficiency
Export initiative, supported by President Barack Obama, was created, in
part, to improve U.S. export competitiveness in renewable energy. In
2010, the United States exported $128 million worth of wood pellets in
response to the demand for a source of renewable energy.\36\ In 2014,
this figure grew to over $500 million, as growth was facilitated by the
USDA Market Access Program's commitment to identifying and growing
additional market opportunities for wood pellet exports in the European
Union.\37\ The same support for the broader biobased products industry
must be demonstrated on a state level for the industry to maximize its
potential.
---------------------------------------------------------------------------
\36\White House, ``National Bioeconomy Blueprint'', White House,
last updated April 2012, https://www.whitehouse.gov/sites/default/
files/microsites/ostp/national_bioeconomy_blueprint
_april_2012.pdf.
\37\Lowenthal-Savy, D, ``UK's renewable energy targets drive
increases in U.S. wood pellet exports'', U.S. EIA, last updated 4/22/
15, http://www.eia.gov/todayinenergy/detail.cfm?id=20912.
---------------------------------------------------------------------------
A few states have specific policies in place to further the
advancement of the bioeconomy and specifically the biobased products
industry, as shown in Table 3. While this report does not include
economic data on biofuels, we include biofuel incentives as examples of
what could be done for biobased products, and to indicate movement by
states towards increasing the utilization of biological feedstocks for
industrial purposes in the United States.

Table 3. Overview of State Policies and Incentives for Biobased Products Development
----------------------------------------------------------------------------------------------------------------
Production Procurement
Tax Credit(s) Tax Exemption Loans Payment Grant(s) Program
----------------------------------------------------------------------------------------------------------------
Iowa X
Massachusetts X
Michigan X
Minnesota X
Oregon X
Virginia X X X
Washington X
Wisconsin X
----------------------------------------------------------------------------------------------------------------

Iowa
In April 2016, the Iowa Legislature passed the Biorenewable
Chemical Tax Credit Program, a revenue-neutral tax incentive and
economic development package that allocates $100 million in tax credits
over 10 years to be applied to the manufacturing of 40 key building
block chemicals. For each pound of biobased chemicals produced in a
given year, a company can receive a $0.05 tax credit. Financial
incentives are annually capped at $500,000 for companies 5 years and
older, and $1,000,000 for companies less than 5 years old. The program,
which represents the strongest existing incentive package for the
global biobased chemical industry, was designed and implemented to
attract national biobased chemical companies and new businesses to the
state.\38\
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\38\Cultivation Corridor, ``Biorenewable Chemicals: The Iowa
Advantage'', Cultivation Corridor, accessed 6/1/16, http://
www.cultivationcorridor.org/biochem/.
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The production of higher-value basic chemical compounds, which can
utilize the co-products of existing corn and soybean manufacturing
facilities, is a fast growing segment of the biobased products
industry, representing a significant change for Iowa to develop a
cluster of biobased chemical companies.\39\ The hope is that the Iowa
Biorenewable Chemical Tax Credit Program will achieve the same success
as the tax credits of the Iowa ethanol industry, which produces a
quarter of the ethanol in the United States. An analysis of the Iowa
ethanol industry indicated that 32 percent of the industry is located
in Iowa because of the support given by the state. Furthermore, since
2006, tax credits in excess of $61 Million have been provided in
support of the state's 38 ethanol plants. Total capital spending on
these plants has been nearly $4.5 billion, meaning that tax support
equaled just 1.3 percent of the total capital spending.\40\
---------------------------------------------------------------------------
\39\Iowa Economic Development, ``Renewable Chemical Production Tax
Credit Program'', Iowa Economic Development, accessed 6/1/16, http://
www.iowaeconomicdevelopment.com/userdocs/documents/ieda/
RenewChemTaxCredit_042016.pdf.
\40\Cultivation Corridor, ``Biobased Chemicals: The Iowa
Opportunity,'' Cultivation Corridor, last updated 1/14/16, http://
www.cultivationcorridor.org/assets/pdf/Iowa-Biobased-Chemicals-Full-
Report.pdf.
---------------------------------------------------------------------------
Massachusetts
Massachusetts offers an Environmentally Preferable Products (EPP)
Procurement Program, which aims to help the Commonwealth use its
purchasing power to reduce both the environmental and public health
impacts of state government, in addition to stimulating market demand
for environmentally preferable products and services.\41\ As part of
the Procurement Program, the state provides an Environmentally
Preferable Products and Services Guide that assists buyers in finding
products, services, and vendors. Since its inception in 1995, the
program has increased spending on EPPs from roughly $5 million to an
estimated $400 million. Furthermore, Massachusetts works to identify
locally sourced products that are grown, harvested, and processed
within the state. Certified products are provided a ``Commonwealth
Quality'' brand designation by the Massachusetts Department of
Agricultural Resources, which works to provide a guarantee that such
products are grown and harvested within the state, utilizing production
practices that adhere to a set of criteria and environmental
standards.\42\
---------------------------------------------------------------------------
\41\E Commonwealth of Massachusetts Executive Office for
Administration and Finance, ``Environmentally Preferable Products (EPP)
Procurement Program,'' Mass.Gov, accessed 6/14/16, http://www.mass.gov/
anf/budget-taxes-and-procurement/procurement-info-and-res/procurement-
prog-and-serv/epp-procurement-prog/.
\42\Massachusetts Department of Agricultural Resources (MDAR),
Commonwealth Quality, MDAR, accessed 6/14/16, http://thecqp.com/
index.html.
---------------------------------------------------------------------------
Michigan
In Michigan, the Department of Agriculture & Rural Development, in
conjunction with the Michigan Economic Development Corporation, offers
a variety of programs intended to help support the financing and growth
of agricultural processing and support industries within the state.\43\
---------------------------------------------------------------------------
\43\Michigan Economic Development Corporation, ``Agribusiness
Financing Programs,'' Michigan Economic Development Corporation,
accessed 6/1/16, http://www.michiganbusiness.org/cm/files/fact-sheets/
agribusinessfinancingprograms.pdf?rnd=1464620718277.
---------------------------------------------------------------------------
Minnesota
In 2015, the Minnesota legislature established the Bioincentive
Program, which is intended to make Minnesota an excellent destination
for commercial-scale advanced biofuel and biobased chemical plants. The
program provides production payments to encourage commercial-scale
production of advanced biofuels, biobased chemicals, and thermal energy
production from agricultural, forestry, or solid waste sources.\44\
---------------------------------------------------------------------------
\44\Minnesota Department of Agriculture, ``Bioincentive Program'',
Minnesota Department of Agriculture, accessed 6/1/16, http://
www.mda.state.mn.us/grants/agri/bioincentive.aspx.
---------------------------------------------------------------------------
For companies to take advantage of the Renewable Chemical
Production Incentive Program, chemicals must be at least 51 percent
biobased. Manufacturing facilities must also (a) be located within
Minnesota, (b) source 80 percent of their raw materials from Minnesota,
and (c) produce a minimum of 750,000 pounds of chemicals per quarter to
enter the program and for each quarter in which a reimbursement claim
is made. Production payments range from $0.03 per pound of chemical
produced from sugar, cellulosic sugar, or starch, to $0.06 per pound of
chemical produced from cellulosic biomass.\45\
---------------------------------------------------------------------------
\45\Minnesota Department of Agriculture, ``Bioincentive Program'',
Minnesota Department of Agriculture, accessed 6/1/16, http://
www.mda.state.mn.us/grants/agri/bioincentive.aspx.
---------------------------------------------------------------------------
The producer payment incentive program, in addition to volumetric
fuel blending requirements, was previously championed by Minnesota to
build a strong first-generation ethanol industry.\46\ Over the course
of a decade, the State of Minnesota provided over $450 million to help
construct 21 corn ethanol plants within the state, which jointly
contribute over $5 billion annually to the Minnesota economy.\47\ As
opposed to alternative financial programs, the inherent advantage of a
producer payment program is that payments are only made for actual
production of eligible products, thereby negating the risks inherent in
grants or loans.
---------------------------------------------------------------------------
\46\Bioeconomy Coalition of Minnesota, ``Bioeconomy Production
Incentive Program Created in Minnesota'', Bioeconomy Coalition of
Minnesota, accessed 6/1/16, http://mnbioeconomy.org.
\47\Bilek, A. and Jordan, B. ``2015 Minnesota Legislative Session
Recap: Bioeconomy Edition'', Great Plains Institute, last updated 7/6/
15, http://www.betterenergy.org/blog/2015-minnesota-legislative-
session-recap-bioeconomy-edition.
---------------------------------------------------------------------------
Oregon
Oregon provides tax credits for the production, collection, and
transportation of biomass resources that are utilized for energy
production.\48\ To be eligible for the tax credits, the biomass
material must be (a) sourced from within the state and (b) utilized as
biofuel, or used in the production of biofuel in Oregon.
---------------------------------------------------------------------------
\48\Business Oregon, ``Renewable Energy'', Business Oregon,
accessed 6/1/16, http://www.oregon4biz.com/Oregon-Business/Tax-
Incentives/Renewable-Energy.
---------------------------------------------------------------------------
Virginia
Virginia offers incentives, such as tax incentives, grants, and
investment programs, for emerging life science technologies and
companies within the state.\49\
---------------------------------------------------------------------------
\49\Virginia Biotechnology Association, ``Incentives for Bioscience
Research, Commercialization and Investment in the Commonwealth'',
Virginia Biotechnology Association, accessed 6/1/16, https://
www.vabio.org/?page=incentives.
---------------------------------------------------------------------------
Washington
Washington has passed a House Bill that restored preferential
timber industry business and occupation tax rates for manufacturers of
biocomposite surface products, in addition to existing incentives for
timber harvesting and manufacturing/processing activities. Washington
also offers a reduced tax rate for manufacturing wood biomass fuel.\50\
---------------------------------------------------------------------------
\50\Washington State Department of Revenue, ``Incentive Programs:
Deferrals, Exemptions, and Credits,'' Washington State Department of
Revenue, accessed 6/1/16, http://dor.wa.gov/content/findtaxesandrates/
taxincentives/incentiveprograms.aspx/.
---------------------------------------------------------------------------
Wisconsin
Wisconsin creates a competitive advantage within its state by
offering a ``Manufacturing and Agriculture Credit'', which serves to
virtually eliminate the tax on income for both manufacturing and
agricultural activities occurring within the state.\51\
---------------------------------------------------------------------------
\51\Wisconsin Department of Revenue, ``Wisconsin Manufacturing and
Agriculture Credit'', Wisconsin Department of Revenue Retrieved, last
updated 9/8/15, https://www.revenue.wi.gov/taxpro/fact/manufandagr.pdf.
---------------------------------------------------------------------------
B. State Statistics
Figure 8 shows the number of biobased products industry jobs per
1,000 people in each state in 2013. Table 4 shows the direct jobs
contributed at the state level for the top ten states. Similarly,
Figure 9 shows the value-added by the biobased products industry in
each state, and Table 5 shows the top ten states by value-added
contribution in the biobased products industry.
Figure 8: Direct Jobs Contributed by the Biobased Products Industry in
Each State and the District of Columbia in 2013\52\
---------------------------------------------------------------------------
\52\Esri, TomTom, Department of Commerce, Census Bureau, U.S.
Department of Agriculture (USDA), National Agricultural Statistics
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16,
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.
---------------------------------------------------------------------------
Jobs per State, 2013

Table 4. Top 10 States for Direct Jobs in the Biobased Products Industry in 2013
----------------------------------------------------------------------------------------------------------------
Rank State Direct Value-Added
----------------------------------------------------------------------------------------------------------------
1 California 145,080
2 North Carolina 90,040
3 Texas 88,680
4 Georgia 80,520
5 Pennsylvania 71,360
6 Wisconsin 68,250
7 Ohio 52,930
8 New York 52,300
9 Alabama 49,650
10 Florida 47,690
----------------------------------------------------------------------------------------------------------------

Figure 9: Direct Value-Added Contribution in Each State by the Biobased
Products Industry in 2013\53\
---------------------------------------------------------------------------
\53\Esri, TomTom, Department of Commerce, Census Bureau, U.S.
Department of Agriculture (USDA), National Agricultural Statistics
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16,
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.
---------------------------------------------------------------------------
Billions of U.S. Dollars per State, 2013

Table 5. Top 10 States for Direct Value-Added to the Biobased Products Industry in 2013
----------------------------------------------------------------------------------------------------------------
Rank State Direct Value-Added
----------------------------------------------------------------------------------------------------------------
1 California $9,862,930,000
2 Georgia $8,237,608,000
3 Texas $6,828,425,000
4 Pennsylvania $6,522,151,000
5 North Carolina $6,437,140,000
6 Wisconsin $6,252,403,000
7 Alabama $4,977,941,000
8 Tennessee $4,429,804,000
9 Ohio $4,276,668,000
10 South Carolina $4,227,162,000
----------------------------------------------------------------------------------------------------------------

C. National and State Facts Sheets
A major addition in this report from the 2015 report is a detailed
analysis of all 50 states and the District of Columbia. This report
contains a single page for each state. Each fact sheet offers a
snapshot of companies and associations that are active in the biobased
products industry overall within the state, and information about the
USDA's Rural Development office in that state. They also include the
direct and total economic contributions of the biobased products
industry in terms of value-added contribution and jobs supported. Each
of the biobased products industry's seven major sectors' direct jobs
and value-added are also provided. The numbers presented for each
sector are limited to direct jobs for comparison of the biobased
products industry size between states.
The national ranking by direct jobs and direct value-added for each
state are also provided in Appendix C (direct jobs) and Appendix D
(direct value-added). An alphabetical listing of the states with the
number of direct jobs and value-added are in Appendix E.
This section closes with two case studies of organizations
supporting the growth of the biobased products industry at the state
level and beyond.
United States
Companies per State, 2016

Number of Companies participating in the BioPreferred Program
(June 2016).\54\
---------------------------------------------------------------------------
\54\Esri, TomTom, Department of Commerce, Census Bureau, U.S.
Department of Agriculture (USDA), National Agricultural Statistics
Service (NASS). ``USA States'' Basemap. ArcGIS Online, accessed 3/3/16,
http://www.arcgis.com/home/item.html?id=1a6cae723af14f9cae228
b133aebc620.

Agriculture and Forestry
Direct Jobs: 263,500
Direct Value-Added: $15.8 B

Biobased Chemicals
Direct Jobs: 17,690
Direct Value-Added: $5.0 B

Biorefining
Direct Jobs: 570
Direct Value-Added: $155.0 M

Enzymes
Direct Jobs: 3,000
Direct Value-Added: $873.8 M

Forest Products
Direct Jobs: 1,059,660
Direct Value-Added: $93.3 B

Textiles
Direct Jobs: 164,370
Direct Value-Added: $9.6 B

Packaging
Direct Jobs: 1,200
Direct Value-Added: $11.4 M
Alabama

Total Jobs: 102,850
Direct Jobs: 49,650
Total Value-Added: $9.010 Billion
Direct Value-Added: $4.978 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 10,740 $776.5M
Biobased Chemicals 260 $82.6M
Biorefining <50 <$5M
Enzymes 50 $14.2M
Forest Products 33,420 $3.9B
Textiles 5,840 $266.0M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

14 Alabama companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Jasper Lumber Company (Jasper, AL; jasperlumber.com): Jasper Lumber
Company has manufactured quality southern pine lumber for more than 25
years, offering a wide range of wood products. The company is the only
lumber manufacturer in the southeast U.S. to hold certifications from
both the Forest Stewardship Council and the Sustainable Forestry
Initiative.
Biobased Chemicals
Alpha CLP (Winfield, AL; alphaclp.com): Alpha CLP manufactures a
biobased, non-gumming firearm cleaner, lubricant, and protectant. The
finished product is 99 percent biobased, utilizing vegetable oils
during the production process.
Renewable Oil International, LLC (Florence, AL; renewableoil.com):
Renewable Oil International is dedicated to developing and
commercializing an advanced biomass distillation process based on fast
pyrolysis technology. The objective is to cost effectively fractionate
wood and other types of biomass into high-value products.
USDA Rural Development Alabama Office
Ronald Davis, State Director (www.rd.usda.gov/al)
4121 Carmichael Road, Suite 601, Montgomery, AL 36106-3683
Phone: (334) 279-3402
Alaska

Total Jobs: 1,980
Direct Jobs: 1,420
Total Value-Added: $120 Million
Direct Value-Added: $67 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 640 $46.8M
Biobased Chemicals <50 <$5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 670 $17.8M
Textiles 110 <$5M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

5 Alaska companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Denali Organics, LLC (Chugiak, AK; denaliorganics.com): Denali
Organics provides organic liquid fertilizer products, made with catfish
byproducts and proprietary digestive enzymes. These fertilizers can be
blended to meet a customer's specific requirements.
Biobased Chemicals
Polyseal Insulation (Palmer, AK; polysealinsulation.com): Polyseal
Insulation offers a range of services including insulation, spray foam,
roofing foam, and advanced coatings. Their Green Cellulose Insulation
product is non-toxic and manufactured from at least 80 percent
recovered, post-consumer paper fiber.
Forest Products
Tongass Forest Enterprises (Ketchikan, AK;
akforestenterprises.com): Tongass Forest Enterprises specializes in
producing custom wood building products. The company uses the byproduct
from these products to produce wood pellets, as well.
USDA Rural Development Alaska Office
Jim Nordlund, State Director (www.rd.usda.gov/ak)
800 West Evergreen, Suite 201, Palmer, AK 99645-6539
Phone: (907) 761-7705
Arizona

Total Jobs: 27,730
Direct Jobs: 14,790
Total Value-Added: $1.968 Billion
Direct Value-Added: $912 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 3,510 $268.6M
Biobased Chemicals 120 $33.2M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 10,360 $582.8M
Textiles 830 $29.5M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

30 Arizona companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Yulex (Phoenix, Arizona; yulex.com): Yulex manufactures 100 percent
plant-based rubber. As the first commercial enterprise to produce
biobased natural rubber latex in North America, Yulex, now collaborates
with consumer, industrial, and medical market leaders to co-develop a
variety of products.
Biobased Chemicals
GEMTEK (Phoenix, AZ; gemtek.com/): GEMTEK is dedicated to providing
high performance cleaners, lubricants, solvents, and specialty
chemicals derived from renewable plant-based resources.
Eco Safety Products, LLC (Phoenix, AZ; ecosafetyproducts.com): Eco
Safety Products manufactures high-performance paints, stains, finishes,
and chemicals that utilize sustainable biobased technology.
USDA Rural Development Arizona Office
Ernie Wetherbee, Acting State Director (www.rd.usda.gov/az)
230 North First Avenue, Suite 206, Phoenix, AZ 85003-1706
Phone: (602) 280-8701
Arkansas

Total Jobs: 64,590
Direct Jobs: 31,400
Total Value-Added: $5.903 Billion
Direct Value-Added: $3.165 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 7,330 $512.9M
Biobased Chemicals 190 $58.0M
Biorefining <50 <$5M
Enzymes 50 $8.2M
Forest Products 23,330 $2.6B
Textiles 860 $40.6M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

12 Arkansas companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Anthony Forest Products Company (El Dorado, AR; Urbana AR;
anthonyforest.com): Anthony Forest Products operates a southern pine
lumber producing mill in Urbana, and an engineered wood laminating
plant in El Dorado. Some of the company's fastest growth has been in
the engineered wood products sector.
Biobased Chemicals
AgSeal LLC (Harrison, AR; agseal.com): AgSeal services the growing
needs of poultry and agriculture markets for energy saving retrofitting
of facilities and structures. The company's foam sealants and
insulation are biobased and made especially for poultry and
agricultural applications.
Biobased Technologies (Springdale, AR; biobased.net): Biobased
Technologies manufactures a high bio-carbon soy polyol, Agrol, which
can replace some petroleum polyols. Agrol is used in a variety of
products, including lubricants, furniture, adhesives, inks, and
agricultural products.
USDA Rural Development Arkansas Office
Lawrence McCullough, State Director (www.rd.usda.gov/ar)
700 West Capitol Avenue, Room 3416, Little Rock, AR 72201-3225
Phone: (501) 301-3200
California

Total Jobs: 265,530
Direct Jobs: 145,080
Total Value-Added: $21.577 Billion
Direct Value-Added: $9.863 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 42,310 $2.4B
Biobased Chemicals 1,250 $324.4M
Biorefining <50 $7.3M
Enzymes 170 $42.9M
Forest Products 71,340 $5.7B
Textiles 31,090 $1.5B
Bioplastic Bottles & Packaging 90 $7.5M
------------------------------------------------------------------------

262 California companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
TerraVia (San Francisco, CA; solazyme.com): TerraVia, formerly
Solazyme, has refined its efforts to focus on manufacturing algae oil
for the food and personal care industries for use in products that
include cooking oils, protein powders, and face lotions.
Verdezyne (Carlsbad, CA; verdezyne.com): Verdezyne leverages the
power of biology to produce chemicals from renewable, non-food sources.
Verdezyne's feedstocks are derived from the byproducts of vegetable oil
production.
Bioplastic Bottles & Packaging
BeGreen Packaging LLC (Santa Barbara, CA; begreenpackaging.com): Be
Green Packaging designs, manufactures, and distributes the only non-GMO
Product Verified, tree-free, and compostable packaging for the food and
consumer packaging industries. Renewable plant fibers are utilized to
produce both consumer and food packaging products.
USDA Rural Development California Office
Janice Waddell, State Director (www.rd.usda.gov/ca)
430 G Street, #4169, Davis, CA 95616-4169
Phone: (530) 792-5800
Colorado

Total Jobs: 21,840
Direct Jobs: 11,500
Total Value-Added: $1.526 Billion
Direct Value-Added: $635 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,710 $54.9M
Biobased Chemicals 110 $31.9M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 8,510 $476.6M
Textiles 1,200 $72.4M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

60 Colorado companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Natracare LLC (Greeley, CO; natracare.com): Natracare LLC
manufactures feminine hygiene products using responsibly sourced,
biobased materials. Natracare's products are compostable and made to
limit the user's exposure to chemicals such as chlorine, plastic,
pesticides, and petroleum derivatives.
Forest Products
Sustainable Flooring (Boulder, CO; sustainableflooring.com):
Sustainable Flooring offers various flooring and walls products,
designed for both residential and commercial applications. In addition
to wood, the company utilizes bamboo and cork in the manufacturing
process.
Bioplastic Bottles & Packaging
Eco-Products (Boulder, CO; ecoproducts.com): Eco-Products offers a
full selection of disposable products, including plates, cups,
containers, and silverware. All products are produced from recycled
content or renewable resources (e.g., corn, sugarcane, plant starch).
USDA Rural Development Colorado Office
Trudy Kareus, State Director (www.rd.usda.gov/co)
Denver Federal Center, Building 56, Room 2300, PO Box 25426, Denver,
CO 80225-0426
Phone: (720) 544-2904
Connecticut

Total Jobs: 18,750
Direct Jobs: 8,970
Total Value-Added: $1.905 Billion
Direct Value-Added: $846 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 680 $19.2M
Biobased Chemicals 190 $47.0M
Biorefining <50 <$5M
Enzymes <50 $5.4M
Forest Products 7,200 $670.0M
Textiles 910 $109.5M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

24 Connecticut companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Citrasolv (Ridgefield, CT; citrasolv.com): Citrasolv produces a
line of [E]arth-and-people-friendly cleaning supplies that are derived
from renewable resources. Citra Solv Concentrate, a multipurpose
cleaning product, is 95 percent biobased.
New Polymer Systems INC (New Canaan, CT; newpolymersystems.com):
New Polymer Systems has patents pending on processes that yield
lightweight, hydrophobic lignocellulosic fillers, the core component of
their NeroPlast branded products. NeroPlast can be utilized in a host
of applications, including car parts, decking, pallets, and roofing and
is a USDA Certified Biobased Product with 100 percent biobased content.
Bioplastic Bottles & Packaging
Green Valley Packaging (Danielson, CT; vegware.us): Green Valley
Packaging is a key distributor of the Vegware brand of eco-packaging
products in the food service sector. Feedstock inputs include sugarcane
bagasse and corn starch.
USDA Rural Development Connecticut Office
Scott Soares, State Director (www.rd.usda.gov/ct)
451 West Street, Amherst, MA 01002-2999
Phone: (413) 253-4300
Delaware

Total Jobs: 4,170
Direct Jobs: 2,140
Total Value-Added: $5,501 Million
Direct Value-Added: $347 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 160 <$5M
Biobased Chemicals 60 $32.1M
Biorefining <50 <$5M
Enzymes <50 $8.9M
Forest Products 1,580 $290.7M
Textiles 330 $17.9M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

5 Delaware companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
DuPont Industrial Biosciences (Wilmington, DE; dupont.com): DuPont
is a global leader in the development of renewably sourced biobased
materials. By utilizing glucose as the basis for Bio-PDO, a biobased
monomer, DuPont created an ingredient a biobased fiber, Sorona, which
is used in a variety of everyday products.
Ensyn Corporation (Wilmington, DE; ensyn.com): Ensyn is a producer
of advanced, drop-in cellulosic biofuel, produced from wood biomass and
agricultural residues. Much of their biofuel production has been
dedicated to the production of renewable chemicals and heating fuels
for the specialty chemicals industry.
The Chemours Company (Wilmington, DE; chemours.com): Teflon, a
brand of The Chemours Company, manufactures EcoElite, the first
renewably sourced, non-fluorinated fabric treatment designed for
durable water repellency. The product contains 60 percent renewable
content.
USDA Rural Development Delaware Office
Bill McGowan, State Director (www.rd.usda.gov/de)
1221 College Park Drive, Suite 200, Dover, DE 19904
Phone: (302) 857-3580
Washington, D.C.

Total Jobs: 280
Direct Jobs: 220
Total Value-Added: $26 Million
Direct Value-Added: $18 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry <50 <$5M
Biobased Chemicals <50 <$5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 180 $16.7M
Textiles <50 <$5M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

3 Washington, D.C. companies currently participate in the
BioPreferred Program.
Example Biobased Product Firms
Forest Products
Kwai (Washington, D.C.; kwaihome.com): Kwai produces handcrafted
materials utilizing fronds from areca palm trees. Finished materials
are 100 percent biobased, and fully biodegradable.
Bioplastic Bottles & Packaging
TemperPack Technologies (Washington, D.C.; temperpack.com):
TemperPack seeks to replace petrochemical-based packaging with more
sustainable forms of packaging, utilizing renewable jute fiber as a
feedstock. Additional feedstocks include post-consumer recycled plastic
and paper.
USDA Rural Development Washington, D.C. Office
U.S. Department of Agriculture (usda.gov/)
1400 Independence Ave., S.W.
Washington, D.C. 20250
Information Hotline: (202) 720-2791
Florida

Total Jobs: 98,460
Direct Jobs: 47,690
Total Value-Added: $7.805 Billion
Direct Value-Added: $3.738 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 14,800 $721.0M
Biobased Chemicals 410 $79.2M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 28,850 $2.8B
Textiles 3,950 $170.9M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

118 Florida companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Arizona Chemical (Panama City, FL; Pensacola, FL;
arizonachemical.com): Arizona Chemical is the world's leading producer
and biorefiner of pine chemicals. The company provides innovative,
biobased chemical solutions to multiple industry sectors, including
adhesives, roads and construction, tires, and coatings. Approximately
85 percent of the company's raw materials are made from renewable
sources.
BioBag Americas, Inc. (Palm Harbor, FL; biobagusa.com): BioBag
produces bags and plastic films derived from renewable agriculture
feedstocks, including cornstarch and vegetable oils. Compostable
products span both retail and commercial applications.
Naturally Green Products LLC (Seminole, FL; naturally-
greenproducts.com): Naturally Green offers the most comprehensive line
of USDA BioPreferred cleaning and floor care products. Product
offerings include bathroom cleaners, dishwashing products,
disinfectants, floor and carpet clearness, laundry products, and hand
soaps and sanitizers.
USDA Rural Development Florida Office
Richard Machek, State Director (www.rd.usda.gov/fl)
Post Office Box 147010, 4440 NW 25th Place, Gainesville, FL 32614-
7010
Phone: (352) 338-3402
Georgia

Total Jobs: 178,110
Direct Jobs: 80,520
Total Value-Added: $16.365 Billion
Direct Value-Added: $8.238 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 17,940 $1.5B
Biobased Chemicals 620 $168.9M
Biorefining <50 <$5M
Enzymes 70 $14.9M
Forest Products 41,970 $5.1B
Textiles 21,020 $1.6B
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

71 Georgia companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Arizona Chemical (Savannah, GA; arizonachemical.com): Arizona
Chemical is the world's leading producer and biorefiner of pine
chemicals. The company provides innovative, biobased chemical solutions
to multiple industry sectors, including adhesives, roads and
construction, tires, and coatings.
Forest Products
U.S. Floors (Dalton, GA; usfloorsllc.com): U.S. Floors is the
leading producer of sustainable, biobased flooring, produced from cork,
bamboo, and FSC Certified hardwood. U.S. Floors is currently the only
producer of cork and bamboo flooring with manufacturing facilities in
the U.S.
Bioplastic Bottles & Packaging
The Coca-Cola Company (Atlanta, GA; coca-colacompany.com): In 2009,
the Coca-Cola Company unveiled the first-ever fully recyclable PET
plastic beverage bottle made from plants. In 2012, the Company
announced the formation of the Plant PET Technology Collaborative, a
strategic initiative aimed at developing 100 percent biobased PET.
USDA Rural Development Georgia Office
Jill Stuckey, State Director (www.rd.usda.gov/ga)
Stephens Federal Building, 355 E. Hancock Avenue, Stop 300, Athens,
GA 30601-2768
Phone: (706) 546-2162
Hawaii

Total Jobs: 2,840
Direct Jobs: 1,930
Total Value-Added: $138 Million
Direct Value-Added: $66 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 420 $9.4M
Biobased Chemicals <50 <$5M
Biorefining <50 <$5M
Enzymes 50 <$5M
Forest Products 1,040 $40.1M
Textiles 460 $15.1M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

8 Hawaii companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Hawaiian Earth Products, Ltd. (Kapolei, HI;
menehunemagichawaii.com): Hawaiian Earth Products makes products that
use waste from yard trimmings, such as compost and potting mix. After
being collected as waste from several cities in Hawaii, these trimmings
are converted into useful products, rather than being sent to a
landfill.
Biobased Chemicals
Malie Organics (Kalaheo, HI; malie.com): Malie offers a range of
personal care and beauty products, all produced from natural and
organic feedstocks. Product ingredients are all sustainably grown and
harvested.
Forest Products
Honsador Lumber LLC (Kapolei, HI; honsador.com): Honsador is
Hawaii's largest lumber supplier. In addition to lumber and plywood,
the company offers an array of finished products, including cabinetry,
doors, and windows.
USDA Rural Development Hawaii Office
Chris Kanazawa, State Director (www.rd.usda.gov/hi)
Federal Building, Room 311, 154 Waianuenue Avenue, Hilo, HI 96720
Phone: (808) 933-8380
Idaho

Total Jobs: 25,660
Direct Jobs: 12,250
Total Value-Added: $1.724 Billion
Direct Value-Added: $886 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 3,350 $213.3
Biobased Chemicals 60 $9.1M
Biorefining <50 $5.7M
Enzymes <50 <$5M
Forest Products 9,440 $647.8M
Textiles 390 $11.3M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

13 Idaho companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Eagle Forest Products (Eagle, ID; eaglefp.net): Eagle Forest
Products offers a wide variety of lumber and wood products. The company
provides lumber to a number of industries, including flooring,
construction, music, and landscaping.
Idaho Forest Group, LLC (Coeur d'Alene, ID; idahoforestgroup.com):
The Idaho Forest Group, one of America's largest lumber producers,
grows, harvests, manufactures, and distributes sustainable wood. In
addition to lumber, available products include oriented strand board,
paper and packaging materials, wood pellets, wood chips, and bark for
power production.
Biobased Chemicals
Pro-Tek Chemicals (Glenns Ferry, ID; protekchemical.com): Pro-Tek
manufactures more than ten biobased cleaning products that are readily
biodegradable. Product offerings include cleaners, scrubs, polishes,
and enzymes.
USDA Rural Development Idaho Office
Wallace Hedrick, State Director (www.rd.usda.gov/id)
9713 West Barnes Drive, Suite A1, Boise, ID 83709
Phone: (208) 378-5600
Illinois

Total Jobs: 90,930
Direct Jobs: 39,940
Total Value-Added: $8.385 Billion
Direct Value-Added: $3.543 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,950 $63.0M
Biobased Chemicals 1,000 $235.0M
Biorefining 130 $48.2M
Enzymes 130 $222.2M
Forest Products 34,380 $3.1B
Textiles 3,100 $157.6M
Bioplastic Bottles & Packaging 80 $9.2M
------------------------------------------------------------------------

123 Illinois companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
ADM (Chicago, IL; adm.com): ADM is one of the world's largest
agricultural processors, manufacturing a variety of food, animal feed,
energy, and industrial products, which include those for construction,
packaging, personal care, pulp and paper, and plastic. Oilseeds and
corn are the company's primary feedstocks.
Elevance Renewable Sciences, Inc. (Woodridge, IL; elevance.com):
Elevance Renewable Sciences is a specialty chemical company that
creates chemicals from renewable feedstocks. Market uses include
personal care products, detergents and cleaners, engineered polymers,
lubricants, and other specialty chemical markets.
LanzaTech (Skokie, IL; lanzatech.com): LanzaTech's bioprocessing
platform provides an economically robust route to carbon capture and
re-use. The company's novel gas-to-liquid technology is the only
process that converts waste gases (carbon monoxide and carbon dioxide)
to fuels and chemicals.
USDA Rural Development Illinois Office
Colleen Callahan, State Director (www.rd.usda.gov/il)
2118 West Park Court, Suite A, Champaign, IL 61821
Phone: 217-403-6200
Indiana

Total Jobs: 85,530
Direct Jobs: 46,050
Total Value-Added: $5.820 Billion
Direct Value-Added: $2.843 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,850 $63.9M
Biobased Chemicals 490 $157.5M
Biorefining <50 $11.4M
Enzymes 60 $12.8M
Forest Products 41,740 $2.5B
Textiles 1,980 $95.2M
Bioplastic Bottles & Packaging 70 $5.4M
------------------------------------------------------------------------

28 Indiana companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Toni Natural Products Co. LLC (Sunman, IN; toninatural.com): Toni
Natural offers an assortment of products that contain 100 percent
natural plant- and mineral-based compounds. These products include
cleaning products, laundry detergents, fabric softeners, dishwashing
liquid, soaps, shampoos, and lotions.
Trellis Bioplastics (Seymour, IN; trellisbioplastic.com): Trellis
Bioplastics creates a wide range of bioplastic resins and consumer
products, replacing upwards of 95 percent of the petroleum content used
in traditional plastics. Starch-based feedstocks are currently used in
manufacturing processes, with plans to expand feedstock use to include
algae, distillery byproducts, wheat chaff, and rice hulls.
Enzymes
Enzyme Solutions Inc. (Garrett, IN; enzymesolutions.com): Enzyme
Solutions is a leader in ``green'' cleaning technology, manufacturing
both enzymes and enzyme products. Manufacturing, testing, formulation,
and bottling are all conducted in Indiana.
USDA Rural Development Indiana Office
Philip Lehmkuhler, State Director (www.rd.usda.gov/in)
5975 Lakeside Boulevard, Indianapolis, IN 46278
Phone: (317) 290-3100 ext.4
Iowa

Total Jobs: 37,430
Direct Jobs: 20,110
Total Value-Added: $3.022 Billion
Direct Value-Added: $1.735 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,400 $51.7M
Biobased Chemicals 230 $123.1M
Biorefining 80 $22.3M
Enzymes 140 $65.3M
Forest Products 17,620 $1.5B
Textiles 750 $45.1M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

79 Iowa companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Avello Bioenergy (Ames, IA; avellobioenergy.com): In collaborating
with Iowa State University, Avello is commercializing proprietary
technology that provides quality, low-cost, profitable feedstocks for
producing bulk chemicals, specialty chemicals, lignin based chemicals,
adhesives, and flavors and fragrances.
Corn Oil ONE (Pleasant Hill, IA; cornoilone.com): Corn Oil ONE
refines crude corn oil, thereby eliminating free fatty acids, moisture,
and waxes. The refined corn oil product delivers the same advantages as
soybean oil, making it available as an alternative feedstock for
oleochemical and biobased industries.
Renewable Energy Group, Inc. (Ames, IA; regfuel.com): Renewable
Energy Group is a leading North American advanced biofuels producer and
developer of renewable chemicals. The company's growing industrial
biotechnology business manufactures sustainable chemical products using
renewable feedstocks such as corn, sugarcane, and cellulosic sugars.
USDA Rural Development Iowa Office
William Joseph Menner, State Director (www.rd.usda.gov/ia)
Federal Building, Room 873, 210 Walnut Street, Des Moines, IA 50309
Phone: (515) 284-4663
Kansas

Total Jobs: 17,070
Direct Jobs: 9,080
Total Value-Added: $1.129 Billion
Direct Value-Added: $504 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 910 $44.2M
Biobased Chemicals 140 $56.5M
Biorefining <50 <$5M
Enzymes 60 $13.4M
Forest Products 6,890 $367.3M
Textiles 1,070 $35.9M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

27 Kansas companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Corbion (Lenexa, KS; corbion.com): Corbion is the global market
leader in lactic acid, lactic acid derivatives, and lactides. Product
offerings include bioplastics, biochemical, and biomedical products.
Nowa Technology, Inc. (Prairie Village, KS; nowatechnology.com):
Nowa Technology, Inc. uses solids extracted from wastewater treatment
sludge to create useful products, including fertilizer. The Nowa
Technology process efficiently creates useful products from a source
that would otherwise be undesirable waste.
LC Bioplastics (Wichita, KS; lcbioplastics.com): LC Bioplastics
manufactures a range of bioplastic resins and additives, including a
line of ready-to-use finished goods such as custom film and bag
products. Biohybrid resins, which are a blend of renewable
thermoplastic materials and traditional polyolefins, increase the
renewable content of a product by up to 50 percent in comparison to
traditional packaging.
USDA Rural Development Kansas Office
Patricia Clark, State Director (www.rd.usda.gov/ks)
1303 SW First American Place, Suite 100, Topeka, KS 66604-4040
Phone: (785) 271-2700
Kentucky

Total Jobs: 53,190
Direct Jobs: 27,290
Total Value-Added: $4.037 Billion
Direct Value-Added: $2.128 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 3,110 $98.3M
Biobased Chemicals 450 $11.9M
Biorefining <50 <$5M
Enzymes 50 $11.3M
Forest Products 21,960 $1.8B
Textiles 1,780 $76.5M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

12 Kentucky companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Owensboro Grain Company (Owensboro, KY; owensborograin.com):
Owensboro Grain Company manufacturers an array of products from
soybeans, including protein meal and hull pellets for animal feeds,
crude and degummed oil, lecithin, and various blends of refined
vegetable oils for human consumption, biodiesel, and glycerin.
RyDol Lubricants (Shelbyville, KY; rydol.com): RyDol manufactures
and distributes specialty high-performance, biodegradable lubricants,
solvents, and degreasers. Products contain soybean oil, grease, and
methyl esters as base fluids.
Soy Technologies, LLC (Nicholasville, KY; soytek.com): Soy
Technologies is a specialty chemical manufacturer that develops
renewable, biobased chemicals. Available products include biobased
solvents and emulsions, personal care products, paint thinners, and
additional specialty products.
USDA Rural Development Kentucky Office
Thomas G. Fern, State Director (www.rd.usda.gov/ky)
771 Corporate Drive, Suite 200, Lexington, KY 40503
Phone: (859) 224-7300
Louisiana

Total Jobs: 49,070
Direct Jobs: 22,440
Total Value-Added: $4.906 Billion
Direct Value-Added: $2.649 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 6,670 $451.0M
Biobased Chemicals 330 $151.8M
Biorefining <50 $8.1M
Enzymes 70 $27.9M
Forest Products 14,810 $2.0B
Textiles 780 $26.7M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

7 Louisiana companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Biosynthetic Technologies (Baton Rouge, LA; biosynthetic.com):
Biosynthetic Technologies manufactures biobased synthetic molecules
produced from organic fatty acids found in plant oils. Biosynthetic
oils have numerous applications in the lubricant, chemical, and
cosmetics industries. In conjunction with Albemarle, a specialty
chemical company, the company operates a demonstration plant in
Louisiana.
Myriant (Lake Providence, LA; myriant.com): Myriant developed a
proprietary platform for the production of biobased chemical
intermediates, which can be seamlessly integrated into existing
chemical production processes in order to provide a wide range of
consumer applications. A variety of feedstocks is utilized in the
production process.
Giant Cleaning Systems, Inc. (Duson, LA;
giantcleaningproducts.com): Giant Cleaning Systems manufactures a
variety of industrial cleaners, including drill rigs, printing
industry, and aircraft cleaners. Many of these products contain
biobased materials.
USDA Rural Development Louisiana Office
Clarence Hawkins, State Director (www.rd.usda.gov/la)
3727 Government Street, Alexandria, LA 71302
Phone: (318) 473-7920
Maine

Total Jobs: 46,950
Direct Jobs: 20,500
Total Value-Added: $3.574 Billion
Direct Value-Added: $1.600 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 6,020 $268.7M
Biobased Chemicals <50 <$5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 13,390 $1.3B
Textiles 1,040 $47.1M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

14 Maine companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Genesan LLC (Gorham, ME; cleaneasier.com): Genesan is a leading
source of high-performance, ecological, and biotechnological cleaning
products in the U.S. Collaborating with Pollet, a world leader in
developing and manufacturing biobased cleaning solutions, over 54
percent of Genesan SKUs are classified as biobased and derived from
natural sources.
Textiles
Biovation II, LLC (Boothbay, ME; biovation.com): Biovation
manufactures non-woven material consisting of natural, or naturally
derived, fibers. The material is manufactured using a sustainable
biopolymer, polylactic acid.
Grow-Tech, LLC (South Portland, ME; grow-tech.com): Grow-Tech
manufactures BioStrate, a biobased non-woven textile used by aquaponics
and hydroponics farms to grow lettuce, microgreens, and tomatoes.
USDA Rural Development Maine Office
Virginia Manuel, State Director (www.rd.usda.gov/me)
967 Illinois Avenue Suite 4, Bangor, ME 04401-2767
Phone: (207) 990-9160
Maryland

Total Jobs: 18,150
Direct Jobs: 9,570
Total Value-Added: $1.613 Billion
Direct Value-Added: $801 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,050 $40.7M
Biobased Chemicals 170 $73.0M
Biorefining <50 <$5M
Enzymes 60 $52.8
Forest Products 7,030 $546.8M
Textiles 1,310 $85.7
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

24 Maryland companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Forest Products
American Wood Fibers (Columbia, MD; awf.com): American Wood Fibers
is a leader in the field of specialty forestry products. The company
offers an array of products for people, pets, and livestock, all
produced from wood shavings and wood flour. Industrial fiber
applications include adhesives, absorbents, papers, and plastics.
Enviva Partners, LP (Bethesda, MD; envivabiomass.com): Enviva is
the world's largest producer of wood pellets, owning and operating six
plants within the southeastern U.S. Pellets are produced using
sustainable practices that protect Southern forests.
Wicanders (Hanover, MD; wicanders.com/us): Wicanders developed
Corktech, a technology that provides exclusive properties for floors
and wall coverings made from cork.
USDA Rural Development Maryland Office
Bill McGowan, State Director (www.rd.usda.gov/md)
1221 College Park Drive, Suite 200, Dover, DE 19904
Phone: (302) 857-3580
Massachusetts

Total Jobs: 40,350
Direct Jobs: 19,140
Total Value-Added: $3.613 Billion
Direct Value-Added: $1.417 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,460 $43.7M
Biobased Chemicals 340 $79.8M
Biorefining <50 <$5M
Enzymes <50 $14.7M
Forest Products 14,160 $1.1B
Textiles 3,280 $184.3M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

49 Massachusetts companies currently participate in the
BioPreferred Program.
Example Biobased Product Firms
Agriculture & Forestry
Bum Boosa Bamboo Products (Mashpee, MA; bumboosa.com): Bum Boosa
produces biodegradable, eco-friendly bamboo products, which can be
adopted as an alternative to products produced from tree-pulp and many
types of plastic used in fiber production.
Biobased Chemicals
Metabolix, Inc. (Cambridge, MA; metabolix.com): Metabolix is an
advanced biomaterials company, focused on delivering sustainable
solutions to the plastics industry. Metabolix produces biobased
polymers utilizing renewable carbon-based feedstock.
Myriant (Quincy, MA; myriant.com): Myriant manufactures a broad
pipeline of biobased chemicals, including bio-succinic acid and its
derivatives, in addition to other biobased chemical intermediates that
perform equal to, or better than, petroleum-based chemicals. Grain
sorghum and other cellulosic feedstocks are used in the production
processes.
USDA Rural Development Massachusetts Office
Scott Soares, State Director (www.rd.usda.gov/ma)
451 West Street, Amherst, MA 01002-2999
Phone: (413) 253-4300
Michigan

Total Jobs: 81,820
Direct Jobs: 37,790
Total Value-Added: $6.426 Billion
Direct Value-Added: $2.882 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 5,210 $243.2M
Biobased Chemicals 950 $169.8M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 30,090 $2.4B
Textiles 1,880 $117.1M
Bioplastic Bottles & Packaging 70 $5.5M
------------------------------------------------------------------------

52 Michigan companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Lear Corporation (Southfield, MI; lear.com): Lear Corporation
produces SoyFoam, derived from soybean oil, for automotive interior
applications on North American Ford and other customer vehicles.
KTM Industries, Inc. (Lansing, MI; ktmindustries.com/
products.html): KTM Industries develops, manufactures, and markets new
technologies that incorporate bioplastics. One of the company's
products is Green Cell, a starch-based biodegradable foam.
Biorefining
Hydro Safe, Inc. (Dewitt, MI; hydrosafe.com): Hydro Safe products
use vegetable-based oils as base fluids for a number of market
products, including hydraulic oils, cleaners, and lubricants.
Bioplastic Bottles & Packaging
Green Cell Foam (Lansing, MI; greencellfoam.com): Green Cell Foam
produces a unique natural packaging material, produced from high-grade,
non-GMO cornstarch.
USDA Rural Development Michigan Office
James Turner, State Director (www.rd.usda.gov/mi)
3001 Coolidge Road, Suite 200, East Lansing, MI 48823
Phone: (517) 324-5190
Minnesota

Total Jobs: 81,670
Direct Jobs: 35,850
Total Value-Added: $7.371 Billion
Direct Value-Added: $3.392 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 3,280 $146.9M
Biobased Chemicals 270 $74.1M
Biorefining <50 $6.3M
Enzymes 50 $10.5M
Forest Products 28,880 $3.1B
Textiles 1,730 $81.6M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

92 Minnesota companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
BioAmber (Plymouth, MN; bio-amber.com): BioAmber manufactures
succinic acid, which can be used to create of a number of consumer
products, including polyurethanes, artificial leathers, cosmetics and
personal care products, plastics, and dyes and pigments.
Cargill (Minneapolis, MN; cargill.com): Cargill offers a variety of
biobased products, suitable for a number of industrial applications and
markets.
NatureWorks, LLC (Minnetonka, MN; natureworksllc.com): NatureWorks
is dedicated to driving environmental progress through developing the
global market for biobased plastics and fibers. Industry partnerships
include service ware, home textiles, food packaging, and apparel.
StarchTech, Inc. (Minneapolis, MN; starchtech.com): StarchTech is a
global manufacturer of cornstarch-based loose fill packaging material
produced from ReNew Resin.
USDA Rural Development Minnesota Office
Mary Colleen Landkamer, State Director (www.rd.usda.gov/mn)
375 Jackson Street, Suite 410, St. Paul, MN 55101-1853
Phone: (651) 602-7800
Mississippi

Total Jobs: 68,760
Direct Jobs: 40,350
Total Value-Added: $4.730 Billion
Direct Value-Added: $2.692 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 9,330 $610.9M
Biobased Chemicals 170 $44.9M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 29,400 $1.9B
Textiles 1,470 $84.0M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

16 Mississippi companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
SpillEater (Flora, MS; spilleater.com): SpillEater manufactures
natural, biobased spill absorbents, produced from cotton plants.
Absorbents are available for a number of classifications, including
all-purpose, oil, acid, and bodily fluid. Market segments include
retail, transportation, manufacturing, and government.
Biobased Chemicals
ALGIX (Meridian, MS; algix.com): A subsidiary of ALGIX, Solaplast
harnesses the potential of algae to produce biobased plastics for the
replacement of traditional, petroleum-based plastics. Algae is sourced
from areas that have historically had algae problems, enhancing the
waterway.
Forest Products
Magnolia Forest Products, Inc. (Terry, MS; magnoliaforest.com):
Founded in 1976, Magnolia Forest Products is a national supplier of
quality, low-cost wood products, including wooden pallet parts,
plywood, particleboard, oriented strand board, and furniture parts.
USDA Rural Development Mississippi Office
Trina George, State Director (www.rd.usda.gov/ms)
Federal Building, Suite 831, 100 West Capitol Street, Jackson, MS
39269
Phone: (601) 965-4316
Missouri

Total Jobs: 54,760
Direct Jobs: 27,290
Total Value-Added: $4.693 Billion
Direct Value-Added: $2.506 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 4,460 $266.5M
Biobased Chemicals 450 $127.7M
Biorefining <50 <$5M
Enzymes 130 $28.6M
Forest Products 20,850 $2.1B
Textiles 1,780 $75.3M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

50 Missouri companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Gateway Foam Insulators (Warrenton, MO; gatewayfoam.com): Gateway
Foam Insulators produces a soy-based spray foam insulation, BioBased
501, which exhibits the same air sealing capabilities as low-density
polyurethanes, and is produced using soybean oil.
Soya Systems (Saint Louis, MO; soya.com): Soya Systems Products are
the first shampoos and conditions in the world to contain hydrolyzed
soya protein.
Bioplastic Bottles & Packaging
Biodegradable Food Service LLC (Richland, MO; earth-to-go.com):
Biodegradable Food Service produces over 82 biobased, single-use food
service products, in addition to eco-friendly lid options. Feedstock
inputs include bamboo fibers, cornstarch, potato starch, as well as
additional vegetable starches.
USDA Rural Development Missouri Office
Anita ``Janie'' Dunning, State Director (www.rd.usda.gov/mo)
601 Business Loop 70 West, Parkade Center, Suite 235, Columbia, MO
65203
Phone: (573) 876-0976
Montana

Total Jobs: 11,350
Direct Jobs: 6,340
Total Value-Added: $674 Million
Direct Value-Added: $3,334 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,860 $75.0M
Biobased Chemicals <50 <$5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 4,280 $250.8M
Textiles 190 $5.6M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

10 Montana companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Blue Marble Biomaterials (Missoula, MT; bluemarblebio.com): Blue
Marble Biomaterials manufactures complex chemical compounds using
refined green chemistry processes. Organic biomass material, including
food co-products, spent brewery grain, and wood chips, is utilized in
the production of chemical products.
Botanie Soap Inc. (Missoula, MT; botaniesoap.com): Botanie Soap
manufactures all-natural soap, utilizing basic organic ingredients. The
company's base oil blend includes combinations of certified organic
coconut, palm fruit, sunflower, and safflower oils.
Forest Products
Bitteroot Valley Forest Products (Missoula, MT; bvfpmontana.com):
Bitteroot Valley Forest Products provides a large range of specialty
wood products, including logs, timber, siding, and wood shavings. The
company works to incorporate beetle-kill and standing dead wood in some
of their product lines.
USDA Rural Development Montana Office
John Walsh, State Director (www.rd.usda.gov/mt)
2229 Boot Hill Court, Bozeman, MT 59715
Phone: (406) 585-2580
Nebraska

Total Jobs: 11,890
Direct Jobs: 6,020
Total Value-Added: $895 Million
Direct Value-Added: $426 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 830 $30.5M
Biobased Chemicals 130 $56.8
Biorefining <50 <$5M
Enzymes 120 $46.3M
Forest Products 4,650 $307.8M
Textiles <50 <$5M
Bioplastic Bottles & Packaging 360 $18.8M
------------------------------------------------------------------------

23 Nebraska companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
The Clean Environment Company (Laurel, NE; cleanenvironmentco.com):
The Clean Environment Company manufactures a variety of cleaning
products produced from naturally derived, renewable ingredients.
Product offerings include cleaners, solvents, and detergents.
Laurel BioComposite, LLC (Laurel, NE; laurelbiocomposite.com):
Laurel BioComposite manufactures Bio-Res powder and pellets using
distiller's grain. The powder and pellets can be blended with
thermoplastics and thermosets in a variety of manufacturing
applications, replacing petroleum-based resins at inclusion rates up to
40 percent in final products.
NatureWorks, LLC (Blair, NE; natureworksllc.com): NatureWorks is
dedicated to driving environmental progress through developing the
global market for biobased plastics and fibers. NatureWorks's
manufacturing facility is located in Blair, Nebraska.
USDA Rural Development Nebraska Office
Maxine B. Moul, State Director (www.rd.usda.gov/ne)
Federal Building, Suite 308, 100 Centennial Mall North, Lincoln, NE
68508-3859
Phone: (402) 437-5551
Nevada

Total Jobs: 7,130
Direct Jobs: 3,840
Total Value-Added: $515 Million
Direct Value-Added: $229 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 300 $6.3M
Biobased Chemicals <50 $5.5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 3,110 $193.9M
Textiles 390 $22.4M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

14 Nevada companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Aervoe Industries Inc. (Gardnerville, NV; aervoe.com): Aervoe
Industries manufactures paints, cleaners, lubricants, and other
industrial products and aims to meet strict environmental requirements
and specifications. Several products made by Aervoe Industries contain
biobased materials.
Bio Pac Inc. (Incline Village, NV; bio-pac.com): Bio Pac produces
an assortment of biodegradable cleaning products. Available offerings
include dishwashing products, laundry products, household cleaning
supplies, and hand and body wash. All products are void of petroleum
distillates, dyes, perfumes, and chlorine.
Enzymes
Bio-Pure Products Inc. (Minden, NV; biopureproducts.com): Bio-Pure
Products provides microbiology-based on-site organic waste management
solutions for many industries. All products intend to replace dangerous
chemicals with a unique combination of living microbes and enzymes,
which together act to break down and digest organic waste.
USDA Rural Development Nevada Office
Sarah Jose Mersereau-Adler, State Director (www.rd.usda.gov/nv)
1390 South Curry Street, Carson City, NV 89703-9910
Phone: (775) 887-1222
New Hampshire

Total Jobs: 13,480
Direct Jobs: 7,090
Total Value-Added: $939 Million
Direct Value-Added: $404 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,840 $81.4M
Biobased Chemicals <50 $7.6M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 4,110 $240.3M
Textiles 1,080 $71.7M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

18 New Hampshire companies currently participate in the
BioPreferred Program.
Example Biobased Product Firms
Biobased Chemicals
Ink Mill (Sanbornton, NH; inkmillcorp.com): Ink Mill manufactures
premium quality digital inks, including a line of inks produced with
natural materials called, BTW BioSolvent Ink.
Forest Products
WE Cork, Inc. (Exeter, NH; wecork.com): For more than 100 years, WE
Cork has offered an array of all-natural products derived from the bark
of cork trees. Product offerings include flooring, expansion joints,
insulation corkboard, and composition cork.
Bioplastic Bottles & Packaging
Stonyfield Farms, Inc. (Londonderry, NH; stonyfield.com):
Stonyfield Farms, the world's largest organic yogurt producer, uses
biobased plastic for its multipack yogurt cups. As a result, the
company lowered its carbon emissions from packaging by 48 percent.
USDA Rural Development New Hampshire Office
Ted Brady, State Director (www.rd.usda.gov/nh)
87 State Street Suite 324, P.O. Box 249, Montpelier, VT 05601
Phone: (802) 828-6000
New Jersey

Total Jobs: 47,390
Direct Jobs: 21,950
Total Value-Added: $4.541 Billion
Direct Value-Added: $1.878 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,280 $38.8M
Biobased Chemicals 770 $215.1M
Biorefining <50 <$5M
Enzymes 150 $35.3M
Forest Products 16,660 $1.4B
Textiles 3,560 $205.7M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

60 New Jersey companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
AVEENO Active Naturals (Skillman, NJ; aveeno.com): Aveeno's Active
Naturals brand uses a number of renewable, natural ingredients,
including oat, soy, blackberry, and wheat. The company offers several
skin, beauty, and hair care products.
Ingredion Incorporated (Bridgewater, NJ; ingredion.com): Ingredion
has been a recognized leader in biomaterial innovation and application
development since 1895. Biobased ingredients derived from feedstocks
such as corn, tapioca, and potatoes, are used in a number of industry
sectors, including personal care, household and fabric care, and
biobased plastics.
National Bio+GreenSciences (Branchburg, NJ; biogreencrystals.com):
National Bio+GreenSciences offers the world's first nutraceutical
grade, zero waste, [E]arth friendly product line of cleaning supplies,
formulated with plant- and mineral-based ingredients.
USDA Rural Development New Jersey Office
Howard Henderson, State Director (www.rd.usda.gov/nj)
5th Floor North, Suite 500, 8000 Midlantic Drive, Mt. Laurel, NJ
08054
Phone: (856) 787-7700
New Mexico

Total Jobs: 6,630
Direct Jobs: 4,210
Total Value-Added: $389 Million
Direct Value-Added: $208 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,120 $53.1M
Biobased Chemicals <50 <$5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 2,740 $140.5M
Textiles 310 $12.0M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

8 New Mexico companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
BioShield Paint Company (Santa Fe, NM; bioshieldpaint.com):
BioShield Paint Company manufactures a variety of paints, stains,
thinners, and waxes, all of which are primarily produced from naturally
derived raw materials such as citrus peel extracts, essential oils,
seed oils, tree resins, and natural pigments.
Private Label Select (Ranchos de Taos, NM; privatelabelselect.com):
Private Label Select manufactures lip balms, lip tints, glosses, and
other high-quality personal care and cosmetics products. A pioneer in
the natural and organic cosmetics industry, its manufacturing
facilities were some of the first USDA certified organic.
Forest Products
Albuquerque Hardwood Lumber Company (Albuquerque, NM;
abqhardwoods.com): Albuquerque Hardwood Lumber Company is the premier
supplier of quality hardwood products in the southwestern U.S. In
addition to lumber options, the company also offers wood panel
products.
USDA Rural Development New Jersey Office
Terrence Brunner, State Director (www.rd.usda.gov/nm)
6200 Jefferson Street, Room 255, Albuquerque, NM 87109
Phone: (505) 761-4950
New York

Total Jobs: 100,630
Direct Jobs: 52,300
Total Value-Added: $9.236 Billion
Direct Value-Added: $3.848 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 4,450 $170.0M
Biobased Chemicals 720 $237.7M
Biorefining <50 <$5M
Enzymes 120 $33.6M
Forest Products 36,130 $2.6B
Textiles 11,260 $828.9M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

83 New York companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
AnelloTech (Pearl River, NY; anellotech.com): AnelloTech produces
cost-competitive renewable chemicals form non-food biomass feedstocks.
These chemicals can be used in a number of consumer goods, including
beverage bottles, automotive and electronic components, clothing,
footwear, and carpeting.
Forest Products
Ecovative (Green Island, NY; ecovativedesign.com): Ecovative is a
leading biobased materials company, with products that span a range of
applications, from furniture to packaging and insulation. Myco Board,
one product offering, is a certified sustainable, engineered wood,
which can be molded into desired shapes and designs.
Textiles
Carnegie Fabrics (Rockville, NY; carnegiefabrics.com): In 2013,
Carnegie Fabrics introduced Xorel, the world's first and only biobased
high performance interior textile. This line of fabrics is sourced from
sugarcane plants and has a biobased content range from 60 to 85
percent.
USDA Rural Development New York Office
Scott Collins, Acting State Director (www.rd.usda.gov/ny)
The Galleries of Syracuse, 441 South Salina Street, Suite 357,
Syracuse, NY 13202-2541
Phone: (315) 477-6400
North Carolina

Total Jobs: 179,380
Direct Jobs: 90,040
Total Value-Added: $13.631 Billion
Direct Value-Added: $6.437 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 9,410 $625.9M
Biobased Chemicals 860 $349.8M
Biorefining <50 <$5M
Enzymes 210 $103.6M
Forest Products 61,930 $4.3B
Textiles 17,870 $1.1B
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

61 North Carolina companies currently participate in the
BioPreferred Program.
Example Biobased Product Firms
Enzymes
Novozymes North America (Franklinton, NC; novozymes.com): Novozymes
is the world leader in biobased innovation, advancing both the biofuel
and renewable chemical industries. Manufactured products include
industrial enzymes, microorganisms, and biopharmaceutical ingredients.
Textiles
Cotton Incorporated (Cary, NC; cottoninc.com): Cotton Incorporated
is the research and marketing company representing upland cotton. The
company focuses its efforts in three key areas: fiber processing,
product development and trend analysis, and dyeing and finishing.
Bioplastic Bottles & Packaging
Earth Renewable Technologies, Inc. (Brevard, NC;
earthrenewable.com): Earth Renewable Technologies uses various plant-
based resins, in conjunction with their patent pending, biobased
microfiber-additive packaging, to produce superior plant-based
alternatives to traditional plastic packaging. Feedstock sources
include sugarcane and sugar beets.
USDA Rural Development North Carolina Office
Randall A. Gore, State Director (www.rd.usda.gov/nc)
4405 Bland Road, Suite 260, Raleigh, NC 27609
Phone: (919) 873-2000
North Dakota

Total Jobs: 5,600
Direct Jobs: 3,360
Total Value-Added: $429 Million
Direct Value-Added: $238 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 470 $21.1M
Biobased Chemicals <50 $5.1M
Biorefining <50 $5.8M
Enzymes <50 <$5M
Forest Products 2,740 $200.8M
Textiles 120 $6.1M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

5 North Dakota companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Bison Forest Products LLC (Fargo, ND; bisonforestproducts.com):
Bison Forest Products is a wholesale lumber supplier. In addition to
its lumber offerings, the company provides quality wheat and barley
straw.
Forest Products
Weekes Forest Products, Inc. (Fargo, ND; weekesforest.com): Weekes
is the leading distributor of specialty building materials, commodity
lumber, engineered wood components, and industrial materials. Among its
specialty product offerings, Eco-Side is a 100 percent recycled,
ecologically friendly siding option.
USDA Rural Development North Dakota Office
Ryan Taylor, State Director (www.rd.usda.gov/nd)
Federal Building, Room 208, P.O. Box 1737, 220 East Rosser, Bismarck,
ND 58502-1737
Phone: (701) 530-2037
Ohio

Total Jobs: 117,370
Direct Jobs: 52,930
Total Value-Added: $9.730 Billion
Direct Value-Added: $4.277 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 3,500 $165.5M
Biobased Chemicals 1,310 $443.6M
Biorefining <50 <$5M
Enzymes 180 $4.4M
Forest Products 45,260 $3.5B
Textiles 3,070 $192.0M
Bioplastic Bottles & Packaging 100 $8.5M
------------------------------------------------------------------------

92 Ohio companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Arizona Chemical (Dover, OH; arizonachemical.com): Arizona Chemical
is the world's leading producer and biorefiner of pine chemicals. The
company provides innovative, biobased chemical solutions to multiple
industry sectors, including adhesives, roads and construction, tires,
and coatings. Approximately 85 percent of the company's raw materials
are from renewable sources.
Procter & Gamble (Cincinnati, OH; us.pg.com): Tide, a Procter &
Gamble brand, recently launched the first biobased detergent, Tide
purclean. The detergent is comprised of 65 percent biobased ingredients
and aims to set the performance standard for natural detergents.
Renewable Lubricants (Hartville, OH; renewablelube.com): Renewable
Lubricants is the world's leading developer and manufacturer of high-
performance, biobased lubricants, producing utilizing soy, corn,
canola, sunflower, and other biomaterials. The company offers more than
250 biobased and biodegradable products.
USDA Rural Development Ohio Office
Tony Logan, State Director (www.rd.usda.gov/oh)
Federal Building, Room 507, 200 North High Street, Columbus, OH
43215-2418
Phone: (614) 255-2400
Oklahoma

Total Jobs: 21,550
Direct Jobs: 10,320
Total Value-Added: $1.960 Billion
Direct Value-Added: $995 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 2,790 $138.1M
Biobased Chemicals 100 $40.5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 7,000 $773.2M
Textiles 730 $63.6M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

8 Oklahoma companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Envia Energy (Oklahoma City, OK; enviaenergy.com): Envia Energy
uses the latest developments in gas processing and Fischer-Tropsch
technology to create high purity synthetic fuels and chemicals. Methane
captured from landfills is used as a feedstock.
Forest Products
Forest Products Supply Co. (Oklahoma City, OK; fp-supply.com):
Forest Products Supply is a leading wholesale distributor of lumber and
building materials in the Midwest. Product offerings consist of over
2,500 products, ranging from general commodities to specialty products.
TO MARKET (Oklahoma City, OK; tomkt.com): TO MARKET prides itself
on bringing alternative materials for interior paces to the commercial
marketplace, designing and selling commercial flooring. Flooring
products are manufactured utilizing recycled and sustainable content,
including rubber and cork.
USDA Rural Development Oklahoma Office
David Ryan McMullen, State Director (www.rd.usda.gov/ok)
100 USDA, Suite 108, Stillwater, OK 74074-2654
Phone: (405) 742-1000
Oregon

Total Jobs: 92,520
Direct Jobs: 46,480
Total Value-Added: $7.798 Billion
Direct Value-Added: $4.159 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 13,460 $1.1B
Biobased Chemicals 90 $17.5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 31,700 $3.0B
Textiles 1,230 $50.8M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

49 Oregon companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Trellis Earth Products (Wilsonville, OR; trellisbioplastic.com):
Trellis Bioplastics creates a range of biobased plastic resins and
consumer products in efforts to replace traditional plastics. Trellis
Earth branded food service disposables are currently the leading
industry solution for ``greening'' the take-out food service sector.
Forest Products
DR Johnson Lumber (Riddle, OR; drjlumber.com): DR Johnson is the
first APA/ANSI certified manufacturer for cross-laminated timber (CLT)
in the U.S.
SierraPine (Medford, OR; sierrapine.com): SierraPine is North
America's leading manufacturer of medium density fiberboard (MDF) and
particleboard, which are used in a variety of applications including
furniture, cabinetry, wall panels, shelving, and doors. SierraPine
produces MDF and particleboard from recycled or recovered wood fiber
and adhesives.
USDA Rural Development Oregon Office
Vicki L. Walker, State Director (www.rd.usda.gov/or)
1220 SW 3rd Avenue, Suite 1801, Portland, OR 97204
Phone: (503) 414-3300
Pennsylvania

Total Jobs: 151,090
Direct Jobs: 71,360
Total Value-Added: $13.667 Billion
Direct Value-Added: $6.522 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 6,860 $309.2M
Biobased Chemicals 820 $170.5M
Biorefining <50 <$5M
Enzymes 170 $52.7M
Forest Products 58,790 $5.8B
Textiles 5,370 $267.3M
Bioplastic Bottles & Packaging 70 $6.6M
------------------------------------------------------------------------

79 Pennsylvania companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Armstrong World Industries (Lancaster, PA; armstrong.com): In
response to increased market demand for non-PVC flooring products,
Armstrong Flooring created a bio-flooring line that is made with 85
percent limestone and BioStride, a patented biobased polyester binder
that is partly comprised of domestically produced corn.
Houghton International, Inc. (Norristown, PA; houghtonintl.com):
Houghton International produces a variety of specialty chemicals, oils,
and lubricants. The company has two hydraulic fluids that are USDA
Certified Biobased Products and are derived from vegetable oil-based
feedstocks.
Sun and Earth, Inc. (King of Prussia, PA; sunandearth.com): Sun and
Earth has been producing non-toxic, all-natural cleaning supplies since
1988. In lieu of petroleum-based materials, the company produces
products via plant-based, naturally derived ingredients.
USDA Rural Development Pennsylvania Office
Thomas P. Williams, State Director (www.rd.usda.gov/pa)
359 East Park Drive, Suite 4, Harrisburg, PA 17111-2747
Phone: (717) 237-2299
Rhode Island

Total Jobs: 6,670
Direct Jobs: 3,500
Total Value-Added: $522 Million
Direct Value-Added: $228 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 150 <$5M
Biobased Chemicals 70 $9.6M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 2,190 $158.5M
Textiles 1,100 $56.0M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

5 Rhode Island companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Spectral Chemical Co., Inc. (Warwick, RI; spectralchemical.com):
Spectral Chemical Company offers a range of chemical and cleaning
products, some of which are biobased products produced from soy-based
feedstocks.
Toray Plastics, Inc. (North Kingston, RI; toraytpa.com): Toray
Plastics is the only U.S. manufacturer of polypropylene, polyester,
metallized, and biobased films. The company developed a biobased bio-
axially oriented polyester film that is utilized in the manufacturing
process of solar control window films for commercial and residential
applications.
USDA Rural Development Rhode Island Office
Scott Soares, State Director (www.rd.usda.gov/ct)
451 West Street, Amherst, MA 01002-2999
Phone: (413) 253-4300
South Carolina

Total Jobs: 82,670
Direct Jobs: 38,430
Total Value-Added: $7.448 Billion
Direct Value-Added: $4.227 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 6,870 $449.0M
Biobased Chemicals 560 $152.1M
Biorefining <50 <$5M
Enzymes <50 $5.1M
Forest Products 22,930 $3.0B
Textiles 8,370 $640.9M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

15 South Carolina companies currently participate in the
BioPreferred Program.
Example Biobased Product Firms
Biobased Chemicals
Ingevity (North Charleston, SC; ingevity.com): Ingevity
manufactures specialty chemicals and high-performance carbon materials.
Ingevity's biobased product offerings create value for many industries,
including wood coatings, plastic stabilizers, mining, and specialty
additives.
Sorbent Green LLC (Aiken, SC; greensorb.com): Sorbent Green
develops, manufactures, and distributes biobased products for
industrial and commercial applications. The biobased solvents offered
are readily biodegradable, with zero volatile organic compounds.
Forest Products
Domtar (Fort Mill, SC; domtar.com): In addition to being a global
leader in pulp production, Domtar is also North America's largest
producer of uncoated freesheet paper. Domtar is committed to using
fiber from responsibly managed sources, and was an early supporter of
the Forest Stewardship Council.
USDA Rural Development South Carolina Office
Michele Cardwell, State Director (www.rd.usda.gov/sc)
Strom Thurmond Federal Building, 1835 Assembly Street, Room 1007,
Columbia, SC 29201
Phone: (803) 765-5163
South Dakota

Total Jobs: 10,790
Direct Jobs: 6,160
Total Value-Added: $677 Million
Direct Value-Added: $332 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 670 $35.2M
Biobased Chemicals <50 $13.3M
Biorefining <50 <$5M
Enzymes <50 $9.7M
Forest Products 5,230 $274.7M
Textiles 240 $11.1M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

11 South Dakota companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Ultra Green Floor Sweep (Platte, SD; ultragreenfloorsweep.com):
Ultra Green Floor Sweep produces an all-natural sweeping compound,
which can be used to shine floors without the need for any water.
Biorefining
POET Biorefining (Chancellor, SD; poet.com): The POET Biorefining
facility in Chancellor, the largest of the POET plants, processes 110
million gallons of ethanol each year. POET INVIZ zein, a natural, non-
toxic edible protein product is extracted from the ethanol fermentation
process and used as a biobased alternative for a number of industrial
applications.
Forest Products
Pure Pulp Products (Plankinton, SD; purepulpproducts.com): Pure
Pulp Products utilizes biomass waste as a sustainable substrate for
packaging. Post-industrial waste from corrugated box manufacturing is
re-purposed to create fiber that can be turned into an array of
products, including food service plates and bowls, trays, and
clamshells.
USDA Rural Development South Dakota Office
Bruce Jones, Acting State Director (www.rd.usda.gov/sd)
Federal Building, Room 210, 200 Fourth Street, SW, Huron, SD 57350
Phone: (605) 352-1100
Tennessee

Total Jobs: 100,980
Direct Jobs: 44,850
Total Value-Added: $8.981 Billion
Direct Value-Added: $4.430 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 5,890 $322.2M
Biobased Chemicals 720 $174.9M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 33,990 $3.7B
Textiles 4,320 $223.1M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

27 Tennessee companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Colonial Chemical (Pittsburg, TN; colonialchem.com): Colonial
Chemical is an industry forerunner in the development and manufacture
of products that are derived from renewable ingredients. Products
include cosmetic and industrial surfactants, performance additives, and
key building-block ingredients for use in personal care, household,
industrial, lubrication, and oilfield applications.
DuPont Tate & Lyle (Loudon, TN; tateandlyle.com): DuPont's facility
in Loudon was the first to produce commercial shipments of Bio-PDO,
thereby creating a renewably sourced ingredient for biobased fibers.
Bio-PDO can be used in cosmetics, apparel, and industrial applications.
Forest Products
International Paper (Memphis, TN; internationalpaper.com):
International Paper is a global leader in packaging and paper.
Ecotainer packaging is a compostable solution for single-use packaging
that is produced entirely from renewable resources.
USDA Rural Development Tennessee Office
Bobby Mack Goode, State Director (www.rd.usda.gov/tn)
3322 West End Avenue, Suite 300, Nashville, TN 37203-1071
Phone: (615) 783-1300
Texas

Total Jobs: 178,480
Direct Jobs: 88,680
Total Value-Added: $15.228 Billion
Direct Value-Added: $6.828 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 24,440 $1.7B
Biobased Chemicals 1,680 $471.3M
Biorefining <50 $5.4M
Enzymes 350 $101.2M
Forest Products 57,020 $4.4B
Textiles 6,750 $253.1M
Bioplastic Bottles & Packaging 60 $5.6M
------------------------------------------------------------------------

136 Texas companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
DSI Ventures, Inc. (Tyler, TX; dsiventures.com): DSI offers a
comprehensive line of eco-friendly, biodegradable lubricant solutions.
Feedstocks for the biobased lubricants include vegetable and citrus
oils.
Samsill Corporation (Fort Worth, TX; samsill.com): Samsill
Corporation manufactures business accessories and office supplies. The
company's Earth's ChoiceTM Biobased binders are made using a
biobased intermediate, and the binders are USDA Certified Biobased
Products.
Bioplastic Bottles & Packaging
Accredo Packaging, Inc. (Sugar Land, TX; accredopackaging.com):
Using renewably sourced resin from sugarcane feedstock, Accredo
successfully pioneered sustainably produced packaging with a renewable
content. The renewable packaging is predominantly used for the pre-
packaged foods and consumer products markets.
USDA Rural Development Texas Office
Paco Valentin, State Director (www.rd.usda.gov/tx)
Federal Building, Suite 102, 101 South Main Street, Temple, TX 76501
Phone: (254) 742-9700
Utah

Total Jobs: 21,980
Direct Jobs: 10,770
Total Value-Added: $1.825 Billion
Direct Value-Added: $963 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 610 $12.9M
Biobased Chemicals 90 $32.4M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 9,140 $896.6M
Textiles 980 $28.7M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

11 Utah companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Prolix (West Jordan, UT; prolixlubricant.com): Prolix offers a
biodegradable, non-petroleum based solvent/lubricant for firearms. The
product can also be used to clean clocks, bike chain, knives, vehicle
locks, lawn and garden equipment, and musical instruments.
Forest Products
Intermountain Wood Products (St. George, UT; Salt Lake City, UT;
intermountainwood.com): Intermountain Wood Products offers a complete
selection of wood products, including cabinet, casework, millwork, and
flooring. In addition to using reclaimed wood, the company is also
certified by the Forest Stewardship Council.
National Wood Products, Inc. (Salt Lake City, UT;
nationalwood.com): National Wood Products is a multi-product, multi-
location building products distributor. The company offers a range of
lumber, plywood, and flooring products.
USDA Rural Development Utah Office
Wilson ``David'' Conine, State Director (www.rd.usda.gov/ut)
Wallace F. Bennett Federal Building, 125 South State Street, Room
4311, Salt Lake City, UT 84138
Phone: (801) 524-4321
Vermont

Total Jobs: 11,420
Direct Jobs: 6,500
Total Value-Added: $630 Million
Direct Value-Added: $278 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,820 $53.9M
Biobased Chemicals <50 <$5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 4,390 $213.9M
Textiles 280 $7.6M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

9 Vermont companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Currier Forest Products (Danville, VT; currierforestproducts.com):
Currier Forest Products is a Forest Stewardship Council certified Chain
of Custody supplier of custom sawn forest products, including an array
of flooring, timber, and lumber products.
The A. Johnson Co. (Bristol, VT; vermontlumber.com): The A. Johnson
Co. produces an array of flooring, paneling, and lumber products.
Timber is harvested in accordance with the guidelines of the
Sustainable Forestry Initiative.
Biobased Chemicals
Seventh Generation (Burlington, VT; seventhgeneration.com): Seventh
Generation was one of the first recipients of the USDA BioPreferred
Program's certification label. The company boasts a number of plant-
based offerings, including disinfectants, hand soaps, laundry supplies,
and surface cleaners.
USDA Rural Development Vermont Office
Ted Brady, State Director (www.rd.usda.gov/vt)
87 State Street Suite 324, P.O. Box 249, Montpelier, VT 05601
Phone: (802) 828-6080
Virginia

Total Jobs: 75,540
Direct Jobs: 38,920
Total Value-Added: $6.456 Billion
Direct Value-Added: $3.145 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 5,750 $309.0M
Biobased Chemicals 460 $135.9M
Biorefining <50 <$5M
Enzymes 50 $15.3M
Forest Products 29,430 $2.3B
Textiles 3,730 $401.9M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

45 Virginia companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Earth Friendly Chemicals (Virginia Beach, VA; efchem.com): Earth
Friendly Chemicals manufactures ``green'' chemistry products valued by
many markets seeking 100 percent biodegradable and non-toxic products.
Biobased product offerings include residential and commercial cleaners,
as well as industrial degreasers.
Forest Products
Blue Ridge Fiberboard (Danville, VA; blueridgefiberboard.com): Blue
Ridge Fiberboard products are composed of all-natural, [E]arth-friendly
wood chips. The binding agent utilized in the manufacturing process is
also all-natural, consisting of vegetable starch that contains no added
formaldehydes.
uDo Inc. (Arlington, VA; udobrush.com): uDo manufactures eco-
friendly, bamboo-handled toothbrushes that are 92 percent biobased.
USDA Rural Development Virginia Office
Basil I. Gooden, PHD, State Director (www.rd.usda.gov/va)
Culpeper Building, Suite 238, 1606 Santa Rosa Road, Richmond, VA
23229
Phone: (804) 287-1550
Washington

Total Jobs: 82,640
Direct Jobs: 41,140
Total Value-Added: $7.867 Billion
Direct Value-Added: $3.808 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 11,180 $890.2M
Biobased Chemicals 130 $23.3M
Biorefining <50 <$5M
Enzymes <50 $6.9M
Forest Products 27,780 $2.8B
Textiles 2,080 $89.2M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

175 Washington companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
WISErg Corporation (Redmond, WA; wiserg.com): WISErg harvests food
scraps and turns them into fertilizer. The company sells Harvester
machines in which the waste is collected and the resulting fertilizer
products.
Forest Products
Weyerhaeuser NR Company (Federal Way, WA; woodbywy.com):
Weyerhaeuser makes construction products such as lumber, oriented
strand board, and joists. Sustainability policies adopted by
Weyerhaeuser include using third-party certifications such as the
Sustainable Forestry Initiative (SFI) and the ISO 14001 Environmental
Management System.
Bioplastic Bottles & Packaging
Grow Plastics, Inc. (Bothell, WA; growplastics.com): Grow Plastics
currently utilizes NatureWorks's Ingeo biobased polymer to produce a
variety of biobased plastic products. With an ability to produce nearly
any shape or size, Grow Plastic offers a number of custom options.
USDA Rural Development Washington Office
Mario Villanueva, State Director (www.rd.usda.gov/wa)
1835 Blacklake Boulevard SW, Suite B, Olympia, WA 98512-5715
Phone: (360) 704-7740
West Virginia

Total Jobs: 17,490
Direct Jobs: 9,960
Total Value-Added: $1.107 Billion
Direct Value-Added: $601 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 1,920 $89.1M
Biobased Chemicals 210 $45.5M
Biorefining <50 <$5M
Enzymes <50 $6.5M
Forest Products 7,660 $463.8M
Textiles 200 $5.5M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

One West Virginia company currently participates in the
BioPreferred Program.
Example Biobased Product Firms
Agriculture & Forestry
AFP Lumber & Logs, LLC (Buckhannon, WV; afpcorp.com): AFP is a
leading global provider of high-quality hardwood forest products,
offering an array of lumber, timber, and forest products.
Allegheny Wood Products (Petersburg, WV; alleghenywood.com):
Allegheny Wood Products offers a variety of wood products, suitable for
the manufacturing of cabinets, flooring, furniture, moldings, and
millwork. All of the company's facilities are Forest Stewardship
Council Chain of Custody certified.
Forest Products
Carter Lumber (Ripley, WV; Parkersburg, WV; New Martinsville, WV;
carterlumber.com): Carter Lumber, with three locations in West
Virginia, is one of the nation's largest building materials suppliers,
with product offerings including building supplies, lumber, flooring,
and siding.
USDA Rural Development West Virginia Office
Robert Lewis, State Director (www.rd.usda.gov/wv)
1550 Earl Core Road, Suite 101, Morgantown, WV 26505
Phone: (304) 284-4860
Wisconsin

Total Jobs: 160,010
Direct Jobs: 68,250
Total Value-Added: $13.542 Billion
Direct Value-Added: $6.252 Billion

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 5,280 $202.5M
Biobased Chemicals 470 $136.5M
Biorefining <50 <$5M
Enzymes 130 $25.4M
Forest Products 60,760 $5.8B
Textiles 1,710 $112.1M
Bioplastic Bottles & Packaging 80 $6.7M
------------------------------------------------------------------------

72 Wisconsin companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Biobased Chemicals
Virent (Madison, WI; virent.com): Virent converts soluble, biomass-
derived sugars into products molecularly identical to those made with
petroleum. Among its product offerings, Virent manufactured the first
ever bio-polyester shirt produced from 100 percent renewable resources.
Enzymes
Enviro-Zyme International, LLC (Beloit, WI; envirozyme.com):
Enviro-Zyme offers an assortment of products and services for
residential, commercial, and industrial cleaning. Products are made
with naturally occurring microbes.
Bioplastic Bottles & Packaging
Plastic Ingenuity (Cross Plains, WI; plasticingenuity.com): Plastic
Ingenuity is one of the largest custom thermoformers in North America,
offering packaging solutions that encompass every stage of packaging
design and manufacturing. The Plastic Ingenuity team created new
thermoforming methods that incorporate wood pulp into the packaging
material, in addition to producing corn-based polylactic acid
materials.
USDA Rural Development Wisconsin Office
Stan Gruszynski, State Director (www.rd.usda.gov/wi)
5417 Clem's Way, Stevens Point, WI 54482
Phone: (715) 345-7600
Wyoming

Total Jobs: 2,350
Direct Jobs: 1,610
Total Value-Added: $117 Million
Direct Value-Added: $58 Million

The total jobs or value-added is the sum of the direct, indirect,
and induced effects.

------------------------------------------------------------------------
Direct Value-
Sector Direct Jobs Added
------------------------------------------------------------------------
Agriculture & Forestry 480 $13.6M
Biobased Chemicals <50 <$5M
Biorefining <50 <$5M
Enzymes <50 <$5M
Forest Products 1,020 $36.5M
Textiles 110 <$5M
Bioplastic Bottles & Packaging <50 <$5M
------------------------------------------------------------------------

7 Wyoming companies currently participate in the BioPreferred
Program.
Example Biobased Product Firms
Agriculture & Forestry
Bearlodge Forest Products, Inc. (Hulett, WY;
bearlodgeforestproducts.com): Bearlodge Forest Products offers an array
of wood products, including pallets, timber, lumber, and pellets and is
certified with Timber Products Inspection.
Natures Composites (Torrington, WY; naturescomposites.com): Natures
Composites manufactures sustainable, high-performing composite
products, including fencing, decking, landscaping, lumber, and other
composite building materials, produced from recycled high-density
polyethylene reinforced with wheat straw cellulose.
Teton West Lumber Company (Cheyenne, WY; tetonwest.com): Teton West
Lumber is committed to the health of Wyoming's forests by processing,
and repurposing, beetle kill pine into useable lumber products, for
both residential and commercial buildings.
USDA Rural Development Wyoming Office
Connie Baker Wolfe, State Director (www.rd.usda.gov/wy)
Dick Cheney Federal Building, P.O. Box 11005, 100 East B Street, Room
1005, Casper, WY 82601
Phone: (307) 233-6700
C1. Case Study: Michigan Biotechnology Institute

The Michigan Biotechnology Institute (MBI) was founded by the State
of Michigan in the 1980s to help encourage start-ups in the biobased
products industry with the goal of diversifying the state's economy
away from the struggling automotive industry. According to Dr. Susanne
Kleff, a biologist with a background in metabolic engineering who
joined MBI 20 years ago, MBI's mission matured over the years to
provide a not-for-profit entity that offered custom-tailored solutions
to advance new biobased technologies for its own government-funded
technologies and collaboratively for other companies all over the
world.
MBI houses fermenters that range from lab-scale up to 1,000
gallons, and they provide the ability to manufacture products in the
volumes required to support pre-commercial product development,
application testing, and routine production. A general rule of thumb in
the biobased products industry is that production at the 1,000 gallon
scale identifies the technology's problems and demonstrates its
robustness and viability. Other similar facilities in the United States
have fermentation capacities in the range of 50-200 gallons.
MBI has developed successful technologies of its own, such as
processes for organic acid production, and its current focus is on
ammonium fiber expansion technologies (AFEXTM), but these
technologies failed to use the pilot facility at its full potential.
This led to MBI's offering to collaboratively advance and scale-up
technologies for and with other companies worldwide. Many well-known
companies that have biobased capabilities have worked with MBI,
including Genomatica, Bolt Threads, DuPont, OPX BIO (acrylic acids),
Novozymes, Tepha Medical Devices, and others. Over the past 6 years,
MBI had a 100 percent success rate in technology scale-up.
Very recently, the Process Development and Scale-up Branch of MBI
joined Michigan State University's Bioeconomy Institute (MSU-BI) and
its sister facility in Holland, Michigan, to expand its downstream
processing capabilities. The Holland plant was an old Pfizer
pharmaceutical production facility, and it is capable of downstream
recovery and chemical extractions. This addition of a chemical pilot
plant to the fermentation facility in Lansing provides a unique set of
scaling capabilities that is unparalleled in the United States.
Dr. Kleff explained that the process of taking a new product from
an idea or concept to commercialization encompasses many hurdles that
many start-up entrepreneurs are not aware of, ``We had startups who
came to us with ideas, but they have only produced their products in
shakeflasks or 2 liter fermenters. They come to us at a stage where
they need to be able to produce a material for application testing,
which means they need larger scale fermenters. Acquiring or
constructing a facility of their own with larger fermenters would be
time consuming, and would require substantial additional funding to
demonstrate whether the technology is scalable and viable. An organism
may be sensitive to the differences in pressure, gas exchange rates, or
mixing times at the larger scale. This is essentially the `de-risking'
process, to ensure the technology can be scaled. Our team is also able
to work with the start-up on the economics of the technology and can
provide realistic feedback. Most of the people who come to us know the
targets they have to achieve.''
MBI also receives grants for some of its technologies.
Nevertheless, MBI requires that startups that wish to run product
scale-ups in its facility must do so on a fee-for-service basis. Today,
representatives from MBI attend meetings seeking contacts, but they
indicated that many of their clients approach them after others have
recommended them. MBI provides both the facilities and skilled staff
members who are well trained and very familiar with fermentation and
recovery processes. This provides start-ups with a much lower cost
alternative to building their own pilot facilities. Dr. Kleff observed
that very few of the companies who come to MBI have the capital to
build a platform for a new facility that often requires full capacity
utilization to make it economical. As noted above, MBI does not limit
itself to supporting only Michigan companies, but it works with many
companies throughout the United States (e.g., Bolt Threads in
California), and has also begun working with companies from Europe and
Asia.
Dr. Kleff emphasized that, given the current low prices of oil, it
is important for the biobased products industry to move away from
commodity chemicals and focus on the specialty chemicals sector.
C2. Case Study: Agricultural Utilization Research Institute (AURI)

The Agricultural Utilization Research Institute (AURI) helps
develop new uses for agricultural products through science and
technology, and it collaborates with businesses and entrepreneurs to
bring ideas to reality. AURI was founded by the State of Minnesota to
help businesses take advantage of innovative opportunities in four
areas: biobased products, renewable energy, coproducts, and food.
AURI has three laboratories located in Crookston, Marshall, and
Wauseca, MN. AURI also works closely with the faculty at the University
of Minnesota. AURI does not engage in research itself, they provide the
space and opportunity for entrepreneurs and other scientists to do
research. Researchers conduct applied research on new ideas, which
leads to products and businesses that can grow in the State of
Minnesota. A significant part of the activity done by AURI involves
program evaluation to ensure that the institute is effective. The group
also has a Director of Innovation and Commercialization who involves
project managers and directors across a variety of innovation networks.
AURI intends to make the results of applied research available to
businesses and to work with entrepreneurs to facilitate product
formulation, troubleshooting, scale-up, and commercialization. Most of
AURI's activity involves working side by side with clients in the
field, helping them find resources to bring their ideas to market, and
helping them network with other providers in the industry.
AURI receives 80 percent of its funding from the State of
Minnesota, which is augmented by contributions from a private
foundation, research and promotion councils, and some Federal funding.
The State of Minnesota is committed to finding new alternative product
channels for the agricultural communities, and this funding is seen as
being vital for the growth of the biobased products industry in
Minnesota. AURI provides assistance, but it does not take equity or
intellectual property positions on the projects, even though it has
been named on several patents. The bulk of the AURI's work is simply to
help businesses move from the laboratory scale to commercialization.
AURI has developed some laboratory space that it has made available
to entrepreneurs to conduct early work on formulations. In the early
stages of chemical development, there is a need to develop formulations
and develop the intellectual property that will enhance the ability to
get venture capital funding.
The biobased products facility is intended for use in processing
agricultural commodities and co-products at the scale of 1 to 10 kg.
Processes have been developed and demonstrated for producing increased
value materials by fractionation, chemical conversion, and
purification. Key processes that can be piloted include:

Chemical processing of straw, stover, and other biomass
materials.

Extraction and characterization of oils and high-value
components from oilseed meal and other feedstocks.

Transesterification and esterification reactions for
demonstration of biodiesel processing.

Small-scale fermentation and digestion processes for the
production of fuels.

Distillation and evaporation for process development.

The laboratory will host an ``entrepreneur in residence'', i.e.,
someone occupies laboratory space when it becomes available. The
laboratory space is free of charge, and some analytical work will be
provided for the entrepreneur. There may be scientific support as well.
A representative noted that some entrepreneurs need R&D assistance
beyond the capacity and experience of AURI. To help them, AURI has
additional paid assistance available for different R&D efforts.
The process typically starts with a meeting between the
entrepreneur and AURI staff, who will get a feel for the business, the
concept, and what the entrepreneur is hoping to achieve. This can lead
to a deeper conversation concerning AURI's services and programs and to
the development of a team to assist with the client's concept. In one
case, a client sought to add fibers to plastics to strengthen the
material so it would qualify for Leadership in Energy and Environmental
Design (LEED) construction:

We brought in different partners to help with funding the R&D
that was needed, and we brought in partners who provided $200K.
We helped connect them to potential users of the plastics in
window manufacturing. We are committed to helping them in the
idea stage and through research and prototype partners along
the path to commercialization.

According to AURI staff members, there are only two criteria that
must be met to qualify for these services. First, the product must fit
into an area of service that requires the use of an agricultural
commodity. Second, the science must be sound. The business must
consider the competition and early discussions may involve evaluating
the concept against the reality of the market through industry
contacts. The idea must be technical viable and have and opportunities
in the market before making further investments in the idea.
AURI also provides consulting to give business insight into other
entities that should be part of the new business venture team. The
Institute helps identify locations for commercialization and locations
where contract packers can provide support. Moreover, the AURI provides
introductions to a network of subject matter experts. For instance, the
group will host Innovation Networks that focus on a supply net for a
particular technology. AURI has held forums on paint stripping
materials, duct coatings, and other areas. Users, vendors, and
potential users are invited for \1/2\ a day to share their experiences
and to promote discussion. Individuals learn from the presenters, but
there also are one-on-one conversations and product demonstrations.
As outlined in its annual report, AURI believes that the
``Commercialization Chain'' is very important to developing
technologies. This is essential in creating a ``technology cluster'',
which is a group of enterprises with common sets of knowledge and
expertise that creates a network of support for growth. In a sense,
Minnesota hopes to become the ``Silicon Valley'' for the biobased
economy through its support of AURI.
In terms of the biobased products industry, AURI's staff members
recognize that there is a strong need for high value uses for soy,
sugar, and corn beyond biodiesel and bioethanol. Examples include PLA,
high value plastics, butanol, and other waste streams. AURI believes
that public-private collaboration is essential to grow this industry.
Partnerships with larger companies should be beneficial because they
will provide the ability to leverage existing facilities. In any case,
an AURI staff member we interviewed believes that a long-term
perspective is needed:

We have been around for 26 years, and we were not doing in
the beginning what we are doing today. We have evolved over
time through lessons learned. Investors cannot expect to see a
return on biobased products in 2 years, because the innovation
spectrum can take as long as 10 years to get to full fruition.
This is the building of an entirely new industry, and investors
have to be patient. This is a tough quality to find in
investors. However, the State of Minnesota is willing to invest
in the long-term, to put money into it, and allow the industry
to develop and progress. This is not an easy sell, but it is
the key to success.

AURI and Minnesota stakeholders engaged the Battelle Technology
Partnership to evaluate the state's potential for growth in the
agbioscience sector. The study is a fascinating read, reflecting the
development process, the benefits of public investment in growing the
industry and the specific areas where Minnesota's core competencies
could catalyze significant growth.
IV. Environmental Benefits
A broad analysis of the biobased products industry was performed
using Economic Input-Output Life Cycle Assessment (EIO-LCA) modeling to
determine an estimate of the petroleum use savings and GHG emissions
reductions resulting from the production and use of biobased products.
Using the EIO-LCA methodology, calculated sector sales, and literature,
GHG emissions reductions are estimated to be up to 10 million metric
tons of CO2 equivalents in 2014. The estimated petroleum
savings from biobased product production and use are up to 6.8 million
barrels of oil in 2014. Other environmental impact categories that are
not estimated in this report could produce different impacts for
biobased products as compared to petroleum-based products. Further
analysis should include modeling of additional impact categories and
the implications of other parameters such as land use change.
A. Economic Input-Output LCA
The EIO-LCA methodology was developed by Carnegie Mellon
University's Green Design Institute as a method to estimate materials
and energy resources required for various activities and the subsequent
resulting emissions. The EIO-LCA method is one of several techniques
used to examine the environmental impacts of a product over its
lifecycle. In contrast to a process LCA, which examines a single
process or product quantifying flows unique to that product, the EIO-
LCA process uses ``industry transactions--purchase of materials by one
industry from other industries--and the information about direct
environmental emission of industries, to estimate the total emissions
throughout the supply chain''.\55\
---------------------------------------------------------------------------
\55\Carnegie Mellon University Green Design Institute, ``About the
EIO-LCA Method'', Carnegie Mellon University Green Design Institute,
http://www.eiolca.net/Method/index.html.
---------------------------------------------------------------------------
The EIO-LCA methodology builds upon the economic impact modeling
methods developed by Nobel Prize winner Wassily Leontief, whose
original work aimed to create a model of the U.S. economy and was
expanded to include environmental metrics by Carnegie Mellon
University. The EIO-LCA model and extensive documentation are available
at www.eiolca.net.
B. Objectives and Methodology
The production and use of biobased products has the potential to
reduce GHG emissions and petroleum use.\56\ The reductions in
environmental impacts and resource use depend on both product type and
other factors influencing the production supply chain and products'
lifecycles. Conducting an LCA for thousands of biobased products making
up the bioeconomy was not feasible for this report. As a way to
estimate the potential GHG emissions and petroleum use reductions, a
range of GHG emissions and petroleum use reductions of 0 to 100 percent
as compared to petroleum-based alternatives was used. A 0 percent
reduction would indicate no difference as compared to petroleum-based
products and a 100 percent reduction would indicate no fossil fuel use
by biobased products. In reality, most of the biobased products will
lie somewhere between 0 and 100 percent reduction; however, it is not
possible to determine this for all the products making up the
industrial sectors.
---------------------------------------------------------------------------
\56\Cherubini, F., and Ulgiati, S., ``Crop residues as raw
materials for biorefinery systems--A LCA case study,'' Applied Energy
87, no. 1, (2010): 47-57.
---------------------------------------------------------------------------
Only the biobased chemicals, biorefining, and bioplastic bottles
and packaging sectors were considered as they can directly replace
petroleum-based products. Other industry sectors, such as enzyme
production, were not examined in this part of the study because the
chemicals or products that enzymes directly replace are not always
clear, as opposed to bioplastics, which generally displace other
petroleum-based plastic products. This direct replacement assumption
was required to perform the analysis described in this section.
The environmental metrics of GHG emissions and petroleum use are
two key indicators of interest, but there are other important
environmental impacts that should also be considered when making policy
decisions. In a previous report by Golden, et al., the authors examined
a broader suite of environmental impacts in addition to GHG emissions
specific to the biobased products industry.\57\ These additional impact
categories are important to consider and are acknowledged here, but the
scope of this work is limited to GHG emissions and petroleum use
reductions resulting from the use of biobased products as a substitute
for petroleum-based products.
---------------------------------------------------------------------------
\57\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell,
T.E., An Economic Impact Analysis of the U.S. Biobased Products
Industry: A Report to the Congress of the United States of America, A
Joint Publication of the Duke Center for Sustainability & Commerce and
the Supply Chain Resource Cooperative at North Carolina State
University, 2015.
---------------------------------------------------------------------------
As each biobased product and production process will produce
different environmental impacts, this work does not seek to give one
number that represents all products; instead, a range of GHG emissions
savings and petroleum displacement was determined based on percent
reductions compared to petroleum-based materials. The calculated range
of reductions was also compared to the peer-reviewed literature, which
describes reductions in environmental impacts. The values used to
determine the estimated impact reductions were determined using EIO-LCA
with the TRACI impact assessment method to calculate the GHG emission
equivalents and petroleum use.\58\ Economic data used in the
environmental analysis was based on 2014 U.S. national data as reported
in previous sections of this report.
---------------------------------------------------------------------------
\58\Carnegie Mellon University Green Design Institute, ``Economic
Input-Output Life Cycle Assessment (EIO-LCA) U.S. 1997 Industry
Benchmark Model'', Carnegie Mellon University Green Design Institute,
http://www.eiolca.net/Models/index.html.
---------------------------------------------------------------------------
C. Results Overview
The petroleum saved by the biobased products industry are estimated
to be as much as 6.8 million barrels of oil. In terms of GHG emissions
reductions, the biobased products industry are estimated to be as much
as 10 million metric tons of CO2 equivalents. The avoided
GHG emissions and petroleum use associated with direct replacement of
petroleum-based products with biobased products are shown in Figures 10
and 11, respectively. The EIO-LCA model results were generated in terms
of kg CO2 equivalents and terajoules of petroleum, however,
the petroleum use was converted to barrels of oil using a heating value
of 6.077 MMBTU per barrel of oil.\59\ For both impact measures, lines
show the potential avoided impacts as a function of percent reduction
compared to the petroleum-based alternative ranging from 0 to 100
percent. In addition to the range of avoided impacts, percent
reductions from the peer-reviewed literature were also applied to the
EIO-LCA output and reported in the following sections.
---------------------------------------------------------------------------
\59\http://www.eia.gov/totalenergy/data/monthly/pdf/sec13_2.pdf.
---------------------------------------------------------------------------
Figure 10: Potential Reductions in Petroleum Use by Biobased Products
Manufactured in the United States with a Range of 0% to 100%
Reduction in Petroleum Use as Compared to Non-Biobased Product
Alternatives
Potential Reduction in Petroleum Use due to Biobased Product
Utilization
Percent Reduction in Petroleum Use as Compared to Traditional Products

(Note: assuming a heating value of 6.077 MMBTU per barrel of
oil).60-63
---------------------------------------------------------------------------
\60\Cherubini, F., and Ulgiati, S., ``Crop residues as raw
materials for biorefinery systems--A LCA case study,'' Applied Energy
87, no. 1, (2010): 47-57.
\61\Yu, J., and Chen, L.X.L., ``The Greenhouse Gas Emissions and
Fossil Energy Requirement of Bioplastics from Cradle to Gate of a
Biomass Refinery,'' Environmental Science & Technology 42, no. 18,
(2008): 6961-6966, doi: 10.1021/es7032235.
\62\Harding, K. G., Dennis, J. S., Von Blottnitz, H., and Harrison,
S.T.L., ``Environmental analysis of plastic production processes:
Comparing petroleum-based polypropylene and polyethylene with
biologically-based poly-b-hydroxybutyric acid using life cycle
analysis'', Journal of Biotechnology 130, no. 1, (2007): 57-66.
\63\Golden, J.S., Handfield, R.B., Daystar, J., and McConnell,
T.E., An Economic Impact Analysis of the U.S. Biobased Products
Industry: A Report to the Congress of the United States of America, A
Joint Publication of the Duke Center for Sustainability & Commerce and
the Supply Chain Resource Cooperative at North Carolina State
University, 2015.
---------------------------------------------------------------------------
1. Avoided Petroleum Use
The avoided petroleum use resulting from biobased product use
instead of petroleum counterparts would create petroleum savings up to
6.8 million barrels of oil. The potential petroleum use avoided by
direct displacement with biobased chemicals was the largest, as the
biobased chemicals market size is significantly larger than the other
two sectors. Cherubini and Ulgiati determined that biobased chemicals
produced at a biorefinery using a switchgrass feedstock reduced fossil
fuel usage well beyond 80 percent as compared to petroleum-based
chemical production methods and corresponds to 6 million barrels of
oil.\60\* The biorefining industry producing biochemicals are reported
to use 80 percent less petroleum as traditional refineries and could
generate petroleum savings of up to 552,000 barrels of oil.\60\* The
bioplastic bottles and packaging avoided petroleum use potential was
the lowest of the three sectors examined. Using data from Yu and Chen
and Harding, et al., bioplastic bottles and packaging displacement of
petroleum plastics corresponded to a petroleum savings up to 77,000 and
61,000 barrels of oil, respectively.61-62* The previous
economic impact report estimated a petroleum use reduction of 200,000
average passenger cars for a year.\63\* This previous estimate
corresponds to a 26 percent reduction of petroleum use when biobased
products are used instead of petroleum-based products. Given the data
from the literature shown in this analysis, 26 percent appears to be a
reasonable and conservative number.
---------------------------------------------------------------------------
*Editor's note: the asterisk (*) marked footnote references should
have been formatted as endnotes in the submitted document. The improper
formatting is retained in the document, as submitted.
---------------------------------------------------------------------------
Figure 11: Potential Reductions in Greenhouse Gas Emissions by Biobased
Products Manufactured in the United States with a Range of 0%
to 100% Reduction in GHG Emissions as Compared to Non-Biobased
Product Alternatives60-63*
Potential Reduction in Greenhouse Gas Emissions due to Biobased Product
Utilization
Percent Reduction in Greenhouse Gas Emissions as Compared to
Traditional Products

2. Avoided GHG Emissions
The production and use of biobased products replacing petroleum-
based products had the potential to reduce GHG emissions up to 10
million metric tons of CO2 equivalents in 2014. The
potential avoided GHG emissions for each sector grouping are shown in
Figure 11. Since the biobased chemicals sector is the largest of the
three sectors, it has the highest potential to reduce GHG emissions due
to the higher volume of sales. Cherubini and Ulgiati estimated that
chemicals produced from switchgrass at a biorefinery reduced GHG
emissions compared to petroleum-based chemicals by 49 percent, which
corresponds to approximately 7.5 million metric tons of CO2
equivalents per year. The biorefining sector, with less industrial
output than chemical production, has a lower potential to offset GHG
emissions. With the same percent reduction of 49 percent, biorefining
has the potential to offset GHG emissions up to 1.1 million metric tons
per year.\64\
---------------------------------------------------------------------------
\64\Cherubini, F., and Ulgiati, S., ``Crop residues as raw
materials for biorefinery systems--A LCA case study,'' Applied Energy
87, no. 1, (2010): 47-57.
---------------------------------------------------------------------------
The bioplastic bottles and packaging sector was the smallest by
sales of the three examined, but it had the highest GHG emission
reductions reported in the literature. Yu and Chen reported an 80
percent reduction of GHG emissions compared to petroleum-based
plastics, and Harding, et al., reported a 65 percent reduction compared
to petroleum-based plastic.65-66 When considering these two
GHG reduction percentages, GHG emission reductions from bioplastics
could correspond to 210,000 and 170,000 metric tons of CO2
equivalents for the 65 percent and 80 percent reduction scenarios,
respectively.
---------------------------------------------------------------------------
\65\Yu, J., and Chen, L.X.L., ``The Greenhouse Gas Emissions and
Fossil Energy Requirement of Bioplastics from Cradle to Gate of a
Biomass Refinery,'' Environmental Science & Technology 42, no. 18,
(2008): 6961-6966, doi: 10.1021/es7032235.
\66\Harding, K. G., Dennis, J. S., Von Blottnitz, H., and Harrison,
S.T.L., ``Environmental analysis of plastic production processes:
Comparing petroleum-based polypropylene and polyethylene with
biologically-based poly-b-hydroxybutyric acid using life cycle
analysis'', Journal of Biotechnology 130, no. 1, (2007): 57-66.
---------------------------------------------------------------------------
D. Limitations
While the EIO-LCA model is useful in many regards, it is dated and
has limitations. The data describing the inter-industry transactions
was developed from the 2002 benchmark U.S. input-output table and have
likely changed considerably since then.
Additionally, the emissions associated with the various industries
also have likely changed due to increased emissions regulations and
changing energy production systems. For this study, the U.S. 2002 (428-
sector) Producer model was used, and the adjusted industry output was
deflated from 2013 dollars to 2002 dollars. For each of the three
sectors examined (biobased chemicals, bioplastic bottles and packaging,
and biorefining), a custom model was created by entering the adjusted
output considered biobased for each of the sector groupings. In
addition to the issues with the EIO-LCA model, there is also
uncertainty surrounding the percentages of biobased products that make
up the total industrial sectors. Because of these ambiguities, the
results presented in this study are estimates and should be used
cautiously in context. The aim of this analysis was to provide a range
of estimates for GHG emission and petroleum use reductions. Additional
work in this area is recommended but is outside the scope of the
current study.
V. Recommendations
The following recommendations are based on literature reviews,
conducting individual and group interviews through conference
proceedings, individual meetings with representatives from the biobased
products industry, and various non-governmental organizations. This
includes workshops hosted by the authors in California, North Carolina,
and Washington, D.C. in 2015 and 2016.
To be successful in driving the growth of this national industry
will require the active participation of three distinct segments of our
society. The first are consumers who we believe that upon being
educated on the performance, economic and job benefits at the national
and community level in addition to environmental benefits can be the
voice to motivate retailers and brands to increase their use of
biological feedstocks.
Second are the brands and retailers who can use their purchasing
power, supply chains, and marketing strength to promote the industry.
Finally, the Federal Government and especially the USDA BioPreferred
Program has the ability to support education of the benefits of
biobased products to consumers, retailers, and brands.
These recommendations reflect the opinions of the authors of the
study based on their research and interviews. They do not necessarily
reflect the opinions of the USDA.

Recommendation 1: Congress should continue to advance the biobased
products industry for National Security and Domestic Industrial
Strength.

The biobased products industry must be seen through the lens of
National Security and Domestic Industrial Strength. This is a
nonpartisan approach and domestic need. Through continued and increased
support of the sectors, we are reducing our reliance on foreign
supplies of oil used in petroleum-based products as well as creating
needed American jobs throughout the country as has been presented in
this report. Additionally, many of these jobs are being created in
rural regions of our country where economic development needs are
paramount.
It is telling that the Department of Defense considers the biobased
products industry a matter of national security and important part of
the U.S. economy. Former Deputy Secretary of Defense Gordon England
said, ``To be clear, this is not like the latest health food fad, where
you go to a specialty shop and you buy a lot of additional expensive
supplements and ingredients. This is about substituting an equally
effective product or approach to meet a requirement you have that may
well end up costing less in the end. Our strategy also supports our
long-term national security interests by protecting and preserving the
environment for the future generations, so they can enjoy life, liberty
and the pursuit of happiness to the fullest here in America.''\67\
---------------------------------------------------------------------------
\67\U.S. Department of Defense (DOD), ``Bio-Based Products Enhance
National Security'', U.S. DOD, last updated 9/12/06, http://
archive.defense.gov/news/newsarticle.aspx?id=818.

Recommendation 2: Congress should enact a Short-term Production Tax
---------------------------------------------------------------------------
Credit.

Tax policy needs to be changed throughout the supply chain to level
the playing field with petroleum-based products. A national short-term
Production Tax Credit (PTC) in the United States, coupled with a
stronger commitment to market pull policies, would send a strong
message to companies in the biobased products industry that the United
States is serious about wanting to expand the domestic biobased
products industry. More importantly, it would give companies in the
biobased products industry the money and support they need to challenge
the petroleum industry and the preferential tax treatment it receives.
Increasing numbers of companies (including BASF, DSM, BioAmber,
Elevance, and Amyris) are exploring global site options for commercial
facilities because of the challenges of competing with the petroleum
industry in the United States. PTCs would ensure that the United States
is a competitive site for these new facilities and new jobs. In fact,
the Union of Concerned Scientists documented\68\ that between 2007 and
2014 in large part to a PTC, the United States wind capacity almost
quadrupled and more than 550 manufacturing facilities located in 43
states produced 70% of the wind turbine and components installed in the
United States.
---------------------------------------------------------------------------
\68\Union of Concerned Scientists, ``Production Tax Credit for
Renewable Energy'', Union of Concerned Scientists, accessed August
2016, http://www.ucsusa.org/clean_energy/smart-energy-solutions/
increase-renewables/production-tax-credit-for.html#.V7r_0rsrKM9.
---------------------------------------------------------------------------
The oil and natural gas sectors have long benefited from PTCs,
which has provided great benefits for petroleum-based products as
compared to biobased-sourced products. Some of the oil and gas credits
include:\69\
---------------------------------------------------------------------------
\69\Center for American Progress, ``It Is Time to Phase Out 9
Unnecessary Oil and Gas Tax Breaks'', Center for American Progress,
accessed August 2016, https://www.americanprogress.org/issues/green/
report/2016/05/26/138049/it-is-time-to-phase-out-9-unnecessary-oil-and-
gas-tax-breaks/.

---------------------------------------------------------------------------
Deductions for the costs of drilling wells 26 U.S.C. 263(c).

Deduction for oil and gas production 26 U.S.C. __199.

Deductions for the costs of oil shale exploration and development
26 U.S.C. 617 The tax incentives offered to the biobased products
industry needs to place them on a level playing field with the
petroleum industry, if biobased products are expected to compete on the
market. If Congress creates PTCs for biobased product manufacturers,
the United States could revitalize the manufacturing and plastics
industries.
For a range of biobased product companies, a short-term PTC would
provide collateral to help finance plants in the United States. This
has been successfully done at the state level in Iowa. In July of 2016,
Iowa's Biorenewable Chemical Tax Credit Program was enacted. The
program provides a tax credit of up to $100 million over the next 10
years for products that are over 50% biobased, and intended for uses
other than food, feed, and fuel.\70\ However, there remains a need for
PTCs at a national level to support biobased businesses throughout the
United States.
---------------------------------------------------------------------------
\70\Cultivation Corridor, ``Biorenewable Chemicals: The Iowa
Advantage'', Cultivation Corridor, accessed 6/1/16, http://
www.cultivationcorridor.org/biochem/.
---------------------------------------------------------------------------
On a national level, the Renewable Chemicals Act of 2015 was
introduced to the Senate in November of 2015. If enacted, this bill
would give a tax credit of $0.15 per pound of biobased content for
producers of renewable chemicals who meet certain criteria. This credit
would have an aggregate limit of $500 million and would be distributed
over 5 years.\71\
---------------------------------------------------------------------------
\71\114th Congress (2015-2016), ``S.2271--Renewable Chemicals Act
of 2015'', Congress.gov, accessed August 2016, https://
www.congress.gov/bill/114th-congress/senate-bill/2271/text.

Recommendation 3: Congress should direct the U.S. Department of
Commerce to work with the USDA to Develop NAICS Codes in support of the
---------------------------------------------------------------------------
biobased products industry.

The NAICS codes do not currently provide an effective means of
tracking the economic and job contributions of the biobased products
industry in the United States. This results from a lack of biobased
products industry-specific codes that are representative of the
biobased products sectors of the economy. Many economists and industry
groups have recommended that NAICS codes be developed for biobased
product sectors and that reporting requirements be established to allow
more effective tracking of purchases by Federal agencies. The codes are
a necessary first step, but the goal should also be to improve data on
the production, import, and export of biobased products. The
incorporation of NAICS codes for the biobased product industry should
be extended to Federal surveys of U.S. Industrial activity and trade.
The appropriate U.S. agencies and industry should add biobased product
NAICS codes similar to the biobased products industry specific codes
that have been added in Europe (Nomenclature of Economic Activities--
NACE codes) and are being added in Canada.

Recommendation 4: Congress should Fund the USDA BioPreferred
Program at levels similar to its counterparts.

Federal agencies are required to purchase biobased products
designated for mandatory Federal purchasing by the USDA
BioPreferred' Program, except as provided by Federal
Acquisition Regulation (FAR) Part 23.404(b). In general, Federal
agencies are required to give preference to qualified biobased products
over non-biobased alternatives, as prescribed by Title 7 of the U.S.
Code of Federal Regulations, section 3201.3.
In addition to the mandatory Federal purchasing initiative, the
2002 Farm Bill authorized USDA to implement an initiative to certify
biobased products that are deemed eligible to display the USDA
Certified Biobased Product label. The presence of the label indicates
that the products have been tested by a third party and verified for
biobased content, thus meeting the established minimum biobased content
requirement for the product category applicable to that product. The
BioPreferred Program was reauthorized and expanded under subsequent
U.S. Farm Bills in 2008 and 2014. Increasing the coverage and public
awareness of the USDA Certified Biobased Product label is critical.
Increasing funding for the BioPreferred Program would give the
necessary funding for marketing and to educate consumers on the
benefits and availability of biobased products. With additional
resources, the BioPreferred Program could increase tracking and use of
biobased products. Currently, the BioPreferred Program's budget is
about $2.7 million annually. This is very small compared to the budgets
of some other government programs like the EPA's Energy Star (about $50
million annually) or the USDA's National Organic Program (about $10
million annually).
In addition to the BioPreferred Program, there are other government
drivers in the biobased products industry. For example, on March 19,
2015, President Obama released Executive Order 13693, ``Planning for
Federal Sustainability in the Next Decade'',\72\ which includes
provisions to increase Federal agencies' accountability for achieving
qualified biobased product purchasing requirements. Federal agencies
have been directed to establish annual targets for the number of
contracts awarded with biobased criteria and to report the dollar value
of biobased products under those contracts.
---------------------------------------------------------------------------
\72\The President, ``Executive Order 13693--Planning for Federal
Sustainability in the Next Decade,'' Federal Register, accessed April
2015, https://www.federalregister.gov/articles/2015/03/25/2015-07016/
planning-for-federal-sustainability-in-the-next-decade.
---------------------------------------------------------------------------
Federal agencies also have been directed to ensure that contractors
submit timely annual reports of their biobased purchases.

Recommendation 5: Congress should ensure Federal Policies
Strengthen the Biobased Products Industry.

In terms of Federal policy, some of the ideas recommended from our
interviews include:

Fund and administer the USDA BioPreferred Program.

Fund and administer the USDA Biorefinery Assistance Program,
recently expanded to include facilities producing biobased
chemicals and biobased products.

Fund and administer the USDA Biomass Crop Assistance
Program.

Fund and administer the USDA/DOE's Biomass Research and
Development Program.

Work towards promoting the enactment of tax legislation for
a biobased chemical Production Tax Credit (PTC), an Investment
Tax Credit (ITC), Master Limited Partnerships (MLP), and
Research & Development (R&D).

Ensure biogenic CO2 emissions related to biobased
products are treated as carbon neutral in EPA's carbon
accounting framework.

Recommendation 6: Biobased Products Industry Participants Should
Work Together on the Challenges Facing Their Industry.

Based on our interviews, we identified six major challenges that
should be addressed in the biobased products industry.

1. Examine Public Perceptions vs. Scientific Evidence. Undertake an
extensive analysis concerning how the public, NGOs, policy
makers, scientists, and institutional buyers perceive the
spectrum of biobased feedstocks and biobased products. This
includes quantifying the science or lack of science to
provide clarity concerning which perceptions are
inaccurate, which have a scientific basis, and which need
additional research.

2. LCAs and Land-Use Studies. There is a need to create a common LCA
structure that provides easy way to compare values and
relates LCA results to both consumer and industry
audiences. Stakeholders state that there is a need for
shared life cycle inventory data and standardized
definitions. A shared lifecycle inventory would reduce
costs to individual firms and reduce the person-hours
required to conduct lifecycle assessments.

3. Supply Chain Mapping and Location Analyses. Existing biobased
product supply chains are limited by transportation
disparities related to the location of biofuel producing
sources. Government influence in the form of grants and tax
rebates at the state and local levels can be used to help
promote investments to streamline supply chain execution,
create more integrated and collaborative facility designs,
create shared facilities, and help to stimulate industry
development and investment. Industry leaders should work to
reduce the burden on upstream supply chain participants and
drive more co-development activities to promote biobased in
lower tiers of supply chain. Since suppliers source to
different types of industries, there is a need to create a
common vehicle for marketing products. An example would be
a company deciding between two distinct marketing messages.
A common platform for messaging would create efficiencies
and improve opportunities for aligned investments. If
suppliers and industries could work together to identify
potential inefficiencies and work to solve them using a
common approach, it could be easier to implement biobased
products across the supply chain.

4. Marketing Messaging and Impact Scores. There is a need to conduct
biobased products marketing research and develop marketing
materials that support and promote the biobased products
message, downstream, upstream, in industrial, and in
government procurement processes. An example is an impact
score that can translate LCA information to the end
consumer to drive and influence buying behavior and
decision-making via a standardized scorecard.

Another example might be a biobased material identifier that
could be used to award new business to sustainability-
focused suppliers as part of a procurement initiative.
Better communication with retailers through value-chain
maps that provide a clear definition and value proposition
for biobased products would create differentiated products
that excel in performance.

5. Government Policy and Acquisition Recommendations. Biobased
products industry stakeholders should provide input to
government policies regarding grants and tax incentives to
foster ``downstream pull'' investments in biobased product
development, research, and innovation. Government policy
makers should strive to create consistency across
regulations and incentives for the biobased products
industry, and incentives to drive increased utilization of
biobased contracts, especially in light of the new General
Services Administration focus on Category Management. Since
plants sequester carbon, carbon credits could be given for
using biobased products instead of petroleum-based
products. Create more access to opportunities for industry
to tap into tax incentives, tax credits, and producer
credits, and to highlight the availability of these
programs to biobased producers. Policy makers need
education on biobased products that demystifies the
misconceptions about the industry with solid data.
Additionally, there is a need for education on how to sell
to the government within the context of the biobased
products industry, as legislative requirements have not
meshed well with acquisition actions, and tracking has been
problematic. The DOE's support also could be sought to
drive additional support at various points in the value
chain. Companies could commit to a certain percentage of
biobased sources or get the government to enact policy like
CAFE standards.

6. Identify and Model Risks Facing the Biobased products Sector. The
interviewees also identified risks that should be
considered for the biobased products industry. First, low
oil prices may continue for several years, given the
current reserves of oil and fracking, leading to a
sustained lower price of oil and reduced desire to explore
the potential of biobased products. This is problematic
considering the amount of time it takes to develop a
biobased product. In addition, the amount of venture
capital available for biobased products is decreasing.
Scaling up new projects and the time required to bring
capital investments to scale also are significant
challenges.

How to cite this report

Golden, J.S., Handfield, R.B., Daystar, J., Morrison, B., and
McConnell, T.E., An Economic Impact Analysis of the U.S. Biobased
Products Industry: 2016 Update, A Joint Publication of the Duke Center
for Sustainability & Commerce and the Supply Chain Resource Cooperative
at North Carolina State University, 2016.
Appendix A
The Economic Input-Output Model (IMPLAN)
The Economic Input-Output Model
IMPLAN is an economic impact modeling system that uses input-output
analysis to quantify economic activities of an industry in a predefined
region. IMPLAN was designed in 1976 by the Minnesota IMPLAN Group Inc.
under the direction of the U.S. Forest Service to help meet the
reporting requirements for Forest Service land management programs.
IMPLAN is now used extensively to quantify the economic impacts of
various industrial activities and policies. The IMPLAN system is now
managed by IMPLAN Group LLC of Huntersville, North Carolina.
IMPLAN quantifies the economic impacts or contributions of a
predefined region in terms of dollars added to the economy and jobs
produced (IMPLAN Group LLC 2004).\73\ Data are obtained from various
government sources including agencies and bureaus within the
Departments of Agriculture, Commerce, and Labor.
---------------------------------------------------------------------------
\73\IMPLAN, Computer Software, IMPLAN, IMPLAN Group LLC, http://
www.implan.com.
---------------------------------------------------------------------------
The IMPLAN system's input-output model currently defines 536 unique
sectors in the U.S. economy (which are North American Industry
Classification System [NAICS] sectors, except in some cases in which
aggregates of multiple sectors are used). The IMPLAN system uses its
database to model inter-sector linkages, such as sales and purchases
between forest-based industries and other businesses. The transactions
table within IMPLAN quantifies the number of dollars each sector makes
(sales) and uses (purchases). The table separates processing sectors by
rows and purchasing sectors by columns; every sector is considered both
a processor and purchaser. Summing each row quantifies an industry's
output, which includes sales to other production sectors along with
those sales to final demand. The total outlay of inputs, which are the
sums of the columns, includes purchases from intermediate local
production sectors, payments to local value-added, and imports (both
intermediate and value-added inputs) from outside the study region. The
transactions table can be used to explain a sector's economic
relationships based on the value of the commodities exchanged between
the industry of interest and other sectors.
Leontief (1936) defined the relationship between output and final
demand as shown below:

where x is the column vector of industrial output, I is an identity
(unit) matrix, A is the direct requirements matrix relating input to
output, and y is the final demand column vector. The term (I^A)^\1\ is
the total requirements matrix or the ``multiplier'' matrix. Each
element of the matrix describes the amount needed from sector i (row)
as input to produce one unit of output in sector j (column) to satisfy
final demand. The output multiplier for sector j is the sum of its
column elements, or sector j's total requirements from each individual
sector i. Employment and value-added multipliers also can be derived by
summing the column's elements.
Employment in IMPLAN is represented as the number of both full time
and part time jobs supported within an industry to meet final demand.
Value-added is composed of labor income, which includes employees'
compensation and sole proprietor (self-employed) income, other property
income (OPI), and taxes on production and imports, less subsidies
(TOPI, formerly was labeled `indirect business taxes').\74\ OPI in
IMPLAN includes corporate profits, capital consumption allowance,
payments for rent, dividends, royalties, and interest income. TOPI
primarily consist of sales and excise taxes paid by individuals to
businesses through normal operations. Output is the sum of value-added
and the cost of buying goods and services to produce the product.
---------------------------------------------------------------------------
\74\IMPLAN refers to value-added in this context as ``total value-
added''.
---------------------------------------------------------------------------
Key terms:

Value-added: Value-added describes the new wealth generated
within a sector and is its contribution to gross domestic
product (GDP).

Output: Output is an industry's gross sales, which includes
sales to other sectors (where the output as used by that sector
as input) and sales to final demand.

When examining the economic contributions of an industry, IMPLAN
generates four types of indicators:

1. Direct effects: effects of all sales (dollars or employment)
generated by a sector.

2. Indirect effects: effects of all sales by the supply chain for
the industry under study.

3. Induced effects: A change in dollars or employment within the
study region that represents the influence of the value
chain employees spending wages in other sectors to buy
services and goods.

4. Total effect: the sum of the direct, indirect, and induced
effects.

Economic multipliers quantify the spillover effects, i.e., the
indirect and induced contributions. The Type I multiplier describes the
indirect effect, which is described by dividing the direct effect into
the sum of the direct and indirect effects.\75\ A Type I employment
multiplier of 2.00 for example, means that for every job in the
industry of interest, one additional job is supported in that sector's
supply chain.
---------------------------------------------------------------------------
\75\U.S. Department of Commerce Bureau of Economic Analysis (BEA),
Interactive Data Application, BEA web site, http://www.bea.gov/itable/
index.cfm, accessed April 2015.
---------------------------------------------------------------------------
Type II multipliers are defined as the sum of the direct, indirect,
and induced effects divided by the direct effect (Equation 1). The Type
II multiplier operates by extending the input-output model to include
any contributions induced by final demanders. Type II multipliers
differ by how they define value-added and account for any of its
potential endogenous components. A particular Type II multiplier, the
Type social accounting matrix (SAM) multiplier, considers portions of
value-added to be both endogenous and exogenous to a study region
(Equation 2). This generally incorporates labor payments to the
households and their subsequent consumption of goods and services.
These multipliers indicate the extent to which total activity is
generated in the economy due to the sectors under study. A Type SAM
value-added multiplier of 1.50, for example, indicates that for every
$1.00 of value-added produced in an industry under study, $0.50 of
additional value-added would be generated elsewhere in the economy by
other industries.
Contributions Analyses of Biobased Products Sectors
A contributions analysis describes the economic effects of an
existing sector, or group of sectors, within an economy. The results
define the extent to which the economy is influenced by the sector(s)
of interest. Changes in final demand, which generally are marginal or
incremental, are not assumed here as they are in traditional impact
analysis. Based on the number of sectors contained within each industry
group, multiple sector contributions analyses were conducted. The
bioeconomy at the national level was modeled using IMPLAN's 2013 and
2014 national databases. These models were constructed using the
Supply/Demand Pooling method. The 50 states and District of Columbia
were modeled using IMPLAN's 2013 database for each economy; these
models were constructed using the IMPLAN National Trade Flows Model
method. The models were closed with respect to households only in all
cases. Output was the basis by which contributions were assessed, but
had to be adjusted to eliminate sales and purchases internal to the
sectors to avoid double counting. This required five steps using
Microsoft Excel: (1) compile the total requirements matrix of detailed
Type SAM output multipliers from IMPLAN for the respective economy; (2)
from this matrix, build a truncated matrix of the biobased industrial
groups' sectors and invert it; (3) calculate the direct contributions
vector by multiplying the inverted contributions matrix by the groups'
sector outputs found in the economy's transactions table; (4) multiply
the economy's total requirements matrix by the direct contributions
vector to obtain total output contributions; (5) calculate employment
and value-added contributions based their respective sectoral output
shares. Use of this method avoided the structural changes that result
from customizing the model, and at the same time, it preserved the
original relationships found in the modeled economy's transactions
table.
Equation 1: Type I Multiplier Calculation

Equation 2: Type SAM Multiplier Calculation

Appendix B

Products Participating in the BioPreferred Program by Category--2016
------------------------------------------------------------------------
Number of Number of
Products Category Products Category
------------------------------------------------------------------------
36 2-Cycle Engine 66 Inks--Printer
61 Oils Toner (Greater
Adhesive and Than 25 Pages Per
Mastic Removers Minute)
14 Adhesives 43 Inks--Printer
71 Agricultural Spray Toner (Less Than
Adjuvants 25 Pages Per
Minute)
136 Air Fresheners and 19 Inks--Sheetfed
Deodorizers (Black)
38 Aircraft and Boat 41 Inks--Sheetfed
Cleaners--Aircraf (Color)
t Cleaners
31 Aircraft and Boat 52 Inks--Specialty
Cleaners--Boat
Cleaners
4 Allergy and Sinus 50 Interior Paints
5 Relievers and Coatings--
Animal Bedding Latex and
Waterborne Alkyd
337 Animal Cleaning 26 Interior Paints
46 Products and Coatings--Oil-
Animal Habitat based and
Care Products Solventborne
Alkyd
2 Animal Medical 148 Intermediate
Care Products Feedstocks
37 Animal Odor 9 Intermediates--Bin
Control and ders
Deodorant
130 Animal Repellents 100 Intermediates--Che
micals
1 Animal Skin, Hair, 17 Intermediates--Cle
and Insect Care aner Components
Products
1 Anti-Slip Products 35 Intermediates--Fib
ers and Fabrics
2 Aromatherapy 14 Intermediates--Foa
ms
4 Art Supplies 43 Intermediates--Lub
ricant Components
38 Asphalt and Tar 20 Intermediates--Oil
Removers s, Fats, and
Waxes
13 Asphalt Restorers 45 Intermediates--Pai
nt & Coating
Components
76 Automotive Care 45 Intermediates--Pai
Products nt & Coating
Components
26 Baby and Kids 33 Intermediates--Per
1,176 Bath Products sonal Care
Product
Components
270 Bathroom and Spa 87 Intermediates--Pla
Cleaners stic Resins
172 Bedding, Bed 5 Laboratory
Linens, and Chemicals
Towels
5 Biodegradable 2 Laundry--Dryer
Foams Sheets
172 Bioremediation 223 Laundry Products--
Materials General Purpose
15 Blast Media 75 Laundry Products--
Pretreatment/Spot
Removers
2 Body Powders 6 Lavatory Flushing
Fluid
526 Candles and Wax 79 Leather, Vinyl,
Melts and Rubber Care
Products
114 Carpet and 179 Lip Care Products
Upholstery 8 Loose-Fill and
Cleaners--General Batt Insulation
Purpose
120 Carpet and 856 Lotions and
104 Upholstery 14 Moisturizers
Cleaners--Spot Lumber, Millwork,
Removers Underlayment,
Carpets Engineered Wood
Products
117 Chain and Cable 2 Massage Oils
Lubricants
4 Clothing 5 Medical Supplies
1 Clothing--Utility 23 Metal Cleaners and
51 Gloves Corrosion
Composite Panels-- Removers--Corrosi
Acoustical on Removers
35 Composite Panels-- 36 Metal Cleaners and
68 Countertops Corrosion
Composite Panels-- Removers--Other
Interior Panels Metal Cleaners
22 Composite Panels-- 27 Metal Cleaners and
26 Plastic Lumber Corrosion
Composite Panels-- Removers--Stainle
Structural ss Steel
Interior Panels
18 Composite Panels-- 63 Metalworking
30 Structural Wall Fluids--General
Panels Purpose Soluble,
Compost Activators Semi-Synthetic,
and Accelerators and Synthetic
Oils
78 Concrete and 50 Metalworking
63 Asphalt Cleaners Fluids--High
Concrete and Performance
Asphalt Release Soluble, Semi-
Fluids Synthetic, and
Synthetic Oils
1 Concrete Curing 99 Metalworking
Agents Fluids--Straight
Oils
2 Concrete Repair 286 Microbial Cleaning
2 Materials Products--Drain
Concrete Repair Maintenance
Materials Products
69 Corrosion 177 Microbial Cleaning
Preventatives Products--General
Cleaners
1 Cosmetics 197 Microbial Cleaning
96 Cuts, Burns, and Products--Wastewa
Abrasions ter Maintenance
Ointments Products
8 De-Icers-- 228 Mobile Equipment
Specialty Hydraulic Fluids
83 Deodorants 265 Mulch and Compost
Materials
14 Dethatchers 459 Multipurpose
Cleaners
66 Diesel Fuel 79 Multipurpose
Additives Lubricants
148 Dishwashing 11 Oral Care Products
Products
5 Disinfectants 21 Other
439 Disposable 9 Other Lubricants
Containers
539 Disposable Cutlery 30 Oven and Grill
Cleaners
1 Durable Cutlery 78 Packing and
Insulating
Materials
13 Durable Tableware 60 Paint Removers
35 Dust Suppressants 14 Paper Products--
Non-writing paper
10 Electronic 184 Paper Products--
Components Office Paper
Cleaners
692 Disposable 73 Parts Wash
Tableware Solutions
75 Engine Crankcase 75 Penetrating
Oil Lubricants
247 Erosion Control 1 Perfume
Materials
2 Expanded 3 Pest Control--
Polystyrene (EPS) 5 Fungal--Agricultu
Foam Recycling ral
Products Pest Control--
Fungal--Home and
Garden
9 Exterior Paints 2 Pest Control--
and Coatings Insect--Agricultu
ral
1 Fabric Stain 6 Pest Control--
Preventers and Insect--Home and
Protectors Garden
14 Facial Care 2 Pest Control--
Products Insect--Industria
l
16 Feminine Hygiene 1 Pest Control--
Weeds--Home and
Garden
545 Fertilizers 3 pH Neutralizing
Products
106 Films--Non-Durable 2 Phase Change
Materials
43 Films--Semi- 2 Plant Washes
Durable
2 Filters 48 Plastic Insulating
2 Fingernail/Cuticle Foam for
Products Residential and
Commercial
Construction
2 Fire Retardants 21 Plastic Products
8 Fire Starters, 37 Pneumatic
Logs, or Pellets Equipment
Lubricants
21 Firearm Cleaner 12 Polyurethane
Coatings
43 Firearm Lubricants 27 Product Packaging
163 Floor Cleaners and 33 Roof Coatings
Protectors
357 Floor Coverings 3 Rugs and Floor
(Non-Carpet) Mats
14 Floor Strippers 5 Safety Equipment
6 Fluid-Filled 72 Sanitary Tissues
Transformers--Syn 577 Shaving Products
thetic Ester-
Based
5 Fluid-Filled 1 Shipping Pallets
Transformers--Veg
etable Oil-Based
5 Foliar Sprays 12 Slide Way
Lubricants
35 Food Cleaners 3 Solid Amendments
92 Foot Care Products 1 Solid Fuel
Additives
23 Forming Lubricants 139 Sorbents
28 Fuel Conditioners 7 Specialty Fuels
46 Furniture Cleaners 38 Specialty
and Protectors Precision
Cleaners and
Solvents
111 Gasoline Fuel 20 Sponges, Scrub
Additives Pads, and
Cleaning Tools
107 Gear Lubricants 241 Stationary
Equipment
Hydraulic Fluids
29 General Purpose De- 202 Sun Care Products
Icers
272 General Purpose 2 Thermal Shipping
Household Containers--Durab
Cleaners le
187 Glass Cleaners 1 Thermal Shipping
Containers--Non-
Durable
327 Graffiti and 58 Topical Pain
Grease Removers Relief Products
23 Greases--Food 6 Toys and Sporting
Grade Gear
48 Greases--Multipurp 6 Traffic and zone
ose marking paints
17 Grease--Other 2 Transmission
Fluids
16 Greases--Rail 5 Turbine Drip Oils
Track
12 Greases--Truck 4 Wall Coverings--
Commercial
2 Greases--Wheel 10 Wastewater Systems
Bearing and Coatings
Chassis Greases
19 Hair Care 13 Wastewater
Products--Conditi Treatment
oners Products
472 Hair Care 37 Water Clarifying
Products--Shampoo Agents
s
1 Hair Styling 8 Water Tank
Products Coatings
470 Hand Cleaners and 11 Water Turbine
Sanitizers--Hand Bearing Oils
Cleaners
130 Hand Cleaners and 36 Wood and Concrete
11 Sanitizers--Hand Sealers--Membrane
Sanitizers Concrete Sealers
Heat Generating
Products
1 Heat Transfer 90 Wood and Concrete
68 Fluid--Additive Sealers--Penetrat
Heat Transfer ing Liquids
Fluids
389 Industrial 28 Wood and Concrete
Cleaners Stains
3 Industrial Enamel 12 Woven Fiber
Coatings Products
32 Ink Removers and 2 Writing Utensils--
Cleaners Pens
21 Inks--News
------------------------------------------------------------------------
Note: If applicable, a product may be listed in up to four categories.
Source: USDA BioPreferred Program, May 2016.

Appendix C

States Ranked by Direct Jobs in the Biobased Products Industry--2013
------------------------------------------------------------------------
Rank Direct Jobs State
------------------------------------------------------------------------
1 145,080 California
2 90,040 North
Carolina
3 88,680 Texas
4 80,520 Georgia
5 71,360 Pennsylvania
6 68,250 Wisconsin
7 52,930 Ohio
8 52,300 New York
9 49,650 Alabama
10 47,690 Florida
11 46,480 Oregon
12 46,050 Indiana
13 44,850 Tennessee
14 41,140 Washington
15 40,350 Mississippi
16 39,940 Illinois
17 38,920 Virginia
18 38,430 South
Carolina
19 37,790 Michigan
20 35,850 Minnesota
21 31,400 Arkansas
22 27,290 Missouri
23 27,290 Kentucky
24 22,440 Louisiana
25 21,950 New Jersey
26 20,500 Maine
27 20,110 Iowa
28 19,140 Massachusett
s
29 14,790 Arizona
30 13,250 Idaho
31 11,500 Colorado
32 10,770 Utah
33 10,320 Oklahoma
34 9,960 West
Virginia
35 9,570 Maryland
36 9,080 Kansas
37 8,970 Connecticut
38 7,090 New
Hampshire
39 6,500 Vermont
40 6,340 Montana
41 6,160 South Dakota
42 6,020 Nebraska
43 4,210 New Mexico
44 3,840 Nevada
45 3,500 Rhode Island
46 3,360 North Dakota
47 2,140 Delaware
48 1,930 Hawaii
49 1,610 Wyoming
50 1,420 Alaska
51 220 Washington
D.C.
------------------------------------------------------------------------

Appendix D

States Ranked by Direct Value-Added by the Biobased Products Industry--
2013
------------------------------------------------------------------------
Direct
Rank Value-Added State
------------------------------------------------------------------------
1 9,862,930,0 California
00
2 8,237,608,0 Georgia
00
3 6,828,425,0 Texas
00
4 6,522,151,0 Pennsylvania
00
5 6,437,140,0 North
00 Carolina
6 6,252,403,0 Wisconsin
00
7 4,977,941,0 Alabama
00
8 4,429,804,0 Tennessee
00
9 4,276,668,0 Ohio
00
10 4,227,162,0 South
00 Carolina
11 4,159,173,0 Oregon
00
12 3,848,271,0 New York
00
13 3,807,744,0 Washington
00
14 3,737,850,0 Florida
00
15 3,543,046,0 Illinois
00
16 3,391,516,0 Minnesota
00
17 3,165,255,0 Arkansas
00
18 3,144,753,0 Virginia
00
19 2,882,370,0 Michigan
00
20 2,842,703,0 Indiana
00
21 2,692,484,0 Mississippi
00
22 2,648,699,0 Louisiana
00
23 2,506,357,0 Missouri
00
24 2,127,702,0 Kentucky
00
25 1,877,652,0 New Jersey
00
26 1,735,341,0 Iowa
00
27 1,599,745,0 Maine
00
28 1,416,696,0 Massachusett
00 s
29 995,033,000 Oklahoma
30 963,248,000 Utah
31 912,261,000 Arizona
32 885,697,000 Idaho
33 845,697,000 Connecticut
34 800,959,000 Maryland
35 634,553,000 Colorado
36 601,223,000 West
Virginia
37 503,890,000 Kansas
38 425,733,000 Nebraska
39 403,884,000 New
Hampshire
40 346,817,000 Delaware
41 333,014,000 Montana
42 331,892,000 South Dakota
43 277,682,000 Vermont
44 237,667,000 North Dakota
45 228,664,000 Nevada
46 227,704,000 Rhode Island
47 208,297,000 New Mexico
48 66,937,000 Alaska
49 65,890,000 Hawaii
50 57,902,000 Wyoming
51 18,364,000 Washington
D.C.
------------------------------------------------------------------------

Appendix E

Number of Companies Participating in the BioPreferred Program, Direct Jobs, and Direct Value-Added in Each
State (Alphabetical)
----------------------------------------------------------------------------------------------------------------
Number of Companies
Participating in the
State BioPreferred Program (June Direct Value-Added (2013) Direct Jobs (2013)
2016)
----------------------------------------------------------------------------------------------------------------
Alabama 16 $4,977,941,000 49,650
Alaska 5 $66,937,000 1,420
Arizona 32 $912,261,000 14,790
Arkansas 14 $3,165,255,000 31,400
California 286 $9,862,930,000 145,080
Colorado 62 $634,553,000 11,500
Connecticut 28 $845,697,000 8,970
Delaware 7 $346,817,000 2,140
Florida 130 $3,737,850,000 47,690
Georgia 79 $8,237,608,000 80,520
Hawaii 8 $65,890,000 1,930
Idaho 13 $885,697,000 13,250
Illinois 132 $3,543,046,000 39,940
Indiana 30 $2,842,703,000 46,050
Iowa 79 $1,735,341,000 20,110
Kansas 28 $503,890,000 9,080
Kentucky 13 $2,127,702,000 27,290
Louisiana 8 $2,648,699,000 22,440
Maine 16 $1,599,745,000 20,500
Maryland 25 $800,959,000 9,570
Massachusetts 56 $1,416,696,000 19,140
Michigan 57 $2,882,370,000 37,790
Minnesota 97 $3,391,516,000 35,850
Mississippi 19 $2,692,484,000 40,350
Missouri 52 $2,506,357,000 27,290
Montana 10 $333,014,000 6,340
Nebraska 25 $425,733,000 6,020
Nevada 15 $228,664,000 3,840
New Hampshire 19 $403,884,000 7,090
New Jersey 70 $1,877,652,000 21,950
New Mexico 8 $208,297,000 4,210
New York 95 $3,848,271,000 52,300
North Carolina 71 $6,437,140,000 90,040
North Dakota 5 $237,667,000 3,360
Ohio 105 $4,276,668,000 52,930
Oklahoma 9 $995,033,000 10,320
Oregon 54 $4,159,173,000 46,480
Pennsylvania 90 $6,522,151,000 71,360
Rhode Island 7 $227,704,000 3,500
South Carolina 19 $4,227,162,000 38,430
South Dakota 11 $331,892,000 6,160
Tennessee 29 $4,429,804,000 44,850
Texas 147 $6,828,425,000 88,680
Utah 11 $963,248,000 10,770
Vermont 9 $277,682,000 6,500
Virginia 50 $3,144,753,000 38,920
Washington 77 $3,807,744,000 41,140
Washington D.C. 3 $18,364,000 220
West Virginia 2 $601,223,000 9,960
Wisconsin 78 $6,252,403,000 68,250
Wyoming 7 $57,902,000 1,610
----------------------------------------------------------------------------------------------------------------

appendix d
The Billion Ton Bioeconomy Initiative: Challenges and Opportunities

Official Disclaimer
The Billion Ton Bioeconomy Initiative: Challenges and Opportunities
is a product of interagency collaboration under the Biomass Research
and Development Board and does not establish any new or explicitly
reflect United States Government policy. Some information is based on
activities conducted by the Executive Agencies as of May 2016. However,
some of the views expressed in this document reflect stakeholder
perspectives and do not represent United States Government policy. This
report is not a policy or budget document nor an action plan, and it
does not commit the Federal Government to any new activities or
funding.

Table of Contents
Foreword
Introduction

Overview of the Bioeconomy Initiative
The Need for the Bioeconomy Initiative
Potential Benefits of the Bioeconomy Initiative
Stakeholder Engagement

Expanding the Bioeconomy: Challenges and Opportunities

Challenges
Opportunities

Next Steps
Foreword
The Biomass Research and Development (R&D) Board (the Board) was
created through the enactment of the Biomass Research and Development
Act of 2000 ``to coordinate programs within and among departments and
agencies of the Federal Government for the purpose of promoting the use
of biobased industrial products by (1) maximizing the benefits deriving
from Federal grants and assistance; and (2) bringing coherence to
Federal strategic planning.''\1\
---------------------------------------------------------------------------
\1\U.S. Congress (1999). H.R. 2827. 106th Congress, first session.
http://www.gpo.gov/fdsys/pkg/BILLS-106hr2827ih/html/BILLS-
106hr2827ih.htm
---------------------------------------------------------------------------
The Board is co-chaired by senior officials from the U.S.
Departments of Energy (DOE) and Agriculture (USDA) and consists of
senior decision makers from DOE, USDA, the U.S. Department of
Transportation (DOT), U.S. Department of the Interior (DOI), U.S.
Department of Defense (DOD), U.S. Environmental Protection Agency
(EPA), National Science Foundation (NSF), and the Office of Science and
Technology Policy (OSTP) within the Executive Office of the President.
With its diverse membership, the Board facilitates coordination among
Federal Government agencies that affect the research, development, and
deployment of biofuels and bioproducts.
In February 2016, the Board released the Federal Activities Report
on the Bioeconomy (FARB) to highlight the potential for a stronger U.S.
bioeconomy, specifically some of the impacts of increasing biomass
utilization threefold by 2030.\2\ The goal of the Billion Ton
Bioeconomy Initiative (Bioeconomy Initiative) is to develop innovative
approaches to barriers in order to expand the sustainable use of
America's biomass resources and maximize economic, social, and
environmental outcomes.
---------------------------------------------------------------------------
\2\http://www.biomassboard.gov/pdfs/farb_2_18_16.pdf.
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Since the release of the FARB, the Board has engaged with the
bioenergy stakeholder community to further develop the Bioeconomy
Initiative. This report is foundational to the Board's objective to
strengthen the commitment and coordination between the U.S. Government
and the bioeconomy community. Early feedback from stakeholders has
underscored the importance of biofuels, bioproducts, and biopower. This
report addresses several challenges and opportunities that stakeholders
have identified as critical to the success of the Bioeconomy
Initiative.
Introduction
Overview of the Bioeconomy Initiative
The goal of the Bioeconomy Initiative is to develop and coordinate
innovative approaches to expanding the sustainable use of America's
abundant biomass resources, while maximizing economic, social, and
environmental benefits. By increasing use of renewable plant material
and waste feedstocks for biofuels, bioproducts, and biopower, the
Bioeconomy Initiative has the potential to stimulate job growth and
economic opportunities in certain industries;\3\ support a secure,
renewable energy future; and contribute to improved environmental
quality. The Bioeconomy Initiative differs from ``business as usual''
by creating a sustainability framework that considers multi-dimensional
impacts and benefits to prioritize the most promising sustainable
pathways.
---------------------------------------------------------------------------
\3\Some example opportunities are agricultural and forestry
feedstock production and biorefineries. USDA has a broad renewable
energy portfolio that supports growers, landowners, producers, pulp
workers, and biorefinery workers in allied bioenergy industries. http:/
/www.usda.gov/wps/portal/usda/usdahome?contentid=usda-results-
energy.html.
---------------------------------------------------------------------------
To achieve its goals, the Initiative will require collaborative
data sharing; peer reviewed analyses; optimized financial mechanisms
and contract services; research, development, demonstration, and
deployment for feedstocks; conversion technologies; manufacturing;
infrastructure; harmonized policies and regulations; and market
development of products.
The Need for the Bioeconomy Initiative
The last decade has been unstable for the emerging bioeconomy,
wherein the bioeconomy is defined as the global industrial transition
of sustainably utilizing renewable aquatic and terrestrial biomass
resources in energy, intermediate and final products for economic,
environmental, social, and national security benefits. While the
Renewable Fuel Standard (RFS) and a variety of subsidies have helped
first-generation biofuels penetrate U.S. markets and second-generation
biofuels move closer to reality, the bioeconomy has yet to reach its
full potential.
The economic recession of 2008 affected many bioproduct-related
commodity markets, and the recent drop in oil prices has created
further difficulties for biofuels to reach price parity with fossil
fuels already on the market. The biobased sector has not received the
amount of capital necessary to thrive in today's markets. This lack of
investment in the U.S. bioeconomy contributes to the continued reliance
on foreign and fossil-based energy supplies.
The U.S. consumes over 19 million barrels of petroleum per day. In
2015 ,when imported oil was at $40 per barrel, the U.S. spent nearly $1
billion every day on domestic and imported crude oil, with imported oil
accounting for nearly \1/2\ of this cost.\4\ When imported oil was over
$100 per barrel in 2012, the U.S. spent about $1 billion per day on
just oil imports.\5\ These dollars spent on oil imports could be
reinvested to develop domestic, renewable biofuels.
---------------------------------------------------------------------------
\4\Energy Information Administration, Monthly Energy Review, July
2016, Tables 3.1 and 9.1. 2013.
\5\Energy Information Administration, Monthly Energy Review, July
2016, Tables 3.1 and 9.1. 2013.
---------------------------------------------------------------------------
Although the United States is a global leader in promoting the use
of sustainably produced feedstocks to fuel economic activity and
growth, more efforts are needed to overcome challenges and maximize
opportunities associated with creating products from renewable sources.
Our nation is transitioning from a fossil-based economy to an economy
that is fueled by sustainable and renewable energy, of which biomass
plays a critical role. As outlined in the FARB, to accelerate the
expansion of the bioeconomy, the Board is formulating a collaborative
effort across the government and is currently seeking input and
cooperation from stakeholders in support of the Bioeconomy Initiative.
The Bioeconomy Initiative is defined by several agreed-to principles:

Bioenergy is part of an extensive, evolving renewable energy
portfolio as well as an ``All of the Above'' energy strategy
for the U.S.

The Bioeconomy Initiative includes biomass-derived
products--such as biofuels, bioproducts, and biopower.

The development of America's bioeconomy must incorporate
sustainability and consider environmental, economic, and social
factors to minimize potential negative impacts and maximize
benefits. The bioeconomy should be used to conserve, enhance,
or repair ecological functions.

The investment community seeks to minimize risk and maximize
process capability prior to investing in large facilities. Due to price
parity issues, competing demands for and potential impacts on natural
resources, and policy-related market uncertainties, the private sector
remains hesitant to provide investments to continue scaling up advanced
technologies. However, the potential for a domestic bioenergy and
bioproducts industry--that reduces our reliance on foreign and fossil-
based energy supplies through the sustainable use of agricultural,
forestry, and waste biomass--remains a driving force behind
diversifying the U.S. energy sector. If successfully expanded, the
bioeconomy can keep energy dollars in the country as well as provide
rural, energy, and manufacturing jobs and revitalize domestic
manufacturing capabilities in biobased industries, while increasing the
nation's competitive advantage and improving the environment.
Federal agencies are coordinating their efforts to overcome the
technical and financial barriers that may preclude the expansion of a
bioeconomy:

DOE funds research, development, and demonstration of
advanced biofuels to lower production costs.

USDA supports the sustainable production of high-quality,
nonfood feedstocks for conversion into bioproducts, bioenergy,
bioheat, and biopower.

EPA implements the Renewable Fuel Standard\6\ and regulates
the processes and safety of biobased products.
---------------------------------------------------------------------------
\6\https://www.epa.gov/renewable-fuel-standard-program.

The U.S. Department of Navy supports the use of alternative
---------------------------------------------------------------------------
fuels for its maritime fleet and national security.

DOT funds research to develop alternative energy pathways
for the U.S. transportation sector.

DOI manages and conserves the public lands for the use and
enjoyment of present and future generations under its mandate
of multiple-use and sustained yield.

The NSF funds research and education in engineering and
areas that involve the transformation and/or transport of
matter and energy by chemical, thermal, or mechanical means.

The Executive Office of the President's OSTP ensures that
the scientific and technical work of the Executive Branch
regarding biobased products is properly coordinated so as to
provide the greatest benefit to society.
Potential Benefits of the Bioeconomy Initiative
Informed by the Analysis Interagency Working Group\7\ (AIWG) of the
Biomass R&D Board, the Bioeconomy Initiative has the potential to
benefit the environment, the economy, and national security. An
expanded bioeconomy could help mitigate challenges associated with
national resource management, environment, and public health if done in
an appropriate manner.
---------------------------------------------------------------------------
\7\http://www.biomassboard.gov/board/working__groups.html.
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While an expanded bioeconomy raises sustainability concerns such as
increased nutrient runoff, soil disturbance, conversion of fragile
lands, and water use, the Bioeconomy Initiative could be implemented in
such a way as to encourage environmental benefits. For example, non-
food crops capable of thriving on marginal lands, which require fewer
inputs for production, could help to reduce nutrient run-off, soil
erosion, and water usage relative to food crops. Using diverse sources
of renewable biobased feedstocks--such as manures, biosolids, food
waste, and sorted municipal solid waste--could help to reduce
greenhouse gas (GHG) emissions, management costs, and water quality
degradation, as well as provide revenue streams and renewable energy.
Some of these potential benefits are discussed in the FARB and
preliminary analysis of the bioeconomy.\8\
---------------------------------------------------------------------------
\8\Rogers J., Stokes B., Dunn J., Cai H., Wu M., Haq Z., Baumes H.
2016. An Assessment of the Potential Products and Economic and
Environmental Impacts Resulting from a Billion Ton Bioeconomy.
Biofuels, Bioproducts & Biorefining. (in press).
---------------------------------------------------------------------------
The Bioeconomy Initiative could also enable the development of
rural economies by sustainably utilizing land resources, algae, and
waste systems in rural America. Homegrown biofuels can help bolster
U.S. renewable energy markets. There is significant opportunity for
higher value bioproducts and materials to enter the market, reducing
technology risks and ensuring feedstock supplies for biofuels. More
biobased energy and product options could provide the United States
with the flexibility to address environmental and energy challenges.
Stakeholder Engagement
To increase the potential benefits of the U.S. bioeconomy, the
Bioeconomy Initiative relies heavily on public engagement. The Board's
Operations Committee held five Bioeconomy Listening Sessions\9\ to
gather feedback on many of the areas impacting the growth of the
bioeconomy. Bioeconomy stakeholders represent a wide number of sectors
and interests: non-governmental organizations; international
governments and organizations; environmental and industry groups;
manufacturers; growers; and other members of the supply chain.
---------------------------------------------------------------------------
\9\Advanced Bioeconomy Leadership Conference in D.C. (2/29);
International Biomass Conference & Expo in Charlotte (4/10); BIO World
Congress on Industrial Biotechnology in San Diego (4/17); 38th
Symposium on Biotechnology for Fuels and Chemicals in Baltimore (4/27);
GoToWebinar hosted in D.C. (5/5).
---------------------------------------------------------------------------
In the first phase, the Operations Committee gathered feedback from
over 400 stakeholders across the United States. Session attendees
reported that the Federal Government, research community, and industry
could be doing more to build a Billion Ton Bioeconomy by 2030.
Stakeholders identified areas that need support and suggested ways to
address perceived gaps in Federal support. Suggestions addressed a
variety of topics such as technical barriers, workforce readiness, and
public engagement.
Stakeholders expressed dissatisfaction with access to capital and
incentives necessary to develop and grow the Bioeconomy Initiative. One
reason is the low oil prices which makes it hard for biofuels to
compete, which in turn increases investor risks. Cheap oil, coupled
with increased pressure to reduce biofuels mandates, are significant
concerns to new start-up cellulosic plant developers.\10\ Many
investors believe ``that the RFS will need to remain in place for the
20 year life of a prospective investment, or a strong belief that low
oil prices will not last long.''\11\
---------------------------------------------------------------------------
\10\Talbot, David. 2014. Cheap Oil Could Kill Off Cellulosic
Ethanol. MIT Technology Review. https://www.technologyreview.com/s/
532956/cheap-oil-could-kill-off-cellulosic-ethanol/.
\11\Tyner, Wallace. 2015. How will low oil prices affect biofuels?
World Economic Forum. February 6, 2015. https://www.weforum.org/agenda/
2015/02/how-will-low-oil-prices-affect-biofuels/.
---------------------------------------------------------------------------
There are additional concerns regarding whether we have enough land
to produce the needed food, forage, feed, and fiber in the future, as
well as high volumes of biomass, in an expanded bioeconomy.\12\ This
land availability issue is further compounded with concerns over the
potential impacts on food prices. There are also concerns about
potential negative environmental impacts, including GHG emissions and
land conversions.
---------------------------------------------------------------------------
\12\Marshall, Elizabeth and Margriet Caswell. 2011. Biofuels and
Land-Use Change: Estimation Challenges. Amber Waves, USDA. July 16,
2011. http://www.ers.usda.gov/amber-waves/2011-june/biofuels-and-land-
use-change.aspx#.V6yspjZTHcs.
---------------------------------------------------------------------------
Many of the stakeholders involved in these sessions believe that a
Billion Ton Bioeconomy is possible by 2030, but it will require the
support of Congress and policies that advance the Bioeconomy
Initiative. Finally, stakeholders agreed that stronger market pull is
critical to the success of the Bioeconomy Initiative.
With help from stakeholders, the Board will continue to find ways
to overcome identified challenges, gaps, and barriers in order to
create opportunities.
Expanding the Bioeconomy: Challenges and Opportunities
This report discusses seven key challenges and ten opportunities
recognized by the bioeconomy community, as identified via the
stakeholder input process outlined above. The Federal Government has a
potential role to play in mobilizing support across the supply chain to
develop sustainable bioeconomy systems. By mobilizing partnerships
between industry, government, and academia, the Federal Government and
stakeholders can spur progress towards validated technologies, which
attract investment for the scale-up and deployment of the most
promising solutions that deliver sustainable economic, environmental,
and social outcomes. However, this report is not a policy or budget
document nor an action plan, and it does not commit the Federal
Government to any new activities or funding.
Challenges
Challenge: Major technical hurdles for development and scale.

Before there can be investment in large-scale biorefineries capable
of utilizing 1 billion tons of biomass to produce fuels and
bioproducts, investors must be confident that the technology is sound,
and that its supply chain is economically and environmentally
sustainable. Technology risk has been a major focus of the research
programs funded by industry, NSF, DOE, and USDA, as innovations are
moved from the lab to pilot- and demonstration-scale. New discoveries
can support innovations at the applied and engineering scales to reduce
technical risks. Developments in biotechnology, whether for biomass
plants or conversion-enabling microbes, are reaching early adopters.
Collaboration among scientists, and the industries their inventions
will support, has yet to be commonplace in the bioeconomy. Technical
and environmental risks introduced by new catalysts or organisms for
conversion are compounded by the diversity of the feedstocks locally,
regionally, nationally, and seasonally as well as by the multitude of
products that can be produced.

Challenge: Steep competition from traditional petroleum-derived
resources.

Market uncertainty is a major challenge for the emerging
bioeconomy. For more than 20 years, the variability in the cost of
petroleum has led to waning interest in furthering the development of a
bioeconomy. Through research and development, the cost of various
renewable energy alternatives--such as wind, solar, and bioenergy--is
continually dropping, which is revitalizing interest in renewables
despite relatively low oil prices. However, for bioenergy, the
uncertainty of the market limits the financial investment that is
needed to scale-up and validate technology performance and the ultimate
availability and price of bioproducts.
Historically, driving down the consumer price of biofuels has been
challenging. Since 2012, DOE has demonstrated technologies that can be
scaled-up to produce modeled mature, price-competitive cellulosic
ethanol.\13\ Current efforts focus on modeling mature, price-
competitive ``drop-in'' biofuels for various types of transportation
fuels. Biofuels have been supported by a variety of economic
incentives, including grants, income tax credits, subsidies, and loans
to promote biofuels research and development.\14\ The RFS mandates the
use of biofuels and monitors and tracks their use through RINs
(Renewable Identification Numbers). It is unlikely that the consumer
will voluntarily pay more for biofuels than for petroleum-derived
fuels. Thus, price parity would enhance investments in biofuels.
---------------------------------------------------------------------------
\13\BETO, MYPP. http://www.energy.gov/sites/prod/files/2016/07/f33/
mypp_march2016.pdf.
\14\https://www.epa.gov/environmental-economics/economics-biofuels.
---------------------------------------------------------------------------
Certain products, such as power and electricity, drop-in fuels, and
biochemical replacements, can displace a portion of the existing
products derived from fossil fuels with a renewable product; however,
the products must reach the end user with consistent price and
performance for consumer preference or demand to increase.

Challenge: A lack of necessary infrastructure.

Unless a new biofuel is truly compatible with existing
infrastructure, lack of infrastructure for new biofuels is another
challenge to increasing market penetration. Investments in new fuel
dispenser pumps and potential vehicle improvements are costly and
suffer from ``the chicken or the egg'' problem.
While it is potentially exciting to introduce new biobased products
to the market, even those that are chemically identical to their
fossil-based competitor may have some risk to the end user. Extensive
testing of new products is required to ensure that there are no
unforeseen performance issues with the bioproducts that are considered
as replacements for fossil-based products, yet testing has lagged.

Challenge: Access to capital for large financial investments.

Overcoming technical, logistical, and market risks is difficult but
essential to re-energize the financial community to invest in the
bioeconomy. However, overcoming the ``first-of-a-kind'' barrier will
require more than science and engineering as it is inherently more
expensive to build and operate a pioneer facility. Publicly supported
loan guarantee programs and mandated incentives, including the RFS,
have led to pioneer commercial-scale demonstrations for cellulosic
ethanol, but the availability of large financial investments is still
lower than what is necessary in order to achieve a Billion Ton
Bioeconomy.

Challenge: Uncertainties about sustainability--understanding
environmental, social, and economic outcomes.

One area of uncertainty highlighted via the stakeholder engagement
process is the role of sustainability in the bioeconomy, and efforts to
understand the potential environmental, social, and economic benefits
and impacts related to its expansion.
There are ongoing discussions and scientific processes focusing on
the potential effects related to increasing production of biomass and
its use as energy and/or for products, including continuing efforts to
scientifically evaluate those potential effects. Major environmental
concerns include potential impacts on soil and water quality,
biodiversity, GHG emissions and carbon footprint, net energy values,
and direct and indirect land use changes. Additionally, there are
concerns about economic and social issues such as food and economic
security. Another issue highlighted by stakeholders is efforts to
evaluate and verify outcomes from the application of sustainability
practices. The challenge identified there is to rely on relevant,
credible, and validated data, develop and employ the necessary tools
and methods, and adopt (scientifically proven) technologies to reduce
the uncertainties concerning sustainability across the entire supply
chain, but most certainly in feedstock production. The challenge
includes not just being successful but also demonstrating and
documenting that success to the public and policy makers.
While an increasing number of studies demonstrate the benefits from
the use of biomass, questions remain about how the bioeconomy will
evolve over time, and how the costs and benefits can be consistently
evaluated relative to other energy options.

Challenge: Growth instability and increased investment risk caused
by policy uncertainty.

The Energy Policy Act of 2005 and the Energy Independence and
Security Act of 2007 have provided the most support for biofuels. The
RFS mandates the use of sugar-, cellulosic-, and non-fossil-derived
biofuels. Congress set very ambitious goals in the law for growth of
cellulosic biofuels, advanced biofuels, and total renewable fuel. The
RFS supports emerging technologies and is intended to give companies
the stability they need to continue expanding investments. However,
technologies for advanced fuels--made from cellulosic feedstock such as
grasses and corn stover--have not developed as fast as Congress had
anticipated and required volumes have had to be adjusted. This can be a
challenge with any policy that requires new and/or emerging
technologies.
Industry responds to incentives and/or clear supportive policy for
investing in new infrastructure that supports the use of renewable
fuels, power, or products and will not invest in a venture if profits
cannot be made in the foreseeable future.

Challenge: The need for a strong and capable workforce.

As the United States experiences a shift in manufacturing
competencies, new training could help the American workforce to meet
the evolving demands of the bioeconomy. As an emerging industry, jobs
will take time to develop, which could create difficulties for trade
schools, community colleges, and universities looking to invest in
developing programs.
The rural workforce--including farmers, forest landowners,
harvesting equipment operators--will need to learn new ways of doing
business, harvesting crops, and managing logistics as new feedstocks
and end uses emerge.
Opportunities
Opportunity: Develop feedstock and fundamental innovations that
reduce cost and technology risk in the supply chain.

The Bioeconomy Initiative focuses on developing feedstocks that do
not disrupt existing markets for agricultural crops such as food, feed,
and fiber. In bioenergy supply chains for the production of biofuels,
the diversity of the feedstock is a key consideration because diversity
can insulate producers against economic shocks to the system.\15\ An
advanced system reduces the variability of feedstock supply by allowing
a wider range of sources that mitigate supply risks associated with
feedstock outages, such as those associated with local weather, pests,
and diseases. Feedstocks can be purpose-grown plants, wood, and wastes
from agriculture, forestry, or industrial processing. Each of these
feedstocks comes with characteristics that need to be understood for
efficient conversion. In addition, large quantities of feedstocks of
consistent quality need to be delivered to the biorefinery or
distributed pre-processing center to reduce conversion risk. There are
opportunities to densify feedstocks for more efficient transport, as
well as to blend or otherwise pre-process feedstocks to ensure
consistent quality and to enable larger volumes of delivered feedstocks
at a lower cost to biorefinery.
---------------------------------------------------------------------------
\15\Lamers, P., et al. 2015. Strategic supply system design--a
holistic evaluation of operational and production cost for a
biorefinery supply chain. Biofuels, Bioproducts, and Biorefining 9:
648-660. doi: 10.1002/bbb.1575.

------------------------------------------------------------------------

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The Importance of Food Security in the Bioeconomy

The food crisis of 2008 indicated how many factors contribute to the
state of global hunger. Rising oil prices, increased ethanol
production, growing middle class populations, as well as the increased
need for meat in China and milk in India, have all been blamed for
recent increases in food prices.\16\ At the same time, shrinking energy
resources and the possibilities that biomass can spur the development
of a bioeconomy where energy, chemicals, and materials can all be
produced without fossil fuels, have advanced the conversation regarding
the impact of bioenergy production on food security and prices. It is a
complex consideration that requires assessing the impact through
careful analysis of many variables.
\16\https://poldev.revues.org/145.
Through responsible planning, innovations could be applied to enable
improved food production, while increasing the availability of biomass
for fuels and chemicals. For example, landscape design principles can
be used to integrate food and energy systems in a way that reduces
waste, maintains crop yields, and contributes to multiple environmental
and social goals. By proactively applying these design principles, the
bioeconomy can potentially add resilience to agriculture and forestry
production systems and may enhance their ability to provide food, feed,
and fiber into the future.
The Bioeconomy Initiative applies innovations to overcome the
barriers defined by this report, while prioritizing sustainability
principles to ensure that as products from biomass increase in the
marketplace, there are more positive outcomes across market sectors.
------------------------------------------------------------------------

Additionally, there is an opportunity to improve technologies,
systems, and infrastructure that will enable higher productivity of
biomass crops that could result in increased productivity of food,
feed, and fiber, improved soil quality, and reduced water usage across
the entire sector. Applying sustainability criteria to renewable
feedstocks will likely add costs to these feedstocks; however, ensuring
that petroleum products must also adhere to environmental standards
will help to level the playing field and enable cost comparison on an
``apples-to-apples'' basis. Overall, an integrated, multi-disciplinary
effort creates opportunities to reduce risks throughout the entire
supply chain.

Opportunity: Seek opportunities to utilize low-cost waste
resources.

Growing a sustainable, thriving bioeconomy could involve the
development of biomass or bioprocess waste stream utilization
strategies for higher-value applications. This includes the
valorization of lignin and/or carbon dioxide, full utilization of all
algal biomass components, and the incorporation of price-advantaged
feedstocks like organic, municipal, and wet waste materials.
Converting waste streams to fuel, products, and chemicals can
contribute to accelerating the widespread adoption of bioenergy
technologies and to maximizing bioenergy's value proposition through
valorizing underutilized biomass resources. These resources include
landfill gas, municipal sludge, animal manure, industrial organic
wastewaters (including ethanol stillage), food wastes, and organic
fractions of sorted municipal solid waste that could otherwise incur
social and economic costs.
In addition to improving economic value, reliability, and
availability of aggregate biomass resources, waste streams can
supplement or be blended with traditional biomass feedstocks, which
directly contributes to the viability, quality, and resilience of
individual biomass supply chains. To capture the value offered by waste
streams, collaborations among government agencies, industry
stakeholders, research institutions, and national labs could include
the following activities:

Promoting a better understanding of feedstocks and modifying
those feedstocks to improve downstream processingefforts;

Applying research concepts to conversion processes to
achieve breakthroughs in operations;

Developing and testing engineering concepts to known
processes to reduce operational and capital costs and make
liquid fuels/renewable chemicals more cost-competitive;

Conducting detailed and rigorous resource availability and
techno-economic analyses to identify feasible combinations of
waste streams and target markets; and

Supporting the development of a distributed conversion
strategy.

------------------------------------------------------------------------

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Food-Energy-Water Nexus (FEW Nexus)

Several Federal programs are coordinating research, development, and
demonstration to improve the understanding and management of
sustainable food, energy, and water systems. This includes development
of enhanced tools and methods for monitoring, data collection, and
forecasting. In addition, efforts are underway to improve integrated
decision-making at the Federal, state, and local levels to help ensure
stewardship of U.S. resources.
One example of ongoing collaborations is the Innovations at the
Nexus of Food, Energy and Water Systems (INFEWS) program sponsored by
NSF and USDA. The overarching goal of INFEWS is to catalyze the
interdisciplinary research efforts to transform scientific
understanding of the FEW Nexus in order to improve system function and
management, address system stress, increase resilience, and improve
sustainability.
DOE is focused on the use of water with regard to energy production.
In 2014, the Water-Energy Nexus Challenges and Opportunities report\17\
identified six strategic areas to focus on, (1) energy efficiency of
water management through end use; (2) optimization of energy production
and its use of fresh water; (3) enhanced reliability of energy and
water technologies; (4) safe and productive use of nontraditional water
sources through improved technology; (5) responsible energy operations
with respect to water quality, ecosystem, and seismic impacts; and (6)
productive synergies among water and energy systems.
\17\http://www.energy.gov/under-secretary-science-and-energy/downloads/
water-energy-nexus-challenges-and-opportunities.
EPA is focused on partnerships with government agencies and business
to achieve sustainable outcomes of advanced technologies. One such
partnership is with the U.S. Army in support of its Net Zero
Initiative, which is geared to dramatically reduce and even eliminate
energy consumption, water use, and waste generation of military bases.
To support this initiative, EPA is developing tools to assess the
impacts of decisions and provide quality sustainability data.
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Opportunity: Quantify, communicate, and enhance beneficial effects
and minimize negative impacts.

Realizing the full benefits of the bioeconomy requires commitment
to rigorous science-based quantification of benefits and impacts across
multiple environmental, social, and economic dimensions. This will
enable the development of technologies and practices that deliver the
benefits of renewable energy and the bioeconomy, while maintaining
healthy communities and natural ecosystems. As more sustainable
business practices are encouraged, investments in renewable
technologies--including biofuels, bioproducts, and biopower--could
grow.
The Bioeconomy Initiative will create a sustainability framework
that considers multi-dimensional impacts and benefits from the use of
biomass. This framework will help the Bioeconomy Initiative
simultaneously address pressing economic, social, and environmental
challenges, including the preservation of ecosystem services and
biodiversity; improved materials, water, and energy conservation; a
shift from non-renewable to renewable feedstocks in industrial and
consumer product manufacturing; the capture and recovery of non-
renewable and renewable materials from wastes; improved air quality;
improved economic opportunities; and public health.

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Developing a Sustainability Framework

A framework is needed to help coordinate a sustainable approach to
expanding the bioeconomy across agencies. The framework is not
envisioned as a rigid, sustainability oversight tool, but rather a way
to improve cooperation. At the Bioeconomy Federal Strategy Workshop,
experts identified ways to make and ensure the approach to expanding
the bioeconomy is sustainable:

Coordinate analyses and research that demonstrate the
positive contributions the bioeconomy can make to environmental
sustainability-improving land use, water use, water quality, and
air quality--as well as socioeconomic sustainability.

Establish a common framework across agencies to reflect
sustainable futures and establish a common understanding of
sustainability goals, impacts, and benefits from the bioeconomy.

Build a library of economic, social, and environmental
metrics across agencies, and compile data on environmental, social,
and economic impacts, costs, and benefits of specific practices,
technologies, and bioeconomy pathways.

Coordinate the development of user-friendly models that can
improve decision-makers' understanding of options in designing the
bioeconomy, its benefits, and impacts.

Synthesize information on impacts, costs, and benefits to
address questions from diverse stakeholders. Measuring the
economic, social, and environmental outcomes of bioenergy,
biochemicals, and biopower will provide clarity on the short-term
and long-term availability of resources; impacts of the use of
renewable, non-renewable, virgin, and recycled resources; and the
feasibility of creating closed-loop systems for optimal
efficiencies.

Accelerate innovation on sustainable system design that
integrates economic, social, and environmental dimensions with
consideration of synergies and trade-offs.

The Board and the Federal agencies involved with the Bioeconomy
Initiative are dedicated to sustainability and will make it a paramount
goal in implementation. However, achieving sustainability in the
bioeconomy or any other sector is a tenuous goal. Even with the use of
indicators and other metrics and tools, achieving sustainability is a
challenge that is readily recognized. In developing a common framework,
sustainability can reflect an approach, rather than an absolute.
Agencies have diverse approaches to sustainability and different
measures of success, according to various missions and areas of
responsibilities that range from research to implementation to
regulatory oversight. The sustainability framework will allow the
agencies to contribute to a sustainable bioeconomy, while still
accomplishing their missions. A framework is needed to help direct and
coordinate all of these approaches. Working with industry and
collaborators can exacerbate the difficulty of achieving
sustainability, which highlights the need for an agreed-upon framework.
------------------------------------------------------------------------

Opportunity: Increase public education on biomass-derived products
in a bioeconomy.

Public perception plays a key role in market risk. A third-party
analysis comparing bioenergy and bioproducts to fossil energy and
fossil-based products could help communicate the underlying potential
benefits of developing the bioeconomy.
By better understanding and communicating the potential economic,
social, and environmental benefits of biofuels, bioproducts, and
biopower, as well as developing more practices that will mitigate
potential negative impacts, the Bioeconomy Initiative can garner more
public acceptance and demand for a larger bioeconomy. There is an
opportunity to raise awareness about the positive impacts of bioenergy
and bioproducts and discuss the synergies of the bioeconomy with other
renewable opportunities and economic sectors.
In recent years, industry has focused on the interconnectivity
between global bioenergy production, the food and feed required to meet
global needs, and the impacts of bioenergy production has on water
resources and water quality. Industry must recognize the food, water,
and energy sectors as a system of interdependent components and develop
solutions based on multi-sector engagement to enhance the
sustainability of the nation's food, water, and energy supplies.
Through the Bioeconomy Initiative, the Board can help develop a greater
coordination among these three sectors.

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Bioproducts and Biomanufacturing

In April 2016, the National Science and Technology Council
Subcommittee on Advanced Manufacturing published Advanced
Manufacturing: A Snapshot of Priority Technology Areas Across the
Federal Government.\18\ The document highlighted both ongoing
activities to strengthen U.S. manufacturing and emerging advanced
manufacturing priority areas. Two of the five priorities support the
growth of a bioeconomy through engineering biology to support
biomanufacturing and advanced bioproduct manufacturing.
\18\https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Blog/
NSTC%20SAM%20 technology%20areas%20snapshot.pdf.
Federal investments have helped establish the processes and
platforms needed to generate high-value intermediate and end-use
products, thus supporting the growth of bioproduct manufacturing in the
United States. Areas for improvement include the demonstration of
biomass feedstock delivery systems at commercial scale; development of
technologies to reduce costs for conversion processes that produce
intermediates with multiple product potential, including the use of
lignin to produce chemicals with unique characteristics; and scale-up
demonstrations of common processing steps to reduce risk for
commercialization.
USDA, DOE, NSF, and DOD are actively involved in supporting
engineering biology and biomanufacturing, and each agency has research
programs working from fundamental discovery through applied research
and scale-up.
------------------------------------------------------------------------

Opportunity: Develop bioproducts that can accelerate biofuel
production.

Without portfolio diversity and alternative revenue sources to ride
out market fluctuations, many of the early stakeholders working to
develop a bioeconomy experienced significant barriers to continued
biofuels development. Bioproducts--which include high-value chemicals,
reagents, materials, and other biobased intermediates--are a viable
option to reduce petroleum use, while potentially offering a
diversification of market risk to investors once technology risks have
been overcome.
Within the bioeconomy, biofuels represent the product with the
largest market share, yet carry challenging price requirements to
compete with existing petroleum-derived fuels. The U.S. has become
accustomed to readily available, low-cost fuels, which makes this a
difficult and risky path to follow. Using biomass for power and
electricity is less risky, but it derives the lowest economic value
from the resources and must compete with other renewable technologies,
such as solar and wind.
Generally, biochemicals provide the highest value use of biomass
products, and successful technologies can have a positive return on
investment, making these more likely to scale-up to commercial
production. Coupling biofuels and bioproducts development can result in
an accelerated timeline to reduce risks versus a fuels scenario alone.

Opportunity: Enable the testing and approval of new biofuels and
bioproducts.

Biofuels and bioproducts must meet current specifications set for
fossil-derived products, requiring various testing and approval
procedures ahead of market entry. The ability to provide enough
feedstocks, intermediates, and final products to enable testing is a
barrier in the fledgling industry, but it also represents one of the
greatest opportunities. Industry needs capital, new and repurposed, to
perform the necessary testing of new products to ensure they meet
industry standards. Industry also requires capital to develop new
standards across the value chain for bioenergy and bioproducts.
Acquiring this capital will require large public and private
investments that will only materialize if there is a stronger demand
push or market pull for these renewable fuels and products. Leveraging
more progressive international markets by exporting fuels and products,
as well as technologies, can help secure a stronger market pull that
would enable more investment in U.S. pioneer technologies, thus
lowering overall risk while providing benefits to the U.S.\19\
---------------------------------------------------------------------------
\19\https://www.whitehouse.gov/sites/whitehouse.gov/files/images/
Blog/NSTC%20SAM%20
technology%20areas%20snapshot.pdf.

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Co-Optimizing Fuels and Engines

Recognized as an integral part of the bioeconomy vision, DOE's Co-
Optimization of Fuels and Engines (Co-Optima) initiative\20\ seeks to
accelerate widespread deployment of significantly improved fuels and
vehicles. Two parallel research tracks are focused on the
identification and co-development of fuel and engine technologies that,
when used in tandem, offer the greatest combination of efficiency, GHG
reduction, and performance.
\20\http://energy.gov/eere/bioenergy/co-optimization-fuels-engines.

-------------------------------------------------------------------------
The Co-Optima initiative contributes to the Bioeconomy Initiative by
accelerating the deployment of advanced biofuels, targeting 16 billion
gallons per year of by 2030, and contributing to a potential 30%
reduction in petroleum consumption nationwide versus the current 2030
projections.21 22
\21\http://www.energy.gov/sites/prod/files/2016/08/f33/
farrell_bioenergy_2016.pdf.
------------------------------------------------------------------------

Opportunity: Expand the market potential for biomass.
---------------------------------------------------------------------------
\22\http://energy.gov/eere/articles/co-optima-initiative-fuels-
combustion-engine-efficiency.

To the extent that biomass products have demonstrable environmental
advantages relative to fossil fuel-based or other alternatives,
measures that monetize the value of environmental externalities will
increase demand for biomass products. Without being able to monetize
the value of externalities, the low cost of petroleum will result in a
decreased market pull from industry to include renewables in their
portfolios.
The airline industry and its need for jet fuel is an example of an
exception due to multiple factors: industry commitments to achieving
carbon neutral aviation growth by 2020; the U.S. and other member
states development at the International Civil Aviation Organization
(ICAO) of a global market-based mechanism limiting international
aviation emissions; and the potentially devastating effects of price
volatility associated with petroleum-based jet fuels.
Cellulosic ethanol has found a small niche in the oxygenate market
where it will need to compete with starch-based ethanol for the 10%
blend with gasoline. To further pursue this route will require
expanding this market beyond the blend wall by increasing ethanol
blends that are acceptable in current vehicles and by providing current
or reasonable infrastructure upgrades, making room for both starch and
cellulosic ethanol. Innovations and new technology also have the
potential to increase this market by using ethanol as a precursor for
new bioproducts that have a higher value for the production of
polymers. The Bioeconomy Initiative can support the market and further
enable pathways for biofuels and bioproducts, including aviation,
maritime, and surface transportation applications.

Opportunity: Encourage private-sector financing.

Through strategic use of its convening power, the Federal
Government has the ability to forge new partnerships and collaborations
that could enable the development of policies and incentives to
encourage private sector investment across the entire value chain, from
feedstock production in the field to market driven product development
and end-use.

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Federal Alternative Jet Fuel Research and Development (R&D) Strategy

Commercial and military aviation are fundamental drivers of national
economic development, mobility, and security. However, aviation faces
significant energy and environmental challenges due to dependence on
petroleum jet fuels. Drop-in alternative jet fuels (AJFs) can address
these challenges by enabling a diverse, secure, and reliable fuel
supply, increasing energy price stability, displacing fossil-based
emissions that impact air quality and global climate, while also
generating rural economic development. Efforts are needed to quantify
emissions displacement using life-cycle analysis models.
In June 2016, the National Science and Technology Council's
Aeronautic Science and Technology Subcommittee published the Federal
Alternative Jet Fuel Research and Development Strategy.\23\ The
strategy was developed with input from the non-Federal stakeholder
community by representatives from the U.S. Departments of Agriculture,
Commerce, Defense, Energy, State, Transportation, EPA, NASA, and the
NSF.
\23\https://www.whitehouse.gov/sites/default/files/
federal_alternative_jet_fuels_research_Pand_development_strategy.pdf.
The document highlights current Federal agency AJF R&D expertise,
responsibilities, and collaborations. It aligns Federal agency R&D
efforts across the AJF development path and sets out prioritized
Federal R&D goals and objectives to address key scientific and
technical challenges that inhibit the development, production, and use
of economically viable AJFs. This strategic approach is intended to
contribute to the successful mobilization of both the Federal agency
and the non-Federal stakeholder communities towards a common effort to
develop and deploy cost-effective AJFs.
------------------------------------------------------------------------

Creative public-private partnerships with the insurance industry to
cover a range of areas from crop insurance to regulatory-risk insurance
could be considered to survive the early stage of development and
deployment for this new industry. Programs such as the BioPreferred
Program at USDA support and encourage the use of bioproducts throughout
the Federal system. Long-term secure product off-take contracts and
long-term feedstock supply contracts are important for industry
stakeholders when working to secure financing and ensure investors.

Opportunity: Support analysis as a foundation for stable, long-term
policies.

If carefully crafted policies were in place to encourage the
sustainable expansion of a U.S. bioeconomy, many of the challenges
discussed above could be reduced. For decades, the Federal Government
has employed many different types of policy incentives to encourage
energy production in the United States. Moving forward, such policies
must be based on sound science and reflect our best efforts to identify
and mitigate any potential negative environmental, economic, and social
impacts. There are ongoing Federal scientific processes, such as the
EPA's technical review of the carbon implications of biomass use for
energy at stationary sources, that can help us identify forms of
biomass that reflect carbon benefits.\24\ Information from such
scientific processes can advance technical understanding of the role
that biomass can play in GHG emissions strategies by enabling us to
identify and promote biomass that is carbon-beneficial versus those
that could result in CO2 emissions increases or other
potential consequences.
---------------------------------------------------------------------------
\24\Information regarding the EPA's draft technical report,
Framework for Assessing Biogenic CO2 Emissions, and the
related scientific peerreview process can be found at: https://
www3.epa.gov/climatechange/ghgemissions/biogenic-emissions.html.
---------------------------------------------------------------------------
There are a number of policy pathways forward that can help foster
thoughtful expansion of the bioeconomy. For example, policies that
encourage the use of otherwise unused byproduct materials for renewable
bioenergy and bioproducts should be considered. However, any policies
relating to bioenergy must be founded on appropriate analysis and abide
by current standards set in the Clean Air Act and meet established
guidelines to maintain and improve the U.S. environment.

Opportunity: Ensure a ready workforce to meet the needs of the
bioeconomy.

A growing bioeconomy will require a knowledgeable and well-trained
workforce. U.S. K-12 and post-secondary education programs have put an
increased focus on science, technology, engineering, and mathematics,
but there is still room for growth. This will benefit the bioeconomy by
providing a multidisciplinary workforce that will not only include
engineers and scientists, but communications experts, human resource
specialists, and other supporting positions as well. Additionally,
workers will need experience across the supply chain, which could take
the form of apprenticeships, internships, and volunteer opportunities
in the growing industry.
Next Steps
The activity across the Federal Government is extensive, and
agencies have made progress in understanding many aspects of an
emerging bioeconomy, including the production and logistics of
delivering feedstocks to a refinery, as well as innovations that have
significantly reduced the cost of converting feedstocks into fuels and
products. The Bioeconomy Initiative will expand the focus beyond
biofuels, increasing the value and potential benefits of biomass.
The Federal Government has also made efforts to develop sustainable
supply chains, establish standards, and has performed extensive testing
of fuels for aviation and surface transportation. However, to further
reduce the risks of the technology and overcome barriers to achieving a
robust bioeconomy, the bioenergy community must do more.
The Board will continue to develop the Bioeconomy Initiative in
partnership with stakeholders. Building on the release of the FARB,
this report is the next step in forming the coalition to drive the
Bioeconomy Initiative forward by identifying many of the obstacles that
need to be addressed, and understanding how to move forward
cooperatively.
appendix e
Federal Activities Report on the Bioeconomy

February 2016
Official Disclaimer
The Federal Activities Report on the Bioeconomy is a product of
interagency collaboration under the Biomass R&D Board and does not
reflect any changes in policy. All information is based on current
activities conducted by the Executive Agencies as of October 2015. The
potential impacts of technical progress, pending or proposed
legislation, regulations, standards, or any other changes that may have
occurred after the publication date are not reflected in this report.

Table of Contents
Foreword

The Biomass R&D Board
Purpose of the Federal Activities Report on the Bioeconomy

Introduction

Why a Bioeconomy

Path to the Billion Ton Bioeconomy Vision

Genesis of the Bioeconomy Vision
The Goal of the Bioeconomy Vision
The Role of the Biomass R&D Board

Overview of the Billion Ton Bioeconomy Vision

Scope of the Bioeconomy Vision
Expected Benefits

Proposed Objectives of the Bioeconomy Vision:
Federal Agencies' Current Work in the Bioeconomy

Executive Agencies
Interagency Collaboration

Looking Ahead

Bioeconomy Federal Strategy Workshop
Building a National Coalition

Appendix I: Federal Agency Activities
Appendix II: Interagency Activities Supporting the Bioeconomy.
Foreword
The Biomass R&D Board
The Biomass Research and Development (R&D) Board (The Board) was
created through the enactment of the Biomass Research and Development
Act of 2000 ``to coordinate programs within and among departments and
agencies of the Federal Government for the purpose of promoting the use
of biobased industrial products by (1) maximizing the benefits deriving
from Federal grants and assistance; and (2) bringing coherence to
Federal strategic planning.''\1\ The Board is co-chaired by senior
officials from the U.S. Departments of Energy (DOE) and Agriculture
(USDA) and currently consists of senior decision makers from the DOE,
USDA, U.S. Department of Transportation (DOT), U.S. Department of the
Interior (DOI), U.S. Department of Defense (DOD), U.S. Environmental
Protection Agency (EPA), National Science Foundation (NSF), and the
Office of Science and Technology Policy (OSTP) within the Executive
Office of the President. With its diverse membership, the Board
facilitates coordination among Federal Government agencies that affect
the research, development, and deployment of biofuels and bioproducts.
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\1\U.S. Congress (1999). H.R. 2827. 106th Congress, first session.
http://www.gpo.gov/fdsys/pkg/BILLS-106hr2827ih/html/BILLS-
106hr2827ih.htm.
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Purpose of the Federal Activities Report on the Bioeconomy
A Federal Activities Report on the Bioeconomy has been prepared to
emphasize the significant potential for an even stronger U.S.
bioeconomy through the production and use of biofuels, bioproducts, and
biopower. This report is intended to educate the public on the wide-
ranging, federally funded activities that are helping to bolster the
bioeconomy. Further, the report will highlight some of the critical
work currently being conducted across the Federal Government that
either supports or relates to the bioeconomy.

Bioeconomy Vision
Introduction
Why a Bioeconomy
``Bioeconomy'' is a popular phrase used broadly in today's energy
conversation. The term emphasizes the integral role of abundant,
sustainable, domestic biomass in the U.S. economy.
The benefits of the bioeconomy have been well documented.\2\
Biobased products support the growth of plants, trees, and vegetation,
which recycle carbon (CO2) from the atmosphere, resulting in
air quality improvements when compared to fossil fuel-based products.
In addition, producing and utilizing biobased fuels reduces U.S.
reliance on foreign oil (energy security) and creates jobs,
particularly in rural areas.
---------------------------------------------------------------------------
\2\Renewable Chemicals & Materials Opportunity Assessment--Major
Job Creation and Agricultural Sector Engine, USDA, 2014. http://
www.usda.gov/oce/reports/energy/USDA_RenewChems_Jan2014.pdf; U.S.
Economic Impact of Advanced Biofuels Production: Perspectives to 2030,
Bioeconomy Research Associates, 2009. https://www.bio.org/sites/
default/files/EconomicImpactAdvancedBiofuels.pdf; Bio-based Chemicals--
Value-Added Products from Biorefineries, IEA 2011. http://
www.ieabioenergy.com/wp-content/uploads/2013/10/Task-42-Biobased-
Chemicals-value-added-products-from-biorefineries.pdf.

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What Is a Bioeconomy

For the purpose of this report, the bioeconomy is defined as:

``The global industrial transition of sustainably utilizing
renewable aquatic and terrestrial biomass resources in energy,
intermediate, and final products for economic, environmental,
social, and national security benefits.''\3\
\3\An Economic Impact Analysis of the U.S. Biobased Products Industry--A
Report to the Congress of the United States of America, USDA 2015.
http://www.biopreferred.gov/BioPreferred/faces/pages/
DocumentBrowser.xhtml#; Opportunities in the Emerging Bioeconomy, July
25, 2014. www.biopreferred.gov/files/WhyBiobased.pdf; Renewable
Chemicals & Materials Opportunity Assessment--Major Job Creation and
Agricultural Sector Engine, USDA, 2014. http://www.usda.gov/oce/reports/
energy/USDA_RenewChems_Jan2014.pdf.
------------------------------------------------------------------------

Because of these and other benefits, biobased resources are an
important component of the nation's ``All of the Above'' energy policy,
which is focused on developing a range of available energy sources to
meet future demands and increase the stability and security of the
nation's energy supply.\4\ In the Climate Action Plan, the President
recognized that ``biofuels have an important role to play in increasing
our energy security, fostering rural economic development, and reducing
greenhouse gas emissions from the transportation sector.''5 In addition
to biofuels, the Federal Government has emphasized the potential for
biopower, bioproducts, and renewable chemicals as key components of the
national bioeconomy.
---------------------------------------------------------------------------
\4\https://www.whitehouse.gov/sites/default/files/docs/
clean_energy_record.pdf.
\5\https://www.whitehouse.gov/sites/default/files/image/
president27sclimateactionplan.pdf.
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While the United States is a global leader in promoting the use of
sustainably produced feedstocks to fuel economic activity and growth,
the bioeconomy is still in its early stages. A transition is needed
from a fossil-based economy to an economy that is fueled by sustainable
and renewable energy, of which biomass plays a critical role. Assisted
by public-private partnerships, development of new and innovative
technologies in the United States is leading to renewable and drop-in
fuels, biobased materials, and renewable chemicals that are replacing
fossil-based products.
Bioeconomy and the Federal Government

Bioeconomy activities have already touched on the interests of many
Federal agencies and offices. For example, USDA's interest stems from
the development and production of feedstocks to end-use markets for
those feedstocks; DOE's interest involves alternative inputs used to
generate energy and co-products, technologies, and end-use markets; EPA
leads development of the renewable fuel standard for biofuels,
environmental approval of biotechnologies essential to the bioeconomy,
regulates emissions from mobile and stationary sources of the
bioeconomy, and the management of manures, municipal solid waste and
biosolids--all potential feedstocks for the bioeconomy; NSF recognizes
innovative technology underpins a strong bioeconomy and increased
demand for scientists and engineers; DOD and DOT view the bioeconomy
from an alternative fuels and power dimension and are interested in
reducing energy price variability and identifying reliable and
sustainable fuel supplies for all transportation modes, as well as
tactical and non-tactical assets; and DOI seeks to add value to U.S.
land.
The Federal Government as a whole sees great potential in the
nation's abundant natural resources, the capacity for new and advanced
technologies, and the entrepreneurial spirit of the American people.
This potential offers the ability to triple the size of today's
bioeconomy by 2030. To realize the full potential of a sustainable,
domestic bioeconomy, collaboration among Federal agencies is needed, as
are partnerships with state and local governments, universities,
industries affecting the bioeconomy supply chain, and the American
public. The Biomass R&D Board is a standing body that can facilitate
effective implementation of this vision.
Path to the Billion Ton Bioeconomy Vision
Genesis of the Bioeconomy Vision

Since fall 2013, Board members have been planning a broad, new
vision to promote the expansion of the bioeconomy. With 1 billion tons
of biomass projected to be sustainably produced and available annually
by 2030, the Board recognized the need to fully develop a Billion Ton
Bioeconomy Vision.\6\ The Board believes that a single, coordinated
multi-department vision focused on developing and implementing a plan
for utilizing this biomass for these purposes will increase economic
activity, decrease reliance on foreign oil, and create market-driven
demand for bioenergy and bioproducts.
---------------------------------------------------------------------------
\6\U.S. Billion-Ton Update, August, 2011. http://
www1.eere.energy.gov/bioenergy/pdfs/billion_ton_update.pdf.
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The concept was discussed in parallel by the Biomass R&D Technical
Advisory Committee (TAC). The TAC envisioned a new interagency effort
that would help to replace more fossil carbon with renewable carbon in
transportation fuels and related products. The TAC recommended that the
new vision endeavor to rapidly expand emerging biofuels and bioproducts
industries, targeting a potential 30% penetration of biomass carbon
into the U.S. transportation market by 2030 in a sustainable and cost-
effective manner to create jobs, reduce greenhouse gas impacts, and
enhance national security.

Additional expected outcomes of a proposed Bioeconomy Vision by the
TAC and Board include the following:

Enhanced economic development by increasing direct and
indirect jobs.

A cost-effective energy supply that is synergistic with
existing fossil-based energy markets.

Enhanced economic, environment, and social sustainability.

Improved national energy security and decreased dependence
of national defense on foreign energy supplies.

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Preliminary Analyses

Members from the Analysis Interagency Working Group of the Biomass
R&D Board have developed some early benefits metrics. The results of
these analyses will be peer-reviewed and published in 2016.
------------------------------------------------------------------------

The Board Operations Committee also conducted preliminary analyses
to determine the feasibility of having 1 billion dry tons of biomass
sustainably available annually within the relatively short timeframe of
15 years.\7\ These bio-feedstocks would be used to produce biofuels,
bioproducts, renewable chemicals, and biopower. Some preliminary
analyses, led by members of the Board's Analysis Interagency Working
Group, were conducted to determine the feasibility of reaching this
target and harnessing some of the associated social, economic, and
environmental benefits of the effort.\8\
---------------------------------------------------------------------------
\7\The Billion-Ton Update assumes that the geographic range where
energy crop production can occur is limited to areas where production
is under rain-fed conditions, without the use of supplemental
irrigation.
\8\Analysis Interagency Working Group was established as part of
the 2012 National Biofuels Action Plan. The focus of the group is to
identify and address analysis needs in biofuels and bioproducts R&D.
The IWG is co-led by the Departments of Agriculture and Energy and has
representatives from these departments, EPA, and DOT. This Group, along
with added members from national laboratories, provided input and
recommendations to the initial Bioeconomy Vision analysis, as well as a
formal review of the assumptions, data, references, and calculations.
There were more than ten members including scientists and program
managers with expertise in agricultural, forestry, modeling,
statistics, GHG emissions, economics, transport systems, and many other
areas.
---------------------------------------------------------------------------
The Goal of the Bioeconomy Vision
The goal of the Billion Ton Bioeconomy Vision (the Vision) is to
develop and implement innovative approaches to remove barriers to
expanding the sustainable use of America's abundant biomass resources,
while maximizing economic, social, and environmental outcomes. By
increasing use of renewable plant material and waste feedstocks for
biofuels, bioproducts, and biopower, the Vision has the potential to
stimulate job growth and economic opportunities; increase the nation's
competitive advantage; support a secure, renewable energy future; and
contribute to improved environmental quality. This interagency vision
differs from ``business-as-usual'' with an intention to create a
sustainability framework that considers multi-dimensional impacts and
benefits from the use of biomass.

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Interagency Collaboration

Founding Partnerships, Breaking Barriers

USDA, DOE, and EPA jointly released a progress report on the Biogas
Opportunities Roadmap of 2014. The Roadmap identifies voluntary actions
that can be taken to reduce methane emissions through the use of biogas
systems. It outlines strategies to overcome barriers limiting further
expansion and development of a robust biogas industry in the United
States.

For more information on this activity and others like it, see
Appendix II.
------------------------------------------------------------------------

Biomass already plays a significant role in the Administration's
``All of the Above'' energy strategy. The Vision is to take a systems
approach to sustainably reach the full potential of biomass-derived
products as a way of expanding our nation's economy.

This effort will increase the sustainable production of biomass
feedstocks and capture of usable wastes; development of innovative and
more efficient technologies to transform renewable carbon to
intermediates and products; construction of more biorefineries and
manufacturing facilities; and expansion of the market for biofuels,
biochemicals, biopower, and other biomass-derived products. As a
result, the bioeconomy will provide multiple economic, environmental,
and social benefits to the nation.
The Vision requires new science and technologies from universities
and laboratories; industry and manufacturing development; engagement
with financial institutions; education and job training; and additional
producers, contractors, and specialty personnel. Expanding the economic
sector to the extent envisioned in such a short timeframe will require
strong support, commitment, and involvement of many sectors and groups.
The Board's Operations Committee will coordinate engagement and
outreach efforts to achieve commitment and investment among these
external stakeholders. The Committee will collaborate with bioeconomy
partners to develop a strategic framework and plan of action for
reaching target groups across various sectors.
The Role of the Biomass R&D Board
The purpose of the Bioeconomy Vision is to expand the sustainable
production and use of biomass. The Board will have the primary
responsibility for providing overall leadership and coordination of
this vision. The Vision will coordinate and enhance Federal efforts, as
well as facilitate collaboration between the government and its
stakeholders.

There is already a high level of commitment and coordination among
many Federal agencies, as well as a fairly comprehensive approach to
remove barriers that may preclude the commercialization and expansion
of the bioeconomy. To maximize the potential of the U.S. bioeconomy,
the Vision seeks to further align and coordinate agency missions, and
fully engage with the public to achieve success. By involving other
agencies and stakeholders as part of a collaborative effort, the Vision
will strengthen this commitment and coordination, while broadening the
effort to assess impacts and benefits, and prioritize the design and
efficient scale-up of production and utilization of the best biomass
production and utilization pathways.

Federal departments, agencies, offices, and programs will provide
the following:\9\
---------------------------------------------------------------------------
\9\As a separate body established to inform and advise the Board,
the Biomass R&D Technical Advisory Committee, an independent rotating
advisory group of about 30 bioenergy stakeholders, will be encouraged
to provide recommendations on the Bioeconomy Vision to the Board.

Investments in research, development, and demonstration
(RD&D), as well as an objective assessment of life-cycle
performance of technology and system choices looking at RD&D,
production, conversion, delivery, and use.

Workforce development, training, public outreach, extension/
technology transfer.

An understanding of the policies of all agencies to
successfully implement regulations that enable and overcome
challenges to the sustainable expansion of the bioeconomy.

New and existing mechanisms to leverage public-private
relationships and resources.

DOE national labs, USDA, and other Federal research
facilities that will apply their technical expertise and
provide technologies to further break down technical barriers,
and decision support tools for the advancement of a sustainable
bioenergy industry.
Overview of the Billion Ton Bioeconomy Vision
Scope of the Bioeconomy Vision
The Vision includes assessing benefits and impacts, and evaluating
approaches for sustainably expanding the production of biomass-based
fuels, power, and products along the entire supply chain (from the
production of feedstocks to their conversion and end use). These
efforts will require analyses, financial mechanisms, contract services,
research, development, and deployment for feedstocks, conversion
technologies, manufacturing, infrastructures, policies and regulations,
and market development of products.
Expanding the bioeconomy in a sustainable manner will increase
energy diversity and long-term security. It will provide additional
economic, environmental, and social benefits, such as reduced
greenhouse gas emissions, job growth, and responsible management of
diverse sources of biomass and waste materials. Efforts will result in
a greener, stronger nation with diverse, new economic sectors that
enhance U.S. competitiveness.

------------------------------------------------------------------------

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Interagency Collaboration

A More Sustainable Future Together

DOE and USDA engage with the Global Bioenergy Partnership to
exchange information and findings on sustainability and greenhouse gas
emissions of bioenergy. The Global Bioenergy Partnership (GBEP) was
established in 2006 by a mandate from the G8 + 5 in 2005 and is the
venue for the U.S. Government to discuss sustainability of bioenergy on
an international level. Partners currently include 23 countries and
seven United Nations organizations, with Brazil and Italy as co-chairs.

For more information on this activity and others like it, see
Appendix II.
------------------------------------------------------------------------

The following are examples of existing and proposed Bioeconomy
Vision approaches:

The Vision will be developed with participation from Federal
agencies that are not currently involved with the Biomass R&D
Board, thereby expanding the commitment of the Federal
Government to identify and develop sustainable pathways in
support of the bioeconomy.

The Vision will proportionately expand its focus on biofuels
to include other uses of biomass to derive increased value and
benefits.

A national framework will be developed to coordinate Federal
and external efforts to advance the bioeconomy.

Emphasis will be placed on achieving an overall national
bioeconomy goal; specific milestones and deadlines for that
goal will be established.
Expected Benefits
Environmental Benefits

An expanded bioeconomy must help mitigate, and not exacerbate,
challenges associated with resources, environment, and public health.
The Vision is to potentially help address many of today's pressing
environmental challenges: The preservation and/or enhancement of
ecosystem services and biodiversity; improved materials, water, and
energy conservation; shift from non-renewable to renewable feedstock
availability, selection, and use in industrial and consumer product
manufacture; capture and recovery of non-renewable and renewable
materials from wastes; improved air quality; and improved public
health. Environmental assessments can identify pathways that would
result in environmental gains when accounting for their full life
cycle. Some environmental benefits are highlighted below:

Reduced Greenhouse Gas Emissions--Greenhouse gas emission
footprints associated with biomass-derived products are often
more favorable than their fossil-fuel derived counterparts.
Preliminary analyses show that a Billion Ton Bioeconomy could
potentially reduce GHG emissions by over 400 million tons
annually of CO2e, which is equivalent to an
approximate 8% reduction in current U.S. emissions.

Optimizing Land Use--The sustainable production of biomass
makes use of multi-functional landscapes that improve ecosystem
services such as soil health, water quality and availability,
and accessibility of other natural resources for food, fuel,
and fiber production. For example, the development of non-food
crops capable of thriving on marginal lands, which require less
inputs for production, often helps reduce nutrient run-off,
soil erosion, and water use. Also, aquatic biomass developed on
coastal and marine landscapes can provide similar benefits and
expand the areal production of biomass for the bioeconomy.

Higher Purpose Use of Biobased Materials--Opportunities
exist to develop and utilize diverse agricultural, algal, and
biogenic waste (e.g., manures, biosolids, food waste, and
municipal solid waste) feedstocks that, historically, have
presented environmental and economic challenges. Using diverse
sources of renewable biobased materials as feedstocks often
reduces greenhouse gas, eliminates management costs, reduces
water quality degradation, and provides revenue streams and
renewable energy.

Capture, Re-use, and Market Value of Non-renewable Resources
and Pollutants from Biogenic Wastes--Innovative technologies
can extract non-renewable resources (such as phosphorus from
manures and biosolids) and transform them from costly
pollutants into marketable products.
Economic Benefits

The Analysis Interagency Working Group of the Biomass R&D Board
estimates that the bioeconomy currently contributes approximately $50
billion and over a quarter million jobs to the U.S. economy. The
government's Billion Ton Bioeconomy Vision has established goals that
would considerably increase U.S. economic production and job growth.
Effects of a significantly larger bioeconomy would ripple across all
U.S. economic sectors, creating new jobs in biomass production and
logistics, facility operation and quality control, and distribution, as
well as R&D, finance, supplies, and services that deal with the
complexities of building and running new biorefineries. If targets are
met, the bioeconomy could achieve the following milestones:

National Revenues: The total direct revenue could reach
approximately $250 billion annually, with a total economic
impact of $660 billion each year including indirect economic
outputs from the bioeconomy.

Job Growth: The cumulative job benefit could be over a
million new positions that cannot be outsourced from the United
States. A strong bioeconomy will boost job growth in various
sectors, especially in the high-paying technology field. Such
progress would have positive effects throughout much of the
agriculture, aquaculture, forestry, and service sectors of the
economy.

Rural Development: Sustainably utilizing our land resources,
algae, and waste systems would provide economic development
opportunities for both rural and urban America. Additionally,
rural communities and economies would have the potential to
benefit significantly as a result of the Bioeconomy Vision.
National Security Benefits
The volatility of oil prices and supply is a major concern to a
nation still reliant on oil for the majority of its transportation
needs. Biofuels are less susceptible to global events and can help
bolster the U.S. renewable energy markets. Additionally, an expanded
bioeconomy will contribute to the U.S. maintaining a competitive
advantage in a global market. Specific benefits include the following:

Price Volatility: The Billion Ton Bioeconomy will create
more biobased energy options and provide flexibility to address
environmental challenges and future volatility in global fuel
prices.

Infrastructure Compatibility: The bioeconomy will support
development of a responsive, reliable, and efficient transport
and distribution infrastructure that can safely deliver biofuel
products to their end-use locations.

------------------------------------------------------------------------

-------------------------------------------------------------------------
Interagency Collaboration

Scaling up for Success

To supply the U.S. Navy with a home grown, secure fuel supply, USDA,
DOE and the Navy have been working together since 2011 to help
commercialize new fuels that meet military specifications for jet fuel
and diesel. These domestically produced renewable biofuels will help
the U.S. military increase the nation's energy security, reduce
greenhouse gas emissions, and create jobs in America.

For more information on this activity and others like it, see
Appendix II.
------------------------------------------------------------------------

Challenge Areas
There is general agreement that expanding the bioeconomy would
offer significant benefits; however, some major hurdles still exist.
They include: (1) a lack of available, cost-competitive, biomass-
derived products as compared to fossil resource (petroleum, natural
gas, coal) products, (2) concerns over environmental issues associated
with growing biomass and mitigating/reducing negative impacts, (3)
reducing risks to warrant investment in biomass production systems,
conversion facilities, and end-use infrastructure, (4) limited
availability of land and resources (e.g., water, fertilizer, labor,
etc.) to produce 1 billion tons of biomass, (5) current inability to
transport and dispense larger quantities of fuels, and (6) the need for
large capital expenditures in a risk-averse financial environment. The
goals of the Vision can only be accomplished when these challenges have
been considered and mitigated. At the same time, it is critical that
U.S. food, feed, and fiber production is sustained and enhanced.

------------------------------------------------------------------------

-------------------------------------------------------------------------
There are four main barriers that restrict our ability to achieve
Billion Ton Bioeconomy goals:

First, sustainably producing and accessing adequate,
affordable feedstocks--Biomass as the source of low-cost renewable
carbon feedstock for conversion to fuels, power, and products add
significant complexity to the agricultural and forestry industries
for the production of biomass and to the waste management
industries for the recovery of organic materials.

Second, developing and applying innovative, cost-
competitive conversion technologies--Conversion technologies for
production of fuel from cellulosic feedstocks suffer from high
energy requirements and low productivity (yield, selectivity, and
rate of production), as well as high capital expenditures per
gallon, which results in conversion technologies that are unable to
achieve reinvestment economics. Solid fuels combustion systems are
relatively commercial state-of-the-art technologies, but are still
significantly inefficient conversion processes for electricity and
thermal energy production. Current conversion technology cannot
economical maximize value from by- and co-products. Using and
blending waste resources into conversion system are still limited
by non-robust conversion technologies.

Third, optimizing distribution infrastructure across the
nation to allow movement of biomass and subsequent derivatives
across the entire supply chain--The lack of an updated distribution
infrastructure and other market incentives, especially for fuels,
directly impacts their use by consumers. Developing functional,
compatible, and competitive distribution systems for end use, while
expanding existing infrastructure (i.e., feedstocks, distribution,
end-use, and delivery) is critical to the success of the Bioeconomy
Vision.

Fourth, educating the consumer--Education of the positive
aspects of biomass, re-use of waste streams, and production of
biofuels and bioproducts.
------------------------------------------------------------------------

Proposed Objectives of the Bioeconomy Vision
By leveraging existing expertise across the various agencies, this
new vision could propel the United States to develop the leading
bioeconomy in the world. The objectives of the Vision can be
categorized into five distinct areas. A table has been provided to
discuss the main themes of the Bioeconomy Vision.

------------------------------------------------------------------------

------------------------------------------------------------------------
1 Use an integrated systems Holistic, integrated supply chains that
approach overcome barriers and reduce
financial, environmental, and market
risks. Objectives are:

Utilize financial data and
business models to reduce risks in
commercialization in order to
satisfy needs along the entire
supply chain.
Utilize models and data
across the Federal Government to
understand and quantify tradeoffs
and synergies to optimize the
economic, environmental, and social
benefits of the bioeconomy to
minimize adverse impacts.
------------------------------------------------------------------------
2 Provide the science and the Science provides solutions to barriers
technology and innovative technologies help drive
the bioeconomy. Objectives are:

Efficiently integrate and
validate engineering,
environmental, and economic data
that are associated with biomass
production, conversion to
bioeconomy products, and use.
Adapt current
infrastructure and design and
develop new machinery for
efficiency.
Integrate biophysical,
environmental, and social models in
systems development.
------------------------------------------------------------------------
3 Public and private Expansion of the bioeconomy requires
collaboration to overcome public and private collaboration
barriers and accelerate across the entire sector: Federal,
deployment state, and local government, Tribes,
business and industry, academia,
producers, landowners, workers, and
many others. Objectives are:

------------------------------------------------------------------------
4 Develop a workforce for the Millions of additional workers are
future bioeconomy needed in agricultural, aquatic, and
forestal production, biorefineries
R&D, transportation, manufacturing,
and various allied fields. Objectives
are:

Develop specific
educational programs for
professionals and technical
students at various levels of
higher education.
Provide career pathways
information and activities for high
school students.
------------------------------------------------------------------------
5 Understand and inform policy Policies seek to improve economic,
environmental, and social outcomes,
and drive direction and funding of new
scientific endeavors and program
implementation to accelerate the
bioeconomy. Objectives are:

Inform local and state
governments, industry, and other
stakeholders about policies and
their impact.
Integrate economic and
environmental policy factors to
reduce financial risks to
investors, producers, and
manufacturers, and to protect
environmental quality across the
supply chain.
------------------------------------------------------------------------

Federal Agencies' Current Work in the Bioeconomy
Executive Agencies
As stated previously in this report, the bioeconomy involves many
different agencies and mission areas within the Federal Government. The
national bioeconomy is wide-reaching and multi-faceted, and relates to
a range of different offices within many executive agencies, even
beyond those represented on the Biomass R&D Board. Appendix I covers
all Board agencies, and details specific offices and programs involved
in the current bioeconomy in support of their specific mission areas
(note that this is not an exhaustive listing for the entire Federal
Government). The following chart presents a snapshot of the synergies
and roles for each agency across the vast bioeconomy supply chain. For
details on how each agency is currently supporting specific aspects of
the bioeconomy, please see Appendix I.

Interagency Collaboration
As evident throughout this report, there is already significant
collaboration between agencies to take advantage of the wide-ranging
expertise across the government. Interagency activities take many forms
and seek to confront varied challenges facing the bioeconomy today.
These collaborative projects offer the chance to fully leverage Federal
Government expertise, ensuring that activities produce valuable
projects and achievements for the public.
Further, interagency projects offer some of the best opportunities
for stakeholder organizations to work directly with multiple agencies
on specific aspects of the bioeconomy. For more examples of interagency
projects currently underway, please see Appendix II.
Looking Ahead
Bioeconomy Federal Strategy Workshop
In May 2015, the Board convened a workshop of Federal agencies to
discuss options for expanding and developing the bioeconomy. A
significant component of this activity involved sharing information on
existing agency programs and activities that intersect with or are
directly focused on the bioeconomy. The Federal Government has numerous
efforts underway to help expand the bioeconomy, and brief summaries of
those activities are included in this report.
The workshop included many productive discussions given the
extensive knowledge, experience, opinions, and insights across the
agencies. Participants addressed issues concerning specific aspects of
the supply chain, while also considering the sustainable expansion of
the bioeconomy from a holistic perspective. Exchanges among the
participants were enlightening, concluding that the effort would be
challenging, but not insurmountable. Some key discussion points
involved the following:

Addressing technical and sociological challenges to using
genetically modified organisms (GMOs) in developing sustainable
feedstocks.

Identifying the key role algae plays for the future of
bioproducts and biochemicals. Sharing a common understanding of
sustainability and achievement metrics, and discussing paths
for practical implementation.

Realizing that biomass production and use must be within the
context of sustainability, resource availability, social
concerns, and public perceptions.

Being aware that, if done correctly, an expanded bioeconomy
could significantly impact America's landscape with
opportunities to improve ecological functions and ensure the
mitigation of negative impacts of increased land use.

Expansion of the bioeconomy will happen in the marketplace,
and the market must simultaneously meet society's need for
food, fiber, and forage, as well as energy and products.

Overall, the workshop helped Federal agencies identify processes
for working together and with their many stakeholders. The following
specific efforts were established at the meeting and are being
addressed:

Ensure consistent Federal messaging.

Increase Federal agency coordination.

Recognize opportunities for improvements across the supply
chain.

Integrate diverse national goals and objectives linked to
the sustainable bioeconomy.

Coordinate stakeholder interests and actions in both the
public and private sectors.

Notably, the workshop became the bridge to building a national
effort within the Federal Government to work together to expand the
bioeconomy. Although many barriers and opportunities were identified
and discussed, issues were not resolved at the meeting. The workshop
was not intended to establish processes or undertake detailed planning.
The workshop was the cornerstone for identifying roles and issues and
building a vision that would conceivably bring together many Federal
agencies, stakeholders, and the American public.
Building a National Coalition
The work has already started on building a national Federal
Government coalition with the goal to expand the bioeconomy. Agencies
have distinctive missions that relate to the bioeconomy that are
currently being accomplished through various approaches and programs,
authorized by various statutes. This coordinated effort will leverage
these approaches and programs, as appropriate.

As described previously, many of these agencies have been
coordinating similar efforts for over a decade through the Biomass R&D
Board. The Board has the lead role in building the coalition while
working through the agency's executive leaders, managers, and staff.
However, this activity will not only involve agencies, but will be
conducted in cooperation with many stakeholders and with the public.
This report is the first step in building the coalition--the next step
is engaging the public, beginning with agency stakeholders. From this
collaborative engagement, an implementation plan will be developed to
help direct the Vision.
The Federal Government's goal to expand biomass resources for
economic, environmental, social, and energy security benefits will be
facilitated by collaborative educational and engagement efforts. The
global transition to full utilization of biopower, bioenergy, and
biobased products is being driven by a wide array of groups. Reaching
out to diverse stakeholders (non-governmental organizations;
international governments and organizations; environmental and industry
groups; manufacturers; and other members of the supply chain) to obtain
multiple perspectives, share key data, identify opportunities, and
understand motivations, business cases, and realities will help achieve
the bioeconomy goal and its expected benefits.

Growth of the bioeconomy will require more than a ``public
awareness campaign''. A Board committee is currently conducting efforts
to identify and understand more about the various bioeconomy
stakeholders. This effort will help determine the Board's future
education and communications activities to address current barriers to
growing the bioeconomy. These activities will include meaningful
communication across the U.S. Government (developing and deploying
consistent Federal messaging); stakeholder and public workshops
(listening sessions to gather information about the Bioeconomy Vision
and the role of education); and the potential establishment of a formal
coalition to provide leadership and oversight of the Vision's strategy
and practice. The information gathered from this direct engagement with
the public will result in an overall plan for the Vision, to be
detailed in an Integrated Bioeconomy Implementation Plan, to be
released in 2016.
Appendix I: Federal Agency Activities
This Appendix includes details on the missions, activities, and
linkages to the U.S. Bioeconomy within the Executive Agencies
participating on the Biomass R&D Board. Each agency brings their own
mission and expertise to the issues surrounding creating a bioenergy
industry. Numerous sub-agencies, divisions, and program offices are
included below, however due to the broad nature of the bioeconomy,
there are more offices that play a part in this sector that are not
listed. Additionally, information included in this appendix is only a
snapshot of the work being done by each office. For additional details
on these offices and agencies, please visit the website listed.

Department of Energy
www.energy.gov
Bioenergy Technologies Office
The Bioenergy Technologies Office seeks to develop and transform
our renewable biomass resources into commercially viable, high-
performance biofuels, bioproducts, and biopower through targeted
research, development, and demonstration supported through public and
private partnerships.
This Office conducts R&D, demonstration, and market transformation
activities through an integrated supply chain approach addressing
supply, conversion, distribution, and end-use. Cross-cutting areas--
sustainability, strategic analysis, and strategic communications--
develop and disseminate a body of knowledge and tools related to the
economic, environmental, and social dimensions of advanced bioenergy.
The process is managed through its Multi-Year Program Plan (MYPP).\1\
Program of work includes feedstock supply assessment, logistics systems
improvements, lower cost conversion technologies, and market
development. Signature elements are the periodic national assessment,
advanced and depot logistics, validated conversion pathways, feedstock/
conversion interfaces and integration, market development,
technoeconomic analyses, and sustainability analysis and research. Work
is done through national laboratories, competitive R&D grants,
consortia, and partnerships. The Office collaborates with other DOE
Offices and departments.
---------------------------------------------------------------------------
\1\http://www.energy.gov/eere/bioenergy/downloads/bioenergy-
technologies-office-multi-year-program-plan-july-2014-update.
---------------------------------------------------------------------------
The Bioenergy Technologies Office is dedicated fully developing the
bioeconomy, and establishes partnerships with key public and private
stakeholders to develop and demonstrate technologies for producing
cost-competitive advanced biofuels from non-food biomass resources,
including cellulosic biomass, algae, and wet waste (e.g., biosolids).
The Office pursues innovations for and testing of crucial bioenergy
technologies including pilot- and demo-scale integrated biorefineries.
Vehicle Technologies Office
The Vehicle Technologies Office supports research and development
that will lead to new technologies that reduce our nation's dependence
on imported oil, further decrease vehicle emissions, and serve as a
bridge from today's conventional powertrains and fuels to tomorrow's
hydrogen-powered hybrid fuel cell vehicles. The Vehicle Technologies
Office also supports implementation programs that help to transition
alternative fuels and vehicles into the marketplace, as well as
collegiate educational activities to help encourage engineering and
science students to pursue careers in the transportation sector.
The Office supports research to improve how vehicles will use
alternative fuels in the future. Work includes determining the impact
of biofuels' properties on engines' efficiency, performance, and
emissions. Activities include examining ways to increase alternative
fuel vehicles' fuel economy, investigating the potential effects of
upcoming blends, and improving the quality of current and future
biofuel blends, especially biodiesel and E85. VTO's Clean Cities
Program develops public/private partnerships to promote alternative
fuels, vehicles, and infrastructure.
Fuel Cell Technologies Office
The Fuel Cell Technologies Office conducts comprehensive efforts to
overcome the technological, economic, and institutional barriers to the
widespread commercialization of hydrogen and fuel cells. The office's
efforts will help secure U.S. leadership in clean energy technologies
and advance U.S. economic competitiveness and scientific innovation.
This is the lead Federal agency for applied research and
development (R&D) of cutting edge hydrogen and fuel cell technologies.
The overall challenge to hydrogen production is cost reduction which
includes the use of biomass. DOE is working closely with its national
laboratories, universities, and industry partners to overcome critical
technical barriers to fuel cell commercialization.
Advanced Manufacturing Office
The Advanced Manufacturing Office partners with industry, small
business, universities, and other stakeholders to identify and invest
in emerging technologies with the potential to create high-quality
domestic manufacturing jobs and enhance the global competitiveness of
the United States.
Efforts leverage state, utility, and local resources to help
manufacturers save energy, reduce climate and environmental impacts,
enhance workforce development, and improve national energy security and
competitiveness throughout the supply chain. The Office invests in
emerging technologies that include the use of biomass for fuels,
chemicals, materials, heat, and electricity. A specific example is
developing polyacrylonitrile for the manufacture of carbon fiber.
Federal Energy Management Program Office
The Federal Energy Management Program (FEMP) works with key
individuals to accomplish energy change within organizations. It brings
expertise from all levels of project and policy implementation to
enable Federal agencies to meet energy-related goals and to provide
energy leadership.
The Program provides technical assistance to reduce the energy
intensity of Federal facilities. FEMP also helps Federal agencies with
funding mechanisms for their projects, such as energy-saving
performance contracts (ESPCs). Such projects could include the use of
biomass. FEMP works with the Federal fleet to increase the use of
biopower, renewable and alternative fuels, and flexible-fuel vehicles.
Office of Fossil Energy
The Office of Fossil Energy (FE) plays a key role in helping the
United States meet its continually growing need for secure, reasonably
priced and environmentally sound fossil energy supplies. Put simply,
FE's primary mission is to ensure the nation can continue to rely on
traditional resources for clean, secure and affordable energy while
enhancing environmental protection.
The Office's primary mission is to ensure the nation can continue
to rely on traditional resources for clean, secure and affordable
energy while enhancing environmental protection. The Office includes
the National Energy Technology Laboratory. There are opportunities to
integrate biopower applications into utility-scale electric generation
and to use biomass and natural gas synergistically to maximize outputs.
Advanced Research Projects Agency--Energy
The Advanced Research Projects Agency--Energy (ARPA-E) advances
high-potential, high-impact energy technologies that are too early for
private-sector investment. ARPA-E awardees are unique because they are
developing entirely new ways to generate, store, and use energy.
The focus of ARPA-E is on transformational energy projects that can
be meaningfully advanced with a small investment over a defined period
of time. ARPA-E empowers America's energy researchers with funding,
technical assistance, and market readiness. An example is Plants
Engineered to Replace Oil, PETRO, with its aim to develop non-food
crops that directly produce transportation fuels. The PETRO activity
conducts applied research and development to generate novel crop
feedstocks that are directly a production of fuel molecules in planta,
and improved photosynthetic activity. The production of new crop
feedstocks is critical for advanced biofuels, bioproducts, and
biochemicals, and the PETRO project will help develop the technology to
expand the national bioeconomy. Another activity is the Transportation
Energy Resources from Renewable Agriculture (TERRA) program, which
conducts applied research and development of improved high throughput
breeding tools (phenotyping/genotyping) to increase yields of energy
crops. The expedited development of improved varieties of bioenergy
feedstocks is what links TERRA to the Bioeconomy.
Office of Science: Office of Basic Energy Sciences
The Office of Basic Energy Sciences (BES) supports fundamental
research to understand, predict, and ultimately control matter and
energy at the electronic, atomic, and molecular levels in order to
provide the foundations for new energy technologies and to support DOE
missions in energy, environment, and national security. BES also plans,
constructs, and operates major scientific user facilities to serve
researchers from universities, national laboratories, and private
institutions.
Within BES, the Physical Biosciences and Photosynthetic Systems
programs support basic research to understand energy capture,
conversion, and storage in plants and microbes.\2\ The Physical
Biosciences program combines experimental and computational tools from
the physical sciences with biochemistry and molecular biology to
understand the conversion and storage of energy in living systems.
Supported research includes characterization of the biochemical and
biophysical principles determining the architecture and biosynthesis of
biopolymers and the plant cell wall and studies of redox and active
site protein chemistry that can provide a basis for development of
highly selective and efficient bio-inspired catalysts. The
Photosynthetic Systems program brings together biology, biochemistry,
chemistry, and biophysics to uncover the fundamental science of
biological capture of sunlight and its conversion to and storage as
chemical energy. This research provides a scientific knowledge base
that can inspire artificial photosynthesis and enable new strategies
for more efficient generation of biomass as a renewal energy source.
The Catalysis Science program develops fundamental understanding of the
scientific principles enabling rational catalyst design and chemical
transformation control.\3\ Supported research includes basic studies of
catalysis relevant to the conversion and use of renewable energy
resources and the creation of advanced chemicals. The DOE Energy
Frontier Research Centers Program\4\ aims to accelerate transformative
discovery to understand and manipulate matter on the atomic and
molecular scales and address key scientific challenges for energy
technologies. Located across the United States, the 32 multi-
investigator, multidisciplinary Energy Frontier Research Centers bring
together leading scientists to tackle the toughest scientific
challenges preventing advances in energy technologies. Their efforts
are laying the scientific groundwork for fundamental advances in solar
energy, biofuels, transportation, energy efficiency, and carbon capture
and sequestration.
---------------------------------------------------------------------------
\2\http://science.energy.gov/bes/csgb/research-areas/
photochemistry-and-biochemistry/.
\3\http://science.energy.gov/bes/csgb/research-areas/catalysis-
science/.
\4\http://science.energy.gov/bes/efrc/.
---------------------------------------------------------------------------
BES research programs provide the fundamental knowledge base of
chemical and biochemical processes and properties that underpins
development of new methods and technologies for efficient and
sustainable production of biofuels and bioproducts.
Office of Science: Office of Biological and Environmental Research
The Office of Biological and Environmental Research (BER) supports
fundamental research aimed at expanding foundational knowledge of
biological systems and enabling the development of secure and
sustainable bioenergy solutions.
This Office supports basic research programs relevant to DOE
missions in energy and the environment. To enable the development of
sustainable bioenergy and bioproducts, BER focuses on genome driven
systems biology approaches that advance understanding of plants,
microbes, integrated communities, and their interactions with
environmental variables. This foundational understanding is used to
further the development of more sophisticated biosystems design
capabilities applicable to improving biomass feedstock plants, microbes
applicable to biomass deconstruction and conversion to biofuels/
bioproducts, and photosynthetic microorganisms. BER research also
examines the intersection between plants, their associated microbiomes,
and their ecosystems in order to understand responses to changing
environmental variables and identify factors critical to sustainable
biomass production. BER science programs are conducted via research
funding at DOE National Laboratories, competitive grants to academic
institutions, cooperative agreements, and support of national
scientific user facilities.
BER research programs advance fundamental understanding of
biosystems of plants, microbes, and biological communities and enable
the development of more sophisticated biodesign approaches for
sustainable production of biofuels and bioproducts.
Loan Programs Office
The Loan Programs Office (LPO) accelerates the domestic commercial
deployment of innovative and advanced clean energy technologies at a
scale sufficient to contribute meaningfully to the achievement of our
national clean energy objectives--including job creation; reducing
dependency on foreign oil; improving our environmental legacy; and
enhancing American competitiveness in the global economy of the 21st
century.
LPO enables DOE to work with private companies and lenders to
mitigate the financing risks associated with clean energy projects to
encourage the development of clean energy on a broader and much-needed
scale. The Loan Programs consist of three separate programs managed by
two offices, the Loan Guarantee Program Office (LGP) and the Advanced
Technology Vehicles Manufacturing Loan Program Office. LPO originates,
guarantees, and monitors loans to support clean energy projects,
including large scale biorefineries, through these programs.

Department of Agriculture
www.usda.gov
Agricultural Marketing Service
The Agricultural Marketing Service (AMS) administers programs that
create domestic and international marketing opportunities for U.S.
producers of food, fiber, and specialty crops.
The AMS Transportation Services Division (TSD) serves as the
definitive source for economic analysis of agricultural transportation
from farm to market. TSD experts support domestic and international
agribusinesses by providing market reports, economic analysis,
transportation disruption reports, technical assistance, and outreach
to various industry stakeholders. Tracking developments in truck, rail,
barge, and ocean transportation, TSD provides information and analysis
on the four major modes of moving food from farm to table, port to
market. On every first Wednesday of the month, and with data from
public documents provided by the railroads, TSD updates rail tariff
rate information for Ethanol\5\ and Dried Distillers Grains with
Solubles (DDGS).\6\ Information provided through the updates is only
for reference. Individual railroads should be consulted prior to
conducting any business transactions.
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\5\http://www.ams.usda.gov/services/transportation-analysis/
datasets/ethanol.
\6\http://www.ams.usda.gov/services/transportation-analysis/
datasets/ddgs.
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AMS biofuels market reports and market intelligence reports apprise
stakeholder of prices and volumes of select feedstocks, fuels, and
transport metrics.
Agricultural Research Service
The Agricultural Research Service (ARS) is the chief scientific in-
house research agency of the USDA which conducts research to develop
and transfer solutions to agricultural problems of high national
priority and provide information access and dissemination to:

a. ensure high-quality, safe food, and other agricultural products,

b. assess the nutritional needs of Americans,

c. sustain a competitive agricultural economy,

d. enhance the natural resource base and the environment, and

e. provide economic opportunities for rural citizens, communities,
and society as a whole.

ARS priorities\7\ are in two parts. Part One includes the U.S.
regional based feedstocks production systems with a focus on
sustainability and economic impact. ARS conducts advanced biofuels
research at the USDA Regional Biomass Research Centers7a
through biophysical and economic models validated for regional
conditions to incorporate energy production into existing agricultural
systems. Genetic improvement work is primarily directed at perennial
grasses including switchgrass and Napier grass, non-food biomass
sorghum including sweet sorghum, energy cane, and lipid seed crops
including industrial rapeseed and field pennycress. ARS also is
developing technology to sustainably harvest crop residues including
corn stover, and utilize livestock manure, as well as develop
inventories for removing invasive tree species and restoring western
rangelands.
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\7\http://www.ars.usda.gov/SP2UserFiles/Program/213/
BioenergyResearchStrategy2010.pdf.
\7a\http://www.ars.usda.gov/research/programs/
programs.htm?np_code=213&docid=24694.
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Part Two includes developing conversion technologies at its four
ARS utilization centers (Albany, CA; New Orleans, LA; Peoria, IL;
Wyndmoor, PA) to enable sustainable commercial production of biofuels
by the agricultural sector in ways that enhance our natural resources
without disrupting existing food, feed, and fiber markets. Research
will optimize both the production of plant feedstocks and the
biorefining of agricultural materials to bioenergy and value-added
(biobased) coproducts. This research will strengthen rural economies,
provide increased supplies of renewable transportation fuel, enhance
energy security, and improve the U.S. balance of trade. ARS is
committed to diversifying rural economies and employment through new
biobased technologies and commercial coproducts.
Animal and Plant Health Inspection Service
The Animal and Plant Health Inspection Service (APHIS) protects and
promotes U.S. agricultural health, regulates genetically engineered
organisms, administers the Animal Welfare Act and carries out wildlife
damage management activities.
Biotechnology Regulatory Services (BRS) implements the APHIS
regulations for certain genetically engineered (GE) organisms that may
pose a risk to plant health. APHIS coordinates these responsibilities
along with the other designated Federal agencies as part of the Federal
Coordinated Framework for the Regulation of Biotechnology. APHIS' Plant
Protection and Quarantine program vigilantly protects agriculture and
the environment against pest and disease threats to ensure a diverse
natural ecosystem and an abundant and healthy food supply for all
Americans. An invasive pest is a non-native species whose introduction
into the country can cause damage to the economy, natural resources, or
human health.
Climate Change Program Office
Climate-smart agriculture (CSA) promotes ``production systems that
sustainably increase productivity [and] resilience (adaptation),
reduc[ing]/remov[ing] greenhouse gases (mitigation), and enhancing
achievement of national food security and development goals'' (FAO
2015). The U.S. is a member of the Global Alliance for Climate-smart
Agriculture (GACSA), a partnership of countries and organizations
committed to sustainability, resilience, and greenhouse gas mitigation
in agricultural systems in a changing climate. Federal and private
research produces a diversity of practices, technologies, agricultural
varieties and tools to assist farmers and ranchers in mitigating and
adapting to climate change. In addition to critical research and
research support, USDA provides data standardization, knowledge
sharing, and collaborative platforms; monitoring and decision support
tools; outreach and extension activities; and a far-reaching
organizational infrastructure that allows the most effective
transmittal of up-to-date information between scientists and producers,
and among producers themselves, leading to favorable and regionally-
specific outcomes.
The USDA Climate Change Program Office also focuses on assessing
the lifecycle GHG emissions of Corn-Based Ethanol. EPA's 2010
Regulatory Impact Analysis (RIA) of the revised Renewable Fuel Standard
(RFS2) included a lifecycle analysis (LCA) of the GHG emissions
associated with corn-based ethanol. The LCA concluded that substituting
(on an energy equivalent basis) corn-based ethanol for gasoline in
transportation fuels would result in a reduction in CO2
emissions of 20-21 percent by 2022. EPA's LCA was based on projected
emissions pathways through 2022 for 11 distinct GHG source categories
associated with corn-ethanol. Since 2010, new scientific studies, data,
and industry trends have emerged that show the emission paths of
several key categories have not developed as projected, and, the actual
paths strongly suggest the GHG profile of corn ethanol is significantly
better than the RIA LCA concluded. For example, the largest source
category in the RIA LCA is projected emissions from indirect land use
change--due to future clearing of tropical forest (mainly in Brazil) to
expand commodity production. Actual data now show that in the period
U.S. corn ethanol increased from 3.0 billion gallons to just under 14
billion gallons, deforestation in Brazil's Amazon dropped from
10,200\2\ mile to just under 2,400\2\ miles. With renewable fuels and
GHG mitigation becoming higher policy priorities, USDA's Climate Change
Program, Office has contracted with ICF International to do a
retrospective analysis of the RIA LCA including a review of new
information that has become available since 2010 related to each
emissions category, quantification of new emissions estimates for each
source category, development of an updated LCA reflecting the current
GHG profile of corn ethanol.
Departmental Management
Departmental Management (DM) provides management leadership to
ensure that USDA administrative programs, policies, advice and counsel
meet the needs of USDA program organizations, consistent with laws and
mandates; and provide safe and efficient facilities and services to
customers.
DM's Environmental Management Division (in the Office of
Procurement and Property Management) develops policy and implements
programs and projects for USDA sustainable practices, environmental
response and restoration, and biobased product market transformation.
USDA's BioPreferred program increases the development, purchase,
and use of biobased products through two initiatives: mandatory
biobased product purchasing requirements for Federal Government
agencies (regulatory initiative) and voluntary bioproduct certification
and labeling. Both parts of the program work in concert as end-use
market tools in USDA's supply chain approach to hastening the global
transition to the bioeconomy. An economic impact analysis recently
released by the program finds that the biobased products industry
contributed a total of $369 billion value to the U.S. economy. Biobased
products industries directly employ approximately 1.5 million people,
while an additional 2.5 million jobs are supported in other sectors.
Environmentally, the increased use of biobased products currently
displaces about 300 million gallons of petroleum per year--equivalent
to taking 200,000 cars off the road. (All numbers as of 2013.) Numerous
efforts are continually underway to increase biobased product
procurement Federal Government-wide, track product use, and evaluate
how these products are helping Federal agencies meet their
sustainability goals. The more than 2,200 products that have received
certification to display the USDA Certified Biobased Product label are
creating and increasing consumer and commercial awareness about a
material's biobased content as one measure of its environmental
footprint.
The two elements of the BioPreferred program work in concert as
end-use market tools in USDA's supply chain approach to hastening the
global transition to the bioeconomy. Further, DM operations work to
make USDA facilities greener and reduce the greenhouse gas footprint of
departmental assets.
Economic Research Service
The Economic Research Service (ERS) informs and enhances public and
private decision making on economic and policy issues related to
agriculture, food, the environment, and rural development.
The ERS strategic plan\8\ specifically includes understanding the
effects of alternative fuels on agricultural markets, the interactions
of commodity, livestock, and food markets with biofuels, bioenergy
impacts on rural communities, and the production impacts on natural
resources and the environment. Research is focused on these economic
analyses and on examining the influence of bioenergy and bioenergy
policy on domestic and global agricultural markets, natural resources,
the environment, rural communities, and implications for food prices.
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\8\www.ers.usda.gov/about-ers/strategic-plan.aspx.
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To the extent that policies or market developments associated with
the bioeconomy affect commodity markets, rural communities, the
environment, food prices or other issues within the domain of the ERS
mission, ERS disseminates data, information, and special studies that
address these interactions. Specifically, as a Principal Federal
Statistical Agency, ERS has a long-standing and ongoing role in the
collection, analysis, and distribution of market data and forecasts for
the commodities that most directly influence, and are influenced by,
the bioeconomy. ERS maintains a comprehensive set of economic data on
ethanol and biodiesel production, consumption, trade, as well as for
feedstock and co-product markets, in addition to other metrics.
Economic modeling at ERS evaluates the economic and competitive
potential for forest residues and dedicated energy crops (e.g.,
switchgrass) as feedstocks for electricity generation, under
alternative scenarios such as a renewable portfolio standard or
policies to reduce carbon dioxide emissions. Longer-term scenarios
consider the role of bio-electricity combined with carbon dioxide
capture and storage as a negative-emissions technology.
Farm Service Agency
The Farm Service Agency (FSA) equitably serves all farmers,
ranchers, and agricultural partners through the delivery of effective,
efficient agricultural programs for all Americans.
This Agency manages the Biomass Crop Assistance Program (BCAP)\9\
that provides financial assistance to owners and operators of
agricultural and private forestland who wish to establish, produce, and
deliver biomass feedstocks. As part of the process, the agency does
conservation and forest stewardship plans, cost analysis, and has a
Programmatic Environmental Impact Statement (PEIS). FSA also has
Interagency Agreements with U.S. Forest Service and Bureau of Land
Management to support economically viable retrieval of forest residues
from the National Forest System (NFS) for delivery to bioenergy at
facilities, at a long haul distance from the NFS. In 2015, USDA
announced the Biofuels Infrastructure Partnership (BIP), with USDA
sourced funding of $100 million in grants, and that to apply states and
private partners match the Federal funding by a 1:1 ratio. USDA is
partnering with 21 states through the BIP to nearly double the number
of fueling pumps nationwide that supply renewable fuels to American
motorists.
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\9\http://www.fsa.usda.gov/FSA/
webapp?area=home&subject=ener&topic=landing.
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Forest Service
The Forest Service (FS) sustains the health, diversity, and
productivity of the nation's forests and grasslands to meet the needs
of present and future generations.
Woody biomass utilization is an important component of the Forest
Service Strategic Energy Framework,\10\ which sets direction and
proactive goals for the FS to contribute significantly and sustainably
toward resolving U.S. energy resource challenges, by fostering
sustainable management and use of forest and grassland resources. The
Forest Service is part of the USDA Wood-to-Energy11-13
initiative, an interagency effort to expand renewable wood energy
development and use. The Forest Service's wood utilization program
develops markets to reduce the cost of hazardous fuels treatments,
forest management, and restoration activities. The Forest Service
provides woody biomass feedstocks from hazardous fuels reduction
treatments and restoration activities. FS researchers\14\ work to
develop sustainable forest biomass management and production systems;
conversion technologies for biofuels, biopower, and bioproducts; and
information and tools for decision making and policy analysis.
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\10\http://www.fs.fed.us/specialuses/documents/
Signed_StrategicEnergy_Framework_01_14_
11.pdf.
\11\http://blogs.usda.gov/2010/10/25/wood-to-energy-efforts-
expanding-restoring-economies-and-ecosysems/#more-29613.
\12\http://heatingthemidwest.org/wp-content/uploads//David-Atkins-
HTM-20121.pdf.
\13\http://blogs.usda.gov/2013/09/13/funds-promote-development-of-
rural-wood-to-energy-projects/.
\14\http://www.fs.fed.us/research/pdf/
RD_Bioenergy_Strategy_March_2010.pdf
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The USDA Forest Service's emphasis on biomass, wood products, and
wood energy encourages market development for woody biomass and
provides high quality data to inform business, management, and policy
decisions. Forest Service activities reduce investor risk, provide for
sustainable feedstocks, and develop new products and efficient fuels.
These activities significantly contribute to U.S. energy security,
environmental quality, and economic opportunity and firmly supporting
the bioeconomy.
National Agricultural Statistics Service (NASS)
The National Agricultural Statistics Service (NASS) is responsible
for conducting monthly and annual surveys and preparing official USDA
data and estimates of production, supply, prices, and other information
necessary to maintain orderly agricultural operations. NASS also
conducts the Census of Agriculture which is currently conducted every 5
years.
Credible data is essential for a broad spectrum of uses ranging
from simple visual inspection of data or data series to developing
analytical frameworks to more in-depth analyses of policies, supply and
demand drivers, markets dynamics, and price formation. NASS is the
source of much of the data released by USDA and used by industry and
analysts. NASS collects and publishes data on feedstocks relevant to
bioenergy production and on grain crushings and coproducts.
In 2014 NASS started publishing on a monthly basis a particularly
valuable report, Grain Crushings and Co-Products Production which is
part of the Current Agricultural Industrial Reports (CAIR) program.
Data are collected from all known mills that produce ethanol. In
addition, an operational profile was completed for each facility to
determine the presence of dry and/or wet alcohol mill and the nameplate
production capacity. All operations which will produce alcohol will be
selected for the monthly Dry Mill Producers of Ethanol Survey and/or
Wet Mill Producers of Ethanol Survey which ask for quantities of grain
used as feedstock and co-products produced.
NASS published the first Fats and Oils: Oilseed Crushings,
Production, Consumption and Stocks in 2015. The data is a combination
of all known crushing, rendering and refining facilities. Prior to the
beginning of data collection, operations were contacted to verify that
they met the scope of the project. The Fats and Oils: Oilseed
Crushings, Production, Consumption and Stocks also publishes data on
animal fats.
National Institute of Food and Agriculture
The National Institute of Food and Agriculture (NIFA) provides
leadership and funding for programs that advance agriculture-related
sciences. We invest in and support initiatives that ensure the long-
term viability of agriculture.
NIFA seeks to facilitate the development of regional biomass
systems for the sustainable production of biofuels and biobased
products. Coordinated Agricultural Projects (CAPs)\15\ that consist of
partnerships between government, industry, non-government
organizations, and universities, including 1890 land-grant
universities, Tribal Nation colleges, and Hispanic serving institutions
address the integration of the supply chain. The Biomass Research and
Development Initiative (BRDI) is a joint effort between the U.S.
Department of Agriculture (USDA) and the U.S. Department of Energy
(DOE). Priorities are jointly set by USDA and DOE each year. USDA-DOE
Plant Feedstock Genomics for Bioenergy\16\--This competitive grant
program is committed to fundamental research in biomass genomics,
providing the scientific foundation to facilitate use of
lignocellulosic materials for bioenergy and biofuels.
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\15\http://www.nifa.usda.gov/newsroom/news/2011news/
09281_biofuel_production.html.
\16\http://genomicscience.energy.gov/research/DOEUSDA/awards.shtml.
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NIFA programs support the entire Bioeconomy supply chain at the
regional scale. This begins with research, development and deployment
for feedstock development and management; logistics including
harvesting, storage, and transportation; and conversion processes for
biofuels and biomaterials. Supporting this research is a full
examination of environmental, economical, and social sustainability of
these bioeconomy systems. The mission of each NIFA program connected to
the bioeconomy is to reduce risk for stakeholders. NIFA also supports
programs that build the future bioeconomy workforce as well as
outreach/extension programs that translate research for stakeholder
awareness.
Natural Resources Conservation Service
Natural Resources Conservation Service (NRCS) provides America's
farmers and ranchers with financial and technical assistance to
voluntarily put conservation on the ground, not only helping the
environmental but agricultural operations, too.
NRCS provides technical assistance to producers to assess the
feasibility of growing and harvesting biomass residues and its impact
on environmental sustainability in individual fields and farms. In
addition, NRCS Plant Materials Centers evaluate potential feedstocks in
cooperation with USDA-ARS and Universities, collect plant data to
support conservation planning for biomass crops, provide demonstrations
and training on the production of energy crops, and support best
management practices for the production of biomass crops.
Office of Energy Policy and New Uses
Office of Energy Policy and New Uses (OEPNU) is part of the Office
of the Chief Economist (OCE) and advises the Secretary of Agriculture
on the economic implications of policies and programs affecting the
U.S. food and fiber system and rural areas. OCE supports USDA policy
decision making by analyzing the impact of proposals and coordinating a
response among several USDA agencies.
The Office assists the Secretary of Agriculture in developing and
coordinating Departmental energy policy, programs, and strategies.
Research is currently underway on biodiesel fuels, ethanol fuels, and
other sources of biomass energy. Measurement of atmospheric emissions
associated with renewable energy also is under study. OEPNU's scope of
work also includes renewable electricity and examines the integration
of energy with agriculture, the environment, and rural communities.
Rural Development
Rural Development (RD) commits to helping improve the economy and
quality of life in rural America. RD programs help rural Americans in
many ways.
Rural Development offers technical and financial assistance to help
agricultural producers, cooperatives, and other businesses improve the
effectiveness of their operations, produce energy as a new cash crop,
and process raw agricultural and forestry raw materials into value-
added, biobased products. RD programs have funds available to complete
energy audits, complete energy efficiency improvements, install
renewable energy systems, construct biorefineries, support production
of advanced biofuels and much more. USDA Rural Development is at the
forefront of renewable energy financing, with options including grants,
guaranteed loans and payments. RD programs, authorized through the
Agriculture Act of 2014, fall into four main programs under the Energy
Title: the Biorefinery, Renewable Chemical, and Biobased Product
Manufacturing Assistance Program provides loan guarantees for the
development, construction, and retrofitting of commercial-scale
biorefineries and biobased product manufacturing facilities; the
Repowering Assistance Program provides payments to eligible
biorefineries to replace fossil fuels used to produce heat and/or power
to operate the biorefineries with renewable biomass; the Advanced
Biofuel Payment Program provides payments to producers in order to
support and expand production of advanced biofuels refined from sources
other than corn kernel starch; and the Rural Energy for America Program
provides assistance to agricultural producers and rural small
businesses to complete a variety of projects, including renewable
energy systems, energy efficiency improvements, renewable energy
development assistance, and energy audits. The mission area has helped
contribute to effective public-private partnerships which connect
industry with larger Departmental goals contributing to cleaner air and
water as well as reducing waste contributing to a strong biobased
economy in the U.S.

Environmental Protection Agency
www.epa.gov
Office of Air and Radiation/Office of Transportation and Air Quality
The Office of Air and Radiation/Office of Transportation and Air
Quality (OTAQ) protects human health and the environment by reducing
air pollution and greenhouse gas emissions from mobile sources and the
fuels that power them; advancing clean fuels and technology; and
encouraging business practices and travel choices that minimize
emissions.

Renewable Fuel Standard Program

The Renewable Fuel Standard (RFS) Program began in 2006 pursuant to
the requirements in Clean Air Act (CAA) section 211(o) that were added
through the Energy Policy Act of 2005 (EPAct). The statutory
requirements for the RFS program were subsequently modified through the
Energy Independence and Security Act of 2007 (EISA), resulting in the
publication of major revisions in the regulatory requirements on March
26, 2010. The fundamental objective of the RFS provisions under the
Clean Air Act is clear: to increase the use of renewable fuels in the
U.S. transportation system every year through at least 2022. These
fuels must be derived from renewable feedstock, coming from qualifying
land and demonstrate they meet certain minimum reductions of Greenhouse
Gas Emissions over the fuels they are replacing. There are several
categories of fuels specified in the law: Cellulosic biofuels which are
required to have 60 percent or greater greenhouse gas (GHG) emissions
benefits on a lifecycle basis than the petroleum based fuels they
replace; advanced biofuels 50 percent or greater benefit; and
conventional biofuels (other than grandfathered facilities) 20 percent
or better benefit. Increased use of renewable fuels means less use of
fossil fuels, which results in lower GHG emissions over time as
advanced biofuel production and use becomes more commonplace. By aiming
to diversify the country's fuel supply, Congress also intended to
increase the nation's energy security. The law establishes annual
volume targets, and requires EPA to translate those volume targets (or
alternative volume requirements established by EPA) in accordance with
statutory provisions. Since the initial promulgation of the RFS program
regulations in 2007, domestic production and use of renewable fuel
(also referred to as biofuel) volumes in the U.S. has increased
substantially. Renewable fuels include corn starch ethanol, the
predominant biofuel use to date, but Congress envisioned the majority
of growth over time to come from advanced biofuels as the non-advanced
(conventional) volumes remain constant starting in 2015, while the
advanced volumes continue to grow. This program is currently the
predominant biobased program with direct and significant intersection
with the Bioeconomy Vision. The production of these renewable
transportation fuels uses feedstocks that do and will likely continue
to compete with feedstocks expected to play a role in the broader
bioeconomy. As a broader Bioeconomy market develops, there could be
market shifts and competition both in terms of feedstock availability,
utilization, and diversification. Market economics will drive the
Bioeconomy participants to select the most economical/profitable
market. Shifts in feedstock competition, cost, availability and
finished product values (Fuels, chemicals, energy, food, other) are
likely to have impacts, potentially positive and negative, to existing
and emerging markets, policies (mandated programs, subsidized programs,
etc.). Evaluating the bioeconomy vision in this context is vital, given
the additional complexity that is likely under such market
circumstances.
Office of Air and Radiation/Office of Atmospheric Policy (OAP)
OAP protects human health and the environment through
implementation of cross-cutting atmospheric programs.
Three programs have relevance to the Bioeconomy:

1. Framework for Assessing Biogenic CO2 Emissions from
Stationary Sources

In November 2014, EPA released the second draft of the
technical report, Framework for Assessing Biogenic CO2
Emissions from Stationary Sources. EPA engaged in a
targeted peer review on the revised Framework with EPA's
Science Advisory Board in 2015.
The intent of the Framework is to evaluate biogenic
CO2 emissions from stationary sources that use
biogenic feedstocks, given the unique ability of biogenic
material to sequester CO2 from the atmosphere
over relatively short time frames through the process of
photosynthesis. It is a methodological framework for
assessing the extent to which the production, processing,
and use of biogenic material at stationary sources results
in a net atmospheric contribution of biogenic
CO2 emissions. Biogenic CO2 emissions
are defined as CO2 emissions related to the
natural carbon cycle, as well as those resulting from the
production, harvest, combustion, digestion, fermentation,
decomposition, and processing of biologically based
materials. The Framework was developed as a policy-neutral
framework for assessing biogenic CO2 emissions
from stationary sources--it was not developed as technical
guidance in conjunction with any specific policy or
program. However, it was designed to be flexible so that
decisions on specific technical components can be made to
accommodate different policy applications.

2. AgSTAR

The mission of AgSTAR is to promote the use of biogas recovery
systems at livestock operations to reduce methane emissions
and achieve other environmental benefits through outreach,
education, tools and partnerships.
AgSTAR develops technical resources for farmers, state
government representatives and other stakeholders. AgSTAR
also participates in outreach events with livestock
producers, renewable energy industry leaders, and state and
local governments to raise awareness about the benefits of
livestock biogas recovery systems and the Federal resources
available for project planning and implementation. Finally,
AgSTAR hosts a partnership program, which brings together
representatives of universities, state and local
governments, not-for-profits, and other related
organizations to share information and encourage
implementation of biogas recovery systems.
EPA is expanding the scope of AgSTAR's national mapping tool
(www2.epa.gov/agstar/agstar-national-mapping-tool) to
include sources of wasted food and other organic wastes, as
well as facilities with capacity to receive these
materials, and will be completed by fall 2016. This update
will allow organic waste generators to find anaerobic
digestion facilities and allow biogas project developers to
understand the potential organics available in a given
area.
AgSTAR promotes widespread adoption of commercially available
technologies to capture and use methane in the agricultural
sector for power, fuel and other products.
AgSTAR has an interagency agreement with USDA to coordinate
efforts to promote biogas recovery in the agricultural
sector.
USDA, DOE and EPA jointly released the Biogas Opportunities
Roadmap in August 2014. The Roadmap builds on progress made
to date to identify voluntary actions that can be taken to
reduce methane emissions through the use of biogas systems
and outlines strategies to overcome barriers limiting
further expansion and development of a robust biogas
industry in the U.S. EPA participates in the Biogas
Opportunities Roadmap Working Group (along with DOE and
USDA) to pursue these solutions and enhance Federal
communication and collaboration regarding biogas
activities.

3. Landfill Methane Outreach Program (LMOP)

The EPA's Landfill Methane Outreach Program (LMOP) is a
voluntary assistance program that helps to reduce methane
emissions from landfills by encouraging the recovery and
beneficial use of landfill gas (LFG) as a renewable energy
resource. LFG contains methane, a potent greenhouse gas
that can be captured and used to fuel power plants,
manufacturing facilities, vehicles, homes and more. By
finding cost-effective ways to utilize landfill methane as
energy, LMOP helps to reduce GHG emissions and prevent air
pollution, encourage development of a renewable energy
resource, promote local economic development, and reduce
dependence on non-renewable fossil fuels.
LMOP forms partnerships with communities, landfill owners,
power marketers, states, project developers, Tribes, and
nonprofit organizations to overcome barriers to project
development by helping them assess project feasibility,
find financing, and market the benefits of project
development to the community. LMOP offers a wide array of
free technical, promotional, and informational tools as
well as services to promote the development of LFG energy
projects. Through its partnerships, LMOP creates a vital
network of landfills, states, communities, and companies
interested in LFG use.
LMOP encourages the development and beneficial use of LFG as a
renewable fuel resource.
Office of Air and Radiation/Office of Air Quality Planning and
Standards
The Office of Air and Radiation/Office of Air Quality Planning and
Standards (OAQPS) preserves and improves the quality of the air that we
breathe. To accomplish this, OAQPS compiles and reviews air pollution
data; develops regulations to limit and reduce air pollution; assists
states and local agencies with monitoring and controlling air
pollution; makes information about air pollution available to the
public; and reports to Congress the status of air pollution and the
progress made in reducing it.
On August 3, 2015, the EPA issued the first-ever national standards
to address carbon pollution from existing fossil-fuel fired power
plants, also known as the Clean Power Plan. Under the authority of
Clean Air Act (CAA) section 111(d), the EPA is establishing a
CO2 emission performance rate for each of two subcategories
of fossil fuel-fired Electric Generating Units (EGUs)--fossil fuel-
fired electric steam generating units and stationary combustion
turbines--that expresses the ``best system of emissions reduction . . .
adequately demonstrated'' (BSER) for CO2 from the power
sector. The EPA is also establishing state-specific rate-based and
mass-based goals that reflect the subcategory-specific CO2
emission performance rates and each state's mix of affected EGUs. The
guidelines also provide for the development, submittal and
implementation of state plans that implement the BSER--again, expressed
as CO2 emission performance rates--either directly by means
of source-specific emission standards or other requirements, or through
measures that achieve equivalent CO2 reductions from the
same group of EGUs.
The EPA also issues preconstruction (i.e., New Source Review (NSR)
permits) and construction (i.e., Title V) permits for sources that use
biomass as feedstocks as long as these sources emit or have the
potential to emit a non-greenhouse gas pollutant, in addition to
greenhouse gases, at or above the applicable permitting thresholds.
OAQPS routinely interacts with various USDA offices, and also,
through their Federal Advisory Committee, participates in the
Agricultural Air Quality Task Force that provides advice to EPA on air
quality issues impacting agriculture.
It is recognized that some biomass-derived fuels can play an
important role in CO2 emissions reduction strategies. It is
anticipated that some states may consider biomass-derived fuels used in
energy production as a way to mitigate CO2 emissions, and
will include them as part of their state plans to meet the emission
guidelines in the Clean Power Plan or as part of their NSR's GHG Best
Available Control Technology (BACT) review.
Office of Chemical Safety and Pollution Prevention
Office of Chemical Safety and Pollution Prevention (OCSPP) protects
you, your family, and the environment from potential risks from
pesticides and toxic chemicals. Through innovative partnerships and
collaboration, OCSPP also works to prevent pollution before it begins.
This reduces waste, saves energy and natural resources, and leaves our
homes, schools and workplaces cleaner and safer.

Toxic Substances Control Act

EPA's Office of Pollution Prevention and Toxics (OPPT) manages
programs under the Toxic Substances Control Act (TSCA). Under this law,
EPA evaluates new and existing chemicals and their risks, and finds
ways to prevent or reduce pollution before it gets into the
environment.
The premanufacturing oversight portion of TSCA (Section 5) provides
EPA with authority to review all new chemicals and new microorganisms
subject to TSCA. These include microorganisms and chemicals used for a
variety of applications such as biomass conversion for chemical
production, waste and pollution control, and mining and resource
extraction. Premanufacturing notification is required prior to
commercial production for new substances subject to TSCA
(Premanufacturing Notification [PMN] for chemicals, Microbial
Commercial Activity Notice [MCAN] for microorganisms) to enable human
health and environmental risk assessment [>]. Notification is also
required (TSCA Experimental Release Application [TERA]), for all new
microorganisms, for research activities that constitute environmental
testing.
EPA conditionally exempts certain organisms used in contained
systems from MCAN review and conditionally exempts all R&D done inside
structures from TERA review, provided specified safety procedures are
complied with. Only commercial research is subject to TSCA oversight,
but much academic research has commercial intent and is covered.
With these procedures, TSCA oversight provides public confidence
that activities in the commercial space that use newer technologies
like biotechnology is subject to detailed risk assessment.
Biotechnology throughout the Federal establishment is subject to
coordination under the Coordinated Framework for Regulation of
Biotechnology, led by the Office of Science and Technology Policy and
involving all the relevant regulatory agencies. That framework, last
updated in 1992, is undergoing a review started in July 2015.

EPA'[s] Pollution Prevention (P2) and Green Chemistry Programs

The mission of EPA's Pollution Prevention (P2) Program is to
prevent pollution at the source, promote the use of greener substances,
and conserve natural resources. The P2 Program's authority comes from
the 1990 Pollution Prevention Act, which established a national policy
to prevent or reduce pollution at the source, wherever feasible. The
Presidential Green Chemistry Challenge Awards Program\17\ established
in 1996, is one of several initiatives within the EPA's P2 Program. The
Presidential Green Chemistry Challenge Awards Program promotes the
environmental and economic benefits of developing and using green
chemistry. The EPA manages the program in partnership with the American
Chemical Society, and in the 20 years the program has been operating
has received over 1,500 nominations and made 104 awards. Many of the
recent awards are for using biobased feedstocks as substitutes for
petroleum feedstocks to efficiently produce a wide range of products,
from biofuels to biopolymers and specialty chemicals.
---------------------------------------------------------------------------
\17\www2.epa.gov/greenchemistry.
---------------------------------------------------------------------------
On July 13, 2015 EPA and the American Chemical Society held the
20th Annual Presidential Green Chemistry Awards. Among the six winners
was an academic researcher who developed a process for using plant-
based materials in the production of renewable chemicals and liquid
fuels via a waste-free and metal-free catalytic process. One of the
industry winners was a company that developed a blue-green algae to
produce ethanol and other fuels; the algae uses CO2 from air
or industrial emitters with sunlight and saltwater to create fuel while
dramatically reducing the carbon footprint, costs, and water usage,
with no reliance on food crops as feedstocks. Another industry winner
was a company that developed a safer, plant-based polyurethane for use
in a variety of applications, including flooring, furniture, and foam
insulation; perhaps most notably, the technology eliminates the use of
isocyanate feedstocks. A fourth winner developed a cost-effective two-
step process using supercritical water to deconstruct a wide range of
renewable plant material and produce separate streams of cellulosic
xylose and glucose for use as building block chemicals in a multitude
of downstream technologies; after sugar extraction, remaining lignin
solids can be burned to supply the bulk of the heat energy required for
the process or utilized in higher-value applications like adhesives or
thermoplastics.
Other recent awardees include: a vegetable oil (soy) dielectric
fluid for electrical transformers that is less flammable, higher
performing, and less environmentally risky if spilled, than
traditionally used mineral oil; a carbohydrate-based firefighting foam
certified for hydrocarbon fire suppression that does not include
persistent (and potentially toxic) fluorinated surfactants; and high-
throughput methods for using supercritical water (versus acids,
enzymes, solvents) to economically break down plant material into low-
value sugars that are used as building blocks for renewable chemicals
and fuels. These awardees represent just a few of the highly innovative
and high impact green chemistry technologies that have received
recognition through this competitive awards program.
The EPA also has focused its P2 grant programs to include
opportunities for grantees green chemistry innovations into the
marketplace, with a focus on improving the environmental and economic
performance of small and medium-sized companies. In FY 2015, the EPA
issued more than 70 grants.
Many of the recent Presidential Green Chemistry Challenge Awards
have been for technology innovations that focus on either transforming
plant-based materials economically into feedstocks for manufacturing
chemicals/feedstocks, or for transforming such feedstocks into valuable
biobased products like fuels and/or polymers. These innovations in
materials-transformation are key enabling technologies for the
Bioeconomy.
Many companies that have received the Presidential Green Chemistry
Challenge Award have also received grants or loans from other Federal
programs to promote renewable, biobased economic development. EPA is
increasingly looking to work with other Federal agencies (e.g., USDA,
DOE, NSF) on identifying supply chain opportunities (or barriers)
associated with adoption of green chemistry innovations into the
marketplace.
Office of Land and Emergency Management
The Office of Land and Emergency Management (OLEM) provides policy,
guidance and direction for the Agency's emergency response and waste
programs. OLEM develops guidelines for the land disposal of hazardous
waste and regulation of underground storage tanks. OLEM provides
technical assistance to all levels of government to establish safe
practices in waste management. OLEM administers the Brownfields program
which supports state and local governments in redeveloping and reusing
potentially contaminated sites. OLEM also manages the Superfund
program, which responds to abandoned and active hazardous waste sites
and accidental chemical releases. Finally, OLEM encourages innovative
technologies to address contaminated soil and groundwater.
Office of Underground Storage Tanks
The Office of Underground Storage Tanks (OUST) carries out a
Congressional mandate, under Subtitle I of the Solid Waste Disposal Act
to develop and implement a regulatory program for underground storage
tank (UST) systems (40 CFR Part 280) storing petroleum and certain
hazardous substances.
In 1985, EPA created the Office of Underground Storage Tanks to
carry out a Congressional mandate to develop and implement a regulatory
program for underground storage tank (UST) systems. EPA works with its
state, territorial, and Tribal partners to prevent and clean up
releases from UST systems. Many UST systems are designed for 30 year
lifespans or longer, and many existing UST systems have components that
were installed before ethanol and biodiesel became commonly blended
with gasoline and diesel for use as motor fuel.
Biofuels can be more aggressive towards certain parts of UST
systems than their hydrocarbon counterparts, and may affect physical
qualities of some components and cause them to swell or shrink or
become hard or brittle. This incompatibility could cause a release of
fuel to the environment. Biofuel blends also show higher rates of
corrosion in UST systems which can prevent UST equipment, including
release prevention equipment, from functioning correctly.
The Office of Underground Storage tanks has led several regulatory
and research efforts to address biofuel compatibility and corrosion
considerations for UST systems. In 2011, the office released guidance
for owners and operators to assist them when determining and
demonstrating compatibility of their UST systems to ensure their UST
system can store biofuels compatibly. New requirements in the updated
2015 Federal UST regulation require owners notify implementing agencies
of their intent to store biofuels and keep records demonstrating the
compatibility of their UST systems. The clarity provided will help
prevent biofuels from being stored in systems that are not compatible.
The office has also funded research into: the potential impacts to
UST systems of storing E15 blends of ethanol; suitability testing of
leak detection equipment in various percentages of ethanol blended
fuel; development of protocols for certifying leak detection equipment;
corrosion of equipment in USTs storing ethanol blended fuels; and any
role of biofuels in internal corrosion of UST systems storing diesel
fuel.
The Office of Underground Storage Tanks continues to work to find
answers to existing and evolving compatibility and corrosion concerns
with biofuels to ensure these fuels can be stored safely in UST
systems.
Office of Resource Conservation and Recovery
The Office of Resource Conservation and Recovery (ORCR) is
primarily responsible for implementing EPA's resource conservation,
recovery and waste management goals under the Resource Conservation and
Recovery Act (RCRA.) A principal responsibility is to build a national
waste management program, implemented through EPA Regional Offices and
State Programs. The Office is responsible for promoting sustainability
and safe materials management, and fostering waste reduction and
responsible management practices that will conserve natural resources,
prevent future problems, and clean up problems from the past. Specific
activities include:
Waste Reduction Model (WARM): In March 2015, EPA updated WARM to
incorporate food wastes. EPA is currently working on updating the model
to add anaerobic digestion as a waste management practice. WARM helps
solid waste planners and organizations calculate the GHG benefits of
alternative end-of-life waste management decisions. These new updates
will allow them to consider the potential impacts of anaerobic
digestion of food wastes compared to other optional practices when
making decisions for their operations.
Reducing Wasted Food: Reducing the amount of food waste sent to
landfills continues to be an opportunity for improvement across the
United States. Food is the largest stream of materials in our landfills
accounting for 21% of the American waste stream. This large volume of
disposed food is a main contributor to the roughly 18% of total U.S.
methane emissions that come from landfills, a powerful greenhouse gas.
In November 2015, EPA will co-host a Food Recovery Summit in
Charleston, SC to gather critical feedback and develop key connections
with the private and public players needed to achieve significant
wasted food reductions.
The Sustainable Materials Management (SMM) is a systemic approach
to using and reusing materials more productively over their entire
lifecycles, including production of biofuels, biochemicals, and
biopower, when appropriate. It represents a change in how our society
thinks about the use of natural resources and environmental protection.
By looking at a product's entire lifecycle we can find new
opportunities to reduce environmental impacts, conserve resources, and
reduce costs.
Office of Water
The Office of Water primarily supports the Clean Water Act, Safe
Drinking Water Act, and portions of other Federal statutes. Many long-
standing regulations and programs, and new initiatives are supportive
of the bioeconomy, as doing so positively impacts our nation's waters.
Within the Office of Water's Office of Wastewater Management (OWM),
primary regulatory duties include oversight of the regulation of
industry and municipal wastewater discharges, in which most states are
delegated to carry out the day-to-day aspects. Other activities within
OWM include management of the Clean Water State Revolving Fund (CWSRF),
which may provide financial assistance to support the bioeconomy
through funding projects that produce biofuels and biopower from
treatment of municipal wastewater. Many of these projects would be
eligible for funding under the CWSRF's Green Project Reserve (GPR), a
provision which requires, to the extent sufficient projects are
available, that a portion of each state's capitalization grant be
provided for green infrastructure, energy and water efficiency, and
other environmentally innovative projects. Drinking Water State
Revolving Funds (DWSRFs), managed by OW's Office of Groundwater and
Drinking Water, are also eligible to be used in non-traditional ways
that may support the bioeconomy. If funded by Congress, the new Water
Infrastructure Finance and Innovation Act (WIFIA) program is another
useful tool that will be able to provide low-cost financing for any
project already eligible under the CWSRF or DWSRF programs. Through the
use of these innovative financing tools, EPA hopes to find more
integrated, lower long-term cost solutions to address the estimated
$600 billion in infrastructure needs over the next 20 years.
Within OWM's Rural Branch, several voluntary collaborative
initiatives have been launched that focus on the animal agriculture
industry, such as energy and nutrient recovery from animal manures, for
example. The Rural Branch is partnering with dairy and swine producers,
USDA, industry trade associations, and academic experts to launch an
innovation challenge to encourage the development and adoption of
affordable and effective technologies that can extract and transform
nutrients in dairy and swine manure (raw and/or digested) and sequester
them into reusable and/or sellable products. The challenge is
anticipated to launch in fall 2015. Following a call for submissions of
technology concepts, EPA and collaborators will implement multiple
phases for innovators to bring their concepts through technology
designs, then prototypes, and ultimately to pilot-scale systems to be
demonstrated at U.S. dairy and swine operations.
Annually, more than two billion livestock animals at animal feeding
operations (AFOs) and concentrated animal feeding operations (CAFOs)
generate over a billion tons of manure.\18\ Manure can be used as a
feedstock in renewable energy generation systems, such as anaerobic
digesters and gasifiers, to generate biogas and synthetic natural gas
(syngas). Manure can also be transformed into a range of value-added
co-products, such as composts, potting soils, animal bedding, paper
products, planting pots, particle boards, and concentrated nutrient
products.
---------------------------------------------------------------------------
\18\USDA. 2014. 2012 Census of Agriculture, USDA. 2005. FY 2005
Annual Report Manure and Byproduct Utilization National Program 206.
---------------------------------------------------------------------------
A few U.S. livestock operations (ten, most of which are poultry
operations) are experimenting with gasification and combustion systems.
Such combustion systems that are able to concentrate the majority of
nutrients in manure in a mineral-rich ash product, which may be used as
a fertilizer and soil amendment.
In the past decade, innovators have developed and demonstrated
technologies that can recover a significant amount of N and P from
manure, as well as from wastewater treatment plants (now being referred
to as water resource recovery facilities [WRRFs]), and yield
concentrated, dry, and potentially valuable nutrient products, such as
struvite and ammonium sulfate fertilizer.
OWM regularly coordinates with EPA AgSTAR, the Office of Research
and Development, as well as USDA's Agricultural Research Service (ARS),
Natural Resource Conservation Service (NRCS), and Rural Development
(RD) on development of innovative manure nutrient recovery
technologies. OWM also coordinates with EPA's AgSTAR Program and the
Office of Land and Emergency Management, USDA's Rural Development, and
DOE's Bioenergy Technologies Office on development of the Biogas
Roadmap, which supports the President's Climate Action Plan.
Within OW's Office of Wetlands Oceans and Watersheds (OWOW), the
Nonpoint Source Branch provides grants (known as 319 Grants) that are
targeted towards non-point sources (i.e., other than regulated entities
under the Clean Water Act). These grants may also be used in ways that
support the bioeconomy. OWOW is responsible for projection of our
nation's wetlands.
OW as an overall office collaborates with many other Federal
agencies in issues that touch upon the bioeconomy, such as Department
of Energy on energy and nutrient recovery from municipal waste water,
and agencies active in climate adaptation.
Office of Research and Development
The Office of Research and Development (ORD) conducts leading-edge
research and fosters the sound use of science and technology to fulfill
EPA's mission to protect human health and safeguard the natural
environment. ORD develops flexible tools that inform decision-making
based on a holistic assessment of impacts to environmental, social, and
economic dimensions enabling insights into the trade-offs associated
with alternative decision options.

Net Zero

As ORD's Net Zero Initiative moves forward, a research area of
particular interest is the nexus between Net Zero/Net Positive energy
and Net Zero waste. Net Zero scientists are looking into the
development and implementation of innovative technologies that recover
waste streams to produce energy, like co-digestion. In the process of
co-digestion, food waste, oils and grease are added to under-capacity
anaerobic digesters in wastewater treatment plants to produce energy in
the form of biogas.
This project links to the Bioeconomy by providing a sustainable
method to utilize biomass resources for energy production, and will
support ORD's mission to transition the term ``waste'' to ``resource''.
The Net Zero team is partnering with the U.S. Army and the U.S.
Army Corp of Engineers to investigate the feasibility of co-digestion
at Fort Huachuca, AZ.

National Research Area--Sustainable and Healthy Communities

The EnviroAtlas is a multi-scaled spatial data resource and
analysis tool that covers the conterminous U.S. Focused on mapping the
supply and demand of ecosystem services (with over 300 national-scale
GIS coverages), the EnviroAtlas also contains coverages depicting
drivers of change (e.g., population, land use, resource exploitation,
pollution, projected scenarios of climate change), demographics,
economic data (e.g., employment dependent on ecosystem services), as
well as features of the built environment (e.g., transportation). It is
scalable from national to regional to local and includes analysis tools
that allow evaluation of ``what-if'' scenarios. The EnviroAtlas is a
useful tool for identifying sensitive resources (habitat for vulnerable
species, limited water supplies) as well as opportunities for
development. Future scenarios for land use and climate change can be
used to explore possibilities of co-benefits or unintended
consequences.
The EnviroAtlas is a multi-agency/multi-institution effort
including collaboration with USFS, USGS, NRCS, Nature-Serve, and a
number of academic institutions. It is a foundational component of the
Administration's EcoInforma effort.

National Research Area--Air, Climate, and Energy

ORD conducts leading-edge research and fosters the sound use of
science and technology to fulfill EPA's mission to protect human health
and safeguard the natural environment. The Air, Climate, and Energy
(ACE) Research Program conducts research to evaluate the potential
environmental impacts of increased biofuel production and use. Research
is examining the effects of changing biofuel content on vehicle
emissions and toxicity, the potential change in nutrients associated
with increased biofuel feedstock production, and changes in emissions
due to co-firing of coal and biomass for power generation. Additional
work addresses potential changes in environmental impacts across the
full life cycle of production and use for biomass- and fossil-fueled
energy.
The Program's research is designed to inform decision makers about
the potential positive and negative impacts of large-scale adoption of
biomass-based energy.
Work is coordinated with USDA to understand how increased biomass
production may affect feedstock prices and with DOE to understand
advances in biofuel conversion technologies.

National Research Area--Safe and Sustainable Water Resources

ORD through the Safe and Sustainable Water Resources (SSWR)
research program includes projects that focus on the costs of nutrient
release to the environment and systems research on best management
practices for nutrient sources. As the bioeconomy relies on
agricultural biomass as feedstock, SSWR nutrient research informs
practitioners in multiple sectors (e.g., irrigation, cropland
management, CAFO, wastewater, and transportation) about the potential
impacts or benefits of agricultural practices in protecting water
quality and watersheds. This work represents collaborative research
with USGS and USDA.
The SSWR program also focuses on water reuse and resource recovery.
SSWR conducts research on treatment technologies for fit-for-purpose
water with an emphasis on low cost/low energy treatment systems.
Resource recovery from wastewater and water reuse treatment aims to
maximize energy recovery from biosolids through the generation and
capture of methane.
EPA Regional Offices
Region 4

Regionally Applied Research Effort (RARE): Through a RARE project
Region 4 provided funds to Mississippi State University in a research
project that demonstrated the use of algae as a feedstock for biofuels.
Region 4 is currently coordinating with EPA's ORD on a RARE project to
investigate the use of common agricultural wastes in Region 4, such as
corn stover and forestry wastes, in a process that will result in
torrefied pellets that can be used as a bio-coal supplement to fossil
coal as well as a bio-char that can be used as a soil amendment. The
study will determine if the bio-coal pellets will have an equivalent
heating content as fossil coal while reducing emission levels of
controlled pollutants such as NOX.
Southeast Regional Partnership for Planning and Sustainability
(SERPPAS): Region 4 is a member of SERPPAS which is a six-state
partnership of state and Federal agencies that promotes collaboration
in making resource-use decisions supporting conservation of natural
resources, working lands, and national defense. Specifically regarding
biofuels, the Region coordinates the partnership's Biomass Workgroup.
This Workgroup supports the sustainable use of forest resources to
produce energy in order to support local economies, create clean energy
jobs, reduce energy related greenhouse gas emissions, and enhance
energy independence and security. The Workgroup's goals include
advancing the use of forest biomass to energy initiative, bringing
Federal and state agencies together to identify, address and
communicate current and emerging issues in the use of biomass for
energy, sharing information on successes and lessons learned regarding
biomass energy, and increasing the range of technologies available for
biomass projects in the region.
Region 4's Southeast Diesel Collaborative (SEDC) was established to
reduce emissions from the existing diesel fleet, such as through the
use of biodiesel. The SEDC has been very proactive in promoting the
production and use of biodiesel and has coordinated with the Department
of Energy's National Renewable Energy Laboratory as well as that
Departments' Clean Cities programs. The SEDC has hosted two biodiesel
workshops that discussed the intricacies of the production of biodiesel
as well the implementation of biodiesel strategies for fleet managers.
Biodiesel producers such as St. Johns County, Florida and Hoover,
Alabama have been frequent speakers at SEDC conferences and workshops.
Region 4 has promoted the use of biomethane as a transportation
fuel. The Region has coordinated tours of the Seminole Landfill
biofuels facility with Dekalb, County, Georgia. State and local air
directors as well as other EPA staff have toured this facility which
collects landfill gases and cleans them to pipeline quality so they may
be used in the County's waste haulers as well as being sold to the
public as a transportation fuel. Additionally, representatives from the
facility have been frequent speakers at Regional conferences and
meetings.
Region 4 representatives served on the State of Georgia's ``One
Stop Shop'' for biofuels. This was an effort by the state to provide a
forum for biofuel and energy companies considering locating in Georgia
to simultaneously meet with all the representatives from state and
Federal agencies having jurisdiction on biofuel and energy production
facilities. The goal is to expedite an understanding of necessary legal
requirements.
Region 4 has worked to identify and promote the availability of
alternate fuels along critical freight corridors such as the Region 4
portion of the I-75 (the Green Corridor project). Additionally, the
Region has coordinated with the State of Tennessee in implementing its
Green Corridors project for alternative fuels throughout interstates in
that state. Region 4 has also worked with Colonial Pipeline in their
efforts to ship biodiesel blends on its pipeline to central and
southern Georgia.
The Region has been very active in promoting biodiesel. The Region
worked with the National Park Service to promote and provide technical
advice for the use of biodiesel in Park Service vehicles. The Region
also coordinated with the Cherokee Indian Nation on the use of
biodiesel and provided funds for the implementation of an overall
biodiesel program that included two transit buses and six school buses.
The Region has also provided grants to North and South Carolina for
biodiesel fleets, including freight locomotives in and around the Port
of Charleston. Additionally the Region has coordinated with nonprofit
organizations such as the Southern Alliance for Clean Energy (SACE) to
promote the use of biofuels and the establishment of biofuel refueling
networks.

Region 9

EPA Region 9 provided funds to demonstrate an ultra-low nitrogen
oxides (NOX) biogas powered engine installed at a dairy farm
in the San Joaquin Valley, California. More information can be found at
the Air District website.\19\ EPA Region 9 funded refuse trucks fueled
by renewable natural gas at a food waste facility in Sacramento,
California. Through anaerobic digestion, food waste is converted into
compressed natural gas to fuel refuse trucks and provide electricity
and heat used at the facility. The remaining processed material is
turned into fertilizer and soil amendments.\20\
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\19\http://valleyair.org/grants/documents/technologyadvancement/C-
4236_EF&EE_Final
Report.pdf.
\20\http://westcoastcollaborative.org/files/grants/smaqmd-dera-
fy13-refuse-truck-ag-tractor-replacements-wcc-factsheet.pdf.
---------------------------------------------------------------------------
EPA ORD and Region 9 are conducting research to compare different
biogas management technologies by examining air quality, greenhouse gas
and economics/operations. This analysis may enable governments,
regulators and project developers to identify geographically-
appropriate and cost-effective biogas management options. DOE and
USDA's NRCS will continue to be involved with this research.
EPA Region 9 is publishing food recovery guides for six
metropolitan areas in the Pacific Southwest, which will include
listings for anaerobic digestion and fats, oils, and grease recycling
opportunities. The guides are intended for food waste-generating
businesses to facilitate greater food recovery. The guides are expected
to be published November 2015.
In March 2015, EPA published a report titled ``Food Waste to
Energy: How Six Water Resource Recovery Facilities are Boosting Biogas
Production and the Bottom Line.''\21\ This report presents the co-
digestion practices, performance, and experiences of six such water
resource recovery facilities. The report describes the types of food
waste co-digested and the strategies--specifically, the tools, timing,
and partnerships--employed to manage the material. Additionally, the
report describes how the facilities manage wastewater solids, providing
information about power production, biosolids use, and program costs.
---------------------------------------------------------------------------
\21\epa.gov/region9/organics/ad/epa-600-R-14-240-food-waste-to-
energy.pdf.
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Starting in 2012, EPA Region 9 convened a state/Federal/local
working group to facilitate the proliferation of dairy digesters in
California, which is the nation's largest dairy producer. EPA co-
chaired the working group along with NRCS and California Department of
Food and Agriculture, and the group included all relevant state and
local agencies. The group accomplished several things including: (1)
developing a coordinated permitting system of dairy digesters across
the phalanx of agencies in California, (2) getting digesters included
in the renewable energy mix required by California, and (3) developing
criteria for the types of digesters that are ideal to be built in
California. In 2014, $12 million from the California Department of Food
and Agriculture was awarded to dairy digester projects in California as
a result of this working group.

Department of [the] Interior
www.doi.gov
Bureau of Land Management
The Bureau of Land Management (BLM) manages and conserves the
public lands for the use and enjoyment of present and future
generations under our mandate of multiple-use and sustained yield.
Nearly \1/4\ of the lands--58 million acres--managed by the BLM are
forests or woodlands. An estimated 14 million acres have been affected
by the suppression of natural fire and are in need of active management
to restore resilient species composition and stand structure. Forest
and woodland management produces traditional wood products as well as
woody biomass which primarily results from restoration residues and
smaller diameter material from forestry, fuels and rangeland
treatments.
Biomass from BLM forest and woodland projects has become part of
the feedstock that energy companies are relying on to meet various
state and Federal renewable energy portfolio standards.\22\
---------------------------------------------------------------------------
\22\https://www.doi.gov/sites/doi.opengov.ibmcloud.com/files/
uploads/FY2016_BLM_Green
book.pdf.
---------------------------------------------------------------------------
From 2010 to 2014, BLM sold an average of 177,000 tons of biomass
for energy through contracts and permits.\23\ Additionally the BLM
entered into a Memorandum of Agreement in 2014 with the USDA Farm
Services Agency to implement the Biomass Crop Assistance Program (BCAP)
that allows collection, harvest, storage, and transportation assistance
for biomass delivered to certified bioenergy facilities from BLM lands.
BCAP projects on BLM land meet environmental standards equivalent to
forest stewardship plans and the biomass is limited to material
generated as a byproduct of wildfire hazard fuels treatments or
treatments to reduce or contain disease or insect infestations in
accordance with the Agricultural Act of 2014.\24\
---------------------------------------------------------------------------
\23\https://www.doi.gov/sites/doi.gov/files/migrated/pmb/ppp/
upload/DOI-APPR-02022015-v2-Final.pdf.
\24\http://www.fsa.usda.gov/Internet/FSA_File/
ccc_2015_0001_0001.pdf.

National Science Foundation
www.nsf.gov

The Division of Chemical, Bioengineering, Environmental, and
Transport Systems (CBET) supports innovative research and education in
the fields of chemical engineering, biotechnology, bioengineering, and
environmental engineering, and in areas that involve the transformation
and/or transport of matter and energy by chemical, thermal, or
mechanical means.
Standing programs within the CBET Division of the ENG Directorate,
including the Energy for Sustainability, Environmental Sustainability,
Biochemical Engineering, Catalysis & Biocatalysis, and Process &
Reaction Engineering programs, provide funding opportunities for
supporting fundamental scientific research needed to develop future
processes for advancing the bioeconomy. Awards typically range from
$300-$400k for 3 years. There are no solicitations or proposal calls
specifically for the bioecomony within CBET. However, many of
unsolicited proposals, submitted primarily from the academic research
community, are closely related to topics relevant to the bioecomony, as
described below. Proposals on bioeconomy topics that are the most
strongly recommended for funding through the peer review processes are
considered for funding. CAREER awards offered through each program are
designed to support early career, tenure-track faculty in these areas.
The standing programs identified above support research relevant to
advancing the bioecomony in the conversion and sustainability areas
through development and scientific understanding of (1) new chemical,
catalytic, and biological processes for the conversion of renewable
carbon resources (plant biomass, algae, CO2) to biofuels,
bioproducts, biochemicals, as well as their downstream separation;
([2]) new catalysts and synthetic biology approaches for supporting
these processes; (3) biopower production though energy-positive waste
water treatment, (4) new tools for life cycle, environmental, and
sustainability analyses of biofuel and biorefinery processes.
Engineering Directorate, Emerging Frontiers in Research and Innovation
The Emerging Frontiers in Research and Innovation (EFRI) provides
critical, strategic support of fundamental discovery at the frontiers
of engineering research and education.
Each year, EFRI develops and issues two topics for through a formal
solicitation process. Up to $16 million is available to support each
topic on up to eight awards of approximately $2 million each. Proposals
are recommended for funding through a highly-competitive peer review
process.
Recent EFRI solicitations relevant to the bioeconomy in the
conversion and sustainability areas were HYBI (NSF 08-599, Hydrocarbons
from Biomass, FY09), and PSBR (NSF 12-583, Photosynthetic
Biorefineries, FY13). The HYBI program supported research on new and
potentially transformative approaches for chemical and catalytic
conversion of biomass constituents and algae to energy-dense molecules
and drop-in hydrocarbon biofuels.
The PSBR program supported fundamental research to advance
development and scientific understanding of biofuel and biorefinery
processes by linking fundamental biology of phototrophic organisms,
bioprocess engineering, and life cycle analysis through a multiscale
analysis approach.
Biological Sciences Directorate
The Biological Sciences Directorate (BIO) Directorate programs
support research advances at the frontiers of biological knowledge,
increases understanding of complex systems, and provides a theoretical
basis for original research in many other scientific disciplines.
The Plant Genome Research Project (PGRP) within the BIO Directorate
supports academic research for the development and fundamental
scientific understanding of functional genomics tools and sequence
resources for use in the study of key crop plants and their models.
From FY12 to FY14, the program supported approximately $120 million in
research.
The Plant Genome Research Project supports the bioeconomy in the
feedstocks area by advancing the development and genetic tools for key
crop plants and their models.
Science, Engineering and Education for Sustainability
Science, Engineering and Education for Sustainability (SEES) is a
cross-cutting initiative within NSF to advance science, engineering,
and education to inform the societal actions needed for environmental
and economic sustainability and sustainable human well-being. The SEES
portfolio activities highlights NSF's unique role in helping society
address the challenge(s) of achieving sustainability. Recent special
solicitations and funding opportunities to support the bioeconomy in
the context of SEES included:
The Sustainable Energy Pathways (SEP) solicitation (NSF 11-590,
FY12) supported fundamental research on scalable approaches for
sustainable energy conversion to useful forms, as well as its storage,
transmission, distribution, and use, through a systems approach to
designed to seek comprehensive understanding of the scientific,
technical, environmental, economic, and societal issues.
The Sustainable Chemistry, Engineering, and Materials (SusChEM)
Funding Opportunity (NSF 15-085) addresses the interrelated challenges
of sustainable supply, engineering, production, and use of chemicals
and materials.
The SEP program supported seven projects to advance the bioeconomy
through fundamental research on biofuel production platforms in the
context of their integrated scientific, technical, environmental,
economic, and societal issues. The SusChEM initiative advanced the
bioeconomy by supporting a variety of projects related to the
sustainable production of biofuels, bioproducts, and biochemicals
through sustainable carbon resources.

Department of Transportation
www.dot.gov
Federal Aviation Administration
The Federal Aviation Administration (FAA) strives to provide the
safest, most efficient aerospace system in the world. FAA has taken a
comprehensive approach to overcome barriers to the development and
deployment of sustainable alternative (e.g., renewable) jet fuels that
are drop-in replacements to fuels derived from petroleum, as part of an
effort to achieve carbon-neutral growth at 2005 emissions levels
starting in 2020. These efforts include R&D via the Continuous Lower
Energy Emissions and Noise (www.faa.gov/go/cleen) (CLEEN) and Aviation
Sustainability Center (www.ascent.aero) (ASCENT) University Center of
Excellence program programs to evaluate alternative fuels for safety,
technical, and environmental performance; sponsorship with industry of
the Commercial Aviation Alternative Fuels Initiative (www.caafi.org)
(CAAFI), a broad stakeholder coalition; new fuel certification through
ASTM International; a partnership with USDA, DOE, and the aviation
industry to enable fuel supply development via the Farm to Fly 2.0
Initiative; and the joint development of a Federal alternative jet fuel
R&D strategy in partnership with numerous Federal agencies. FAA also
has bilateral agreements to leverage other countries' efforts to
develop, assess, and deploy alternative jet fuels, and participates in
the United Nation's International Civil Aviation Organization (ICAO)
activities on alternative jet fuels.
FAA's goal of goal of having 1 billion gallons of alternative jet
fuel in use by 2018 has spurred rigorous research and rapid innovation
in advanced feedstock and renewable aviation fuel pathway development.
FAA-supported testing and demonstrations of many biobased jet fuels
have shown a sharp reduction of air quality emissions with no adverse
impact on aircraft engine operations. Broad deployment of renewable jet
fuels may substantially reduce lifecycle aircraft exhaust emissions of
aviation operations, and enhance public awareness of advanced biofuels.
National Highway Transportation Safety Administration
National Highway Transportation Safety Administration (NHTSA) works
daily to help prevent crashes and their attendant costs, both human and
financial.
Vehicle Corporate Fuel Economy (CAFE) standards are regulated by
NHTSA; NHTSA sets and enforces the CAFE standards, while the
Environmental Protection Agency (EPA) calculates average fuel economy
levels for manufacturers, and also sets related GHG standards. NHTSA
has proposed to require badges, labels and owner's manual information
for new passenger cars, low-speed vehicles (LSVs) and light-duty trucks
in order to increase consumer awareness regarding the use and benefits
of alternative fuels, including biofuels.
E85 capable flex-fuel vehicles (FFVs) have long-qualified for a
special calculation of their fuel economy performance under NHTSA
administered CAFE regulations. These special calculations provide
vehicle manufacturers with powerful credit incentives to develop and
produce FFVs. The existence of the current national FFV fleet is
largely attributable to this regulatory incentive (effective in its
current form through model year 2016). Consumer education on biofuel
end-use would be advanced by NHTSA's proposed rule to require vehicle
OEMs to prominently exterior-label vehicles capable of running on
biofuels, describe the capabilities and benefits of using alternative
biofuels to owners' manuals provided for alternative fuel vehicles, and
clearly label the fuel filler compartment of vehicles capable of
running on biofuels.
Federal Highway Administration
The Federal Highway Administration (FHWA) strives to improve
mobility on our nation's highways through national leadership,
innovation, and program delivery.
The Congestion Mitigation and Air Quality (CMAQ) Improvement
Program provides funding to state departments of transportation (DOTs),
municipal planning organizations (MPOs), and transit agencies for
projects and programs in air quality non-attainment and maintenance
areas that reduce transportation-related emissions, including
alternative fuels deployment. The FHWA Office of Real Estate Services
has been cooperating with states to examine the both the potential and
implications for bioenergy production within highway right-of-ways
(ROWs).
Past and current CMAQ projects have provided for the purchase and
development of alternative fuel refueling infrastructure, and
conversion of public fleet vehicles to operate on alternative fuels,
including biofuels. Generating biofuel feedstocks on highway ROWs would
add highly-visible bioenergy production capacity, advance Federal and
state sustainability goals, support a local green job market, and help
reduce highway maintenance costs while potentially generating
additional revenue for transportation agencies.
Pipeline and Hazardous Materials Safety Administration
Pipeline and Hazardous Materials Safety Administration (PHMSA)
works to protect people and the environment from the risks of hazardous
materials transportation.
PHMSA works with other Federal agencies, industry, standards
organizations, and emergency responders, to ensure adequate design and
operating standards for biofuel pipelines. PHMSA has examined the
potential for ethanol-induced stress corrosion cracking in existing
pipeline infrastructure used to transport ethanol and various ethanol-
blended fuels. PHMSA also supports emergency responder education and
training on optimal emergency response to spill incidents involving
ethanol and other biofuels in transportation. In partnership with the
Federal Railroad Administration (FRA), PHMSA has undertaken a
comprehensive, system-wide approach to prevent and mitigate rail
accidents involving flammable liquids, including biofuels. The joint-
approach focuses on improvements to rail operations, ensuring proper
classification of hazardous materials, and improving tank car
survivability.
Safe and efficient pipeline and rail transport will be critical to
bioeconomy expansion. Continued Federal efforts in research and
development, resolving technical issues, and setting/clarifying safety
standards are key to reducing transport accidents, mitigating the
consequences of an incident, and ensuring proper emergency response.
Maritime Administration
The Maritime Administration (MARAD) promotes the use of waterborne
transportation and its seamless integration with other segments of the
transportation system, and the viability of the U.S. merchant marine.
MARAD has been evaluating the use of renewable diesel fuel blends
in commercial vessels. This has included recent at-sea testing and
reporting on engine performance, fuel economy, air emissions, engine
vibration, underwater radiated noise, and effect on the engine itself.
MARAD has also conducted tests to determine the effects of long-term
storage on renewable diesel blend quality.
Successful operational and storage testing is critical for
advancing the deployment of biofuels in the waterborne transportation
sector and the national merchant marine fleet.
Federal Transit Administration
Federal Transit Administration (FTA) strives to ensure personal
mobility and America's economic and community vitality by supporting
high quality public transportation through leadership, technical
assistance and financial resources.
FTA has supported the expanded use of biofuels (i.e., biodiesel)
within the nation's transit bus fleet through a large number of field
studies, fleet demonstrations, and funded deployments.
Widespread evaluation of biodiesel blend use among U.S. transit
agency fleets generates key information regarding the impact of
biofuels on transit bus engines, fuel systems, operations, and
maintenance, and has helped establish industry best practices.
Successful, highly-visible biodiesel transit bus deployments have
helped raise the public's awareness of biofuels and their benefits.
Federal Railroad Administration
Federal Railroad Administration (FRA) works to enable the safe,
reliable, and efficient movement of people and goods for a strong
America, now and in the future.
FRA has been evaluating the use of biodiesel and renewable diesel
fuel blends, as well as biobased lubricants in freight and passenger
locomotives. FRA-sponsored feasibility studies have assessed biofuel
use impacts on locomotive performance, fuel efficiency, exhaust
emissions, and engine parts. In partnership with the Pipeline and
Hazardous Materials Safety Administration (PHMSA), FRA has undertaken a
comprehensive, system-wide approach to prevent and mitigate rail
accidents involving flammable liquids, including biofuels. The approach
focuses on improvements to rail operations, ensuring proper
classification of hazardous materials, and improving tank car
survivability.
Successful feasibility testing of biofuels in locomotives is
critical for advancing the deployment of biofuels in the rail
transportation sector and national rail passenger and freight fleet.
Expanded rail tank car transport of biofuels is also critical to the
growth of the bioeconomy, underscoring the need for rail transport
safety improvements to prevent accidents, mitigate consequences in the
event of an accident, and support emergency response.
Office of the Assistant Secretary for Research & Technology
Office of the Assistant Secretary for Research & Technology (OST-R)
is committed to transform transportation by expanding the base of
knowledge to make America's transportation system safer, more
competitive and sustainable.
OST-R sponsors research focusing on the safe use of new fuels and
energy technologies within the transportation system (including
biofuels), and the safe, efficient distribution of biofuels and other
energy resources across the transportation network. OST-R coordinates
research across DOT modal administration, including efforts related to
biofuels and bioenergy. OST-R supported research includes the Sun Grant
Initiative Regional Competitive Grants Program, which funds research
and demonstration activities related to biomass feedstock, biofuels,
and biobased products, and analyses to determine the energy and
environmental impacts of bioenergy. The Volpe National Transportation
Systems Center, a part of OST-R, conducts model and tool development to
analyze transportation needs and constraints associated with biofuel
biomass collection, processing, and distribution.
OST-Rs efforts to encourage bioenergy research collaboration
between government agencies and regional land-grant colleges and
universities helps foster innovations, and bioeconomy workforce
development. Modeling work by the Volpe Center helps agencies and
bioeconomy industry stakeholders better understand how multimodal
transportation capacity and infrastructure constraints impact biomass
feedstock and biofuel movements (and vice-versa), transport-related
environmental impacts, and economic costs. Future policies,
infrastructure investments, and other decisions supporting the
bioeconomy may hinge upon robust scenario analysis models and tools.
Appendix II: Interagency Activities Supporting the Bioeconomy

------------------------------------------------------------------------

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As discussed in Appendix I, existing foundational pillars of the
bioeconomy are in place to support further expansion. Each agency
focuses on their own priorities and mission areas, but to fully develop
a strong national bioeconomy, synchronization across the government is
critical. Such examples of these interagency activities include EPA's
Renewable Fuel Standard, the Farm to Fly 2.0 Initiative, the Defense
Production Act Initiative, the Coordinated Agriculture Projects, the
Farm to Fleet Initiative, the Rural Energy for America Program, the
Biogas Roadmap, and the Biomass Crop Assistance Program.
------------------------------------------------------------------------

Feedstock Partnerships Across the Government
The U.S. Department of Agriculture (USDA) and the Department of
Energy (DOE) have compatible goals in the developing and promoting the
use of biomass for biofuels, biopower, and biobased
products.25-29 Collectively the two Departments have a well-
established portfolio covering agronomics, silviculture, genetics,
engineering, economics, modeling, and many other scientific disciplines
and resource areas. Several USDA agencies have research, technology,
deployment or assistance programs associated with various aspects of
the production and use of biomass from America's agricultural and
forestry lands. DOE has feedstocks development and logistics RDD&D
activities distributed across a program, an office, and an agency. USDA
has feedstocks plant materials and genetic development, sustainable
management and production systems development, logistics, improving
interfaces in the supply chain, and integration with conversion
activities. Much of the Federal Government's expertise in these areas
is within the Departments and RDD&D activities are completed with
National Laboratories, university and industrial partners.
---------------------------------------------------------------------------
\25\http://energy.gov/quadrennial-technology-review.
\26\http://www1.eere.energy.gov/biomass/pdfs/mypp_april_2011.pdf
\27\http://www1.eere.energy.gov/biomass/pdfs/biomass_two_pager.pdf.
\28\http://www.whitehouse.gov/sites/default/files/rss_viewer/
growing_americas_fuels.PDF.
\29\http://science.energy.gov//media/ber/pdf/
Biofuels_strategic_plan.pdf.
---------------------------------------------------------------------------
A long standing collaboration between USDA and DOE is the Plant
Feedstock Genomics for Bioenergy Program. Initiated in 2006, the
program funds fundamental science projects that accelerate plant
breeding programs and improve biomass feedstocks by characterizing the
genes, proteins, and molecular interactions that influence biomass
production. In addition, the two agencies jointly fund a competitive
program in support of the development of a biomass-based industry
through the Biomass Research and Development Initiative. The technical
areas under consideration include feedstocks development, biofuels and
biobased products development, and biofuels development analysis.
Projects span research through early stage demonstration.
The Federal Working Group, ``Woody Biomass Utilization Group'' led
by USDA, DOE and DOI with members also including EPA and DOD promotes
and supports the utilization of woody biomass and woody biomass
products and residues from forest and woodland health, management and
restoration treatments wherever environmentally, economically and
legally appropriate. The group has annual plans of work and many
accomplishments including a resource center, special projects, and
partnering with stakeholders.
Waste Resource Development
USDA, DOE and EPA jointly released the Biogas Opportunities Roadmap
in August 2014. The Roadmap builds on progress made to date to identify
voluntary actions that can be taken to reduce methane emissions through
the use of biogas systems and outlines strategies to overcome barriers
limiting further expansion and development of a robust biogas industry
in the United States. EPA participates in the Biogas Opportunities
Roadmap Working Group (along with DOE and USDA) to pursue these
solutions and enhance Federal communication and collaboration regarding
biogas activities. A Progress Report is expected to be published in
fall, 2015.\30\
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\30\Biogas Opportunities Roadmap: http://www3.epa.gov/
climatechange/Downloads/Biogas-Roadmap.pdf.
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Additionally, EPA's AgSTAR program partners with USDA to promote
the use of biogas recovery systems at livestock operations to reduce
methane emissions and achieve other environmental benefits through
outreach, education, tools and partnerships. AgSTAR develops technical
resources for farmers, state government representatives and other
stakeholders. AgSTAR also participates in outreach events with
livestock producers, renewable energy industry leaders, and state and
local governments to raise awareness about the benefits of livestock
biogas recovery systems and the Federal resources available for project
planning and implementation. AgSTAR hosts a partnership program, which
brings together representatives of universities, state and local
governments, not-for-profits, and other related organizations to share
information and encourage implementation of biogas recovery
systems.\31\
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\31\For more information on AgSTAR please visit: http://
www2.epa.gov/agstar.
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NSF, EPA and DOE jointly hosted the Energy-Positive Water Resource
Recovery (EPWRR) Workshop in April of 2015 to envision a transition
from the wastewater treatment facilities of today to a new generation
of Water Resource Recovery Facilities (WRRFs), nationwide, and identify
specific opportunities to stimulate and support this transition. Future
WRRFs could effectively manage more diverse waste streams, generate
biogas for a number of biofuel platforms, produce water and fertilizer,
and help communities recover other valuable resources. Participants of
this collaborative interagency workshop provided information to Federal
stakeholders about ongoing industry efforts and how Federal activities
could best amplify and help realize the industry vision for the WRRF of
the Future that would continue to assign top priority to wastewater
treatment for the protection of public health and the environment, but
also expand its slate of services and products in support of healthy,
economically vibrant communities.
Looking Beyond Ground Transportation
In 2014, the U.S. Departments of Energy, Navy, and Agriculture
announced three awards to construct commercial scale integrated
biorefineries capable of producing renewable jet and diesel that is
compatible with military fuel specifications. The partnership between
the Federal Government and private industry to make cost-competitive
drop-in biofuels a reality while strengthening the nation's capability
to lead the global clean energy market and diversifying potential fuel
sources for the Department of Defense. The feedstock used to power
these facilities comes from municipal solid waste, woody biomass, and
waste oils and fats, and will be converted into more than 100 million
gallons of renewable jet and diesel fuel annually. This means many
additional professional jobs for engineers, plant operators,
construction workers, and feedstock suppliers. The renewable jet fuel
and diesel that will be produced from these facilities has been
extensively tested and qualified by the Department of Defense and
proven operate seamless with existing infrastructure, engines, and
military operations.\32\
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\32\For more information about the DOE-DoN-USDA partnership please
visit: http://www.energy.dla.mil/Pages/DefenseProductionAct.aspx.
---------------------------------------------------------------------------
To date fuel blends consisting of up to 50% synthetic hydrocarbons
made via the Fischer-Trospch and Hydroprocessed Esters and Fatty Acids
pathways are acceptable in military fuel specifications. Additional
pathways are being tested. Following adoption into fuel specifications,
the Department of Defense has now moved to accept drop-in biofuels as
part of its worldwide bulk fuel supply, which totals over 5 billion
gallons. Jet and naval distillate fuel purchased for the Army, Navy,
Marine Corps, and Air Force can be supplied by biofuel producers
capable of meeting military specifications and cost-competitive with
conventional fuels.\33\
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\33\For more information on Farm to Fly 2.0 please visit: http://
energy.gov/eere/bioenergy/articles/farm-fly-20-energy-department-joins-
initiative-bring-biofuels-skies
---------------------------------------------------------------------------
Similar to the nation's military, the U.S. airline industry has a
large demand for jet fuel--almost 22 billion gallons annually. In 2014,
as part of an effort to meet the demand of renewable aviation fuels,
DOE, USDA and FAA committed to Farm to Fly 2.0. The Federal Government,
working closely with the aviation industry, will endeavor to enable
commercially viable, sustainable renewable jet fuel and necessary
supply chains in the U.S. in order to support the goal of 1 billion
gallons jet fuel from biomass for use by 2018.\34\
---------------------------------------------------------------------------
\34\For more information on Farm-to-Fleet visit: http://
www.usda.gov/wps/portal/usda/usdamediafb?contentid=2013/12/
0237.xml&printable=true&contentidonly=true.
---------------------------------------------------------------------------
With Farm to Fly 2.0 as a model, the DON and USDA are working
together in another partnership, Farm-to-Fleet, to ensure markets for
renewable biofuel blends as part of the regular, operational fuel
purchase and use by the military. $161.33 million of USDA Commodity
Credit Corporation (CCC) funds are made available to defray premiums
(up to a limit) associated with USDA-approved, U.S.-grown feedstocks
for the acquisition of naval distillate or jet fuel. An award was made
with the help of CCC funds in October 2015 to AltAir Fuels in
Paramount, CA for 77.66 million gallons of F-76 naval distillate fuels
consisting of 10% drop-in biofuels made using Midwestern-grown waste
beef fats as a feedstock. Farm to Fly 2.0 will continue to seek awards
in the domestic bulk fuel supply awards.
Developing a Sustainable Future
DOE and USDA are actively involved in the Sustainability and
Greenhouse Gas Accounting working groups of the Global Bioenergy
Partnership. The Global Bioenergy Partnership (GBEP) was established in
2006 by a mandate from the G8 + 5 in 2005 and is the preferred venue
for USG to talk about sustainability of biofuels internationally.
Partners currently include 23 countries and seven United Nations
organizations, with Brazil and Italy as co-chairs. Significant
achievements include a GHG Methodological Framework (United States co-
chaired with United Nations Foundation) and continued work on
development of Sustainability Criteria and Indicators (chaired by
United Kingdom). Partners: DOE, USDA, EPA, USTR, and Commerce
collaborate with State Department, the National Security Council, and
the National Economic Council on a U.S. position going into each of the
quarterly GBEP meetings.\35\
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\35\For more information on the Global Bioenergy Partnership please
visit: http://www.globalbioenergy.org/.
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appendix f
February 21, 2017

Hon. Mike Enzi, Hon. Bernard Sanders,
Chairman, Ranking Minority Member,
Senate Committee on the Budget, Senate Committee on the Budget,
Washington, D.C.; Washington, D.C.;
Hon. Diane Black, Hon. John Yarmuth,
Interim Chairwoman, Ranking Minority Member,
House Committee on the Budget, House Committee on the Budget,
Washington, D.C.; Washington, D.C.;
Hon. Thad Cochran, Hon. Patrick Leahy,
Chairman, Ranking Minority Member,
Senate Committee on Appropriations, Senate Committee on Appropriations,
Washington, D.C.; Washington, D.C.;
Hon. Rodney Frelinghuysen, Hon. Nita Lowey,
Chairman, Ranking Minority Member,
House Committee on the Budget, House Committee on the Budget,
Washington, D.C.; Washington, D.C.

Dear Chairmen and Ranking Members:

The undersigned organizations, representing America's agriculture,
nutrition, conservation, rural development, finance, forestry, energy,
trade, local government, plant/animal health, agricultural sciences and
veterinary medicine, labor, outdoor recreation, equipment
manufacturing, cooperatives, hunters, anglers and crop insurance
sectors, strongly urge you to reject calls for additional cuts to
policies within the jurisdiction of the Senate Committee on
Agriculture, Nutrition and Forestry or the House Committee on
Agriculture.
Almost 3 years ago, Congress passed a bipartisan farm bill that
made a significant contribution to deficit reduction. This bipartisan
legislation was estimated to contribute $23 billion to deficit
reduction over 10 years at the time of passage. This was the first time
a farm bill voluntarily reduced spending before Congress began
considering the bill. It was the only reauthorization bill in that
Congress that voluntarily offered savings. These difficult cuts
resulted from hard choices made to reform and reduce the farm safety
net, conservation initiatives, and nutrition assistance.
In fact, the Congressional Budget Office's (CBO) January 2017
baseline estimates that the 2014 Farm Bill has cost far less than
projected. According to CBO, nutrition and crop insurance alone will
spend nearly $100 billion less, while mandatory Federal spending
outside the Agriculture Committees' jurisdiction has risen over the
same time period.
We have all begun preparing for the 2018 Farm Bill and recognize
that passing a bill with additional funding reductions would be
extremely difficult, if not impossible. Therefore, as the Senate and
House Agriculture Committees begin preparing for the 2018 Farm Bill, it
is imperative that the committees not be hamstrung by further budget or
appropriations cuts to any farm bill program. Instead, we strongly
encourage you to recognize the substantial savings already achieved,
which far exceed expectations, and to provide the committees the
opportunity to complete their work through regular order, without
arbitrary budget cuts or caps. With the agriculture and rural economy
struggling, households across the country struggling to meet their
basic needs for nutrition, and farm income down 46 percent from only 3
years ago, it would be perilous to hinder development and passage of
the 2018 Farm Bill with further cuts.
During consideration of the 2014 Farm Bill, the Agriculture
Committees made the difficult choices necessary to deliver a bipartisan
bill. Budget cuts made in that bill should be recognized as
Agriculture's contribution to deficit reduction. We know the committees
will once again face challenging budgetary and policy choices in the
development of the 2018 Farm Bill. That is why it is so important you
ensure the Committee process for the farm bill can proceed with some
budget flexibility.
Thank you for your consideration.
Sincerely,

Academy of Nutrition Florida Peanut Nebraska Pork
and Dietetics Producers Association Producers Association
Ag Processing Inc Food Bank Council of Nebraska Soybean
Michigan Association
AgChoice Farm Credit Food Bank of Alaska Nebraska Wheat Board
AgCountry Farm Credit Food Research & Action Nebraska Wheat Growers
Services Center (FRAC) Association
AgCredit FoodCorps Nevada Wildlife
Federation
AgFirst Farm Credit Food Pantry New England Forestry
Bank Foundation
AgGeorgia Farm Credit, Forest Stewards Guild New Jersey Anti-Hunger
ACA Coalition
AgriBank, FCB Forestry Association of New Jersey Farm Bureau
South Carolina
Agriculture Energy Freestore Foodbank New Mexico Appleseed
Coalition
AgStar Financial Frontier Farm Credit New Mexico Sorghum
Services, ACA Association
Alabama Farmers Garden Valley New Mexico Association
Federation Neighborhood House of Food Banks
Alabama Food Bank Generations United New Mexico Wildlife
Association Federation
Alabama Peanut Georgia Farm Bureau New York Farm Bureau
Producers Association
Alabama Soybean & Corn Georgia Food Bank North Carolina Farm
Association Association Bureau
Alaska Food Coalition Georgia Peanut North Carolina Pork
Commission Council
Aldo Leopold Grange Insurance North Central Weed
Foundation, Inc. Audubon Center Science Society
Algae Biomass Greater Cleveland Food North Dakota Soybean
Organization Bank Growers Association
Alliance to End Hunger GreenStone Farm Credit Northeast Organic
Services Dairy Producers
Alliance
American Academy of Growth Energy Northeast Organic
Pediatrics GROWMARK Farming Association--
American Agri-Women Interstate Council
American Agriculture Hardwood Federation Northeast Organic
Movement Inc. Farming Association
of New York
American Association of Headwaters Chapter, Northeast Organic
Avian Pathologists Izaak Walton League of Farming Association
America of Vermont
American Association of Hudson Crop Insurance Northwest Farm Credit
Bovine Practitioners Services Services
American Association of Humboldt State NTCA--The Rural
Crop Insurers University Dept. of Broadband Association
Forestry
American Association of Hunger Free Colorado Ohio AgriBusiness
Mycobacterial Diseases Association
American Bankers Hunger Free Vermont Ohio Association of
Association Foodbanks
American Cotton Hunger Solutions Ohio Corn & Wheat
Shippers Association Minnesota Growers Association
American Crystal Sugar Hunger Solutions New Ohio Ecological Food
Company York and Farm Association
American Dairy Science Hunger Task Force Ohio Environmental
Association Council
American Farm Bureau Idaho Hunger Relief Ohio Farm Bureau
Federation Task Force Federation
American Farm Bureau Idaho Wildlife Ohio River Foundation
Insurance Services, Federation
Inc.
American Farmland Trust Illinois Council Trout Ohio Soybean
Unlimited Association
American Feed Industry Illinois Farm Bureau Oklahoma Association
Association of Conservation
Districts
American Fisheries Illinois Hunger Oklahoma Farm Bureau
Society Coalition
American Forest & Paper Illinois Pork Producers Oklahoma Pork Council
Association Association
American Forest Independent Community Oklahoma Sorghum
Foundation Bankers of America Association
American Forests Independent Insurance Oklahoma Soybean
Agents & Brokers of Association
America
American Heart Indiana Farm Bureau Oregon Cherry Growers,
Association Inc.
American Insurance Indiana Forestry & Oregon Farm Bureau
Association Woodland Owners
Association
American Malting Barley Indiana Soybean Oregon Food Bank
Association Alliance
American Mushroom Intertribal Timber Oregon Small Woodlands
Institute Council Association
American Rivers Iowa Corn Growers Organic Trade
Association Association
American Seed Trade Iowa Environmental Our Lady of Mt. Carmel
Association Council St. Vincent dePaul
Society
American Sesame Growers Iowa Farm Bureau PA Association of
Association Federation Conservation
Districts
American Sheep Industry Iowa Soybean Panhandle Peanut
Association Growers Association
American Society of Irrigation Association Partners for a Hunger-
Agronomy Free Oregon
American Society of Islamic Relief USA PennFuture
Farm Managers and Kansas Appleseed Center Pennsylvania Farm
Rural Appraisers for Law and Justice Bureau
American Soybean Kansas Association of People's Community
Association Wheat Growers Church
American Sugar Alliance Kansas Cooperative Personal Ag Management
Council
American Sugar Cane Kansas Farm Bureau Pheasants Forever
League
American Sugarbeet Kansas Grain Sorghum Pinchot Institute for
Growers Association Producers Association Conservation
American Veterinary Kansas Pork Association Pollinator Partnership
Medical Association
American Water Works Kentucky Association of Prairie Rivers Network
Association Food Banks
American Wood Council Kentucky Farm Bureau Producers Cooperative
Association
AmericanHort Kentucky Soybean Project Bread
Association
Appalachian Mountain Kiddie City Child Care Public Health
Club Community Institute
Applegate Partnership PYCO Industries, Inc. Quail Forever
and Watershed Council
Aquatic Plant Land Trust Alliance Rain and Hail
Management Society Insurance Society
Archery Trade Laurie M. Tisch Center Resource Management
Association for Food, Education & Service, LLC
Arizona Farm Bureau Policy, Teachers RESULTS
Federation College Columbia
University
Arizona Pork Council Lee Miles Hunger Center Rio Grande Valley
Sugar Growers
Arkansas Farm Bureau Louisiana Association Rural & Agriculture
Federation of Cooper[a]tives Council of America
Arkansas Forestry Louisiana Farm Bureau Rural Advancement
Association Federation Foundational
International
Arkansas Hunger Relief Louisiana Food Bank Schlitz Audubon Nature
Alliance Association Center
Arkansas Soybean Louisiana Forestry School Nutrition
Association Association Association
Arkansas Wildlife Louisiana Wildlife Second Harvest Food
Federation Federation Bank CCL
Aspen American Lower Clear Fork SWCD Second Harvest Food
Insurance Company Bank of North Central
Ohio
Associated Milk Lower Mississippi River Second Harvest Food
Producers Inc. Foundation Bank of the Mahoning
Valley
Association of American Lutheran Services in Select Milk Producers,
Veterinary Medical America Inc.
Colleges
Association of Arizona Maryland & Virginia Share Our Strength
Food Banks Milk Producers
Association of Maryland Farm Bureau Shared Harvest
Equipment Foodbank
Manufacturers
Association of Fish and Maryland Forests Shoesole Management
Wildlife Agencies Association, Inc. Team
Association of Illinois Maryland Hunger Silveus Insurance
Soil and Water Solutions Group
Conservation Districts Massachusetts SNF Agriculture
Association of
Conservation Districts
Association of Kansas Massachusetts Farm Society for Nutrition
Food Banks Bureau Federation, Education and
Inc. Behavior
Association of Public Massachusetts Law Society of American
and Land-grant Reform Institute Foresters
Universities
Association of Texas Meals on Wheels America Society of St. Andrew
Soil and Water Michigan Agri-Business Society of St. Vincent
Conservation Districts Association de Paul, Cleveland
Association of Michigan Bean Shippers Soil and Water
Veterinary Biologics Conservation Society
Companies
Audubon Arizona Michigan Farm Bureau Soil Science Society
of America
Audubon Arkansas Michigan Forest South Carolina
Association Appleseed Legal
Justice Center
Audubon California Michigan Pork Producers South Carolina Farm
Association Bureau
Audubon Center at Michigan Soybean South Carolina Peach
RIverlands Association Council
Audubon Connecticut Mid-Ohio Foodbank South Dakota Farm
Bureau
Audubon Dakota Mid-West Dairymen's Co. South Dakota Soybean
Association
Audubon Florida MidAtlantic Farm Credit South Dakota Wildlife
Federation
Audubon Great Lakes Midwest Dairy Coalition South East Dairy
Farmers Association
Audubon Minnesota Midwest Organic and Southeastern Lumber
Audubon Mississippi Sustainable Education Manufacturers
Service--MOSES Association
Southern Oregon Forest
Restoration
Collaborative
Audubon Nebraska Milwaukee Riverkeeper Southern Peanut
Farmers Federation
Audubon New York Minnesota Association Southern States
Audubon North Carolina of Soil and Water Cooperative
Conservation Districts Southwest Council of
Agribusiness
Audubon of the Western Minnesota Corn Growers Southwest Georgia Farm
Everglades Association Credit
Audubon Pennsylvania Minnesota Farm Bureau Soyfoods Associat[i]on
Federation of North America
Audubon Rockies Minnesota Milk Stewardship Alliance
Producers Association of Northeast Elko
Audubon South Carolina Minnesota Pork Sugar Cane Growers
Producers Association Cooperative of
Florida
Audubon Texas Minnesota Soybean Sustainable Northwest
Growers Association
Audubon Vermont Mississippi Farm Bureau Tennessee Farm Bureau
Federation Federation
Audubon Washington Mississippi Peanut Tennessee Justice
Growers Association Center
Aullwood Audubon Center Mississippi Pork Tennessee Pork
and Farm Producers Producers Association
Aurora Cooperative Mississippi Soybean Tennessee Soybean
Association Association
B.A.S.S. LLC Missouri Coalition for Texas Agricultural
the Environment Cooperative Council
Beartooth Fertilizer Missouri Farm Bureau Texas Farm Bureau
Inc. Federation
Biotechnology Missouri Pork Texas Grain and Feed
Innovation Association Association
Organization
Blue Diamond Growers Missouri Soybean The American Chestnut
Association Foundation
Bluestem Communications MKC The American
Phytopathological
Society
Bongards Creameries Montana Association of The Community Pantry
Christians
Bread for the World Montana Cattlemen's The Conservation Fund
Associaton
C&H Associates Montana Cattlemen's The Fertilizer
Association Foundation Institute
California Association Montana Farm Bureau The Food Depot
of Food Banks Federation
California Association Montana Food Bank The Food Trust
of Resource Network The Foodbank, Inc.
Conservation Districts Montana Food Security
Council
California Farm Bureau Montana Grain Growers The Hardwood
Federation Association Federation
California Pork Montana Partnership to The Izaak Walton
Producers Association End Childhood Hunger League of America
California Rice Montana Wildlife The Jewish Federations
Commission Federation of North America
CarbonVerde, LLC N.C. Association of The Lyme Timber
Food Banks Company
Catch-A-Dream National All-Jersey The Nature Conservancy
Foundation
Center for Heirs' National Alliance of The Trust for Public
Property Preservation Forest Owners Land
Center for Law and National Association The Wetlands
Social Policy for the Advancement of Initiative
Central Aroostook Soil Animal Science Theodore Roosevelt
& Water Conservation Conservation
District Partnership
CGB Diversified National Association of TN Environmental
Services Clean Water Agencies Council
Chesapeake Bay National Association of Trout Unlimited
Foundation Conservation Districts
CHS Inc. National Association of U.S. Apple Association
Counties
City Bank Texas National Association of U.S. Canola
Farmer Elected Association
Committees
CoBank, ACB National Association of U.S. Cattlemen's
Forest Service Association
Retirees
Colorado Sorghum National Association of U.S. Dry Bean Council
Association Mutual Insurance
Companies
Colorado Wildlife National Association of U.S. Sweet Potato
Federation Nutrition and Aging Council
Congressional Hunger Services Programs USA Dry Pea & Lentil
Center Council
Connecticut Forest & National Association of Union of Concerned
Park Association Plant Breeders Scientists
Conservation Federation National Association of United Egg Producers
of Missouri Professional Insurance
Agents
Cooperative Network National Association of United Fresh Produce
Cottonseed and Feed Resource Conservation Association
Association & Development (RC&D) United Way Worldwide
Councils
Crop Insurance and National Association of USA Rice
Reinsurance Bureau Retired ASCS/FSA U.S. Rice Producers
Crop Insurance Office Employees Association
Professionals
Association
Crop Science Society of National Association of Utahns Against Hunger
America State Departments of Vermont Foodbank
D.C. Hunger Solutions Agriculture
Dairy Business Milk National Association of Vineyard Community
Marketing Cooperative State Foresters Church
Delaware Association of National Association of Virginia Conservation
Conservation Districts University Forest Network
Delaware Farm Bureau Resource Programs Virginia Farm Bureau
Federation
Delta Waterfowl National Association of Virginia Forestry
Wheat Growers Association
Ducks Unlimited National Barley Growers Washington Association
Association of Conservation
Districts
eGovernment Payments National Barley Washington Farm Bureau
Council of the Improvement Committee Virginia Soybean
Electronic Funds National Black Growers Association
Transfer Association Council
Empire State Forest National Bobwhite Washington Farm
Products Association Conservation Forestry Association
Initiative
Empower Missouri National Cattlemen's Watershed Research &
Beef Association Training Center
Endangered Habitats National Christmas Tree Weed Science Society
League Association of America
Entomological Society National Co+op Grocers West Ohio Food Bank
of America
End Hunger Connecticut! National Coalition for West Virginia Rivers
Food and Agricultural Coalition
Research
Environmental and National Conservation Western Center on Law
Energy Study Institute District Employees and Poverty
Association
Environmental Defense National Corn Growers Western Growers
Fund Association Association
Environmental Law & National Cotton Council Western Landowners
Policy Center Alliance
Equity Cooperative National Cotton Western Peanut Growers
Livestock Sales Ginners' Association Association
Association
Fair Food Network National Cottonseed Western Society of
Products Association Weed Science
Farm Credit Bank of National Council of Western United
Texas Farmer Cooperatives Dairymen
Farm Credit Council National Council on Wholesome Wave
Aging
Farm Credit East National Deer Alliance Wildlife Management
Institute
Farm Credit Mid-America National Farm to School Wildlife Mississippi
Network
Farm Credit of the National Farmers Union Windmark Crop
Virginias Division, City Bank
Texas
Farm Credit Services of National Milk Producers Wisconsin Farm Bureau
America Federation Federation
Farmer Mac National Organic Wisconsin Pork
Coalition Association
FarmFirst Dairy National Parks Women Involved in Farm
Cooperative Conservation Economics
Association
Federation of Virginia National Peach Council
Food Banks
Feeding America National Pork Producers WoodWorks--Wood
Council Products Council
Feeding Illinois National Potato Council Wyoming Farm Bureau
Feeding Indiana's National Sorghum World Wildlife Fund
Hungry Producers
Feeding Pennsylvania National Sunflower Wyoming Wildlife
Association Federation
Feeding Texas National Sustainable NC Forestry
Agriculture Coalition Association
Feeding Wisconsin National Wild Turkey Nebraska Appleseed
Federation
First District National Wildlife Nebraska Farm Bureau
Association Federation Federation
Florida Farm Bureau National Woodland Nebraska Grain Sorghum
Federation Owners Association Board
Florida Forestry National Young Farmers Nebraska Grain Sorghum
Association Coalition Producers Association
Florida Impact NAU Country Insurance
Company

______

Submitted Statement by Ron Moore, President, American Soybean
Association
Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee and full Committee, the American Soybean Association (ASA)
is pleased to provide this written statement for the record on the
Energy Title programs for the next farm bill and their role in
providing markets for agricultural products and economic growth for
rural America.
There are several Energy Title programs in which soybean producers
have a strong interest, including the Biobased Market Program (Section
9002), the Biodiesel Fuel Education Program (Section 9006), and the
Bioenergy Program for Advanced Biofuels (Section 9005). ASA recognizes
that these Energy Title programs do not have baseline going forward,
increasing the challenge of extending these programs and building on
the benefits they have provided. However, these programs remain high
priorities for ASA and we believe that the relatively low cost and the
benefits they provide warrant their continuation with an increased
level of mandatory funding.
Section 9002, Biobased Market Program: The Biobased Market Program
continues and expands the Federal biobased procurement program and
voluntary labeling program. This is an effective and important program
for promoting the emerging biobased industry, which has significant
potential to enhance agricultural markets, meet the growing demand for
biobased alternatives in chemicals, plastics, cleaners and other
industrial products, and contribute new jobs to the economy.
The U.S. biobased products industry in 2014 added $393 billion to
the U.S. economy and created 4.22 million jobs, according to a 2016
report from authored by Duke University's Center for Sustainability &
Commerce, and North Carolina State University's Poole College of
Management. This study, authorized in the 2014 Farm Bill Energy Title,
also reported that the state of Georgia ranks second, only behind
California, in direct economic value addition from the biobased
products industry in 2013. Georgia's direct value addition from
biobased totaled $8,237,608,000. With 80,520 biobased-sector jobs,
Georgia ranked fourth among states benefiting from the biobased
industry's ability to create jobs.
The soybean industry continues to partner with companies and invest
resources into biobased product development. Funding from soybean
farmers' check-off dollars has been invested with private-sector
partners to develop soy biobased products.
Through its use of soybean oil to displace petroleum in carpet and
artificial turf and grass, the Dalton, Georgia-headquartered company,
Universal Textile Technologies (UTT), is a global leader in the
biobased and textile industries. UTT manufacturers,
BioCelTM, a soy-based polyol technology developed with
support from the soybean check-off. America is literally walking on
thousands and thousands of square feet of soy-backed carpet available
from major companies like Masland and Signature Accord. SYNLawn, a
synthetic grass company, uses BioCel everywhere from New York City
rooftops and playgrounds to North Dakota backyards to water-conscious
resorts and residences in California and New Mexico.
The Biobased Market Program, established and expanded through
previous farm bills, plays an important role in the development of the
biobased products industry in the United States. By providing a
procurement preference for Federal Government purchases, the program
helps pull products into the market and encourages investment and
development of biobased products. ASA supports providing mandatory
funding through the farm bill for USDA to more effectively administer
the programs and further promote biobased markets.
Section 9006, Biodiesel Fuel Education Program: The Biodiesel
Education Program plays a vital role in helping expand marketplace
acceptance and use of biodiesel as a low-carbon, renewable diesel
replacement fuel. It supports technical outreach efforts to engine
manufacturers, truckers, and fuel marketers that allow the use of
higher biodiesel blends in conventional diesel applications. The
education program serves to expand and increase market penetration,
thus promoting growth for the entire industry. This translates into
higher production, more jobs, and more economic value, especially in
rural communities. Specifically, the biodiesel education program had a
large part to play in building automakers trust in, and support for,
biodiesel blends and growing the number of terminals, distributors, and
retail outlets carrying biodiesel.
ASA urges the continuation of this modest program that has achieved
great success in expanding biodiesel acceptance and availability.
Section 9005, Bioenergy Program for Advanced Biofuels: The
Bioenergy Program for Advanced Biofuels is a program of significant
interest and opportunity for producers of bioenergy and bioproducts,
particularly biodiesel. The biodiesel industry is still working to
establish itself in the competitive fuels marketplace and the Bioenergy
Program plays a beneficial role is supporting domestic producers facing
market fluctuations and uncertainty and competition from subsidized
foreign biomass-based diesel imports.
Many of the approximately 170 biodiesel production facilities in
the U.S. are located in rural areas. Biodiesel is produced from soybean
and other vegetable oils as well as animal fats. Nearly all of the
feedstock used to produce biodiesel is grown or originates in rural
areas. For the soybean industry, biodiesel provides a valuable market
for soybean oil that has historically provided a drag on overall
soybean prices and it has provided an outlet and market for soybean oil
whose use in food production for baking and frying has declined due to
trans fat issues.
While ASA recognizes the funding challenges that exist, we believe
that the Bioenergy Program for Advanced Biofuels can continue to play a
role in supporting the development of advanced biofuels, bioenergy, and
biobased products and we support the reauthorization and funding of the
program in the next farm bill.
We appreciate the Committee holding this hearing on rural
development and energy programs and providing ASA the opportunity to
submit this statement for the record. As always, we look forward to
working with you on the development of a farm bill that includes an
Energy Title and mandatory funding for priority programs.
Sincerely,

Ron Moore,
President,
American Soybean Association.
______

Submitted Statement by CoBank ACB
The farm bill is a unique piece of legislation that is reauthorized
every 4 to 5 years. The first agricultural act was authorized during
Roosevelt's ``New Deal'' period. The Agricultural Adjustment Act of
1933 was authorized to aid farmers during troubling times. In 1938,
this piece of legislation was updated to require farm programs be
looked at every 5 years, ensuring Congress paid attention to the
volatile markets and changing times of the ever growing economy. Today,
the farm bill authorizes hundreds of programs. This piece of
legislation provides food assistance to disadvantaged individuals,
opportunities for emerging agricultural research, security for
livestock and crop producers, and capital for infrastructure investment
in rural communities.
The Rural Development Title of the farm bill was created as an
avenue to enhance the communities where agricultural producers live, so
that the heart of the country will not have to leave home in order to
thrive. Since 1973, every farm bill has included a rural development
section. Of importance, there is no overarching statutory framework
that underpins Federal rural policy. Title VI of the farm bill is the
main policy tool to address emerging rural and small community issues.
Issues including adequate housing, business creation, human capital
concerns, rural poverty, adequate medical care, and infrastructure
needed to serve these communities are all addressed in this one area of
the omnibus farm bill.
Rural populations and job opportunities continue to decline. The
need for investment to improve and enhance rural America is more urgent
than ever. According to the U.S. Census, manufacturing now accounts for
over 20% of rural private-sector earning and nearly 11% of rural jobs.
That economic activity depends on the answers to important questions.
How do we get people to go to rural America? How do we keep them there?
How should the government help rural America thrive and put rural
residents in a position to compete in the global marketplace? When we
answer these questions we help our communities thrive.
The Rural Development title, addresses these questions every day.
CoBank is proud to be a partner in those efforts. It is our mission to
serve the hard working individuals, companies, producers, and customers
that call our rural communities home. We work with those who have been
overlooked. We do so by finding solutions to broadband issues in rural
Utah, improving health care facilities for rural Minnesota, and we
ensure that rural Iowa communities have access to clean water. We
accomplish each of these missions in partnership with the United States
Department of Agriculture (USDA).
CoBank is a member of the Farm Credit System, a nationwide network
of banks and retail lending associations chartered to support the
borrowing needs of U.S. agriculture and the nation's rural economy.
CoBank is a national cooperative bank, with the mission to serve rural
America. The bank provides loans, leases, export financing and other
financial services to agribusinesses and rural power, water and
communications providers in all fifty states. In addition to serving
our direct retail borrowers, we also provide wholesale loans and other
financial services to our affiliated Farm Credit Associations across
twenty-three states and serving approximately 70,000 farmers, ranchers,
and other rural businesses.
The mission of CoBank includes serving ``as a dependable provider
of credit and other value-added financial services to agriculture and
rural infrastructure businesses for the benefit of rural America.'' Our
mission parallels' that of USDA's Rural Development office, which is,
``We promote economic development by supporting loans to businesses
through banks, credit unions and community-managed lending pools. We
offer technical assistance and information to help agricultural
producers and cooperatives get started and improve the effectiveness of
their operations.'' Our two entities are naturally complementary. We
serve the same entities to better the same communities, and to improve
the lives of rural America's residents.
A strong Rural Development title is necessary to bridge the growing
divide between rural and urban America. As individuals leave the farm
for the urban life, what is left is sometimes forgotten. The
deteriorating infrastructure in our small and local communities is
omnipresent. The idea that water treatment facilities have not been
replaced in over sixty years is unacceptable. With water quality issues
being prevalent throughout the country like we have most recently seen
in Flint, Michigan, the fact that we are not able to take care of the
issues in our back yard, is unsettling for most. The Rural Development
title of the farm bill, when funded adequately and administered
efficiently, has the ability to repair all of the issues that
disadvantage most small and rural communities. Access to the capital to
finance improvements to a local water treatment facility, access to
broadband that allows for a teleconference with a doctor in an urban
community 5 hours away from home, and financial incentives to attract a
meat processing facility to a rural community all serve to improve the
quality of life and economic activity of rural America. None would be
possible without the programs that the Rural Development title
authorizes.
Several programs that are important to CoBank customers are
included below.
Water and Wastewater Loan Programs
The Water and Wastewater Loan Program is vital to the health of any
rural community. Without clean water a community cannot exist. The
program extends affordable access to clean and reliable water for
households and businesses in rural areas. Infrastructure in these
communities has exceeded its lifespan and the deterioration of these
facilities is hurting communities. In most recent years, much of the
country went through a major drought. Many were often faced with the
tough decision between increasing water prices to deter usage,
rationing water, or penalizing farmers for excessive water use? The
irony of this situation is that many rural areas hurting the most were
losing sometimes fifty percent of the water moving through their pipes.
For many towns it was cheaper to waste water than to update their local
communities' water infrastructure. This program must be continued.
Communities and Facilities Loan Program
The Community Facilities Loan Guarantee Program encourages private
lenders, like CoBank, to assist rural communities in building
facilities that are essential to the lives of their residents. This
program permits the investment in the purchase, construction, and
improvement to equipment or necessary facilities. Public facilities,
healthcare facilities, utility services, and public safety and
educational services are considered essential as well. CoBank has
recently partnered with a local farm credit association in Minnesota to
finance improvements at a local rural hospital Improving their existing
structure and expanding capacity to assist rural constituents who
without this project may not be able to receive or seek necessary
treatment without burdensome travel. This program is important and
could be streamlined to make it even more useful.
Farm Bill Broadband Loan and Loan Guarantees and Telecommunications
Infrastructure Loan and Loan Guarantees
It is no surprise that many rural areas still struggle with
obtaining adequate access to rural broadband. Broadband is now a
necessity everywhere: for any small rural community, every rural
medical office, every farmer, and every household with a child in
school. No one will stay or plant their roots in rural America if they
cannot access services to which they have become accustomed or if they
cannot find meaningful work.
The Farm Bill Rural Broadband Access Loan and Loan Guarantee
Program (Farm Bill Broadband Program) allows for cooperatives, like
CoBank, to provide loans to provide funds for construction,
improvement, and acquisition of facilities and equipment. Without the
capital to purchase these materials, broadband would not be feasible
for many rural communities.
Further, the Telecommunications Infrastructure Loan and Loan
Guarantees Program provide financing for improvements, expansions,
constructions, some acquisitions, some opportunities for refinancing,
and additionally to finance broadband capable telecommunications
service. These programs are essential, and should be streamlined, where
possible, to make them easier to deploy.
Business & Industry Loan Guarantees
Business & Industry Loan Guarantees (B&I Loans) have the unique
ability to allow farm credit banks, like CoBank, to offer the private
credit structure by guaranteeing rural business loans. This allows
entities participating in the loan to extend more credit than they
typically would be able to, to bring investment needed to improve rural
America and to improve the agricultural economy as a whole.
Rural Energy for America Program--Renewable Energy Systems and Energy
Efficiency Improvement Loan and Grants
The Rural Energy for America Program (REAP) allows for guaranteed
loan financing, and grant funding to agricultural producers and small
rural businesses. REAP allow these entities to make investments and to
enhance their operations and increase their energy efficiency to bring
down their operating costs. This program allows cooperatives to invest
in their customers by helping them weather the long term and constantly
changing commodity prices we are experiencing.
CoBank supports the passage of a strong Rural Development Title and
will continue to advocate for the same. Improvements are always
possible, but continuing the important progress USDA has made and
working to enhance these programs to improve rural America is of the
utmost importance to CoBank and the customers we serve.
______

Submitted Statement by National Biodiesel Board
Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee and full Committee, the National Biodiesel Board (NBB)
appreciates the opportunity to submit this statement for the record for
the hearing titled, ``The Next Farm Bill: Rural Development & Energy
Programs''. The biodiesel industry is extremely proud of the
contribution to energy & economic growth that our industry provides the
nation, especially in rural America. The U.S. biodiesel industry
experienced a record year in 2016, with approximately 2.9 billion
gallons of biomass-based diesel utilized nation-wide, all of which is
produced using co-products and waste products derived from agricultural
sources.
NBB is the national trade association representing the biodiesel
industry. NBB has significant roots and ties to U.S. agriculture. It
was founded in 1992, with significant investment from the U.S. soybean
industry, and since that time, the NBB has developed into a
comprehensive industry association that coordinates and interacts with
a broad range of cooperators including industry, government and
academia. NBB's membership is comprised of biodiesel producers; state,
national and international feedstock and feedstock processor
organizations; fuel marketers and distributors; and technology
providers.
Biodiesel producers include farmer-owned cooperatives and other
farmer-owned companies, agribusinesses and independently owned
biodiesel producers. The American Soybean Association, United Soybean
Board, numerous state soybean associations, and the U.S. Canola
Association play an active and important role in our organization, and
our Governing Board consists of several active soybean farmers.
About Biodiesel
Biodiesel is a renewable, low carbon diesel replacement fuel.
Biodiesel is refined to meet the D6751 fuel specification set forth by
ASTM International. Biodiesel is made from surplus soybean and canola
oil, waste greases like recycled cooking oil, animal fats, algae, and
inedible corn oil derived from the ethanol production process. There
are approximately 170 biodiesel production plants spread all across the
U.S.
Biodiesel is primarily marketed as a five percent (B5) blending
component with conventional diesel fuel, but can be used in
concentrations up to twenty percent (B20). It is distributed utilizing
the existing fuel distribution infrastructure with blending occurring
both at fuel terminals and ``below the rack'' by fuel jobbers.
Biodiesel is the first and currently the only fuel being produced
in commercial quantities that qualifies as an Advanced Biofuel for
purposes of the Renewable Fuel Standard, which means that it achieves a
minimum of 50% greenhouse gas emissions reductions relative to
petroleum. Along with significant reductions in greenhouse gas
emissions, it dramatically reduces nearly every major toxic air
pollutant, according to the EPA.
The Biodiesel Industry is Creating Jobs and Making a Positive
Contribution to the Economy, Especially in Rural America: In 2016, the
NBB estimates that the U.S. biodiesel industry supports over 48,000
jobs in all sectors of the economy. Biodiesel also makes a significant
contribution to rural economic development. Many of the approximately
170 biodiesel production facilities in the U.S. are located in rural
areas and nearly all of the feedstock used to produce biodiesel is
grown or originates in rural areas.
While the biodiesel market was initially reliant on surplus
vegetable oils as the primary feedstocks, animal fats and greases are
now a prominent and growing portion of the industry. In fact, biodiesel
and renewable diesel are now one of the largest markets for animal
fats, utilizing over 1 billion pounds of fats annually and adding
millions of dollars of value to animal production each year. Animal
fats are used in biomass-based diesel to produce biodiesel, renewable
diesel, and renewable aviation fuel. The livestock, rendering and
biodiesel industries employ tens of thousands of workers nationwide,
with many of these jobs in rural areas across the country.
Biodiesel provides a valuable market for soybean oil that has
historically been in surplus and whose use in food production has
declined in recent years due to trans fat issues. In addition to
providing a growing and valuable market for rendered animal fats,
biodiesel helps increase production of soy meal used for livestock
feed. Soybeans are 80% meal and 20% oil. Between 2005 and 2009, the
increased demand for soybean oil has subsequently increased the
production of soybean meal, which has lowered soybean meal prices for
livestock feed by $16 to $48 per ton from where they would have
otherwise been.\1\
---------------------------------------------------------------------------
\1\Economic Impacts of Biodiesel Production on The Soybean Sector,
Revisited: Centric Consulting Group, LLC, December 2010.
---------------------------------------------------------------------------
Biodiesel & the Farm Bill
Given its agricultural roots and the benefits it provides to U.S.
farmers and rural communities, programs supporting biodiesel are an
appropriate piece of the farm bill. NBB has a particular interest in
two existing farm bill energy title programs--the Biodiesel Fuel
Education Program (Section 9006) and the Bioenergy Program for Advanced
Biofuels (Section 9005). NBB recognizes that these Energy Title
programs do not have baseline funding going forward, which creates a
challenge to extending these programs and building on the benefits they
have provided.
Section 9006, Biodiesel Fuel Education Program
The Biodiesel Fuel Education Program plays a vital role in helping
expand marketplace acceptance and use of biodiesel as a low-carbon,
renewable diesel replacement fuel. NBB urges the continuation of this
program in the next farm bill.
Through competitive grants to nonprofit entities, this program
supports technical outreach efforts to engine manufacturers, truckers,
and fuel marketers that will eventually allow the use of higher
biodiesel blends in conventional diesel applications. This program
helps educate on the different characteristics and benefits of
biodiesel and to clear up misperceptions that have developed. Since
2003, the NBB has achieved great success in garnering and promoting OEM
(Organization of Engine Manufacturers) support for biodiesel through
the OEM biodiesel education program. The OEM biodiesel education
program had a large part to play in building automakers' trust in, and
support for, biodiesel blends.
Section 9005, Bioenergy Program for Advanced Biofuels
Section 9005 of the 2008 Farm Bill also authorized and provided
mandatory funding for USDA to implement the Bioenergy Program for
Advanced Biofuels to make payments to producers of advanced biofuels
and bioenergy to support a stable and expanding production base. The
Bioenergy Program has been beneficial to many biodiesel producers as
the industry is working to establish itself in the competitive
marketplace. The program helps with the development and expansion of
new markets for agricultural feedstocks including vegetable oils and
animal fats. The markets that biodiesel provides for these agricultural
waste and co-products increases value for farmers and ranchers. As
such, we urge the Committee to reauthorize and fund this program.
Conclusion: The U.S. biodiesel industry is proud to produce the
only domestic, emissions-reducing, commercial-scale Advanced Biofuel
that is readily available and accepted in the marketplace. The U.S.
biodiesel industry has both the capacity and available feedstock to
increase production and further expand markets for agricultural
feedstocks.
We are proud of the significant economic, energy, and environmental
benefits associated with biodiesel production. Accordingly, the U.S.
biodiesel industry urges continued mandatory funding for the Biodiesel
Education Program as well as reauthorization and funding of the
Bioenergy Pr[og]ram for Advanced Biofuels. These investments help the
small but growing biodiesel industry gain a sustainable presence in the
U.S. fuels marketplace.
* * * * *
Again, the NBB appreciates the opportunity to submit this statement
for the hearing record. We look forward to working with you on the
development of the farm bill and the continuation of the programs that
support the growing U.S. biodiesel industry.
______

Submitted Statement by Rural Community Assistance Partnership
Thank you Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee, for this opportunity to submit written testimony on the
importance of USDA Rural Development (RD) programs to rural America.
The Rural Community Assistance Partnership (RCAP) is a nonprofit
national network of regional service providers that for nearly 45 years
has helped small, low-income, rural communities address water,
wastewater, and other community development needs in all 50 states,
Puerto Rico, and the Virgin Islands. Our staff of assistance providers
deliver onsite training and technical assistance to small water and
wastewater systems to help these systems meet Federal and state
regulatory requirements, finance and manage capital improvement
projects, and to develop and sustain technical, managerial, and
financial capacities.
For many years, the RCAP network has partnered with USDA to bridge
the gap between RD and the communities they serve. RCAP assists rural
communities with funding applications and every phase of the project
planning and development process, as well as providing training and
technical assistance after construction is complete, helping
communities understand how to properly manage and operate their system
in a fiscally sustainable manner. We work to ensure that RD borrowers
are able to meet the terms of their Letters of Condition and that they
are able to repay their loans on time. Every year, the RCAP network
helps over 2,000 rural communities address their water and wastewater
needs.
Providing these basic services is a challenge for many rural
communities. Rural residents are three times more likely than their
urban counterparts to lack water and sanitation; they also typically
pay nearly three or four times the amount for water and sewer services.
Due to their limited customer base, small utilities lack the economies
of scale that reduce the costs of infrastructure construction,
operation, and maintenance to levels that are affordable to low-income
residents. Few rural communities can access the municipal bond market
or find banks that are willing to invest in such long-term, low-yield
transactions. Many turn to RD as their lender of last resort.
USDA-RD Water and Wastewater Programs Have Been Enormously Successful
RD's water and wastewater programs are a key component of economic
development in rural America. Every water and wastewater construction
dollar generates nearly $15 of private investment and adds $14 to the
local property tax base. Without the basic infrastructure funded by
RD--clean drinking water for household needs, sufficient quantities of
water to support local industry, and sanitary sewers to remove sewage
and industrial byproducts to protect public health--local employers
will relocate or close factories and small businesses will decline and
eventually disappear. The entrepreneurs and small business owners who
are the engines of our economy won't open new businesses, shops or
restaurants on Main Street without basic services. Infrastructure is
the foundation of economic development, and to promote economic growth
in rural America, you need to ensure that businesses' and residents'
basic needs--like water and sewer services--are met. Opportunities for
continued economic growth in rural communities are substantial.
Agricultural production, oil and gas development, mining operations,
alternative energy pursuits, and tourism are all vibrant economic
sectors that depend on thriving rural communities. RD programs play a
part in making available to rural communities water and wastewater
utilities, essential community facilities, affordable housing, and
broadband.
The Water and Environment Programs at RD have enjoyed tremendous
success over the past few decades. The agency boasts a portfolio of
more than 18,000 active water/sewer loans, more than 19 million rural
residents served, and a delinquency rate of just 0.43%. This success is
partly attributable to the field presence RD has historically
maintained in rural areas. With staff in field offices throughout the
country, RD is uniquely positioned to evaluate the credit-worthiness of
small utilities and can distribute Federal funds quickly and
efficiently to areas of need. In drought years, or after natural
disasters, community leaders benefit from being able to turn to a local
RD staffer whom they know and trust and who is familiar with their
system and its needs, though recent staff reductions in RD offices
nationally have started to hinder the ability of RD to serve rural
communities with these critical services. To build on the past
successes of the Water and Environment Programs, the farm bill should
reauthorize the water and wastewater loan and grant programs, the
technical assistance and training grant program, and the water
infrastructure revolving loan fund program at or near the levels in the
current farm bill.
Technical Assistance Is Key to Ensuring RD's and Rural Communities'
Success
Despite RD's many successes, a substantial number of small, low-
income towns and counties have difficulty accessing RD programs. The
application process and eligibility requirements for each program are
slightly different, and each poses unique challenges. Local leaders are
most often volunteers who lack professional staff and the resources to
find out what funding sources are available or the requirements for
funding eligibility. Their first look at the Letter of Conditions on an
RD loan can make the process seem overwhelming and discourage worthy
applications. With help from an experienced technical assistance
provider, however, even communities with no staff and limited planning
resources can develop the local leadership capacity to manage needed
infrastructure projects. Technical assistance plays a vital role in
ensuring that the programs serve the communities they were designed to
benefit in a cost-effective manner.
While there are many calls for reducing the requirements associated
with obtaining water and wastewater financing from RD, RCAP's opinion
is that these requirements are for the most part necessary to ensure
that the Federal Government is making financial support available to
the neediest communities while ensuring the security of the Federal
investment. The extremely low default rate on these loans is a
testament to the efficacy of existing requirements. Common
environmental review requirements among all Federal and state
infrastructure programs would be one area for improvement. Oftentimes
projects have multiple funding sources with varying environmental
review/assessment requirements, and standardizing them across Federal
programs would reduce the burden on applicants to conduct multiple
separate reviews.
Overall, the water and wastewater Technical Assistance and Training
Grant Program has been so successful that many state RD offices and
local community officials have asked the RCAP network to assist with
other, non-water-related RD-funded projects. In the last farm bill,
Congress authorized a new set-aside program for the Rural Housing
Service's Essential Community Facilities (CF) Program to fund technical
assistance because State RD Offices have requested RCAP for assistance
with borrowers under the CF program. If implemented properly, the CF
technical assistance and training program will provide much-needed
support for the CF program, as has been the case with the water and
wastewater programs. Under current and projected economic outlooks,
essential community facilities constitute an important foundation for
rural community growth. Reauthorizing this dedicated CF technical
assistance program will ensure that these facilities are planned for,
constructed, operated and managed in an efficient manner that benefits
the entire community and promotes economic development opportunities.
Reauthorize Revolving Funds for Financing Water and Wastewater Projects
7 U.S.C. 1926(a)(2)(B) authorizes a program for nonprofit entities
to capitalize revolving loan funds for the purposes of financing
eligible borrowers with predevelopment or other short-term capital
costs (such as site acquisition or engineering costs or for equipment
replacement, small service extensions or emergency repairs). RCAP would
recommend that this program be maintained at currently authorized
levels and the maximum for eligible loans to small-system borrowers be
increased from $100,000 to $200,000, as costs for even the smallest
repairs have increased significantly. Both RCAP and the National Rural
Water Association have utilized this program to capitalize revolving
loan fund programs that have assisted small communities to extend
services, meet regulatory requirements, make emergency repairs and fund
pre-development costs associated with major capital construction
projects. These types of loans are typically not available from RD or
the State Revolving Funds, nor do small communities have much hope of
securing these loans from private sources. Demand for these loans far
surpasses amounts authorized and appropriated for this purpose.
Household Water Well Program: 7 U.S.C. 1926(E)
This section allows RD to make grants to nonprofit organizations to
loan money to individuals to finance the construction, refurbishing and
servicing of individually owned household water well systems in rural
areas. While this program, combined at times with state housing
programs, has benefited low-income families in isolated rural areas
that would otherwise be unable to obtain water except through a
household well, the farm bill should require that none of these loans
go to residences in areas where RD has funded or is considering funding
a community water system. Funding individual homeowner loans can
adversely impact small customer bases within areas funded by RD's
community water loans by reducing the potential number of customers who
are ultimately responsible for servicing the Federal debt. Furthermore,
encouraging multiple wells into potentially sensitive and increasingly
depleted aquifers can negatively impact other users from both a water
quality and water quantity perspective.
Conclusion
Solving the challenges facing rural communities requires a multi-
pronged approach that includes adequate funding, along with steps to
ensure that funding is available to all communities that truly need it,
and a comprehensive approach to technical assistance to maximize the
efficiency and effectiveness of RD's programs. It also includes an
emphasis on rural economic development and cost-effective investments
in infrastructure that provide maximum return on scarce Federal, state,
and local resources. The farm bill reauthorization is an opportunity to
replicate the success of the water/wastewater technical assistance
program and modify existing programs, while protecting taxpayer
investment in our nation's water and sewer infrastructure.
We know that there is a long road ahead for the next farm bill
reauthorization, but we stand ready and willing to assist you in
pushing for its adoption and look forward to opportunities to work with
you and your colleagues to ensure that it meets the needs of our rural
communities. We thank you for your commitment to rural America and your
earnest efforts to ensure a robust rural economy.
______

Submitted Questions
Response from Hon. Bob Fox, Chair, Board of Commissioners, Renville
County, MN; Member, Board of Directors, National Association of
Counties*
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*There was no response from the witness by the time this hearing
was published.
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Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Question. In your testimony, you mention the importance of the
Community Facilities Direct Loan and Grant Program within USDA Rural
Development.
The specific language establishing the program provides loans,
grants, and loan guarantees for ``essential community facilities'' in
certain rural areas.
It has been over 20 years since the Virgin Islands has had
sufficient resources to build a new school.
Would the construction of a new school in a qualified rural
community be included in the program's authority to fund ``essential
community facilities''? If not, should the program be expanded to
include this?
Answer.
Response from Dennis L. Chastain, President and Chief Executive
Officer, Georgia Electric Membership Corporation; on behalf of
National Rural Electric Cooperative Association*
Question Submitted by Hon. Tom O'Halleran, a Representative in Congress
from Arizona
Question. You mentioned that the needs of rural co-ops have changed
and your emphasis has moved to making the grid smarter. I have native
constituents that remain without electricity. What improvements to RUS
do you believe will help the rural co-ops that are still working on
expanding their grids?
Answer.
Response from Steve Fletcher, Manager and Operator, Washington County
Water Company, IL; President, National Rural Water Association
Question Submitted by Hon. Tom O'Halleran, a Representative in Congress
from Arizona
Question. You said it was a disaster for your customers when they
turn on the faucet and don't have water. For many of my Tribal
constituents, this disaster is daily life. What do you think what can
we do better in the farm bill to encourage development of clean water
systems in extremely rural communities?
Answer. We understand that on the Navajo Nation in your state many
residents are still hauling water. Many Tribal water systems share the
same problems that many small communities experience, and we also
recognize they have unique challenges such as sovereignty, cultural
norms, many lack resources, capacity issues, high operator turn-over,
etc. The Circuit Rider concept is very effective in addressing and
identifying solutions to these unique issues because of established
long-term relationships predicated on trust and the vast experience of
the Circuit Riders.
For decades, we have been working with these difficult situations
on tribal lands in your home state of Arizona and in New Mexico, North
and South Dakota, Minnesota and other states fulfilling the needs of
their constituency. Currently in Arizona, the Rural Water Association
of Arizona has two full-time Circuit Riders devoted to drinking water
and one full-time Circuit Rider devoted to wastewater systems. You
could expand this program to allow for a dedicated Circuit Rider for
Tribal areas in states that have a large number of federally recognized
tribes.Below are a few suggestions to address these unfortunate
circumstances for tribal areas and extremely remote rural areas through
the Farm Bill and the existing programs:

1. Water Stations--For some areas due to the remoteness and/or the
ability to finance and manage an affordable community water
system, an innovative and affordable solution could include
financing a watering station at a suitable water source
where the residents and/or the community could obtain safe
and affordable water. Then using sanitized water
containers, the residents and/or the community could fill
their containers with clean water and transport the water
and return to the filling station on an as needed basis.

For instance, in the Maricopa Mountain area there are three (3)
well sites that are 60 miles south of Phoenix,
approximately 1,500 people live in this area and they are
still hauling water. Populations located around feed lots
with agriculture land is another concern with nitrates that
have contaminated the ground water and the wells have to
reach 3,000 before they are able to access clean water
that is safe enough to drink.
We have been told this type of facility, a water station, has
been financed before by Rural Development even though the
authority is somewhat vague and left up to interpretation
from each state office. The current regulation
(1780.9(e)(1)(iii) (https://www.gpo.gov/fdsys/pkg/CFR-2017-
title7-vol12/pdf/CFR-2017-title7-vol12-sec1780-9.pdf))*
states that allowable activities include ``Purchasing or
renting equipment necessary to install, operate, maintain,
extend, or protect facilities.'' You may want to add
language to clearly define that funds may be used for this
purpose and include critical equipment, like the vehicle
and containers necessary to transport the water, as an
eligible purpose for loan and grant funding.
---------------------------------------------------------------------------
*Editor's note: See attachment. The hyperlink in the parenthesis is
the offical hyperlink from the U.S. Government Publishing Office; the
hyperlink as submitted is: http://federal.elaws.us/cfr/
title7.part1780.section1780.9.

2. Existing programs--Leverage existing programs currently
authorized in the farm bill to create a sustainable safe
drinking water supply for the community. For example, the
USDA Rural Development Water and Wastewater Loan and Grant
program provides funding to communities with populations of
less than 10,000 for clean and reliable drinking water
infrastructure. With the help of an Arizona Rural Water
Circuit Rider, the community could assess their water
supply sources, identify the needed infrastructure, and
develop a proposal for the review of USDA Rural
Development. One hundred percent of the loans and grants
from this program are targeted to small and rural
communities, and therefore make it an attractive option for
the extremely rural community to consider, especially if
their goal is to have a sustainable water supply of their
---------------------------------------------------------------------------
own wells.

As you are aware, each annual appropriations bill includes a
specific set-aside for loans and grants for Federally
Recognized Native American Tribes (7 U.S.C. 1926) Unlike
the standard grant programs that is capped at 75% grant,
grant funding may be up to 100% of the eligible project
cost for tribal areas.

3. Native American Circuit Rider Program--There is also a program
created by the Appropriations Committee, the Native
American Circuit Rider Program that is specifically
targeted for a qualified national Native American
organization to provide technical assistance for rural
water systems for tribal communities. Since inception, this
program has historically received $800,000 annually. You
may want to review this program and make additional changes
specifically to address the unique needs of Tribal
communities. As previously mentioned, the Rural Water
Association of Arizona had a designated Native American
Circuit Rider, but that funding was lost. You could explore
the possibility to add a preference and/or additional
resources within the standard Circuit Rider program (7
U.S.C. 1926(a)(22) for system capacity and development for
Native Americans.

4. The Grassroots Source Water Protection Program (16 U.S.C. 3839bb-
2)--This program is administered through the Farm Service
Agency and is another resource for Tribal areas and remote
rural communities. You may want to explore expanding this
authorization to provide priority in addressing the
critical water sources for Tribal lands and extremely
remote low-income communities. Recently in Arizona, we have
had requests in Tribal areas to provide this service in
order to mutually develop Source Water Protection plans
necessary to identify threats and preserve and protect
their valuable water sources.

5. Unserved and underserved communities--Unfortunately, many
unserved or underserved rural areas within the United
States lack the technical, financial, and managerial
capacity to adequately operate, maintain or provide safe
and affordable water and wastewater service necessary to
protect and enhance the public health and economic vitality
within in their communities. The National Rural Water
Association held a district/regional water meeting last
year with many utilities and Rural Development employees to
discuss this and other issues.

One solution presented was to consider providing a financial
incentive, in the form of a direct loan at the poverty
interest rate, to encourage local utilities to provide
service to these communities. The intent is to allow
contiguous and local utilities located outside of the
unserved or underserved service areas that have the
capacity and experience to provide this essential water and
or wastewater service.
We thought this would be another positive tool to provide Rural
Development additional authority to address these
situations. Here are a few details of the proposed concept.
We would welcome further discussions and suggestions and
would also encourage you to reach out to Rural Development
and get their comments. Key points--
Assistance
The Secretary may make direct water and wastewater loans at the
poverty interest rate as authorized under Section 307(a)(3)
of the CONACT (7 U.S.C. 11927 (a)(3)) for such projects in
cities, towns, or unincorporated areas with populations at
or below 10,000 in communities that lack the technical,
financial, and managerial capacity to adequately operate,
maintain and serve the present population, as determined by
the Secretary.
Eligible applicants
Eligible applicants shall be contiguous and local utilities
outside of the service area with demonstrated experience
and capacity, as determined by the Secretary, in delivering
water and or waste water programs administrated through the
Rural Utilit[ies] Service and can further demonstrate the
capacity to provide service to the unserved or underserved
area.
Justification
Presently, there are many unserved or underserved rural areas
within the United States lack the technical, financial, and
managerial capacity to adequately operate, maintain or
provide safe and affordable water and wastewater service
necessary to protect and enhance the public health and
economic vitality in their communities. Many contiguous and
local utilities located outside of the unserved or
underserved service area have the capacity to provide
essential water and or waste water services to these
unserved or underserve areas. This proposal provides a
financial incentive in the form of financing direct water
and waste water loans at the poverty interest rate that
will further enhance the ability to provide essential water
and waste water services to these communities in need.
Eligible utilities for funding should be limited to have
demonstrated experience and capacity, as determined by the
Secretary, in delivering water and or waste programs
administrated through the Rural Utilit[ies] Service and can
further demonstrate the capacity to provide service to the
unserved or underserved area.

6. Other resources--In 2016, the Inter-Tribal Council of Arizona,
Inc. (ITCA) was awarded $600,000 proposing to provide
tribal operator certification training and examination
events, training workshops on water utility workforce
retention, public relations, and operator safety awareness.
ITCA will implement a tribally-led capacity development
program that provides technical assistance; SDWA training
and regulatory updates; asset management training; and
utility specific Effective Utility Management team exercise
assessment workshops. ITCA will conduct 12 workshops (two
for each region).
attachment
Code of Federal Regulations
Title 7--Agriculture

Volume: 12
Date: 2017-01-01
Original Date: 2017-01-01
Title: Section A
1780.9--Eligible loan and grant purposes.

Context:

Title 7--Agriculture.
Subtitle B--Regulations of the Department of Agriculture (Continued).
Chapter XVII--Rural Utilities Service, Department of Agriculture
(Continued).
Part 1780--Water and Waste Loans and Grants.
Subpart A--General Policies and Requirements.
1780.9 Eligible loan and grant purposes.
Loan and grant funds may be used only for the following purposes:

(a) To construct, enlarge, extend, or otherwise improve rural
water, sanitary sewage, solid waste disposal, and storm
wastewater disposal facilities.
(b) To construct or relocate public buildings, roads,
bridges, fences, or utilities, and to make other public
improvements necessary for the successful operation or
protection of facilities authorized in paragraph (a) of this
section.
(c) To relocate private buildings, roads, bridges, fences, or
utilities, and other private improvements necessary for the
successful operation or protection of facilities authorized in
paragraph (a) of this section.
(d) For payment of other utility connection charges as
provided in service contracts between utility systems.
(e) When a necessary part of the project relates to those
facilities authorized in paragraphs (a), (b), (c) or (d) of
this section the following may be considered:

(1) Loan or grant funds may be used for:

(i) Reasonable fees and costs such as: legal,
engineering, administrative services, fiscal
advisory, recording, environmental analyses and
surveys, possible salvage or other mitigation
measures, planning, establishing or acquiring
rights;
(ii) Costs of acquiring interest in land;
rights, such as water rights, leases, permits,
rights-of-way; and other evidence of land or
water control or protection necessary for
development of the facility;
(iii) Purchasing or renting equipment
necessary to install, operate, maintain,
extend, or protect facilities;
(iv) Cost of additional applicant labor and
other expenses necessary to install and extend
service; and
(v) In unusual cases, the cost for connecting
the user to the main service line.

(2) Only loan funds may be used for:

(i) Interest incurred during construction in
conjunction with multiple advances or interest
on interim financing;
(ii) Initial operating expenses, including
interest, for a period ordinarily not exceeding
one year when the applicant is unable to pay
such expenses;
(iii) The purchase of existing facilities
when it is necessary either to improve service
or prevent the loss of service;
(iv) Refinancing debts incurred by, or on
behalf of, an applicant when all of the
following conditions exist:

(A) The debts being refinanced are a
secondary part of the total loan;
(B) The debts were incurred for the
facility or service being financed or
any part thereof; and
(C) Arrangements cannot be made with
the creditors to extend or modify the
terms of the debts so that a sound
basis will exist for making a loan; and

(v) Prepayment of costs for which RUS grant
funds were obligated.

(3) Grant funds may be used to restore loan funds
used to prepay grant obligated costs.

(f) Construction incurred before loan or grant approval.

(1) Funds may be used to pay obligations for eligible
project costs incurred before loan or grant approval if
such requests are made in writing by the applicant and
the Agency determines that:

(i) Compelling reasons exist for incurring
obligations before loan or grant approval;
(ii) The obligations will be incurred for
authorized loan or grant purposes; and
(iii) The Agency's authorization to pay such
obligations is on the condition that it is not
committed to make the loan or grant; it assumes
no responsibility for any obligations incurred
by the applicant; and the applicant must
subsequently meet all loan or grant approval
requirements, including environmental and
contracting requirements.

(2) If construction is started without Agency
approval, post-approval in accordance with this section
may be considered, provided the construction meets
applicable requirements including those regarding
approval and environmental matters.

(g) Water or sewer service may be provided through individual
installations or small clusters of users within an applicant's
service area. The approval official should consider items such
as: quantity and quality of the individual installations that
may be developed; cost effectiveness of the individual facility
compared with the initial and long term user cost on a central
system; health and pollution problems attributable to
individual facilities; operational or management problems
peculiar to individual installations; and permit and regulatory
agency requirements.

(1) Applicants providing service through individual
facilities must meet the eligibility requirements in
1780.7.
(2) The Agency must approve the form of agreement
between the applicant and individual users for the
installation, operation, maintenance and payment for
individual facilities.
(3) If taxes or assessments are not pledged as
security, applicants providing service through
individual facilities must obtain security necessary to
assure collection of any sum the individual user is
obligated to pay the applicant.
(4) Notes representing indebtedness owed the
applicant by a user for an individual facility will be
scheduled for payment over a period not to exceed the
useful life of the individual facility or the RUS loan,
whichever is shorter. The interest rate will not exceed
the interest rate charged the applicant on the RUS
indebtedness.
(5) Applicants providing service through individual
or cluster facilities must obtain:

(i) Easements for the installation and
ingress to and egress from the facility if
determined necessary by RUS; and
(ii) An adequate method for denying service
in the event of nonpayment of user fees.
Response from R. Craig Cook, Chief Operations Officer, Hill Country
Telephone Cooperative, Inc.; on behalf of NTCA--The Rural
Broadband Association
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Question. The Minority Leader in the Senate has proposed an
allotment of $20 billion for broadband deployment as part of a $1
trillion plan to spur infrastructure investment and job creation. This
is proposed in association with the President's announcement to make
new investment in infrastructure a priority on his agenda. The funding
would be made available to projects currently eligible under existing
programs at the Department of Agriculture.
Will your organization be advocating for inclusion of supplemental
broadband investment in any forthcoming infrastructure investment
package?
Answer. NTCA--The Rural Broadband Association and its 800+ members
that provide broadband in rural areas strongly support including
resources for broadband investment in any infrastructure legislation.
NTCA began advocating for including resources to enable greater
broadband deployment in an infrastructure package with a December 22,
2016 letter to the National Governors Association, and followed that
with a joint telecom-association letter to House and Senate Commerce
Committee leaders and a letter to President Trump signed by over 100
organizations that represent rural and/or telecommunications
stakeholders.
According to the FCC, over 39 percent of Americans living in rural
areas still lack access to advanced telecommunications capability.
That's a lot of people who are unable to experience new capabilities in
delivering health care, educating children, promoting public safety,
and managing energy, to say nothing of the new jobs created in areas
with robust broadband along with unprecedented access to employment
opportunities presented in established industries.
America's most sparsely-populated rural areas often do not present
a business case for the highly capital intensive undertaking of
providing advanced broadband service. The Universal Service Fund High
Cost Program helps the small broadband providers represented by NTCA
and also other companies that serve rural America make the business
case to deliver and then sustain broadband networks. However, the High
Cost Program has been under the same hard cap since 2011, and currently
lacks the resources to help rural broadband providers meet the
Communications Act principle of reasonably comparable
telecommunications rates and services in rural and urban areas. An
infrastructure bill could help make up this shortfall by providing
support that restores the business case for sustainable broadband
investment.
We are pleased to see broad agreement among elected officials and
stakeholders on the importance of supporting broadband infrastructure,
but the details of how that support is distributed will be key to
achieving the goal of expanding broadband access. In a February 27,
2017 letter to Senators Thune and Nelson and Representatives Walden and
Pallone, NTCA, ITTA, USTelecom, and WTA recommended the following
foundational principles ``to ensure that such broadband investment
maximizes consumer benefits, ensures efficiency, produces results
quickly, and is subject to accountability'':

Any new broadband investment program must ensure sufficient
resources to meet the challenges of delivering broadband to
rural America. In order to truly realize universal broadband
access by all Americans, in all regions of the nation, any
funding should flow to areas currently lacking meaningful
access to broadband services in order to establish and sustain
such services. Adequate broadband services must meet reasonable
and realistic service parameters--e.g., with respect to speed,
latency, and price--and funding should flow to broadband
investment that best meets national broadband goals regardless
of the technology or technologies employed. To promote fiscal
responsibility, funding should not be made available for
duplicative networks that overbuild another provider's existing
broadband infrastructure.
In addition, leveraging existing Federal expertise, gained
through programs such as the Federal Communications
Commission's Connect America Fund, in promoting and sustaining
broadband access will maximize speed-to-market and efficiency
of distribution mechanisms, and minimize administrative burdens
and costs. Strict yet reasonable accountability for broadband
program investments is essential, and requirements should
include build-out and performance targets. Federal and state
tax regulatory, permitting, and other requirements should be
coordinated and reconciled to maximize the benefits of the
broadband investment program.

We appreciate your interest broadband infrastructure and look
forward to working with you and your colleagues on the House Committee
on Agriculture as Congress develops an infrastructure package.
attachment
February 27, 2017

Hon. John Thune, Hon. Bill Nelson,
Chairman, Ranking Minority Member,
Senate Committee on Commerce, Senate Committee on Commerce,
Science, and Transportation, Science, and Transportation,
Washington, D.C.; Washington, D.C.;
Hon. Greg Walden, Hon. Frank Pallone, Jr.,
Chairman, Ranking Minority Member,
House Committee on Energy and House Committee on Energy and
Commerce, Commerce,
Washington, D.C.; Washington, D.C.

Dear Chairman Thune, Ranking Member Nelson, Chairman Walden,
Ranking Member Pallone:

Our associations are composed of well over a thousand companies and
cooperatives that today offer robust broadband over networks spanning
thousands of miles and reaching millions of rural consumers and
businesses. Yet, extending these networks into parts of rural America
still lacking access, delivering affordable services, and upgrading
existing networks to allow rural consumers to benefit from the
capabilities of broadband all remain formidable challenges. Just over a
year ago, the FCC found that over 39 percent of Americans living in
rural areas still lack access to advanced telecommunications
capability. It was nearly 7 years ago that the very first sentence of
the FCC's National Broadband Plan declared that ``[b]roadband is the
great infrastructure challenge of the early 21st century.'' Indeed,
that remains the case.
We are encouraged that one of the foremost priorities of the new
Administration is to improve the infrastructure supporting the lives
and livelihoods of all Americans. We are heartened by the recognition
of how critical broadband infrastructure has been and will continue to
be in improving Americans' collective well-being. Broadband has
unleashed new capabilities in delivering health care, educating
children, promoting public safety, and managing energy. It has enabled,
and holds the promise of continuing to enable, the birth of entire new
industries, in the process creating new jobs while also offering job
seekers unprecedented access to employment opportunities presented in
established industries. It facilitates the vast sharing of knowledge
and has spawned a ``sharing economy.'' Its position as an engine of
economic growth is manifest.
All of these benefits of broadband, however, are only available to
those who have access. In light of the benefits of universal broadband
access coupled with its currently remaining an unrealized national
ambition, we urge you to ensure that broadband infrastructure is a key
priority in any new, comprehensive Federal infrastructure investment
program. And in making it so, we recommend several foundational
principles to ensure that such broadband investment maximizes consumer
benefits, ensures efficiency, produces results quickly, and is subject
to accountability.
Any new broadband investment program must ensure sufficient
resources to meet the challenges of delivering broadband to rural
America. In order to truly realize universal broadband access by all
Americans, in all regions of the nation, any funding should flow to
areas currently lacking meaningful access to broadband services in
order to establish and sustain such services. Adequate broadband
services must meet reasonable and realistic service parameters--e.g.,
with respect to speed, latency, and price--and funding should flow to
broadband investment that best meets national broadband goals
regardless of the technology or technologies employed. To promote
fiscal responsibility, funding should not be made available for
duplicative networks that overbuild another provider's existing
broadband infrastructure.
In addition, leveraging existing Federal expertise, gained through
programs such as the Federal Communications Commission's Connect
America Fund, in promoting and sustaining broadband access will
maximize speed-to-market and efficiency of distribution mechanisms, and
minimize administrative burdens and costs. Strict yet reasonable
accountability for broadband program investments is essential, and
requirements should include build-out and performance targets. Federal
and state tax regulatory, permitting, and other requirements should be
coordinated and reconciled to maximize the benefits of the broadband
investment program.
We are at the beginning of an exciting new process to address our
nation's critical infrastructure needs and to contribute to an improved
way of life for all Americans. There is much work to be done in the
coming months. We look forward to engaging with you on how to ensure
that this work results in all Americans reaping the myriad benefits
that new broadband infrastructure investment will foster.
Sincerely,

Genevieve Morelli, Shirley Bloomfield,
President, Chief Executive Officer,
ITTA--The Voice of Mid-Sized NTCA--The Rural Broadband
Communications Companies; Association;

Jonathan Spalter, Kelly Worthington,
Chief Executive Officer and Executive Vice President,
President,
USTelecom--The Broadband WTA--Advocates for Rural Broadband.
Association;

Response from Hon. James C. Greenwood, President and Chief Executive
Officer, Biotechnology Innovation Organization
Question Submitted by Hon. Collin C. Peterson, a Representative in
Congress from
Question. Mr. Greenwood, does the language in Section 9003, the
Biorefinery, Renewable Chemical, and Biobased Product Manufacturing
Assistance Program need to be modified to ensure standalone renewable
chemical producers can qualify? What has been your members' experience
with the program?
Answer. Yes. Unfortunately, USDA's interpretation of Section 9003
limits renewable chemical facilities that can apply for the program.
BIO urges the Committee to amend the language in Section 9003 to ensure
standalone renewable chemical facilities are eligible in the next farm
bill. This will speed the research, development and commercialization
of biorefineries and job creation.
Question Submitted by Hon. Tom O'Halleran, a Representative in Congress
from Arizona
Question. In your testimony, you mention BCAP and the use for woody
biomass. The use of woody biomass has a great potential for the forest
health of my district. Can you elaborate on what the problems were with
using BCAP for woody biomass and how these problems have been address?
And how do you see this program benefitting forest health?
Answer. For continued growth of the biobased economy and growth of
domestic bioenergy and bioproducts, access to sustainable agricultural,
forestry and waste biomass is critical to its development. Biomass Crop
Assistance Program (BCAP) helps overcome the challenge of accessing
this biomass by providing financial assistance to owners and operators
of agricultural and non-industrial private forest land who wish to
establish, produce, and deliver biomass feedstocks.
After adoption of BCAP in the 2008 Farm Bill, P.L. 110-246, an
increase in price for wood shavings, wood chips, sawdust, and other
wood ``scraps'' for products such as composite panels, particle board,
and fiberboard, and bark and wood chips for mulch caused concern for
some manufacturing and nursery industries about the impact BCAP was
having on the cost of these raw materials.
The 2008 BCAP language prohibited material collected or harvested
from National Forest System and other public lands that would otherwise
be used for higher value products. However, this prohibition did not
initially apply to renewable biomass harvested from private land.
USDA worked to address these concerns in its rulemaking of the 2008
Farm Bill. The 2014 Farm Bill explicitly addressed this issue in
Section 9010, where the definition of ``eligible material'' in previous
law was rewritten to include the following exclusion: ``(vi) any woody
eligible material collected or harvested outside contract acreage that
would otherwise be used for existing market products.'' (For more
information, please see CRS Report R41296 Biomass Crop Assistance
Program (BCAP): Status and Issues, page 14, Jan. 12, 2015)
Continuation of BCAP with mandatory funding will help ensure it can
be a valuable tool to maintain and improving forest health. As the U.S.
Department of Energy 2016 Billion-Ton Report noted, ``Removal of excess
biomass from fuel treatment operations (reducing biomass to help
forests increase fire resistance) and thinning operations designed to
reduce risks and losses from catastrophic fires and improve forest
health.'' (Please see https://energy.gov/sites/prod/files/2016/12/f34/
2016_billion_ton_report_12.2.16_0.pdf).
BCAP incentivizes owners and potential owners of forest biomass to
undertake removal of hazardous fuels and insect/disease projects on
BLM- or Forest Service-managed lands, and orchard clearings. A new,
improved BCAP that has steady mandatory funding would positively impact
all of these biomass sources, produce new fuels, chemicals and power
while reducing unhealthy forest biomass.

THE NEXT FARM BILL

(SPECIALTY CROPS)

----------

THURSDAY, MARCH 9, 2017

House of Representatives,
Subcommittee on Biotechnology, Horticulture, and Research,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:03 p.m., in
Room 1300 of the Longworth House Office Building, Hon. Rodney
Davis [Chairman of the Subcommittee] presiding.
Members present: Representatives Davis, Gibbs, Denham,
Yoho, Bacon, Dunn, Lujan Grisham, Lawson, Panetta, Costa,
McGovern, and Blunt Rochester.
Staff present: Mykel Wedig, Patricia Straughn, Keith Jones,
Kellie Adesina, Troy Phillips, and Nicole Scott.

OPENING STATEMENT OF HON. RODNEY DAVIS, A REPRESENTATIVE IN
CONGRESS FROM ILLINOIS

The Chairman. This is a hearing of the Subcommittee on
Biotechnology, Horticulture, and Research entitled, The Next
Farm Bill: Specialty Crops. This hearing will come to order.
We apologize for the delay and also for the fact that votes
will probably interrupt this hearing. We will see how far we
get before votes are called, and let the witnesses know what we
intend to do to ensure that we either continue the hearing, or
if we are all fast, you know what, we might get done before
votes are called.
First off, welcome to our witnesses. Good afternoon. Thank
you for being here at today's Biotechnology, Horticulture, and
Research Subcommittee hearing. Today's hearing continues our
series where each of the six Subcommittees look at all aspects
of the next farm bill.
As we begin this work, the Committee will consider the
needs of stakeholders who depend upon farm bill programs.
Today, we are focusing on issues important to specialty crop
producers and products. At the time of the most recent Census
of Agriculture in 2012, the value of farm-level specialty crop
production totaled nearly $60 billion, representing about \1/4\
of the value of U.S. crop production. The sheer diversity of
the category, ranging from fruits and vegetables, to tree nuts,
nursery crops, and floriculture, makes the task of developing
specialty crop policies particularly challenging.
The 2014 Farm Bill developed and extended many highly
successful programs that have helped the specialty crop
industry. A great example is the Specialty Crop Block Grant
Program, through which mandatory funding is distributed to all
50 states, including the great State of Illinois, with
specialty-crop-intensive states receiving more funding. It has
given states the flexibility they need to tailor their funds to
their specific regional needs.
Another example of a successful specialty crop program
within the farm bill is the Plant Pest and Disease Prevention
Program. Specialty crop producers are constantly bombarded by
new pests and diseases. The Plant Pest and Disease Prevention
Program provides early plant pest detection and surveillance
through APHIS. It also funds a system of clean plant centers
that safely distribute disease-free, or clean plant material to
producers of nursery stock for high-value, high-risk crops such
as apples, peaches, berries, and citrus. Commercial growers of
these crops benefit from access to healthy stocks of new
varieties in the event of their plants being compromised by
disease.
Additionally, while new stocks are helpful, when
devastating diseases hit, and the witnesses here today know
that they do hit often, research is crucial to finding a cure
or an eradication pathway. The Specialty Crop Research
Initiative in Title VII of the farm bill sets aside mandatory
funding to make sure that specialty crops are not left on the
sidelines when it comes to research funding.
I do believe it is important to highlight that other
Subcommittees' work directly impacts specialty crop producers.
For example, we have made significant strides over the past
several years in expanding crop insurance coverage to a variety
of specialty crops.
While I am proud of the successes we have enjoyed up to
this point, we live in an ever-changing world. To that end, I
look forward to reviewing current programs and hearing about
improvements needed in the next farm bill.
[The prepared statement of Mr. Davis follows:]

Prepared Statement of Hon. Rodney Davis, a Representative in Congress
from Illinois
Good afternoon and welcome to today's Biotechnology, Horticulture,
and Research Subcommittee hearing. Today's hearing continues our series
where each of the six Subcommittees look at all aspects of the next
farm bill.
As we begin this work, the Committee will consider the needs of
stakeholders who depend on farm bill programs. Today, we are focusing
on issues important to specialty crop producers. At the time of the
most recent Census of Agriculture in 2012, the value of farm-level
specialty crop production totaled nearly $60 billion, representing
about \1/4\ of the value of U.S. crop production. The sheer diversity
of the category, ranging from fruits and vegetables, to tree nuts,
nursery crops, and floriculture, makes the task of developing specialty
crop policies particularly challenging.
The 2014 Farm Bill developed and extended many highly successful
programs that have helped the specialty crop industry. A great example
is the Specialty Crop Block Grant program, through which mandatory
funding is distributed to all 50 states, with specialty-crop-intensive
states receiving more funding. It has given states the flexibility they
need to tailor their funds to their specific regional needs.
Another example of a successful specialty crop program within the
farm bill is the Plant Pest and Disease Prevention Program. Specialty
crop producers are constantly bombarded by new pests and diseases. The
Plant Pest and Disease Prevention Program provides early plant pest
detection and surveillance through APHIS. It also funds a system of
``clean plant centers'' that safely distribute disease-free, or
``clean'' plant material to producers of nursery stock for high-value,
high-risk crops such as apples, peaches, berries and citrus. Commercial
growers of these crops benefit from access to healthy stocks of new
varieties in the event of their plants being compromised by disease.
Additionally, while new stocks are helpful, when devastating
diseases hit--and the witnesses here today know that they do hit
often--research is crucial to finding a cure or an eradication pathway.
The Specialty Crop Research Initiative in Title VII of the farm bill
sets aside mandatory funding to make sure that specialty crops are not
left on the sidelines when it comes to research funding.
I do believe it's important to highlight that other Subcommittees'
work directly impacts specialty crop producers. As just one example: we
have made significant strides over the past several years in expanding
crop insurance coverage to a variety of specialty crops.
While I am proud of the successes we have enjoyed up to this point,
we live in an ever-changing world. To that end, I look forward to
reviewing current programs and hearing about improvements needed in the
next farm bill.
With that, I'd like to turn it over to Ms. Lujan Grisham for any
comments she'd like to make.

The Chairman. And I would like to turn it over to my new
Ranking Member on this Subcommittee, my good friend, Ms. Lujan
Grisham, for her opening comments.

OPENING STATEMENT OF HON. MICHELLE LUJAN GRISHAM, A
REPRESENTATIVE IN CONGRESS FROM NEW MEXICO

Ms. Lujan Grisham. Thank you, Mr. Chairman. He made me
sound younger by far than I actually am. I will take that every
day. And I also want to add my welcome and thank you to the
panelists who have joined us here today.
Our objective, I think I can say that for both of us, is
really simple. We want to make sure that we are looking at
which programs work, and which programs need additional
investments or strategies as we undertake the next cycle for
the farm bill. Also, as part of my thank you today, we
recognize that specialty crops producers are engaged in a
continuous cycle of growing, so it means so much to us that you
are here participating in today's hearing.
As I read today's testimony, I am struck by the
extraordinary diversity in your businesses in products,
practices, and size. You grow at a level of tens of acres,
hundreds of acres, and thousands of acres, producing a wide
diversity of crops: apples, oranges, carrots, pinto beans,
lettuce, grapes, and, of course, New Mexico chile. I am further
struck by the fact that you as specialty crop producers are on
the frontlines of delivering fresh, healthy, and wholesome food
to America and to the world's tables. And as a mother and a
grandmother, I know how important it is to provide my children
and my granddaughter with the nutritious foods that she needs.
And as a twelfth generation New Mexican, I know how difficult,
frankly, it can be for individuals living in most of New
Mexico, in rural areas and food deserts, especially in Indian
Country, to access fresh and healthy foods. I just came from a
meeting, Mr. Chairman, in my office where members of the Navajo
Nation were talking about their inability to actually get to a
highway because their bridges and roads are impassable and
completely unsafe. It is really very difficult to do.
Our job in Congress is to assist and promote what you do as
producers, and I look forward to working with the Chairman as
we write a new farm bill, to provide you with the tools so that
you can invest in your businesses, research new technology to
improve yields, improve pest resistance and plant health, and
find many new markets for your crops, both domestically and
internationally. I believe this will expand access to the
abundant, healthy, and nutritious food contained within the
specialty crop and organic sectors for more and more of our
constituents and citizens.
I am looking forward to this discussion today. And with
that, I thank you again, and I yield back, Mr. Chairman.
The Chairman. Thank you, Ms. Lujan Grisham. We are going to
work in other committees on that infrastructure bill to help
the Navajo Nation.
To our witnesses, welcome. It is always great to be the
Chairman from a state like Illinois and have your first witness
from the State of Illinois. I want to welcome my friend, James
Field. James is part of Frey Farms, and the founder of Frey
Farms has sat in that exact same chair in the past for a
hearing such as this when I didn't chair them. So can we please
give our best to Sarah, and we appreciate her time that she
spent here.
Frey Farms operates facilities and farms in Illinois,
Florida, Georgia, Missouri, Indiana, West Virginia, and
Wisconsin. And their production operations specialize in
growing, packing, and shipping of fresh market produce
including watermelons, cantaloupes, sweet corn, fall
ornamentals, hard squash, and fresh market pumpkins. If you
shop at local stores like I do, many of them have the Frey
Farms label on them, especially the last Springfield Wal-Mart
store in Springfield, Illinois, that I toured. And just so
everybody knows, Frey Farms started out of the back of a pick-
up truck, selling produce on the sides of roads, with Sarah as
a young teenager with her father, I believe. And it is a
testament that somebody can take an idea and turn it into the
American Dream. And it started right there where you are at. I
want to welcome James for your opening remarks please.

STATEMENT OF JAMES FIELD, Jr., DIRECTOR OF BUSINESS
DEVELOPMENT, FREY FARMS, LLC, KEENES, IL

Mr. Field. Thank you, sir. Thank you, Chairman Davis,
Ranking Member Lujan Grisham, and all other Members of the
Subcommittee for allowing me to speak here today on specialty
crops under the farm bill. We appreciate the work that you have
done to allow our industry to be more competitive.
And I would like to tell you a little more about myself. I
am the Director of Business Development for Frey Farms. And as
the Chairman stated, we farm in seven, eight states now, I
believe, and so we have great understanding of the agricultural
industry across this nation.
We are a member of the United Fresh Produce Association,
which represents growers, shippers, processors, and sellers of
fresh fruits and vegetables across the country. Sarah Frey, our
CEO, serves on the United Fresh Executive Board, and has served
on the Government Relations Committee as well.
Before we discuss the farm bill programs, I would like to
discuss with you what I believe is the most pressing issue
facing agriculture today, and there is probably a large
consensus of that in this room as well.
Frey Farms participates in the H-2A Program. This is the
only program through which nondomestic workers can be recruited
for our seasonal agricultural needs. The problem with this
program is that we don't receive an adequate number of workers
every year to supply the workforce that we need during harvest
time. Given the highly sensitive nature of harvesting fresh
fruits and vegetables, it is critical that we get workers when
we need them.
According to the Council of Agricultural Employers, the H-
2A Program provides approximately 150,000 guest workers each
year, which is only about ten percent of the 1\1/2\ million
seasonal ag workers needed in this country. The majority of
farmland in the U.S., as you well know, is based in rural
communities, far away from the larger labor pools in urban
areas. On top of that, the seasonality of harvesting specialty
crops is such that it moves very quickly across the country
based on the weather, geographical locations, and climates of
these areas where specialty crops are grown. So we move very
quickly within our business from Florida to Georgia, Missouri,
Arkansas, Indiana, Illinois, and West Virginia, kind of being
an outlier for us. But we grow throughout the country, try to
follow the weather, and that requires us to hire a great deal
of labor who work seasonally, and only in sporadic parts
throughout those states. It is a very short harvest window of,
as short as 2 to 3 weeks sometimes, for certain specialty crops
that we grow. We have to have those workers at that specific
time. And the migratory nature of the business is such that it
makes it very hard for us to locate a domestic labor force. It
is unfeasible and impractical to relocate domestic families
every few weeks across the country. The lack of access to
domestic labor, combined with an overburdened Federal Guest
Worker Program, means that fruit and vegetable providers are in
a daily struggle to secure an adequate workforce at harvest
time.
There is a high level of uncertainty in agriculture as it
relates to the future of migratory workers right now. And the
reality is this, the vast majority of the nation's foreign-born
farmworkers do not have proper work authorization. And the
emphasis on enforce, without an accompanying legal guest worker
program, puts our entire industry at jeopardy.
We want our workforce to be legally authorized to work in
this country. Frey Farms and the industry as a whole have long
advocated for reforms to the nation's immigration system to
deal with this issue. And the ag community would like to work
with you and other lawmakers to find a solution to this
problem. Having said that, for the 2014 Farm Bill, this
Committee acted on recommendations from farmers like us and
implemented the following programs: $75 million annually for
the Animal Plant and Health Inspection Service, $9 million
annually for the Technical Assistance for Specialty Crops, $20
million for the Market Access Program, $75 million annually for
the Specialty Crop Block Grant Program, $80 million in annual
funding for the Specialty Crop Research Initiative, and my
personal favorite is the $184 million spent on the Fresh Fruits
and Vegetables Program, which serves over four million low-
income elementary school students, affording them the ability
to have a fresh fruit and vegetable snack daily in school. And
that is very important to us at Frey Farms because there are
over 107,000 students in the State of Illinois who benefit from
this program, and over $5.4 million are allocated to it. And to
us it is very, very important that these students receive this
nutritional help because a lot of times at home, these are many
of the same recipients who are SNAP or Supplemental Nutrition
Assistance Program recipients, and a lot of times their
Supplemental Nutrition Assistance Program has to be spent on
things that can last longer than fresh product. So for many of
them, their fresh produce is gotten at school through this
program, so we really appreciate that.
These programs have been effective in helping fresh produce
deliver on their mission to ensure that all Americans have
access to abundant and affordable fresh fruits and vegetables.
I speak on behalf of Frey Farms and the entire agriculture
community when I say that we need your support on agricultural
immigration reform. Your efforts to enact meaningful specialty
crop programs in the farm bill are greatly appreciated. We know
we have friends here who want our industry to succeed, and for
that we thank you.
And with that, Mr. Chairman, I am happy to take any
questions.
[The prepared statement of Mr. Field follows:]

Prepared Statement of James Field, Jr., Director of Business
Development, Frey Farms, LLC, Keenes, IL
Thank you Chairman Davis, Ranking Member Grisham, and all Members
of the Subcommittee for the opportunity to share my thoughts about the
treatment of specialty crops under the farm bill. This Subcommittee's
work to promote specialty crops--and on crafting Federal policies that
allow providers to be competitive in the marketplace--is appreciated by
fresh fruit and vegetable providers across the country.
First, a bit about myself and the business I represent. My name is
James Field. I am the Director of Business Development for Frey Farms,
headquartered in Keenes, IL. Frey Farms specializes in growing,
packing, and shipping fresh market fruits and vegetables. We are best
known as the nation's largest fresh pumpkin producer. Our farms and
facilities are located in Florida, Georgia, Missouri, Arkansas,
Indiana, West Virginia, and Illinois.
Frey Farms is a member of the United Fresh Produce Association,
which represents growers, shippers, processors and sellers of fresh
fruits and vegetables across the country. The CEO of Frey Farms, Sarah
Frey, has served on United Fresh's Government Relations Council and is
a member of its board of directors.
Through United Fresh and on our own, Frey Farms has actively
engaged with policymakers on a variety of issues that impact the
specialty crop sector, including the farm bill, so we are thankful for
the opportunity to share our perspective on farm bill programs that
impact our ability to do business.
Before we discuss farm bill programs, it is not possible to give a
full and accurate perspective on Federal policies that most affect our
sector without mentioning immigration. Frey Farms participates in the
H-2A program. Administered by the Department of Labor, H-2A is the only
Federal program through which agriculture employers can recruit
seasonal agricultural guest-workers. We do our best to make the program
work for our operation, but it is very difficult. Frequently we, like
other participants in the program, do not get the adequate number of
workers we need in a timely manner. Given the highly time-sensitive
nature of harvesting fruits and vegetables, it is essential to get
workers when we need them.
According to the National Council of Agricultural Employers (NCAE),
the H-2A program provides approximately 150,000 guest-workers a year--
or only ten percent of the nearly 1.5 million seasonal ag workers
needed in this country. Yet, the program is being used in increasing
numbers--doubling the last 5 years--in a trend that is expected to
continue.
The vast majority of farm land in this great nation is located in
rural communities, far away from the larger labor pools needed to fill
the jobs that are necessary for harvesting specialty crops. The
seasonality of harvesting specialty crops also poses a tremendous
hurdle in recruiting an adequate domestic workforce. In order to
maintain a steady supply of fresh fruits and vegetables, farming moves
across the country rapidly with the changing of the seasons. Many of
the specialty crops grown in the United States have harvest windows as
short as a few weeks due to the geographic location and regional
climates associated with the farmland. Relocating a domestic family
every few weeks is logistically unfeasible. Therefore, the lack of
access to domestic labor, combined with an overburdened Federal guest-
worker program means fruit and vegetable providers are in a near daily
struggle to secure an adequate workforce. There is a high level of
uncertainty in agriculture right now as it relates to the future of
migratory workers.
The reality is this: The vast majority of the nation's foreign-born
farm workers do not have proper work authorization and the emphasis on
enforcement without an accompanying effective legal ag guest-worker
program, puts our industry, and our nation's ability to sustainably and
affordably feed our people, in jeopardy.
I want to be clear: we support strengthening our nation's ability
to uphold the law.
We want our workforce to be legally authorized to work in this
country, and this is why Frey Farms, and the produce industry as a
whole, have long advocated for reforms to our nation's immigration
system to deal with this issue.
I want to express that we at Frey Farms, and the agriculture
industry at large, would like to work with you, and other law makers,
to find solutions. We believe those who are working in agriculture
without proper documentation should to be able to make their presence
known and join the H-2A program. When their seasonal harvest work is
finished, these workers would return to their home country as the
current H-2A program requires and transportation would be provided for
by their American employer. Moreover, the legality of these working
immigrants would no longer be in question and the regulations for
proper execution of the law would firmly be in place. These workers
would be allowed to return under the lawful rules of the H-2A program
and the American farmer could operate without the stress and anxiety of
wondering where their next group of laborers will come from.
Without the farm labor we need, we cannot deliver produce items to
the people of our country. Fresh fruits and vegetables are left to rot
in fields every year due to the lack of a reliable labor pool. Given
that approximately 80 percent of the farm bill budget goes to
supporting supplemental nutrition programs, more commonly known as food
stamps, this is an egregious offense to the people of this country.
Allowing fresh food to go to waste is not a problem that solely affects
our industry, but impacts each and every American.
Farmers are inherently trying to provide healthy, sustainable, and
competitively priced fresh fruits and vegetables, while working against
the factor of time and the perishable nature of these very items. H-2A
is however slow, inefficient, and riddled with bureaucratic
inefficiencies the H-2A program may be, it is the only workforce
solution that we have. The foundation is in place to help agriculture
bridge the gap between its current supply and the vastly disparate
demand for labor. We recognize that immigration policy does not pass
through this Committee--but it most certainly affects the day-to-day
business viability of the men and women who supply most of America's
fresh produce, dairy, and horticultural commodities. Given your support
on past measures, we know that is important to you.
We urge you to do what it takes to ensure that whatever immigration
legislation Congress debates does not become final without a mechanism
for addressing agriculture's real and urgent labor needs. Failure to
address these needs will undermine all the good work you have done to
support specialty crops through legislation like the farm bill--and
ultimately--you would fail to serve the farmers and ranchers this
Subcommittee is designated to represent. I, and many others in the
produce community, do not believe that is what you want to do.
By ensuring agriculture's labor concerns are met, you will show
once again that you recognize how important this sector is to the
overall well-being of America, just as you did when you passed a farm
bill and invested heavily in programs designed to allow produce
providers to act on their own initiative and be competitive. I'd like
to elaborate on a few of those farm bill programs and urge your
continued support for them.
Since 2002, United Fresh has coordinated the Specialty Crop Farm
Bill Alliance, a group of nearly 120 organizations nationwide that
represent almost every specialty crop commodity produced in this
country.
The purpose of the Alliance is to review the farm bill and make
recommendations about programs most relevant to specialty crops. The
Alliance identified a few basic thematic priorities in the most recent
farm bill: market competitiveness, research, nutrition, international
market access and pest and disease control. This priorities further our
goals to increase consumption of fruits and vegetables by promoting the
nutritional and economic well-being of Americans. They also provide
tools and services that growers generally cannot control themselves.
In the past, the Alliance assessed prior program funding levels and
current program usage and gave Congress funding recommendations for the
programs that met these basic priorities. In the 2014 Farm Bill, the
Agriculture Committee acted on those recommendations to provide:

$75 million annually for the Animal Plant Health Inspection
Service (APHIS) Section 10201 program. This helps prevent the
introduction or spread of plant pests and diseases that
threaten U.S. agriculture and the environment, while ensuring
the availability of a healthy supply of clean plant stock;

$9 million annually for the Technical Assistance for
Specialty Crops (TASC) program and $20 million for the Market
Access Program (MAP). Both of these programs are designed to
address various barriers to agriculture exports;

$184 million for the Fresh Fruit and Vegetable Program, or
FFVP, which provides a fresh fruit or vegetable snack to four
million low-income elementary school students in all 50 states.
In Illinois, where Frey Farms is headquartered, the program
allocates $5.4 million to provide such snacks to more than
107,000 students. As the Members of the Subcommittee may be
aware, FFVP has been evaluated by outside experts and found to
be highly effective at increasing students' fresh fruit and
vegetable consumption;

$75 million annually for the Specialty Crop Block Grant
program to enhance the competitiveness of specialty crops. The
2014 Farm Bill also authorized funding for multi-state block
grants; and

$80 million in annual funding for the Specialty Crop
Research Initiative to develop and disseminate science-based
tools to address the needs of specific crops and their regions.

These programs have been effective in helping fresh produce
providers to deliver on their mission to ensure that all Americans have
access to an abundant and affordable supply of nutritious fresh fruits
and vegetables.
We in the produce-sector are aware that Congress must address a
great many pressing needs across America. But few initiatives are as
important, or pay such dividends as helping Americans enjoy the health
benefits of fresh fruits and vegetables. Given your past support for
these initiatives, it is clear that this Subcommittee understands this.
On behalf of the fresh produce industry, I urge you to continue the
progress we have made together by ensuring that these programs are
maintained and are not cut below their current funding levels.
The produce industry also looks forward to working with you to
address agriculture's needs on issues such as trade, infrastructure and
implementation of the Food Safety Modernization Act (FSMA).
All of these issues also go right to the heart of whether a produce
provider can stay in business or not, so your time, attention and
support on these matters is very much appreciated. I reiterate again
however, that no program or policy is more critical and vital to the
continued success of agricultural legislation as that of the H-2A
program and immigration. I thank you on behalf of Frey Farms, and the
agricultural community as a whole, for the continued work and service
that you dedicate to our livelihoods.
Again, thank you for the opportunity to share my thoughts about the
farm bill programs most important to the specialty crop sector, and on
the pressing need of immigration reform. As I stated before, reforms to
our nation's immigration system to provide a steady and reliable stream
of guest workers has the power to make or break our industry. This is
why we are looking to you for more than just support; we are looking
for action on agricultural immigration reform. This Subcommittee's
efforts to enact meaningful specialty crop programs in the farm bill
has not gone unnoticed. We know that we have friends here who want our
industry to succeed, and we want to work with you to guarantee that
future success.
With that, Mr. Chairman, I will be happy to take questions from
you.

The Chairman. Thank you, Mr. Field.
And the rest of the panel will notice that I probably gave
a home state advantage and a little extra time to the witness
from Illinois. We would appreciate, for time's sake, if
everybody could keep their testimony within 5 minutes. I say
that because I am going to ask that my colleague, Mr. Yoho, who
is sitting a few chairs down from me, to introduce the next
witness. And I know that he would gladly take over 5 minutes to
do that. So I would like to yield to Mr. Yoho.
Mr. Yoho. Thank you, Mr. Chairman. The benefits of the
gavel. Thank you.
I get the distinct honor and privilege of introducing a
Florida native, Mr. Larry Black, of Peace River Packing Company
in Fort Meade, Florida. Peace River Packing Company, a family
business established in 1928, is a fully integrated citrus
service company, active in growing, harvesting fresh fruit,
packaging and processed fruit sales. The company runs over
3,300 acres of citrus property, and he is the past President of
Florida Citrus Mutual and development of the Foundation Board.
And we appreciate you being here, and I look forward to hearing
the insight that you have about what is going on in our state
of citrus greening.
And with that, I am going to yield back, but we look
forward to hearing from you. Thank you all of you for being
here.
The Chairman. Mr. Black, you are recognized for 5 minutes.

STATEMENT OF N. LARRY BLACK, Jr., GENERAL MANAGER, PEACE RIVER
PACKING COMPANY, Ft. MEADE, FL

Mr. Black. Chairman Davis, Ranking Member Grisham,
Congressman Yoho, and Congressman Lawson, good afternoon.
Huanglongbing, also known as HLB or citrus greening, is a
bacterial disease spread by a vector, the Asian citrus psyllid.
HLB has seriously affected citrus production throughout the
world for over 100 years. Since 2005, my home state, Florida,
has been severely impacted. The Asian citrus psyllid and HLB
are also found in Texas and California. There is a national
citrus crisis, and one of our signature specialty crops is
threatened.
Throughout history, whenever this disease has appeared,
citrus production has been compromised with the loss of
millions of trees. The disease attacks the vascular system of
the tree, compromising yields, eventually rendering the tree
unproductive.
At our 1998 peak, Florida citrus plantings exceed 850,000
acres, and we produced over 300 million boxes of oranges,
grapefruit, and tangerines. We are now down to about 80 million
boxes of production and \1/2\ million acres. Much of the
decrease is due to HLB.
Huanglongbing and the Asian citrus psyllid are not native
to the State of Florida or the United States. Like citrus
canker, which has also been an ongoing problem for the
industry, HLB is an example of an imported pest and disease
that has resulted in reduced citrus acreage and fruit
production. We have lost packing houses and juice plants.
University economists have estimated since 2011, HLB has cost
our industry $4.5 billion in lost economic activity, and over
8,000 jobs. Today, Florida Citrus Mutual estimates those losses
to be double that amount.
While yields have been drastically decreased, the cost of
growing citrus has skyrocketed. Production costs are now over
$2,100 per acre; triple the cost prior to HLB.
The silver lining, despite the tough times, the Florida
citrus industry is still a major economic driver for the State
of Florida, providing an estimated $10 billion in annual
economic impact. Citrus forms the backbone of many communities
throughout the state's interior. Citrus not only directly
supports processing plants and packing houses, but also
businesses such as banks, truck dealerships, plant nutrition
companies, restaurants, equipment sales, et cetera.
The Florida citrus industry, along with state and Federal
Governments, are making a historic commitment to researching
solutions to solve HLB. Currently, more than 300 research
projects designed to beat HLB are underway across the globe.
Citrus growers, the State of Florida, and the Federal
Government have collectively spent, or have appropriated over
$250 million over the past 6 years on research. Half of this
investment was from the 2014 Farm Bill.
While there is no silver bullet to stop the spread of HLB,
the research investment is yielding tools the growers can use
right now to counter the disease. They include a combination of
bactericides, nutritional therapies, innovative growth design,
thermal therapy, and tolerant root stocks. The future of our
nation's citrus industry is in the hands of our research
scientists. Early HLB detection, ACP management, breeding will
be crucial elements in the long-term success of our production.
These tools will be needed for Florida producers to continue to
provide the most nutrient-filled and great-tasting juice to
consumers.
So what can Congress do? First, it is imperative the next
farm bill include an extension of the Emergency Citrus Disease
and Extension Program which was created by the 2014 Farm Bill.
The trust fund has enabled promising new research that offers
long-term solutions to citrus greening and the hope for the
future of our industry. We are only 3 years into the program
and more time is needed.
The farm bill also provides necessary funding to several
other specialty crop programs, such as the Specialty Crop
Research Initiative, block grants, the National Clean Plant
Network. We urge Congress to continue to invest in these
crucial programs, and seek to increase the allocation to these
programs when available.
While a long-term solution is being developed through
research, citrus producers are working hard to maintain as much
production as possible to keep our industry intact. For now,
our goal is to get more trees in the ground to sustain the
Florida citrus industry. Fruit is the life blood of the
industry, and planting is necessary.
Thank you very much, and I stand ready for questions.
[The prepared statement of Mr. Black follows:]

Prepared Statement of N. Larry Black, Jr., General Manager, Peace River
Packing Company, Ft. Meade, FL
Regarding Huanglongbing
My name is Larry Black and I am a fifth-generation citrus grower
from Lakeland, Florida. I currently serve as General Manager of Peace
River Packing Company. Peace River manages more than 3,300 acres of
citrus groves in central Florida. Peace River Packing Company is a
fully integrated citrus services company, active in growing,
harvesting, fresh fruit packing, and processed fruit sales.
I am also past President of Florida Citrus Mutual and I serve on
the Citrus Research and Development Foundation Board.
Huanglongbing (HLB, or citrus greening) is a bacterial disease
spread by the Asian citrus psyllid (ACP). HLB has seriously affected
citrus production worldwide in Asia, Africa, the Indian subcontinent,
the Arabian Peninsula, Brazil and since 2005, my home state--Florida.
The vector--the Asian Citrus Psyllid (ACP)--and the disease are also
found in Texas and California. Although HLB has most severely affected
Florida, this is a national citrus crisis.
Throughout history, wherever the disease has appeared, citrus
production has been compromised with the loss of millions of trees. It
attacks the vascular system of a tree, severely compromising yields,
and eventually rendering the tree unproductive. Trees are often dead
within 3 years.
At its 1998 peak, Florida citrus plantings exceeded 850,000 acres
and produced 300 million boxes of oranges, grapefruit, and tangerines.
We are now down to about 80 million boxes of production and 500,000
acres. Much of the decrease is due to HLB.
Huanglongbing and the Asian Citrus Psyllid are not native to the
state of Florida or the United States. Like citrus canker, which has
been an ongoing problem for the industry, HLB is another example of an
imported pest and disease that has resulted in reduced citrus acreage
and fruit production; [w]e have lost packinghouses and juice plants.
The processing plants that remain are running below capacity.
University of Florida economists have estimated since 2011, HLB has
cost our industry $4.5 billion in lost economic activity and 8,257
jobs. Today, Florida Citrus Mutual estimates those losses to be double
that amount.
And while yields have dramatically decreased, the cost of growing
citrus in this environment has skyrocketed; production costs in Florida
total over $2,100 per acre, triple the cost prior to HLB. The ``perfect
storm'' has forced many growers out of business.
The silver lining is despite the tough times, the Florida citrus
industry is still a major economic driver for the State of Florida
providing an estimated $10.7 billion in annual economic impact. Citrus
forms the backbone of many communities throughout the state's interior.
Citrus not only directly supports processing plants and packinghouses
but also ancillary businesses such as banks, truck dealerships, plant
nutrition companies, restaurants and equipment stores. These businesses
would have a hard time surviving if it were not for Florida citrus.
Consequently, the Florida citrus industry, along with the state and
Federal Governments, has made a historic commitment to researching
solutions to HLB. Currently, more than 300 research projects designed
to beat HLB are underway across the globe. Citrus growers, the state of
Florida and the Federal Government have collectively spent or
appropriated more than $250 million over the past 6 years on research.
Half of this investment was provided through the 2014 Farm Bill.
While there is no ``silver bullet'' to stop spread of HLB, the
research investment is yielding tools that the grower can use right now
to counter the disease. These include a combination of:

Bactericides.

Nutritional Therapies.

Innovative Grove Design.

Thermal Therapy.

Tolerant Rootstocks.

The future of the Florida, Texas and California citrus industries
is in the hands of our research scientists. Early HLB detection, ACP
management, conventional breeding, and engineered resistance will all
be crucial elements in the long-term success of our national citrus
production. These tools will be needed for Florida producers to
continue providing the most nutrient-filled and great tasting juice to
consumers.
What can Congress continue to do?
First, it is imperative that the next farm bill include an
extension of the Emergency Citrus Disease Research and Extension
Program which was created by the 2014 Farm Bill. The Trust Fund has
enabled promising new research that offers long-term solutions to
citrus greening, and hope for the future of our industry. But we're
only 3 years into the program, and more time is needed.
The farm bill also provides necessary funding to several other
important specialty crop programs--such as the Specialty Crop Research
Initiative (SCRI), Specialty Crop Black Grants, the National Clean
Plant Network. We urge Congress to continue to invest in these critical
programs and seek to increase the allocation to these programs to the
extent funds are available.
While a long-term solution is being developed through research,
citrus producers are working hard to maintain as much production as
possible to keep their businesses, critical infrastructure, and the
domestic citrus industry intact. These efforts include various
cultivation techniques--such as more intensive planting and certain
remedial measures that can have the effect of slowing the spread of the
disease and maximizing short-term productivity. These techniques are
costly but necessary.
For now, our goal is to get more trees in the ground to sustain the
Florida citrus industry. Fruit is the lifeblood of the industry and we
need to replant 30 million additional trees to restore our crops to the
pre-HLB levels and support existing infrastructure.
The strategy is to create incentives for growers that will mitigate
some risk and prompt them to invest.
Last September, the House overwhelmingly passed, under suspension,
H.R. 3957--the Emergency Citrus Disease Response Act, introduced by
Rep. Vern Buchanan. The legislation would allow a producer the full
deduction of the cost of replacing damaged or lost citrus trees, rather
than capitalizing the trees then depreciating over a 14 year period.
Unfortunately, the Senate took no action. Congress should take up and
enact this legislation this year.
In addition, we urge Members of this Committee to weigh in with
your colleagues on the Appropriations Committee to fully fund both the
Citrus Health Response Program (CHRP) at $58 million and the USDA's
Multi-Agency Coordination Group. These two programs provide important
resources for short and medium-term solutions for the industry.
In closing I would just like to point out resilience is a hallmark
of the Florida citrus grower. Growers are proud to produce products
that support the economy, are nutritious, and taste good. Many
families, including mine, have grown citrus for three, four and five
generations while facing many crises including drought, freezes,
hurricanes and disease. Our industry has a bright future ahead of it,
but we need the Federal Government's continued investment and support
during this crisis.
Thank you for your time and allowing me to testify on the
industry's behalf.

The Chairman. Thank you. Sorry we are rushing.
They just called votes, but we are going to try to get the
witnesses to offer their testimony before we go, so we can come
back directly to the question and answer session.
So our next witness is Sean Gilbert with Gilbert Orchards/
Sundquist Fruit, in Yakima, Washington. Mr. Gilbert, you are
recognized for 5 minutes.

STATEMENT OF SEAN GILBERT, GENERAL MANAGER,
GILBERT ORCHARDS, INC. AND SUNDQUIST FRUIT, YAKIMA, WA

Mr. Gilbert. Thank you. Thank you, Chairman Davis and
Ranking Member Lujan Grisham, for the opportunity to testify
before the Subcommittee.
Today, I am representing my family's fruit business that
has been farming in the Yakima Valley since 1897, where we grow
apples, cherries, pears, and wine grapes. I am also
representing a broad community of fruit farmers and their
employees in our state and across the country who share a
common interest in continuing to produce delicious, healthy,
safe, and American-grown fruit for generations to come.
The Pacific Northwest is home to many family-owned orchards
that provide approximately \2/3\ of the apples and about \3/4\
of the pears and sweet cherries grown in the United States.
Together, these crops are valued at over $3 billion annually,
and create tens of thousands of jobs, with about \1/3\ of this
value coming through foreign trade.
Like all farming, tree fruit production is an inherently
risky business, where the whims of weather, pest and disease
can decimate an entire year's crop or an entire orchard.
Through crop insurance programs funded by the farm bill that
fill in where private-sector insurance comes up short, growers
are able to confidently reinvest in modern orchards that are
better for our employees and our customers, and out-compete the
other fruit growing regions of the world.
A number of research programs funded through the farm bill
have yielded critical new tools for tree fruit growers, and
warrant continued or enhanced support. I would like to
highlight two great stories that resulted from federally funded
research. The ARS Laboratory in Wapato, Washington, has given
growers new methods to combat pests like codling moth, an apple
maggot that can destroy fruit in one orchard and jeopardize
export markets. My dad, Craig, who was an early adopter of
organic, says simply, ``Organic farming in Washington would not
be possible without USDA's ARS in Wapato.'' Also a project
partially funded by the Specialty Crop Research Initiative
grant led to the development of a vision system that is a
critical piece of the most promising automated harvester for
fresh apples we have ever seen.
Before I move on to other issues, I want to note that tree
fruit growers do not expect taxpayers to fund all of our
research needs. Our state's growers have paid annual
assessments to fund research since 1969, and in 2013 we voted
to impose an additional assessment to fund a $32 million
endowment at Washington State University to support new
research.
I would also like to highlight the value of the Clean Plant
Network. The Clean Plant Center, located in Prosser,
Washington, has played a vital role in the maintenance and
distribution of virus-free tree fruit material that encourages
us to invest in new orchards with confidence.
Another area I would like to address is organic production,
which is close to my heart personally, and has become a vital
part of our industry. My family has embraced organic practices
throughout our organization, giving us more ecologically
diverse orchards, while giving consumers the right to choose
how their fruit is grown. The membership requirements and
appointment process for the National Organic Standards Board
have not been reviewed since the Board was first created in
1990. The makeup of the organic industry has changed
substantially since then, and I ask that the Subcommittee work
with stakeholders to ensure that the makeup of the NOSB better
represents the organic industry producers and consumers. I
believe this is a needed step in ensuring that organic
practices have the widespread impact on American agriculture
they deserve, while meeting ever-growing consumer demand.
Another area of increasing concern to me is the Food Safety
Modernization Act. Let me be clear, our industry is committed
to producing the safest possible fruit for consumers; however,
two areas of regulation in particular are unreasonable and not
based on risk: the water testing requirements and the
definition for packinghouses that regulates differently based
on size, not risk. I am pleased that FDA Acting Commissioner,
Dr. Stephen Ostroff, informed us that the agency recognizes
these problems, and is reconsidering the language on these
issues.
While it does not fall under the Subcommittee's
jurisdiction, I would like to highlight the Market Access
Program, which, through a 2016 study, showed a remarkable $24
in export gains for every additional $1 spent on foreign market
development. Given the clear effectiveness of the program, I
believe that MAP funding should be increased to $400 million
annually.
Last, I would like to address the need for a stable, legal
agricultural workforce. The bottom line is that the H-2A
Program is insufficient for meeting the needs of our growers,
and it disproportionately hurts small farmers. We need a guest
worker program that is affordable, reliable, and reasonable,
and a solution that provides a pathway to legal status for the
current workforce so that this expertise is not lost. The
culture of fear that looms over our immigrant population puts
at risk our industry's ability to supply the best-tasting,
safest produce in the world, grown in America. I encourage
bold, effective action to address this issue.
Once again, I would like to thank the Subcommittee for
giving me this opportunity, and I am happy to answer any
questions.
[The prepared statement of Mr. Gilbert follows:]

Prepared Statement of Sean Gilbert, General Manager, Gilbert Orchards,
Inc. and Sundquist Fruit, Yakima, WA
Thank you, Chairman Davis and Ranking Member Lujan Grisham, for the
opportunity to testify before the Subcommittee today on the ways that
the next farm bill can serve the needs of specialty crop growers like
myself. I am Sean Gilbert, General Manager of Gilbert Orchards, Inc. I
am a fifth generation farmer and packer. Our family's growing and
packing operations consist of organic and conventional apples,
cherries, pears, stone fruit, and wine grapes.
The Pacific Northwest is home to family-owned orchards that provide
approximately 66 percent of the apples, 74 percent of the pears, and 78
percent of the sweet cherries grown in the United States. Together,
these crops are valued at an average of $3 billion annually, and create
tens of thousands of jobs in rural communities throughout our region.
Exports are vital to our industry, with approximately \1/3\ of the
apples, pears, and cherries grown in the region going to other
countries. We compete in a global environment, not only against fruit
imported into the United States, but also against these same
competitors in the more than 50 countries we export to around the
world. Mexico is our top market for apples and pears, and Canada is our
largest market for cherries and our second largest market for apples
and pears. Many of the other most commercially-important markets for
our products are in the Asian region.
Like other types of farming, tree-fruit production is an inherently
risky business, where the invasion of a pest or disease, or just 1 day
of the wrong weather, can decimate an entire year's crop. I and my
fellow growers rely on programs funded by the farm bill to help address
some of these risks and continue to produce and market fruit of the
highest quality.
For example, research conducted at the USDA Agricultural Research
Service (ARS) laboratory in Wapato has yielded critical new tools to
combat harmful pests like codling moth and apple maggot that can not
only destroy fruit in one orchard, but also jeopardize export markets
for the entire industry. The ARS laboratory in Wenatchee has done
important work on issues ranging from developing new harvest and
storage techniques that improve post-harvest storage of specific apple
varieties like Honeycrisp, to providing new tools for managing apple
replant disease.
ARS laboratories outside our region have also made significant
contributions. For example, the ARS laboratory in Geneva, New York,
runs an apple rootstock breeding program that has been very beneficial
to growers like me by developing plant material with built-in
resistance to pests and diseases. Work coming out of the Kearnsville,
West Virginia, laboratory on the brown marmorated stink bug and out of
the Beltsville, Maryland, laboratory on post-harvest fungicide
resistance have also been of great value.
These and other ARS laboratories throughout the United States have
been level-funded for years, while expenses continue to rise. This has
led to the inability of these laboratories to fill open positions and a
reduction in overall research capacity. I would ask the Subcommittee to
consider increasing the authorization levels for the Agricultural
Research Service to allow some of this research capacity to be built
back up.
Under the research umbrella, I would also like to highlight the
value of the Specialty Crop Research Initiative (SCRI). In spite of its
relatively short existence in comparison to other farm bill research
programs, the SCRI has yielded important results in a variety of areas
for myself and other tree-fruit growers. For example, as the
Subcommittee is likely aware, access to an adequate labor supply to
grow and harvest our crops has become an increasingly significant
problem. During the first year of the SCRI program, a grant was
provided to a group led by Carnagie-Mellon that developed a machine
vision system that is a critical component of an automated robotic
harvester that is now being developed and tested by a California
company with support from the industry-funded Washington Tree Fruit
Research Commission.
Another example of an SCRI success is the RosBREED program, which
is delivering breeding tools to accelerate the commercialization of
tree-fruit varieties with enhanced disease resistance and superior
consumer attributes--reducing production costs and increasing returns.
I would ask the Subcommittee to, at a minimum, extend the SCRI at
its current funding level of $80 million per year, and to consider
building upon this number.
The Specialty Crop Block Grant (SCBG) program has also been a
useful program for the tree-fruit industry. One especially beneficial
component of this program is that it allows for funding to be pooled by
multiple states for projects that have a more regional or national
benefit. This has allowed for collaboration with groups like the Center
for Produce Safety to combine private and public resources from
different states to fund top-priority projects to enhance food safety
for produce. I would ask the Subcommittee to again, at a minimum,
extend funding for this program at its current level.
While not specific to specialty crop growers, I would also like to
recognize the value of the Agriculture and Food Research Initiative
(AFRI). This program, and its predecessor, has helped support projects
of value to the tree-fruit industry for decades, and I would hope that
the Subcommittee would consider extending or enhancing its funding
level in the next farm bill.
Before I move on to other issues, I do want to highlight that tree-
fruit growers do not expect taxpayers to fund all of our research
needs. Since 1969, when the Washington state industry voted to create
the Washington Tree Fruit Research Commission, growers have paid an
assessment on every box of fruit sold commercially to fund research
that we believe to be of value to the industry. The WTFRC has a board
and several committees composed of industry members that determine how
these funds are distributed to individual research projects. More than
$3.8 million industry dollars were allocated directly to research
projects by the WTFRC last year.
Also, growers voted in 2013 to impose an additional assessment on
each box of fruit sold to fund a $32 million Tree Fruit Endowment at
Washington State University to support new research and extension
positions focusing on enhancing orchard and post-harvest operations.
This is the largest contribution to WSU in the University's history. I
am a member of the Tree Fruit Endowment Advisory Committee that helps
oversee the allocation of these funds.
The research conducted at the ARS laboratories and supported
through the SCRI, SCBG, and AFRI programs help leverage these grower
dollars and keep our industry competitive in the global marketplace--
which in turn supports tens of thousands of jobs throughout our region.
Another area of importance that I would like to highlight is the
invaluable work done by U.S. Animal and Plant Health Inspection Service
(APHIS) in both protecting our domestic industry from the invasion of
foreign pests and diseases, and in negotiating new market access with
other countries for our products.
While many of these activities by APHIS are funded outside the farm
bill, one important program that does fall within this area is the
Clean Plant Network. This program provides funding to the Clean Plant
Center Northwest (CPCNW) in Prosser, Washington, which in turn has
played a vital role in developing rapid and accurate techniques for
virus testing, virus elimination, and maintenance and distribution of
domestic virus-free tree-fruit material. Planting a new orchard is a
considerable expense that does not yield income for several years, and
the CPCNW provides growers with the ability to ensure that they are not
introducing viruses into these new plantings. The Center also serves as
a quarantine site for the importation of foreign fruit tree cultivars.
The funding provided through the Clean Plant Network is critical to
the CPCNW's success, and I would like to thank Congress for including
funding for this program in the baseline for the current farm bill.
That being said, there is more need both in the current centers and by
industries that are not yet a part of the program for the services that
the CPN provides, so I would ask the Subcommittee to increase funding
for this program in the next farm bill.
Another area where USDA plays a valuable role is in supporting the
registration of crop protection compounds. In some cases, specialty
crop producers have a hard time maintaining access to these crop
protection tools because registrants don't want to go to the expense of
providing the data necessary to EPA to ensure that the product
continues to be registered for these ``minor'' crops. This is because
the registrants prioritize the uses of larger commodities where the
returns are higher.
The Minor Crop Pest Management, or IR-4, program which is currently
funded by the National Institute of Food and Agriculture (NIFA),
provides assistance to the growers of ``minor'' crops in funding the
research needed to support the registration of these products.
Otherwise, growers would have to shoulder this burden and in some cases
would lose access to these products due to the expense of re-
registration. I would ask that the Subcommittee ensure that NIFA is
still able to support such important work in the next farm bill.
While this is not referenced in the current farm bill, the National
Agricultural Statistics Service (NASS) currently conducts a ``Chemical
Use Survey'' that provides information on the percentage of a crop that
has been treated with a specific pesticide. When used in conjunction
with the Pesticide Data Program, the information from these surveys is
critical to developing more highly-refined risks assessments to support
re-registration of these products.
In recent years, NASS has considered either reducing the frequency
of these biannual surveys or stopping them completely. The data
included in these surveys is critical to maintaining access to
important crop protection tools, and I would request that the
Subcommittee consider adding language to the farm bill to ensure the
continuation of these surveys on a biannual basis.
Another area I would like to address is organics, which is becoming
an increasingly important part of my operation. Gilbert Orchards, Inc.
has been growing and packing organic apples for over 25 years and have
expanded organics to all commodities we grow, making up twenty percent
of our acreage.
Regionally, the Pacific Northwest is the national leader in the
production of organic apples, pears, and cherries. Over eleven million
boxes of organic apples are now harvested from more than 14,000 acres
in Washington state, amounting to over 70 percent of the entire organic
apple crop in the United States. There is also a significant amount of
organic pears and cherries, with more than 1,800 acres planted of each
across the Pacific Northwest. Organic tree-fruit production in the
Pacific Northwest is increasing, with additional acreage being
transitioned to organic each year.
The Organic Agriculture Research and Extension Initiative (OAREI),
funded at $100 million in the current farm bill, has provided valuable
research dollars to find new crop protection approaches that fit into
the organic arena. With organic production increasing so substantially
year-after-year, I would ask that the Subcommittee consider increasing
funding for OAREI in the next farm bill.
I would also like to take this opportunity to raise a second issue
that the Subcommittee should consider as you work on the next farm
bill. The membership requirements and process for the formation of the
National Organic Standards Board (NOSB), which advises USDA on every
product and process that is allowed in organic production, has not been
reviewed since the NOSB was first created in 1990. Alternatively,
organic production and the makeup of the organic industry has changed
substantially in the nearly 27 years since the NOSB was first
authorized. I ask that the Subcommittee work with the variety of
stakeholders that currently operate in, or have an interest in, the
organic marketplace, to modernize the makeup of the NOSB to better
represent the current state of the organic industry.
Another area that has become of increasing concern to myself and
other tree-fruit growers is implementation of the Food Safety
Modernization Act (FSMA). The U.S. Food and Drug Administration (FDA),
which has zero experience regulating on-farm practices, has now
finalized seven regulations to implement this law.
Let me be clear, our industry is committed to delivering a safe
food product to consumers and is no stranger to food safety
requirements. Over the last decade, food safety requirements from
competing retailers have led to our orchards and packinghouses seeing
countless food safety auditor visits each year.
However, there are two issues in-particular that I would like to
highlight for the Subcommittee's consideration as you develop the next
farm bill. First, the water testing requirements included in the
Produce Safety rule are unnecessarily burdensome, costly, and not based
on risk. I am pleased that FDA Acting Commissioner, Dr. Stephen
Ostroff, informed industry representatives on February 16 of this year
that the agency recognizes that fact and is reconsidering the entire
water quality section of the rule.
Initial compliance dates for the Produce Safety rule are in January
of 2018, but Dr. Ostroff and his staff indicated that those dates would
likely need to be delayed for the water quality requirements. I would
ask the Subcommittee to support efforts to ensure that any water
testing requirements imposed by FDA are risk-based and reasonable to
implement on the farm level.
A second concern with FSMA implementation is the way the
regulations treat produce packinghouses. The Preventive Controls for
Human Food rule includes a ``farm'' definition that incorporates some
packinghouses while exempting others that conduct identical activities,
by basing the definition on the location of the packinghouse or the
ownership of the packinghouse and produce handled.
These vague and daunting proposed rules leave many growers and
packing facilities confused about implementation and feelings of unfair
treatment. Providing a safe, high quality, and healthful product to
consumers is the highest priority for our family-owned operation. Not
only does our business depend on it, but our growers and their families
eat the harvested fruit from their orchards. However, that FDA's vague
farm definition is based off of ownership and structure, not risk,
presents a much increased risk to the an operation such as ours.
This definition has implications for whether a facility falls under
the Produce Safety rule or the Preventive Controls rule; whether
certain transportation activities are exempted under the Sanitary
Transportation rule; whether a facility must follow the Intentional
Adulteration rule; and how the FDA's draft Listeria guidance applies to
a facility. I am pleased that Dr. Ostroff told industry representatives
at that same February 16 meeting that the agency recognizes the
problems with an ownership-based farm definition, and is considering
alternatives.
I believe that the farm definition should be based on what
activities a packinghouse conducts, and not extraneous details like
ownership or location that have nothing to do with the level of risk,
and would ask the Subcommittee to support such a definition.
Before closing, I would be remiss if I did not mention my support
for several programs that, while not falling under this Subcommittee's
jurisdiction, still have a significant impact on myself and other tree-
fruit growers. As I mentioned earlier in my testimony, approximately
\1/3\ of Pacific Northwest tree-fruit is exported to other countries.
The Market Access Program (MAP) has been a pivotal part of our
industry's success in expanding overseas markets.
MAP, which is administered by USDA's Foreign Agricultural Service
(FAS), forms a highly successful partnership between nonprofit U.S.
agricultural trade associations, farmer cooperatives, nonprofit state-
regional trade groups, small businesses and USDA to share the costs of
international marketing and promotional activities such as consumer
promotions, market research, trade shows, and trade servicing. MAP has
been tremendously successful and extremely cost-effective in helping
maintain and expand U.S. agricultural exports, protect and create
American jobs, strengthen farm income and help to offset the
government-supported advantages afforded international competitors. A
recent 2016 study by Informa Economics IEG, working with Texas A&M
University and Oregon State University economists, showed that between
2002 and 2014 a return on investment by MAP of a remarkable $24 in
export gains for every additional $1 spent on foreign market
development. Given the tremendous cost-benefits and effectiveness of
the program, I strongly believe that MAP funding should be increased to
$400 million annually, with the increase phased in as part of the next
farm bill.
Another program that has been helpful in both maintaining and
expanding overseas market access is the Technical Assistance for
Specialty Crops (TASC) program. I would request that the Subcommittee
continue to provide adequate support for this program.
I would also like to highlight crop insurance, which does not fall
under this Subcommittee's jurisdiction but has long been recognized by
our industry as a critically important management tool. It is estimated
that approximately 72 percent of apple orchards nationwide are covered
by Federal crop insurance, which provides an important safety net to
growers should a catastrophic event occur.
Last, while not traditionally a topic addressed by the farm bill, I
cannot address the impact of Federal policies on specialty crop growers
without mentioning the need for a stable, legal workforce. It is
becoming increasingly difficult to find the skilled workers necessary
to grow, harvest, and pack the crop. The H-2A program is burdensome and
costly, yet critical to our business. Visa processing delays by the
U.S. Department of Labor often cause workers to arrive days or weeks
late--which can be a disaster for perishable tree-fruit.
The bottom line is that this program is insufficient for meeting
the needs of our growers and packers. We need a guest-worker program
that is affordable, reliable, and reasonable, and that provides a
pathway to legal status for the current workforce so that this
expertise is not lost.
As I conclude my testimony, I do want to note that my industry is
represented on the Specialty Crop Farm Bill Alliance, which is in the
early stages of developing specific requests on behalf of the entire
specialty crop industry for many of the programs I have mentioned
today.
Once again, I would like to thank the Subcommittee for giving me
the opportunity to testify before you today on the priorities of the
tree-fruit industry for the next farm bill. I am happy to answer any
questions the Subcommittee may have.

The Chairman. Thank you. That is very good and on the time.
I would like to yield to Ms. Lujan Grisham to introduce our
next witness.
Ms. Lujan Grisham. Given that votes have been called, I
will forgo a glowing, fabulous description of our New Mexico
witness, Jay Hill, who is a farmer in Mesilla Valley, which is
in southern New Mexico, and grows a variety of fabulous crops,
including New Mexico chile, and simply to say to Mr. Hill,
thank you for being here.

STATEMENT OF JAY HILL, OWNER-OPERATOR, HILL FARMS AND WHOLESOME
VALLEY FARMS, MESILLA PARK, NM

Mr. Hill. Chairman Davis, Ranking Member Lujan Grisham, and
Members of the Subcommittee, thank you for inviting me to join
you this afternoon.
My name is Jay Hill, and I am a specialty crop farmer in
the Mesilla Valley, southern New Mexico. My family and I are
growing carrots, lettuce, pinto beans, chile, along with
another 63 varieties of specialty crops. We grow these for
wholesale and retail markets, as well as for a new store that
will be opening this spring called FARMesilla. We also own a
pinto bean processing facility, and have recently acquired
greenhouses that we are in the process of installing a
hydroponic production system in, in order to expand our growing
season to year-round. We are looking to further diversify our
expanding family-owned and operated business, just as many
others are aspiring to do.
I sit before you today to discuss the success of the
Specialty Crop Block Grant Program. Although I have not yet
directly been a recipient of these funds, my family as well as
so many others throughout our diverse state, have benefitted
from these funds. Beginning in the early 2000s, these funds
were used to carry forward some of the green chile research
being done at New Mexico State University. As a result of this
research, NMSU has released several chile pepper varieties,
such as the Heritage 6-4 and Big Jim, that are now commonly
grown in southern New Mexico, and sought after by retailers and
consumers alike throughout the country.
As a result of cheaper labor costs in other chile-producing
countries, competition and pressure from imported markets have
affected the processing industry. The New Mexico Department of
Agriculture responded by seeking out specialty crop funding to
further develop our retail markets for the fresh green chile.
Since 2006, funds have been used to conduct training for more
retailers, recipe development, and create promotional events in
target markets, and so much more.
Just as these promotional efforts have driven consumer
demand, similar promotional efforts have been undertaken by our
chile growers and shippers in the retail industry.
Specifically, our growers and shippers worked together to
create a New Mexico pavilion at the largest produce trade show
in the country, the Produce Marketing Association's Fresh
Summit. Over 20,000 qualified retail buyers walk the show each
year, and over 60 countries are represented there. It is the
Specialty Crop Block Grants that allow producers like myself to
step off the farm and exhibit and connect with potential
buyers. As a direct result of all these efforts, over 3,000
retail stores across the United States as well as Canada now
offer fresh New Mexico green chile. These chains are many you
may recognize: Wegmans, The Fresh Market, and Whole Foods.
To further quantify the success of our outreach on green
chilies, planted acreage in New Mexico grew 11 percent in 2016.
At the same time, Specialty Crop Block Grant funds have been
used to develop markets for New Mexico green chile throughout
food service channels, further benefitting both chile producers
and value-added processors. Establishments right here in
Washington, D.C., such as Stanton and Greene have served New
Mexico green chile. And, in fact, our famous green chile is
being served just down the street in two of USDA's cafeterias;
the South Cafe and Whitten Cafe.
While I have chosen to focus my testimony on the
progression of the New Mexico green chile industry as a result
of the Specialty Crop Block Grant program, there are many, many
other specialty crop programs that have worked as well, such as
SCRI. The block grant program, however, allows producers such
as myself to innovate and try new things that otherwise would
not have been possible. It allows recipients to gain from
other's lessons learned. Some of these stories will be
highlighted in my written testimony.
To conclude, I would like to recognize the efforts by
Congress, USDA, as well as New Mexico Department of
Agriculture, and the other states involved in the program. The
collaboration between the Federal and state governments have
resulted in the ability to efficiently administer the program
and meet the specific needs of each state or territory. The
program has also supported an overarching goal of bolstering
specialty crop marketability. The Specialty Crop Block Grant
Program is key to the 2018 Farm Bill, that will help
agribusinesses like mine to grow and progress. These program
enabled me to showcase our chile-roasting process in an Iowa
grocery store, and these humble beginnings were the
steppingstones to becoming a successful producer and processor
with national distribution.
I appreciate the opportunity to be with you today, and I am
happy to answer any questions you may have.
[The prepared statement of Mr. Hill follows:]

Prepared Statement of Jay Hill, Owner-Operator, Hill Farms and
Wholesome Valley Farms, Mesilla Park, NM
Introduction
Chairman Davis, Ranking Member Lujan Grisham, and Members of the
Subcommittee, thank you for inviting me to join you this afternoon. My
name is Jay Hill. I am a specialty crop farmer from the Mesilla Valley
in southern New Mexico. My family and I are growing carrots, lettuce,
pinto beans, chile, along with another 63 varieties of other specialty
crops. We grow these for wholesale and retail markets as well as for
our new store that will open this spring called FARMesilla. We also own
a pinto bean processing facility and have recently acquired some
greenhouses and we are in the process of installing a hydroponic
production system in order to expand our growing season year-round. We
are looking to further diversify our expanding, family-owned and
operated business just as many others are aspiring to do.
I sit before you today to discuss the success of the Specialty Crop
Block Grant Program. Although I have not yet been a direct recipient of
these funds, my family and I, as well as so many others throughout our
diverse state, have benefited from this program since its inception.
Success Story
Beginning in the early 2000s, these funds were used to carry
forward some of the chile research being done at New Mexico State
University. As a result of this research, NMSU has released several
chile pepper varieties, such as the Heritage 6-4 and Big Jim, that are
now commonly grown in Southern New Mexico and sought after by retailers
and consumers alike throughout the country.
As a result of cheaper labor costs in other chile producing
countries, competition and pressure from imported chile for the
processing industry began to increase and many growers began seeking
alternative markets for their product. The New Mexico Department of
Agriculture responded by seeking out specialty crop funding to further
develop retail markets for fresh green chile outside of New Mexico.
Since 2006, funds have been used to conduct training for the retailers,
recipe development, create promotional events in target markets, and
more.
Just as promotional efforts drove consumer demand, similar
promotional efforts have been done by our chile growers and shippers
for the retail industry. Specifically, our growers and shippers worked
together to create a New Mexico pavilion at the largest produce trade
show in the country: the Produce Marketing Association's Fresh Summit.
Over 20,000 qualified retail buyers walk this show each year and over
60 countries are represented there. It is this grant program that
allowed producers like myself to step off the farm and exhibit at the
show and connect with potential buyers.
As a direct result of all these efforts, over 3,000 retail stores
across the United States as well as Canada now offer fresh New Mexico
green chile during harvest season. Chains that many of you may
recognize are Wegmans, The Fresh Market, and Whole Foods. To further
quantify this success, planted acreage of New Mexico green chile grew
by 11% in 2016.
At the same time, these funds have been used to develop markets for
New Mexico-grown chile throughout foodservice channels further
benefiting both chile producers and value-added processors.
Establishments right here in Washington D.C. such as Stanton & Greene
have served New Mexico chile. In fact, our famous green chile has been
served right here in two of USDA's cafeterias: the South Cafe and the
Whitten Cafe.
While I have chosen to focus my testimony on the progression of the
New Mexico chile industry as a result of this grant program, there are
many other successful specialty crop stories to be told. This grant
program allows producers, such as myself, to innovate and try new
things that otherwise would not have been possible. It also allows
recipients to gain from others' lessons learned. Some of these stories
are highlighted in my written testimony.
Conclusion
To conclude, I would like to recognize the efforts by Congress,
USDA, as well as the New Mexico Department of Agriculture and the other
states involved in the program. The collaboration between the Federal
and state governments has resulted in the ability to efficiently
administer the program and meet the specific needs of each state or
territory. The program has also supported the overarching goal of
bolstering specialty crop research and marketability. The Specialty
Crop Block Grant Program is a key program to the 2018 Farm Bill that
will help agribusinesses, like mine, progress and grow. The program
enabled me to first showcase our chile roasting process in an Iowa
grocery store parking lot. These humble beginnings were the stepping
stones to becoming a successful producer and retailer nationwide.
I appreciate the opportunity to be with you today and I am happy to
answer any questions that you may have.
Appendix A
Recent Program Highlights from the New Mexico Department of Agriculture
Funding Summary
2014-2017 Funding Cycle:

New Mexico received $550,749.99.

8 projects funded.

2015-2018 Funding Cycle:

New Mexico received $507,181.82.

9 projects funded.

2016-2019 Funding Cycle:

New Mexico received $495,628.39.

9 projects funded.
Sample Projects
2013-2016 Wine Trail Signage and Tourism Promotion Project
($63,700):

The original intent of this project was to improve awareness of
New Mexico wines by establishing wine trails and marking them
with roadside signage. However, many of the wineries and
tasting rooms do not qualify for the type of roadside signage
that was needed. After several unsuccessful requests for
exemptions to the existing signage guidelines, the New Mexico
Wine Growers' Association (NMWGA) decided to change their
strategy.
With this change in direction, future efforts aimed at improving
awareness of New Mexico wines included creating a New Mexico
wine trails app for smart phones, developing various
promotional materials, as well as creating advertisements such
as billboards. Individually, these tools helped the NMWGA reach
their various target markets.

As the project was coming to a close, the NMWGA asked to utilize
the remainder of their funding primarily for winery
participation in the Finger Lakes wine competition. As a
result, all of the New Mexico wines that entered into the
competition were awarded medals. The focus of their advertising
campaign is now centered around these award-winning wines,
helping to not only increase awareness for all New Mexico wines
but to increase awareness of the quality of wines as well.

2014-2017 Taos Veterans Farmers Project ($12,785):

The Not Forgotten Outreach (NFO) Farmers Project provides
veterans and Gold Star Families (survivors of fallen heroes)
with horticulture therapy and beginning specialty crop farmer
training. NFO utilizes previously uncultivated land by means of
Memorandums of Understanding with elderly landowners as well as
hoop houses for season extension purposes in the Taos area in
northern New Mexico.
By the end of the second year, NFO had introduced 17 military
families and three beginning veteran farmers to land
reclamation, planting specialty crops, and preparing the crops
for various wholesale and retail sales throughout their
community. NFO also hosted an aquaponics workshop for 32
individuals that included both military families and civilians.
Nine veterans whom attended the workshop are extremely
interested in producing specialty crops via aquaponics farming
techniques.
Just recently, NFO joined forces with Taos Village Farms and
gained the use of 90 acres. The 90 acres includes a 40x90
greenhouse, cold storage space, 7 acres of drip line irrigated
field crops, 1 acre of hops, and 40 acres of irrigated land.

2015-2018 and 2013-2016 Mitigation of Alternate Bearing in
New Mexico Pecans ($84,997.39 and $93,000 respectively):

Pecans are among the largest economic contributors to New
Mexico's agricultural economy, with production exceeding $60
million annually. One of the most important horticultural
constraints for profitable pecan production in New Mexico is
alternate bearing, which is the annual cycling of pecan trees
between heavy and light crop load. The mechanism behind
alternate bearing is the year-to-year variation in formation
and development of female flowers.
The transition to flowering in pecan trees cannot be visualized
until bloom but the ``decision'' to become a flower takes place
prior to bloom. Neither the timing nor location of the source
for the genetic signal for a shoot meristem to transition from
vegetative to floral is known in pecan trees. Therefore, a
practical approach to address this problem is to utilize
genetic techniques to determine how flowering occurs in pecan
trees. New Mexico State University is using the Specialty Crop
Block Grant Program to do this important research. This
research will allow better resolution for timing of such
alternate bearing mitigation approaches such as mechanical
hedge pruning, fruit thinning, and plant growth regulator
applications. These genetic studies are necessary in
understanding how flower induction in pecan trees occurs, which
will give the pecan growers an invaluable tool to use with
their horticultural practices for mitigating alternate bearing
in pecan trees.
The results of this research will further help southern New
Mexico pecan growers produce a more consistent crop from year
to year. Consistency in production and quality is key to
capturing and maintaining market share.

2015-2018 Cooking with Kids Community Connections for a
Healthy Future ($60,274.65):

The goal of this project is to increase purchases of specialty
crops through: addressing the nutritional health of families in
New Mexico by providing hands-on food and nutrition education
using New Mexico-grown specialty crops; connecting New Mexico
specialty crop farmers with local school children through the
Cooking with Kids Farmers in the Schools program; and to train
farmers in demonstration and sampling skills to market their
crops.
The Cooking with Kids program has experienced great success in
increasing first year sales of specialty crops through their
in-school programing efforts for K-6th graders. Further,
agricultural producer participation in these education programs
is on track to meet or exceed their target goals for the 2 year
project. An unexpected outcome was identifying additional needs
for Spanish-speaking farmers. The program's Year 2 efforts will
focus on facilitating a Spanish-language training on developing
and selling value-added products. The training will include:
(1) a translated presentation from the New Mexico Environment
Department on guidelines and requirements, (2) a presentation
on strategies and lessons learned from farmers who are
successfully marketing value-added products, and (3) a focus
group discussion with current market customers on the types of
products they would like to purchase at market.
Appendix B
Information from the New Mexico Farm & Livestock Bureau
The 2014 U.S. Farm Bill was estimated to contribute $23 billion to
deficit reduction over 10 years. This was the first time a farm bill
has voluntarily reduced spending before consideration and the only
reauthorization bill that offered a savings. The Agriculture Committees
made difficult decisions to deliver a bipartisan bill. As you all begin
preparing for the 2018 Farm Bill we would ask that the substantial
savings that have been achieved be taken into consideration.
Agriculture and rural New Mexico struggles, New Mexicans have
difficulty meeting their nutritional needs. Farm income is down and so
the development and passage of the 2018 Farm Bill without further cuts
is essential.
For New Mexico, the 2018 Farm Bill is important, while many farmers
and ranchers take advantage of the various farm bill programs it is
ultimately the consumers, citizens and our country that truly benefits
from a safe, abundant and affordable food supply. We cannot say that
one program is more important than the other and so careful
consideration must be given to all programs.
As a Board of Director for New Mexico Farm and Livestock Bureau, a
producer and consumer, I respectfully ask that you consider the
contributions that agriculture has already made to reducing the
deficit. We ask that you pass a 2018 Farm Bill with the funding needed
to support our farmers and ranchers while ultimately benefiting all
consumers.
Appendix C
Information from the National Association of State Departments of
Agriculture
The Specialty Crop Block Grant program (SCBGP) is a critical area
of collaboration between the State Departments of Agriculture, the
specialty crop industry, and USDA. Since 2009, the state departments of
agriculture have distributed nearly $393 million in grants to 5,400
project partners that have enhanced the competitiveness of specialty
crops in the United States. These projects are not just increasing
consumer access to safe and healthy food but are expanding economic
opportunities across rural America.
While we highlight this program as a success, program funding
recipients have growing concerns that the flexibility the SCBG program
was built upon is eroding due to increased and unnecessary bureaucratic
processes. This is especially evident in the establishment of certain
performance measures for the program. While we all want to ensure the
wise use of tax dollars, we are concerned these requirements--
especially new sales reporting requirements for marketing projects--are
simply not feasible for many of the kinds of projects that have made
this program so successful. We ask this Subcommittee to take these
concerns into consideration as we work towards a flexible, locally
responsive program in the next farm bill.

The Chairman. With that, I really appreciate your opening
comments, Mr. Hill.
Ms. Davis, since we share the same last name, you are going
to have to have a little bit of patience with me. I am going to
recess this hearing so that we can go vote. We have been trying
to get them to hold it open as long as possible, and they are
now texting me asking where we are at.
So with that being said, this hearing is in recess, and we
will come back immediately after votes to listen to your
opening statement and take questions. Thank you.
[Recess.]
The Chairman. I think Ms. Lujan Grisham is on her way back,
but since we only have one more witness left to offer opening
remarks, I would like to call the hearing back to order and let
Ms. Davis feel free to offer her opening remarks, and then Ms.
Lujan Grisham, our Ranking Member, will be back in time to
begin the question period.
So with that, Laura Davis from Long Life Farm, in
Hopkinton, Massachusetts, who told me earlier today that she
was born in the great State of Illinois, correct? Well, thank
you, another pleasant surprise from the witness table. So with
that, thank you for being here, you are recognized for 5
minutes.

STATEMENT OF LAURA DAVIS, CO-OWNER/CO-OPERATOR, LONG LIFE FARM;
PRESIDENT, BOARD OF DIRECTORS, NORTHEAST ORGANIC FARMING
ASSOCIATION--
MASSACHUSETTS CHAPTER, HOPKINTON, MA

Ms. Davis. Thank you, Chairman Davis, and Subcommittee
Members.
My name is Laura Davis, and like most farmers who are
trying to piece together a living, I wear many hats. Foremost,
I own and operate Long Life Farm, along with my husband, Donald
Southerland. Our daughters, 12 and 14, are the most important
crop we grow. I am the President of the Board of Directors of
the Northeast Organic Farming Association--Massachusetts
Chapter. On behalf of NOFA--Mass, I earn an hourly wage
assisting farmers and food handlers with their organic
certification process. In addition, I organize the Hopkinton
Farmers' Market in Hopkinton, Mass., and I also work as an
independent organic inspector.
The energy that my husband and I have put into building our
farm and raising our children, combined with my experience with
NOFA--Mass, has provided me with an important and unique
perspective on the state of small diversified farms and
specialty crop production in Massachusetts and throughout the
Northeast.
Long Life Farm is a 2\1/4\ acre certified organic,
diversified vegetable farm. We grow 100 varieties of vegetables
and annual fruits. We launched our farm in early 2011, and are
growing produce for 85 families, a community-supported
agriculture program, and we sell our produce at two farmers'
markets.
NOFA--Mass has 1,100 members, and it is part of the NOFA
Interstate Council of seven Northeast states, with
approximately 5,000 members. The NOFAs are proud members of the
National Sustainable Agriculture Coalition, as well as the
National Organic Coalition.
As everyone in this room knows, farms of all types are
struggling throughout country. Rock-bottom commodity prices and
tightening international commodity markets have more and more
farmers looking to local, regional, and organic markets to
diversify their business and ensure their long-term viability.
In such a state of transition, it is critical that the next
farm bill, at the very least, maintain, or better yet, increase
current investments in those sectors of the agriculture
economy. Now is not the time to cut important programs that
serve family farms, that promote rural jobs and economic
opportunity.
I would like to mention a number of farm bill programs that
are critical to supporting producers in the Northeast. Since I
rely on direct market channels for selling my produce,
marketing and sales is a critical part of my job. I know from
experience and from other farmers how important finding a
consumer base is for the success of our farms. The National
Organic Certification Cost-Share Program and the Farmers'
Market and Local Food Promotion Program have been incredibly
important to connecting with customers and supporting both new
and expanded markets. NRCS EQIP grants for high tunnel
greenhouses have also been a very important investment,
allowing farmers like me to extend my season earlier in the
spring and later in the fall.
We are promoting SNAP, Supplemental Nutrition Assistance
Program, at the Hopkinton Farmers' Market, and hope to gain
funding for SNAP nutrition incentives so that we can bring more
benefits to our seniors who are on a limited income. This is
our main SNAP population in our community.
We would also like to be able to accept SNAP EBT for CSA
shares. Like many other Massachusetts farmers, we thought
changes to the last farm bill would make that possible, but
there are still logistical challenges. I hope the next farm
bill can fix some of these logistical challenges.
Food safety is also critical to marketing, and represents
both a challenge and an opportunity. While it is not an
immediate concern for my farm at is current size, as my farm
grows, I will have to become increasingly focused on produce
regulation compliance with the Food Safety Modernization Act.
Understanding FSMA and becoming third-party certified is
weighing heavily on the minds of produce farmers throughout the
Northeast. From my perspective, the next farm bill needs to
invest more research in outreach, education, technical
assistance, and cost-share assistance for farmers to support
FSMA compliance.
Last, in terms of long-term future of farming, we need to
focus on research that benefits organic and sustainable
agriculture. My farm and others throughout the Northeast have
benefitted from on-farm research of new practices shared
through farmer-to-farmer networks. Continued growth in the
local, regional, and organic sectors of agriculture depends
upon developing new locally adapted seeds and techniques. It is
important that the next farm bill continue to invest in
agricultural research and education through programs like the
Organic Research and Extension Initiative.
I am grateful for the Subcommittee's interest in learning
more about how farm programs and policies affect farmers in the
Northeast, and I encourage the Subcommittee Members to give
careful consideration into how the next farm bill can support
rural communities, small family farmers by supporting local and
regional food economies.
Thank you.
[The prepared statement of Ms. Davis follows:]

Prepared Statement Laura Davis, Co-Owner/Co-Operator, Long Life Farm;
President, Board of Directors, Northeast Organic Farming Association--
Massachusetts Chapter, Hopkinton, MA
Introduction
Good afternoon! I appreciate the opportunity to testify before the
Subcommittee on a topic area that is important to farmers throughout
the Northeast. My name is Laura Davis and like most farmers who are
trying to piece together a living, I wear many hats. Foremost, I own
and operate Long Life Farm along with my husband Donald Sutherland. Our
daughters 12 and 14 are the most important crop we grow. I am the
President of the Board of Directors of the Northeast Organic Farming
Association--Massachusetts Chapter; this is a volunteer position. On
behalf of NOFA--Mass, I earn an hourly wage assisting farmers and food
handlers with their organic certification process. In addition, I
organize the Hopkinton Farmers Market in my town and I am an
Independent Organic Inspector. The sweat and energy that my husband and
I have put into building our farm and raising our children, combined
with my experience with NOFA--Mass, has provided me with an important
and unique perspective on the state of small diversified farms and
specialty crop production in Massachusetts but also throughout the rest
of the Northeast.
I have walked the path that Beginning Farmers must travel to access
land, learn agricultural skills and finance infrastructure. Unlike
young farmers starting out, I had a bit of savings that paid my
personal expenses and early capital expenses as I launched my
agricultural business. In addition, several important Federal programs
helped Long Life Farm gain a foothold in our local market.
Long Life Farm is a certified organic diversified vegetable farm
growing over 100 varieties of vegetables and fruit on 2\1/4\ acres of
leased land. We launched our farm in early 2011, and are growing food
and selling direct to 85 families and our community at the Hopkinton
Farmers' Market and the Ashland Farmers markets.
As I mentioned previously I am also the President of the Board of
Directors of NOFA--Mass. NOFA--Mass has 1,100 members and is part of
the NOFA Interstate Council of NOFA organizations from New York,
Vermont, New Hampshire, Connecticut, Rhode Island and New Jersey which
is made up of about 5,000 members. NOFA--Mass enjoys a diversified
revenue mix of Federal, state and private grants, membership, donations
and conducts numerous educational workshops and seminars on organic
farming and gardening.
We teach farmers, gardeners, consumers, landscapers, educators and
policy makers how to take action on their own to return carbon to the
soil and produce nutrient dense food that will resist insect/disease
pressure as well as resist extreme weather events.
NOFA--Mass Mission statement reads: Through education and advocacy
NOFA--Mass promotes organic agriculture to expand the production and
availability of nutritious food from living soil for the health of
individuals, communities and the planet.
The NOFAs are proud members of the National Sustainable Agriculture
Coalition as well as the National Organic Coalition.
I want to turn my attention now to the topic at hand, the next farm
bill and specialty crops. As a small-diversified organic specialty crop
farm relying on direct market channels for selling my produce,
marketing and sales is critical to my job. I know from experience and
through other farmers, how important marketing and finding a way to
connect with customers is for the success of farms like mine throughout
the Northeast.
The National Organic Certification Cost-Share Assistance Program is
an important program that helped us connect and communicate with
potential customers and access the strong and growing market for
certified organic food. There was no hesitation, when I launched Long
Life Farm, that I would pursue organic certification. I have relied on
the USDA/Organic seal in purchasing food for my family and it felt like
a natural progression to certify the food that we were producing on our
farm. It was also important to me to have instant credibility with my
new customers as a new farmer. The USDA Organic label enabled me to
instill confidence with shareholders up front. Farmers can spend years
getting to know customers and familiarizing them with their farming
practices. In the case of farmers interested in selling to wholesale
markets, many institutional buyers, as well as supermarkets and other
groceries now carrying organic produce, require certification.
As the Organic Certification Assistance Coordinator for NOFA--Mass,
I often hear objections from farmers to certification due to cost of
the program. For small farmers, the Organic Cost-Share Program brings
the cost in line with affordability. While costs can vary amongst
different certifiers, recouping 75% (for a maximum $750) of the organic
certification fee paid to certifiers is a huge benefit for small farms.
This means higher margins for farmers who grow commodity crops, when
prices are at historic lows. One could argue that more organic farms
means more conservation programs too, as organic farmers are doing
conservation work through nutrient management, cover cropping, crop
rotations and now more so than ever reduced or no-till farming. The
Organic Certification Cost Share program is bringing benefits to our
farm communities that keep on giving, on multiple fronts.
Another program that I know has been important for developing new
marketing opportunities for family farms is the Farmers Market and
Local Food Promotion Program. This program also helps farmers tap the
existing demand for local produce by developing new markets and
increasing consumer demand. One entity who was awarded a FMPP grant in
2016 here in Massachusetts, New Entry Sustainable Farming Project, is
launching workshops and training programs to develop a direct marketing
plan which will include technical support, branding, websites and
marketing strategy for farmers going through their farm business
planning course and those farming on their incubator farm.
As everyone here in this room knows, farms of all types are
struggling throughout the country. Rock bottom commodity prices and
tightening international commodity markets have more and more farmers
looking to local, regional and organic markets to diversify their
businesses and ensure long-term viability of their farms and the next
generation of farmers. In such a state of general uncertainty with more
and more producers looking to local, regional and organic markets, it
is critical that the next farm bill at the very least maintain or
increase current investments in those sectors of the agriculture
economy--now is not the time to cut important programs serving
agriculture and promoting rural jobs and economic opportunity. In light
of the state of the rural economy and local and international marketing
opportunities, we should really be discussing increasing farm bill
investments in developing local and regional food economies and organic
agriculture.
USDA/NRCS EQIP grants have been an extremely valuable program to so
many Northeast farmers. I have been able to extend my season with the
aid of a high tunnel greenhouse, partially paid for by an NRCS high
tunnel grant in 2015. This grant also enabled me to pay for additional
greenhouse soil testing to insure maximum nutrient management. Not only
have I expanded my farm share offerings to include early spring and
fall greens, but early and late crops undercover are safer from severe
weather events. This would not have been possible without the EQIP
grant. This program should continue to benefit farmers throughout the
U.S.
My farm markets most of our produce through a CSA program, though
we also sell through farmers['] markets where we have benefited from
being able to accept SNAP EBT and double-value SNAP incentives. Only
about 5% of the community that I live in receives SNAP benefits, but
they are seniors who live in subsidized housing. They used to have a
local grocery they could get to within blocks of their home. Now they
must travel some ways to do their grocery shopping. We are promoting
SNAP at the Hopkinton Farmers['] Market and hope to gain funding for
SNAP matching so that we can bring more benefits to our seniors on a
limited income.
We would like to also be able to accept SNAP EBT for CSA shares.
Like many others Massachusetts farmers, we thought changes to the last
farm bill would make that possible but unfortunately severe limitations
in the implementation phase of the farm bill resulted in inadequate
changes. For instance, Many Hands Organic Farm in Barre, MA brings out
the EBT machine once per week for one customer, must connect via dial-
up to connect, and must be available and present when the customer
picks up. They cannot be out in the fields working. All their other
shares are picked up by customers without someone there to assist them.
Many farms deliver CSA shares to more convenient drop off points for
their customers, having to scan the EBT card each week or every other
week, instead of once per season, is preventing farmers from accepting
SNAP benefits for CSA shares, causing people who need the nutritious
food most going without, if they cannot get to the farm. I hope the
next farm bill can fix some of these logistical challenges and make it
possible to truly receive SNAP benefits for a CSA farm share.
In terms of marketing, one of the biggest challenges I face is from
food safety regulations. Food safety is important to our operation
first and foremost for our customers' health and well-being, but food
safety is also about marketing and access to markets, and about
government regulations.
While it is not a concern for my farm at the current size, like
every small business owner I hope my small farm business will continue
to grow and that means I will have to become increasingly focused on
compliance with the Food Safety Modernization Act (FSMA) produce
regulations whether through direct application of those regulations on
my farm or the indirect impact of driving increased reliance on third
party food safety auditing in the larger local and regional produce
markets. Understanding FSMA, and becoming third party food safety
audited for FSMA compliance and/or market access are weighing on the
back of the minds of many farmers throughout the northeast and indeed
the whole country.
Food safety is both a major challenge and an opportunity for which
the farm bill could really help. Throughout the Northeast many small
and medium size farmers are struggling to figure out how and when they
have to or don't have to comply with FSMA rules and regulations. This
is one area in which the farm bill should really play a stronger role.
There needs to be much more robust outreach and education efforts aimed
at helping to educate and train small farmers across this country about
FSMA and its associated rules, regulations and thresholds for
compliance. Providing additional funding for the Food Safety Outreach
Program through the farm bill could help to address these issues. In
addition, the farm bill should look at cost share programs that would
help offset the water testing requirements for surface water for FSMA.
While my organic certifier requires me to do water testing annually at
a cost of $70, the FSMA required 20 tests ($700) to establish baseline
and then five water tests ($175) per year thereafter is not only costly
in terms of testing, it is a logistical nightmare. Labs usually require
you to use only their sample cups, so if you don't have enough in
stock, you must go get them before taking water samples and returning
them to the lab. There is also a small window of time when samples can
be delivered to the lab, making it difficult for farms that are not
within proximity.
A cost-share assistance program focused on food safety would be
tremendous, it could mean the difference between survival and failure
for many farmers of all types from well-established producers to
beginning and veteran farmers. For me and many other farmers it seems
only fair. If society through Congress and the FDA has decided that we
need to impose certain industrial-type food safety regulations and
standards on farmers throughout the country, society should share in
that burden rather than place it all on struggling family farmers and
rural communities.
Last, I would like to talk about a topic that is less focused on
current and short-term challenges and opportunities and on the long-
term future. That topic is research. My farm and so many others
throughout the Northeast have benefited from on-farm research into new
practices and approaches to farming, shared through farmer-to-farmer
networks and events. Farming is not an exact science and techniques
continue to evolve for small organic farms utilizing no-till or minimal
till farming. There are only a handful of universities that focus on
research that is relevant to organic farming. This primarily due to
limited funding to support such research rather than a lack of
interest. Research studies can make a big impact to Northeast farmers.
For instance, the results\1\ from a single recent study from the
University of New Hampshire may have saved \1/4\ acre of fall brassicas
that I lost to aphids last year.
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\1\https://extension.unh.edu/resources/files/
Resource006332_Rep9072.pdf.
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I participated in a Specialty Crop Research Initiative grant
through NOFA--Mass over the last year, and while results have not been
published yet, I do expect to learn about new practices that will make
me a more profitable farmer. I will be sharing my efficiencies in using
black weed guard mulch in between rows of cucurbits and tomatoes.
We also need to research how our changing climate is impacting
agriculture in the Northeast as it pertains to flooding, drought,
severe temperature swings and the direct market farmer.
Continued growth in the local and regional and organic sectors of
agriculture depend on developing new regionally and locally adapted
seeds and techniques, continued investment in organic research and on-
farm research and dissemination of that research to farmers and other
researchers. As you know certified organic growers are required to use
organic seed, however there are limited varieties available if you
compare catalogs of conventional seed. As an Independent Organic
Inspector, I visited 20 organically certified farms in 2016 to do their
annual inspection. A very small handful uses 95-100% organic seed in
their farming operations. This all has to do with the limited
availability, or lack of vigor and breeding of organic seed. It is
important that the next farm bill continues to invest in agriculture
research and education through programs like the Organic Research and
Extension Initiative (OREI).
Organic farming continues to be one of the fastest growing sectors
of agriculture. However, a major challenge facing organic farmers is
the lack of sufficient, appropriate, and relevant research, education
programs, and extension resources. A strong investment in research
underpins growth in any sector, as all farmers--sustainable, organic,
conventional, or otherwise--need cutting-edge research that is easily
accessible and relevant to their farming systems. OREI helps fill the
void of knowledge by supporting research projects that specifically
address the most critical challenges that organic farmers face in their
fields every day. And most of the research results from OREI can also
inform and be applied by more conventional operators as well. The next
farm bill should redouble research investments and activities in OREI.
Thank you. I appreciate the opportunity to speak to you this
afternoon about such an important topic. I am grateful for the
Subcommittee's interest in learning more about how farm programs and
policies are and aren't working for farmers in the Northeast. I
encourage the Subcommittee Members to give careful consideration into
how the next farm bill can and should support rural communities and
small family farmers by supporting local and regional food economies.

The Chairman. Thank you, Ms. Davis.
I would like to get back to the page I had. The chair would
like to remind Members that they will be recognized for
questioning in order of seniority for Members who were here at
the start of the hearing. After that, Members will be
recognized in order of arrival. I appreciate the Members'
understanding.
I now recognize myself for 5 minutes to begin the question
and answer session.
Mr. Field, I would like to start with you. I have heard
from numerous specialty crop groups and they all agree most
Title X Programs are working well. How have the programs been
working for your operations at Frey Farms?
Mr. Field. The programs work great for us. We really don't
seem to have many issues. For us, the number one issue, and I
reiterate this from my testimony, is the fact that immigration
is the one main issue that we need to focus on. Immigration
reform for agriculture is the single largest issue facing us
today, and if we don't fix it, it can likely put our industry
in jeopardy, especially as we come upon the 2018 Farm Bill.
Agriculture needs to be the number one priority for us. And
we understand that it isn't through the jurisdiction of this
particular Subcommittee, however, we are looking to you to be
our champions on that.
The Chairman. Thank you, Mr. Field. You mentioned
immigration reform. Obviously, that is not under the
jurisdiction of our Committee. Looking at the farm bill, can
you offer up any suggestions on what we can do better to make
operations like yours, a multi-state operation, make it more
functional so that we can continue to get produce out into the
global marketplace?
Mr. Field. Absolutely. Research is probably the single
biggest initiative that we should be focusing on. For an
operation like ours, certainly, and I am speaking here from our
personal experience, is that research helps us understand
things like mechanization, it helps us understand food safety,
it helps us understand citrus greening. And especially when you
farm in multiple states like us, under multiple different types
of specialty crops, research is critical for us. And,
specifically for research, this Subcommittee could take a close
look at the funding levels and the structure of how the
research is done at the USDA because, for example, right now
there are plenty of groups who would like to have funding from
the USDA to understand how fruits and vegetables or specialty
crops can be allocated the right funding from the USDA, but
they find it from a lot of other sources. Right now, for
example, in Miami, Florida, where my hometown is, where I am
from, there is a group called Fairchild Tropical Gardens, and
they are one of the finest botanical gardens in the world. And
they are currently doing a study on fresh fruits and
vegetables, funded by NASA. And they are trying to figure out,
they have the funding, but they are trying to figure out how
they can get fresh fruits and vegetables grown in space. So it
is kind of interesting that they are going to NASA to find ways
to do research on fresh fruits and vegetables instead of the
USDA.
The Chairman. I share your concern about USDA funding for
research. Obviously, NASA is another opportunity. We see
opportunities with some of our universities, both land-grant
and non-land-grant universities. But let me ask you, do you at
Frey Farms use any of those opportunities to partner, or do you
use any opportunities to take research that has been partnered
with industry, for example? And what are your thoughts on
industry sponsoring research also?
Mr. Field. Absolutely. We need to have those types of
initiatives in place. I think the university programs are
phenomenal. In Florida, for example, we have worked closely
with IFAS to understand different research programs and
initiatives that they have.
The Chairman. Can we clarify, you said IFAS?
Mr. Field. IFAS.
The Chairman. Okay, thank you.
Mr. Field. Yes. In Florida. And then in Illinois it is
University of Illinois there. And they have helped us with
several different studies, whether it be juice marketing,
things that we do with our commodities that are based in that
part of the country. So those programs are great. They can be
enhanced and probably better equipped for our industry.
The Chairman. Okay. And any private-sector-funded research
opportunities that you guys have taken care of you would like
to expand upon?
Mr. Field. Not that I can think of at the moment.
The Chairman. Do you agree that sometimes researchers
partnering with the private-sector sometimes get unfairly
labeled?
Mr. Field. Yes, I absolutely do. I believe that they do. We
have seen that in the food industry in general where they get
labeled as though they are trying to push them one way or
another. And, in fact, there is some great research done in the
private-sector. I think that initiative should be firmly pushed
forward because they have some skin in the game, and they want
to see something better for the industry.
The Chairman. So public-private partnerships, even in
research, are working to expand the playing field to get us the
next best research project.
Mr. Field. Yes, they are very efficient.
The Chairman. So with that, Mr. Field, thank you very much
for your time.
I now recognize the Ranking Member, Ms. Lujan Grisham, for
5 minutes.
Ms. Lujan Grisham. Thank you, Mr. Chairman. And, of course,
I will ask a question, but before I do I ask unanimous consent
to enter an article from Politico entitled, The Vegetable
Technology Gap, because the information it provides regarding
the importance of investing in specialty crop research, is
right on topic.
The Chairman. Without objection.
[The article referred to is located on p. 459.]
Ms. Lujan Grisham. Thank you.
Mr. Hill, as I mentioned in my opening remarks, one of the
greatest challenges that we face in New Mexico, and many rural
states face, is the difficulty of getting healthy, fresh, and
nutritious foods to rural areas and food deserts, especially
Indian Country. New Mexico ranks 49th in the country in
children's food insecurity: 120,000 or 24 percent of all
children in our state aren't sure about where their next meal
might come from. And 17 percent of all New Mexico households
are food-insecure. In the article that I just entered into the
record, the Director of USDA's National Institute for Food and
Agriculture, Sonny Ramaswamy, said if Americans were to
actually go ahead and consume the recommended amounts of fruits
and vegetables, we would be hard-pressed to, in fact, meet that
demand.
This means that even if we didn't have challenges like food
deserts and access in rural and urban America, we aren't
producing sufficient healthy fruits and vegetables to fulfill
the nutritional recommendations and requirements we are
advising our citizens to follow.
We know that we need to increase crop yields and get more
bang for our buck. Today we get about six times as much corn
out of 1 acre of land as we did in the 1920s. However, in
specialty crops, such as iceberg lettuce, have only doubled
their yields in that same amount of time.
It seems to me then, Mr. Hill, that research, and we talked
about this in the Chairman's question, is fundamental to the
innovation in the sector. In addition to what we have heard
from our panelists, what else can we do in addition to funding
to make sure that we are creating environments, like we do at
New Mexico State University to engage in investing in
innovation, research, and technology that would make a
difference in your future?
Mr. Hill. Thank you for that question, Congresswoman. I
participate on this panel, surrounded by other producers, I
often find a challenge in marketing, and it ties back to
feeding children in my home state. We are asked to provide the
world, through our exports, with healthy, nutritious, great-
tasting food. And people want to purchase that food at, of
course, the lowest dollar that they can. As I try to target
markets, especially those that are close, I look at what covers
overhead: payroll, mortgage payments, and enough to keep new
and updated equipment on my farm, and while I do a sustainable
job as a producer. Everything I do has to make business sense.
I would love to know that when I walk into my operation one of
my greenhouses, that a fresh head of lettuce from my operation
goes to an elementary school cafeteria. I would love to make
that connection. But at this point right now, we need
additional research to make sure that it is feasible, from a
business perspective, for me as a grower to actually produce
that crop and deliver it to that specific marketplace.
Ms. Lujan Grisham. With the time I have left, based on that
response, in addition to making sure that investments in the
farm bill continue, there needs to be parallel efforts to think
about the marketing and the education in connecting buyers, and
in that, provide access to areas that currently don't have that
access to fresh healthy food, such as food deserts. And maybe
that has to be part of that research, Mr. Chairman.
Thank you very much, Mr. Hill.
Mr. Hill. Thank you.
The Chairman. The gentlelady yields back.
I would like to recognize Mr. Yoho, for 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman. I appreciate you all
being here, enduring Congress, I guess, going through votes.
I want to ask Mr. Field and Mr. Black: Since you have had
experience in Florida and you grew up down there, in Miami,
Florida is home to roughly 360 specialty crops. When we talk
about crop insurance and you look at this farm bill and
previous ones, going into the next one, you know how Florida,
we are blessed with an abundance of water, great agricultural
land, and people can switch crops readily, to have the
protection and the safety net. The way I understand it now, if
you look at Florida with the orange groves, 50,000 acres have
been replanted as either blueberries or corn in a lot of the
areas. When you change from one crop to another, and it is a
specialty area, you might try it for a year or 2, it seems like
you fall out of the risk management programs or the crop
insurance because you don't have a track record, even though
you may even border a county that has a historical record. What
are your thoughts on that, and how can we strengthen it, and is
there a need to do that?
Mr. Field. There is absolutely a need to do that, to
strengthen crop insurance, and those programs as you mentioned
them. For example, in Florida, that is one of our newer states
where we produce, we do watermelons. And we have grown
watermelons there, but we have recently taken----
Mr. Yoho. We are first or second in the country on
watermelons.
Mr. Field. Yes.
Mr. Yoho. We are proud of those.
Mr. Field. Yes, absolutely. And we grow a lot of
watermelons down in the LaBelle area and in Parrish, Florida,
and through that part of the country, through that part of the
state, I should say. But we do need to have crop insurance
there because as we are transitioning land from orange grove in
some areas where we have a lot of grove land, but we have had
to take it out due to citrus greening, which kind of goes back
to the research point. But it is very important that we have
that crop insurance, and the ability to fall back on what we
are doing there, because we are trying to utilize the land that
we have there as best as possible. We are trying to do the
right thing by agriculture.
Mr. Yoho. All right. I am going to kind of speak out of
turn here, feel free, especially you, Mr. Black, since you are
from the state, but this goes for everybody up here, and the
suggestions that you can give us early so that we can be
proactive to look at these things, to vet them, to make sure
that this is a program that we can get support bipartisanly,
which this is a great Committee for that, but to go ahead and
vet it so that it is ready for the next farm bill.
And then I want to switch over to citrus greening real
quick. That is something that is dear to all of us in Florida.
I have a Valencia tree, and I bring oranges up here and my wife
loves them when I come back. She loves those more than me. With
the citrus greening we have the problem there, and if we don't
get a handle on this real soon, Florida, it would be like Bud
without weiser, or Wal without Mart. They just go hand in hand.
And so we have to get a fix for this real quickly, and I have
talked to Mike Sparks with Florida Citrus Mutual, and we have
had in-depth conversations. But what I wanted to ask you, do
you know of anybody doing transgenic research on the psyllid
that is spreading the disease, kind of like they have done with
mosquitoes, against the Aedes mosquito? And the other thing is
on GMOs, we know that is going to be one of the cures. And
tress with natural resistance, on the GMO side, do you feel
there is an adequate marketing program out of the USDA to bring
the public into the awareness of how safe GMOs are, and the
processors too, and on the other side, where are you with
natural resistance in trees? That is a lot.
Mr. Black. Thank you, Mr. Yoho. Yes, there is significant
work. The massive research investment, significant dollars are
being funneled both into genetic solutions for the vector, the
Asian citrus psyllid, and also the host, the tree. And as a
tree crop, the genetic solution is much longer and tedious,
compared to an annual crop.
I do believe that genetics will provide solutions long-
term, but we do need to maintain our industry and our
infrastructure short-term.
As far as the consumer perception, those research solutions
are in the 7-10 year horizon, beyond the scope of the next farm
bill. But, that it is a very valid point, that we have to make
consumers aware that we provide safe food to feed the world.
There is the need to increase production in specialty crops, as
we have, and more of our commodity crops around the country,
and it is a very valid goal.
And also for your crop insurance point, I wanted to
encourage increased use of pilot programs. For citrus trees we
have a pilot program that has been in place for several years,
that gives the opportunity to work on new programs in real
time.
Mr. Yoho. I am going to cut you off because I am out of
time, but those are the kind of suggestions, feel free to pass
them up to us.
And I yield back, and thanks for touting IFAS.
The Chairman. Thanks for clarifying IFAS too.
I would like to recognize our colleague from California, it
looks like the Central Valley crew there with Mr. Panetta, Mr.
Jim Costa, for 5 minutes.
Mr. Costa. Thank you very much, Mr. Chairman, and Members
of the Subcommittee for allowing me to be a part of this
afternoon's hearing.
Yes, Mr. Panetta and I represent a great deal of
California's bountiful cornucopia of products, and we are very
proud of that.
This effort on specialty crops, and the focus of the
Subcommittee, is important. This is my third farm bill. Two
farm bills ago we were able to successfully establish a new
specialty crop title. I am very proud of that. Although,
perhaps we should readdress the title because specialty crops
are not just special, but a part of every day good nutrition on
America's dinner table. These are the fruits and vegetables,
the products that our families want to consume for healthy
diets. Members of this Subcommittee, and of the Agriculture
Committee, must understand that agriculture is a part of
America's national security. But not enough of our colleagues,
not enough folks around the country understand that less than
four percent of America's population is actively engaged in the
production of food and fiber. We not only feed the entire
nation, but feed a hungry world as well. A timely
reauthorization of the farm bill is extremely important.
I have a couple of questions as it relates to our block
grant program and research. I will start with Mr. Field, who
has been involved in this program over the years. The block
grant program has been successful, but we need to look at how
we can improve it and expand it in the next reauthorization. Is
the specialty crop industry united in support for specialty
crop farm bill programs? How might we improve them based upon
your experience?
Mr. Field. I am sorry, your question was are we united on
that?
Mr. Costa. Yes.
Mr. Field. Yes. Yes, we are united in seeing those grants
continue, if not improve. There are a lot of great
organizations, both private and public, that can benefit from
these programs. We, as farmers, don't have the resources to go
out and do this research ourselves. There are a lot of
organizations who are equipped to do research that need to have
adequate funding, so funding through the farm bill is very
important.
Mr. Costa. Isn't it true that these block grants are
coupled with not only industry organizations but also land-
grant universities, whether it be Purdue or UC Davis or Fresno
State, go Dogs. But the fact is that we are able to create
value-added by bringing these funding sources together.
Mr. Field. There is no question. Yes, sir.
Mr. Costa. And we can do more of that, and we can do it
better.
Mr. Field. I believe we can, yes, sir.
Mr. Costa. Well, I would hope that the specialty crop
organizations would come together, and as we are putting the
farm bill, that you provide suggestions on how we can improve
upon it.
Does anyone else have a comment you would like to make on
this?
Mr. Black. Yes.
Mr. Costa. Yes, Mr. Black.
Mr. Black. Yes, I would like to encourage increased use of
the Specialty Crop Research Initiative and the block grants.
The hallmark of that is stakeholder involvement and oversight.
When stakeholders can participate in selecting projects, along
with the scientific review panel, it is really a government-
public-private partnership at its best.
Mr. Costa. Right. It creates an incentive.
Mr. Black. Exactly.
Mr. Costa. Public-private partnerships, and you combine the
educational institutions and you have a trifecta.
Mr. Black. Exactly.
Mr. Costa. All right. It was highlighted here, and my time
has gone almost, but I would like comments on improving the H-
2A Program, along with comprehensive immigration reform, which
is badly needed with the broken immigration system we have
today. I see a lot of head nodding.
Mr. Field. Yes, sir. It is, as I have stated, the most
critical thing facing agriculture today. It really puts us in
jeopardy, especially with the high tensions right now around
immigration, and the fact that we do have a nondomestic
workforce, the majority of which does not have the proper work
authorization, causes major stress.
Mr. Costa. Right. Mr. Chairman, my time has expired. I want
to thank you again. But the point is that, in California, 70
percent of our workforce in agriculture is undocumented. And we
can have the best, bountiful crops in the world and good
prices, but if we don't have people to participate in that
agriculture activity, you are not going to get the products to
market or to the dinner table.
The Chairman. The gentleman's time has expired.
I would like to recognize one of our newest Members from
the great State of Florida, Mr. Neal Dunn, for 5 minutes.
Mr. Dunn. Thank you very much, Mr. Chairman. And thank you
all for being here today, and especially for being patient with
our rather fluid schedule.
Mr. Black, a lot of attention has been paid to addressing
immediate threats of disease and pests to specialty crop. For
example, the State of Florida has spent tens of millions, of
course, to combat citrus greening, HLB and its vector, which
are an existential threat to us. In view of that, is the
Federal Government also providing adequate resources to protect
specialty crops from the next infectious crisis through
proactive identification and mitigation of risks that these
emerging threats pose?
Mr. Black. Thank you for the question. And yes, it is a
very difficult task. Tremendous resources are being placed at
the borders and the airports, et cetera, to stave off the next
citrus greening threat to the specialty crops. It is very
difficult, as all of us enjoy traveling, we enjoy our contra-
season fruits and vegetables that are imported into this
country, and it is very difficult to police all of the imports
that come through the borders. And so we need to be ready. We
need to have the funding mechanisms set up through SCRI, or the
block grants, to provide funding for these diseases and threats
that are on the horizon. Some examples are citrus leprosis,
CLV, et cetera, that are around the world, we know they are in
our backyard, and we need to be ready with the research.
Research is the key.
Mr. Dunn. Let me go on and advance. Specialty crop
producers who use, and this is on the crop insurance, specialty
crop producers were, for the first time in 2014 bill, subject
to conservation compliance rules under that farm bill as a
condition of receiving premium subsidies. Can you discuss any
challenges you might have encountered bringing your operation,
your farms into compliance with those regulations?
Mr. Black. For our operations it is just another form that
needs to be completed. We are already complying with the soil
and weather conservation requirements placed on us by the farm
bill. I am a fifth generation farmer, landowner. We care about
our land and water and resources, and we are in compliance, as
all of agriculture is. We love our land and our resources.
Mr. Dunn. So let me open this question up to the panel, and
I will let you decide which one of you or all of you think are
best suited to answer this. Have you identified any
opportunities where Congress can help you with either complying
with regulations or maybe decreasing the number of regulations
that you have to comply with? I am sort of asking for your wish
list on the regulatory environment. Anybody.
Ms. Davis. I would say that definitely the farm bill could
help farmers who need to become compliant with the FSMA
regulations, the water testing. In Massachusetts, with small
farms being the majority of our farms, 5 to 10 acres, it is
very difficult even to read through it several times and
understand if you are actually supposed to comply. Education,
technical assistance in that regard, and most likely cost-
sharing for water testing. I mean currently, as a certified
organic operation, I have to do water testing every year, but
it is not 13 times, it is one time a year. So the cost of water
testing is certainly one thing that would be difficult for a
small farm.
Mr. Dunn. Anybody else? Mr. Field, I see you reaching for
the microphone.
Mr. Field. Absolutely, yes. For an organization like us, in
our experience, we are not just growers, we are growers,
shippers, packers of fresh produce, but we are also processors
in the fact that we make juice, we are now getting into whole
new different parts of our business in the value chain by doing
total crop utilization, using things like our pumpkin seeds and
watermelon rind, and crops that are left in the field that we
can now utilize for the value chain purposes. And so for us,
when you do that you have different food safety requirements,
or different FSMA requirements that will be in place for not
only the growing side, but the facilities and then, of course,
any manufacturing that you do. We need to make sure that those
food safety requirements are streamlined throughout the
process, and that they are talking to each other, that they
work well from a business standpoint.
Mr. Dunn. Our time is running out, so I am going to jump in
here and say you should provide for us some guidance on this
regulatory environment and how we can make that better for you.
And with that, I yield back my time, Mr. Chairman.
The Chairman. Thank you, Mr. Dunn.
I would like to now recognize one of the newer Members of
our Committee also, this Subcommittee, the gentleman from
Florida, Mr. Lawson, for 5 minutes.
Mr. Lawson. Thank you. I know we have a time constraint
here, so I am going to Mr. Black. Mr. Black, welcome to D.C.
During my tenure in the Florida Legislature, we spent quite a
bit money, and continue to spend money on the problems with
citrus, citric canker specifically, and if memory serves me,
appropriated maybe $12 million a year for homeowners to cut
trees from their yard. We have seen a deterioration of our
productivity, as compared to Brazil and other places. I wanted
to know how we are recovering? I see a lot of homes being built
in those areas that used to be covered with citrus?
Mr. Black. Thank you. Yes, we are threatened in Florida by
many invasive pests and diseases. Citrus canker was the focus
in the 1980s and 1990s, and millions of dollars were spent at
the state level in an attempt to eradicate citrus canker, and
unfortunately, we weren't successful. So we have to add
production costs every year to deal with that bacterial disease
that affects the surface of the plant. So it is a tax that we
have to continue to pay through production costs each year. We
lost that battle due to the hurricanes of 2004 and 2005 that
spread that invasive plant disease from a small area in the
Miami-Homestead area, that was brought to our country from
Central and South America, and it spread through the hurricanes
throughout the citrus-growing belt.
Urban pressures on development is also a threat to our
nation's farmland. I believe strongly in private property
rights, but we have to protect America's farms so we can
continue to provide safe and nutritious food for all of us.
Mr. Lawson. I yield my time.
The Chairman. Thank you, Mr. Lawson. The gentleman yields
back.
I would like to recognize another one of our newer Members
from the great State of Nebraska, Representative Bacon, for 5
minutes.
Mr. Bacon. With the name Bacon, this was a natural
committee to get on. So by the way, I echo my friend's, Mr.
Dunn, comments about being tolerant with our schedule. It is
just shifting all over the place today, so I thank you.
And I was going to talk about the Food Safety Modernization
Act, and the impact on farmers, I hear about it in Nebraska
quite a bit, but I think that question has been asked, so I
will move on to my other one.
Mr. Gilbert, you expressed interest in changing the
structure of the National Organic Standards Board. Can you
outline for us who makes up the Board, how they are chosen, and
what sort of change you would like to see on the Board?
Mr. Gilbert. Thank you. Yes, thank you for that question.
Yes, it is important to point out that a top priority really
should be the protection of the organic program overall. My
family has benefitted from the organic program because it has
really become a logo that consumers trust, and we want to
protect that. However, what we have found recently is a grower
from Washington State, from where I am from, was on the Board
for a number of years and that was able to relay our thoughts
and concerns on that Board, and when he stepped off, nobody
from our region was able to replace him. And so I can't point
to the specific composition of the Board, but I can say I
believe it should reflect the changing representation of
organic producers. The organic producers have become bigger.
That is a really good thing because it means organic techniques
are getting more widespread.
Mr. Bacon. This question may be a little outside the
boundaries of where you have gone on it, and I feel bad because
I came in a little bit late, but I went to University of
Nebraska-Lincoln, I toured their innovation lab and the testing
they were doing, and they were working on trying to grow crops,
corn or sorghum, with less water and see, just try to expand
that out. How are we doing with that? Are we, through research,
able to produce new seeds and plants that can do better through
droughts? Are we making progress in that area? I will open that
up to anybody who has some insight there.
Mr. Hill. So in our operation, we are diversified in the
fact that we do grow organically and conventional. We utilize
GMO technology and we have seen a huge change in seed
technology. You look at just corn alone, even though we are
talking about specialty crops this is year 18 in New Mexico of
a drought. I grew up waterskiing on a lake that I can almost
walk across now.
Mr. Bacon. Right.
Mr. Hill. And for us to be able to utilize new technologies
that we can actually take a trait, put it into a crop, put it
in the ground and grow a crop that will yield with minimal
inputs, that still is sustainable, is amazing.
So as far as research is concerned on genetics, it is
winning.
Mr. Bacon. Is there a way to quantify how much progress we
have made there, because it is very fascinating that we have
been able to do that, because that is going to feed many more
people as we gain billions over the next decades?
Mr. Hill. Well, the big question is what have we lost in
trust in the American consumer though. We have put so much into
research as far as how can we get the most out of a gene or the
most out of a crop, at the same time we haven't done our part
as producers to ensure trust in people that when I put a GMO
technology seed in the ground, I do this because I know I am
sustainable, and my inputs are that much less. So as far as
that question is, I think it is 50/50.
Mr. Bacon. Well, thank you very much. I yield back.
The Chairman. The gentleman----
Mr. Bacon. Did you have a comment? I am sorry.
Ms. Davis. Yes. Thank you. I am from Massachusetts, and we
had our first drought this past growing season, which we
weren't used to. We normally have quite a lot of rain. But what
we did notice is that those farms that had high organic matter
were the ones that sustained the drought the best. So the more
percentage points of organic matter they had, the better off
they are going to be, the more water that soil holds.
And so the more that we can do to keep the ground covered
with cover crops, rotate our crops, make sure that we are
constantly growing the fertility of our soils, the more water
we are going to be able to retain and use.
Mr. Bacon. Thank you very much. I yield back.
The Chairman. All right. The new freshman made the first
mistake. He yielded back before we had another witness talk.
But let the record show I let him speak a little longer. You
owe me now, Bacon.
Next up, another new Member. Great to see you out in
specialty crop land a few weeks ago. One of my new friends,
Jimmy Panetta, for 5 minutes, is recognized.
Mr. Panetta. Thank you, Mr. Chairman. I appreciate your
leadership, and this opportunity. I too appreciate all of the
witnesses who took the time to come here. I know it takes a lot
of preparation, a lot of effort on your part, so thank you very
much.
Mr. Chairman, if I could have your indulgence for just a
little bit. You are right, in the farm bill and in the
Agriculture Committee, we are not talking about immigration,
but more people need to realize that specialty crops and
immigration go hand-in-hand.
Mr. Hill, I am sorry for your state's drought. And as you
probably know, California endured a long drought in the past
few years. In fact, I read a report the other day saying that
last year at this time, 95 percent of California was under
drought conditions. However, this year, thanks to the storms
that we have had, only eight percent is now under drought
conditions. So that is a very good thing.
But nevertheless, during this period of extreme drought,
when I would talk to growers, and I would them what is your
number one issue, you would expect it to be the drought and
water, but not in my area, not on the central coast of
California, not in the salad bowl of the world, as we are aptly
called. The number one issue was labor and immigration. I
believe that to tie it to the farm bill though, because for too
long we have been spoiled because of the labor force that we
have had. And that has kind of stunted us when it has come to
mechanization research. I believe that we need a Specialty Crop
Research Initiative in the farm bill dealing with
mechanization.
Mr. Field, is that something you think is applicable, you
think we could do, is that something that you would agree with?
Mr. Field. I certainly think that is a phenomenal research
avenue for us. We can have mechanization in the field, so we
become less reliant on manual labor. At this time, we really
are searching for a solution, an adequate solution, to the
inadequacies that we face in nondomestic, on-farm labor. We
have several solutions for that that we think that we can
provide or would like to help in those solutions, such as
bringing current nondomestic foreign-born farmworkers that are
here, that are without the proper documentation, into the H-2A
Program. Unfortunately, H-2A does have some slow
inefficiencies, but it is a solid foundation, and it is a move
in the right direction.
Another solution would be to bring H-2A into the USDA, and
move that particular program away from DOL. We would like to
see something in that vein, and we believe that some of those
solutions, with the work from people like us in the ag
business, people right here on this very panel, can help with
input on how to do that successfully.
Mr. Panetta. I completely agree with you, but, a two-
pronged approach, is needed. It is two efforts, you have to
have two avenues going; one dealing with the visa issue, there
is no doubt about that. What you referred to was similar to S.
744, the Border Security, Economic Opportunity, and Immigration
Modernization Act from the 113th Congress, that was a 3 year
visa that was brought underneath the Department of Agriculture,
taken out of the DOL's purview, which is smart. But, while we
do need to work on the visa issue and revamping it, at the same
time, we need to catch up, and we need to mechanize the
harvesting of our crops. Let me give you an example. When I go
into the fields, and when I do see machinery there, I always
ask them where is that from. Inevitably, what is the answer?
Spain, Portugal, other countries in Europe. Why? Because they
have had to deal with labor shortages, they have had to deal
with the high price of labor in Europe. We haven't had to, and
I believe that it is time that we need to step up our efforts
in that regard.
Here's another point, the Salinas Valley, where I am from,
is in the shadow of the Silicon Valley, and what you are seeing
is a lot of relationships being built in the area of agtech, as
it is called. Is there anything in your opinion that we can do
to promote private investment in this emerging web of
agriculture and high-tech?
Mr. Field. You hit it on the head right there with the
partnerships between groups in Silicon Valley as an example,
and groups in Salinas. They are close. One has the handle on
the tech, the other one has the handle on ag, and they can
marry the two beautifully to find solutions for mechanization.
We should be the industry leader on figuring our solutions
for ag. The USDA should be able to pioneer those types of
relationships between these types of companies in the private-
and public-sector, and be able to find solutions for
mechanization because, obviously, they are out there. You see
other countries, as you have pointed out, who are pioneering
the engineering on these types of mechanization outlets, and we
should be doing that as well here. Absolutely. Couldn't agree
with you more.
Mr. Panetta. Great. Thank you again. Thanks to all the
witnesses.
Mr. Chairman, thank you. I yield my time back.
Mr. Denham [presiding.] The gentleman yields back.
Okay, further questions? Going through another farm bill
again, as a Californian, we have looked a lot at specialty
crops. I would just ask each of our panel members, as we are
embarking on another farm bill, what would be your number one
priority, or something that you feel that we should address in
the farm bill this year? Ms. Davis?
Ms. Davis. I would definitely continue the Organic Cost-
Share Program that helps small farms that want to certify
organic, especially beginning farmers who are just starting
out. It makes sense for them to start that way. That cost-share
helps them take up 75 percent of the cost of certifying
organic. I do believe that research in organic is very
important. We are seeing no-till in organic really working, and
we are doing small studies within Massachusetts in NOFA that
have really been quite successful.
We believe that more money needs to be spent on research,
for sure. And we also are looking forward to additional support
for CSA shares, for community-supported agriculture, for SNAP
beneficiaries to be able to pay for their CSA share with SNAP.
And we are looking forward to piloting with the State of
Massachusetts that new program this year that enables the
amount of money to be taken out by month automatically, and so
we are looking forward to that as well.
Mr. Denham. Thank you. Mr. Hill.
Mr. Hill. An overhaul of FSMA to actually look and see what
is applicable to growers all sizes, making sure that we all sit
at the same playing table, depending on if you are 2 acres or
30,000 acres, that we are all held accountable to the same
standards. Also too I would like to see the research in the
mechanization side. With that being said, I do think we need to
tread lightly though because as we mechanize, you will change
the local social structure, and as you stop employing people,
you will change the way that your whole demographic works. That
is all I have to say.
Mr. Denham. Thank you. Mr. Gilbert.
Mr. Gilbert. Yes, I would echo the comments from the
previous speakers, but in regards to FSMA, I might make the
comment that any solutions, any regulations need to be risk-
based first, and not just ``blanketly'' cast across all
agriculture. In terms of dollars, the Specialty Crop Research
Initiative has been excellent at being able to respond to new
threats to our industry, like the brown marmorated stink bug.
And then also MAP funding, we are going to be asking that, and
I know that is not specifically part of this Subcommittee's
purview, but the MAP Program has been incredibly successful,
and is really helping us build markets overseas.
Mr. Denham. Changes to MAP?
Mr. Gilbert. Increases in MAP funding, please.
Mr. Denham. Thank you. Mr. Black.
Mr. Black. Echoing the previous comments, increase funding
and flexibility to the Specialty Crop Research Initiative, and
also the Special Crop Block Grants. I believe that we are all
united that research and innovation in agriculture is essential
for us to deal with labor issues, as was pointed out, but also
to feed the world. The example that was presented earlier, that
the multiplier effect of our efficiencies is not as great as
some of the commodity crops, and there is a real opportunity
there. We have a number of examples of technology that have
been put in place in our agriculture growing operation, also
our packinghouse that is making us more efficient and more
competitive, which is essential.
Mr. Denham. Thank you, Mr. Black. Mr. Field.
Mr. Field. The Fresh Fruits and Vegetables Program does a
phenomenal job, and it can be enhanced. There are opportunities
to have more people in the agriculture sector brought in. I
think that there are ways to have public funding enhance this
program, because right now it serves over four million low-
income people and elementary schools, and the majority of
these, as I stated earlier, are actually SNAP recipients. When
you look at this from a fundamental perspective of we are
serving children their fresh fruits and vegetables that they
are probably not getting at home, when they are already part of
SNAP, it is important that they start these programs early,
that they start the consumption of fresh fruits and vegetables
early on in their life and build those habits. An independent
third-party study did show that students who take part in the
Fresh Fruits and Vegetables Program early on end up being long-
term adopters of fresh fruit and vegetable consumption, and we
find that very important. We also find it important that we
continue to support the fact that it is a fresh program,
because there has been a lot of tension between the processing,
canning, and frozen foods groups who would like to see us move
away from the fresh side of that program. And obviously, as you
know, when you process certain things, it can reduce the
nutritional value from them, and the adoption of fresh fruits
and vegetables is so critical to the success of that program
that we need to focus on that.
Mr. Denham. I would just ask one follow-up, Mr. Field. What
about local-grown or American-grown as part of the school
nutrition program?
Mr. Field. It is important to have American-grown, locally-
grown. I think that is very important, especially because the
people who are taking part in that program can then see it. It
is around them regionally or locally, they can understand where
the food comes from. We have a huge deficit in this country,
people who don't understand the fact that their food doesn't
grow in a grocery store. So that is important to us.
Mr. Denham. Thank you.
Well, I would like to thank each of our witnesses today for
not only your insight in part of this discussion, but thank you
for helping us as we formulate the next farm bill.
There is a misperception out there that the farm bill only
focuses on row crop commodity farmers. Today's hearing shows
simply that is not the case. This country has made a
substantial investment to support the production of specialty
crops. In fact, in the last farm bill, specialty crops received
an additional $1.5 billion, while others faced significant
cuts. It is our intention to ensure that the needs of our
specialty crop producers continue to be met.
If there are no further questions this hearing of the
Subcommittee on Biotechnology, Horticulture, and Research is
adjourned.
[Whereupon, at 3:48 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Article by Hon. Michelle Lujan Grisham, a Representative in
Congress from New Mexico
The Vegetable Technology Gap
Washington spends millions on crop research. Why doesn't more go toward
the foods we're actually supposed to eat?

POLITICO
By Helena Bottemiller Evich
03/08/17 07:33 a.m. EST

In the great quest to get Americans eating healthier, spinach is an
unusual success story. We're consuming four times as much fresh spinach
as we were 4 decades ago, as a vegetable once derided as choke-it-down
``good for you'' has become a mainstay of home cooking and upscale
restaurants. But the spinach boom wasn't driven by changing tastes, or
the cartoon exhortations of Popeye (https://www.pinterest.com/
loriwytheriddel/popeye/). It was driven by technology.
Spinach, like many vegetables, is finicky. If you packaged it in
the same airtight bags used for potato chips, the leaves would start to
break down before they made it from California's Central Valley to a
supermarket in Chicago. It wasn't until scientists came up with a
special bag--one that controls how much oxygen and carbon dioxide can
seep in and out--that pre-washed, ready-to-eat spinach became something
that a shopper could grab in the produce section and dump straight into
a salad bowl or smoothie. Spinach, and leafy greens in general, have
become so convenient that Americans are actually eating more of them--
an impressive feat considering just one in ten Americans eats the
recommended servings of fruits and vegetables each day.
As the country seeks solutions to the obesity epidemic, there's
been plenty of debate about how to get people to eat better. Do we need
to improve access to healthy foods? Teach cooking? Tax sugary drinks?
But there's one thing that's often left out of the conversation:
technology.
It might seem strange to think about vegetables as a technology,
but they are. The average supermarket produce aisle represents decades,
if not centuries, of agricultural research and development. But in the
United States, big-league commodity crops like corn and soy, as well as
meat, gobble up most of the agricultural research investment from both
the public- and private-sectors. The U.S. Department of Agriculture's
dietary guidelines tell us to fill \1/2\ our plate with fruits and
vegetables to maintain a healthy diet, but its research priorities are
far different. So-called ``specialty crops''--the government's name for
the category that includes, essentially, all fruits, vegetables and
nuts--received just 15 percent of the Federal research budget over much
of the past 3 decades.
``There's nothing more important we can do to improve the health of
this country than to invest billions and billions into researching the
fruits and vegetables that we're encouraging people to eat,'' said Sam
Kass, the former White House chef and food policy guru under the Obama
Administration who now works with food tech startups.
Agricultural research is fundamental to improving how we raise,
grow, harvest, process and ship everything that we eat. It took
millions of dollars of public and private research and years of
experimenting with limp leafy greens before breathable salad packaging
came onto the scene. Consumers no longer have to wash sand and dirt off
their greens, remove tough stems and ribs or chop them into bite-sized
portions. The same types of technologies have also helped bring us baby
carrot packs with dips, sliced apples in McDonald's Happy Meals and
ready-to-eat kale salad kits.

Packages of Fresh Express salad wait for customers in a San
Francisco grocery store. The technology that keeps spinach and
lettuce fresh in breathable packaging was based on government
agricultural research conducted in the 1950s. D Getty.

The enormous logistical and technological challenges facing so many
of the foods that nutritionists tell us to eat make research especially
critical for produce, which as a sector is still relatively
inefficient. Apples bruise. Berries don't all ripen at once. Cilantro
wilts. Cherries can split and crack if it rains at the wrong time--a
problem that can be so expensive, some growers hire helicopters to fly
over their crop to dry the delicate fruit. Many of these crops still
rely on increasingly expensive (and oftentimes undocumented) labor to
pick them by hand. And water. They need lots of water.
Specialty crops remain special--just three percent of cropland is
dedicated to growing them--though they make up roughly \1/4\ of the
value of crops grown in the U.S. because they demand higher prices.
This lopsided dynamic means that specialty crops have historically
received very little Federal research investment compared to their
value. It also means the country simply doesn't have a food system that
supplies what we're told to eat. In 2007, there were about 8.5 million
acres of specialty crops in a sea of more than 300 million acres of
everything else.
``If Americans were to actually go ahead and jump into consuming
the amount of fruits and vegetables recommended, we'd be hard-pressed
to meet that demand,'' said Sonny Ramaswamy, Director of the USDA's
National Institute for Food and Agriculture, which coordinates a large
part of the government's agricultural research portfolio. ``There's an
incredible amount of innovation that we need, all the way from the farm
to the table.''
The imbalance is no accident: In a sense, it's built into the
mission of the USDA itself, which frustrates both vegetable growers and
nutrition advocates. But there are signs it's starting to change--if
slowly.
The Road To packaged salad isn't just an example of how research
pays off: It shows just how long the process can be, and how much
commitment it requires. It began in the late 1920s when a young
Berkeley grad named Bruce Church bought a field of head lettuce in
Salinas, California, and devised a plan to ship it, packed in ice, by
rail across the United States. According to local lore in the Salinas
Valley, children as far away as Maine would greet the rail cars
excitedly, shouting: ``The icebergs are coming! The icebergs are
coming!'' The name stuck.
After World War II, a handful of USDA scientists stationed in
Fresno, California, set out to learn more about how to best handle,
store and ship fruits and vegetables. They obsessively measured
temperatures, shelf life, spoilage and the rate at which different
crops respire--or breathe--which is one way of measuring how fast
something will rot.
``They're still alive!'' explained Gene Lester, national program
leader for the Agricultural Research Service's food science and
technology division. ``You're eating a lettuce leaf or a kale leaf, or
a string bean, or an apple--they're still alive. There's still
CO2 and oxygen exchanging in those organisms, and that's
what's keeps them healthy for us.''

A vintage poster for Bruce Church, Inc., the Salinas,
California company that helped popularize iceberg lettuce
starting in the 1920s. Bruce Church Inc. later morphed into
Fresh Express, which pioneered the use of breathable packaging
for lettuce and other leafy greens. D Fresh Express.

In 1954, researchers published a roundup of everything they'd
learned in a massive book, known as AH-66. That tome served as a base
of knowledge that preceded major advances in produce innovation for
decades afterward. ``That was kind of a bible for us,'' said Jim Lugg,
a longtime agriculture scientist who in many ways is the grandfather of
modern salad technology. ``The problems weren't really with growing the
crops, it was with shipping them and keeping them fresh.'' Lugg, who's
now 83 years old, still consults in the industry (and, for the record,
still eats lots of salad).
In 1963, Lugg signed on to lead the research division of Bruce
Church Inc., which teamed up with a subsidiary of refrigerator-maker
Whirlpool--a partnership based largely on the hope that they might be
able to figure out how to get lettuce from Salinas to the East Coast
before it turned brown. After a lot of experimentation, they figured
out how to manipulate the atmosphere inside the vehicles in which they
shipped the lettuce so that it was more hospitable, providing the right
balance of CO2 and oxygen in refrigerated rail cars and
containers--a hack that took the shelf life of the lettuce from 3 or 4
days to 14, as long as the lettuce was kept cold.
``We've put it to sleep,'' Lugg explained. ``It's sleeping! It's
not breathing at its normal rate.''
Bruce Church Inc. eventually morphed into Fresh Express, which in
1989 introduced what is believed to be the first pre-washed, bagged
salad in grocery stores nationwide. That first mix, packaged in
breathable bags, was chopped iceberg lettuce, with bits of shredded
carrots and purple cabbage, a combo that meant home cooks could serve a
multi-ingredient salad without chopping a single vegetable. ``We saw a
way to really improve the customer experience with lettuce,'' Lugg
said.
Lugg recalled serving on a board that helped advise the government
on investing in specialty crop research in the 1990s. ``I don't think
they were spending very much,'' he says. (USDA couldn't provide an
estimate.) ``The then-head of [the Agricultural Research Service] was
very defensive about all the problems they had getting money and that
they had to spend money for things like corn and ethanol and cotton.''
He'd sometimes give Ed Knipling, the then-head of ARS, a hard time
about the disparity. ``He would point out how much they spent on this
crop or this crop, and we'd say `Well, how much did you spend on
lettuce?'''
So Why Doesn't the nation spend more on better lettuce? The answer
lies partly in the history of the U.S. Department of Agriculture
itself. On one hand, the department, founded by Abraham Lincoln, is
dedicated to promoting and boosting American agriculture as an
industry. That means investing in the massive commodity crops that
largely fuel American farming, giving us the cheapest, most abundant
food supply in the history of the world. But the department is also
tasked with encouraging healthy eating--it's the agency that gives
Americans nutrition advice--and these two major goals can at times be
directly at odds.
Public health advocates have long lamented that the USDA's
nutrition advice doesn't align with how the institution actually spends
its money, and they often point to crop subsidies as the most glaring
example. Between 2008 and 2012, for example, fruits and vegetables and
other specialty crops got just under \1/2\ of 1 percent of all the
subsidies that were doled out. A full 80 percent of those payments went
to supporting grains used in all manner of foods, to feed livestock and
to fuel our cars, and oils, like what we use to fry potato chips.
The disparity is something that frustrates Rep. Chellie Pingree, a
Democrat from Maine, who also happens to be an organic farmer. When the
Congresswoman speaks at food conferences, she often shows a side-by-
side graphic comparing MyPlate (https://www.choosemyplate.gov/), the
government's nutrition guide, and a plate representation of crop
subsidies.
``Vegetables are called specialty crops! Don't ask me to explain
why,'' Pingree said as she unveiled her graphic at TedxManhattan back
in 2014. The room full of foodies gasped and mumbled disapprovingly.
The idea that junk food is cheaper than produce because of farm
subsidies is so often repeated by food movement leaders like Michael
Pollan that almost everyone assumes that it's true. But the reality is
more nuanced.
Subsidies on their own don't explain why processed foods are
cheaper than produce, calorie for calorie. Fruits and vegetables, first
and foremost, are highly perishable, which makes everything about
growing, harvesting, storing and shipping them infinitely more
complicated and expensive. Many of these crops also take a ton of labor
to maintain and harvest. Economists who've crunched the numbers have
found that removing agricultural subsidies would have little effect on
consumers' food prices, in part because the cost of commodities like
corn and soybeans represent just a tiny share of the cost of the food
sold in the grocery store.
The U.S. has simply gotten much better at growing corn than
lettuce. Today, we get about six times as much corn out of 1 acre of
land as we did in the 1920s, when Bruce Church started his lettuce
farm. Iceberg lettuce yields, on the other hand, have only doubled in
that time. The USDA didn't start tracking such data for most of the
darker leafy greens until the 1990s.
Even if subsidies did make fruits and vegetables dramatically
cheaper, it's far from clear that everyone would start eating their
broccoli. The price of produce isn't the only cost to eating fruits and
vegetables; many consumers also lack the time or the skills to prepare
and cook their perishables. And increasing fruit and vegetable
consumption is hard to keep up as Americans eat more of their food on
the go, away from home and prepare far fewer traditional meals on their
own.
Moreover, the produce industry doesn't want to be subsidized like
Big Corn or Big Soy. When industry leaders come to Capitol Hill, they
have been clear that they didn't want traditional subsidies, like price
supports, said Glenda Humiston, Vice President of Agriculture and
Natural Resources at the University of California. ``They want help
with the infrastructure to do their jobs better,'' she says, including
more funding for research labs and data collection that can help
industry solve problems on the ground.

Migrant workers pick organic spinach in a field in Colorado.
Labor, often from immigrant workers, remains one of the most
costly inputs to growing healthy fruits and vegetables. D
Getty.

Reducing the need for labor is one of the top priorities for the
industry, especially with the Trump Administration's rhetoric and
recent crackdown on undocumented workers. Labor alone can account for
\1/2\ a farm's costs and labor shortages are already preventing the
expansion of acreage of specialty crops in many regions. Farmers can be
hesitant to invest in growing, watering and raising a crop if there's
uncertainty about having enough workers to harvest it.
``Growers and shippers are going to have to find ways to mechanize,
or we're not going to be able to harvest our products, and we're
talking about delicate products,'' said Steve Church, CEO of Church
Brothers Farms, a major grower in Salinas.
``The biggest issue we have here is labor,'' Church added. ``No
question in my mind.''
Today, the government is funding research at Washington State
University and other universities to design robots that can gently
harvest apples and even see or smell when the fruit is ripe--a
potential leap for the kind of mechanization that has so far eluded
much of the produce industry.
USDA researchers are also working on a system that drastically cuts
down on the need to sort fruit. The prototype is an elaborate, six-
armed machine that goes into the field with apple pickers. The apples
are fed onto a conveyer belt that uses an infrared system to detect
blemishes and even grade the fruit on the spot.
Other research is focusing on improving flavor. In Florida,
researchers have cracked the code to make tomatoes taste better, an
innovation that could help reverse decades of breeding tomatoes for
durability and thick skin that has left the fruit tasteless and watery.
The tomatoes, which also have more lycopene, an important nutrient and
anti oxidant, have begun being marketed in Florida under the name
Tasti-Lee. The company that commercialized the technology says nearly
94 million pounds of the tastier tomato have been sold so far.
``We first of all had to have a stable supply. We had to figure out
how to get tomatoes from the West Coast to the East Coast,'' says a
USDA scientist, permitted to speak on background. ``But now we can
focus on the whole flavor component.''
Making tomatoes tastier is only the beginning. ``Understanding this
pathway, it's not unique to just tomatoes, but you can use this as a
model for citrus, or peppers or apples or anything else,'' the
scientist said.
Though Specialty Crops have lagged behind their shelf-stable
brethren for much of the past century, the needs of the produce
industry haven't gone totally unheard in the halls of Washington. The
idea that these smaller crops might deserve more attention began to
gain some traction in the early 2000s, when California growers became
increasingly angry that their state was the No. one agriculture state
based on value, largely due to high-dollar specialty crops, but they
were coming up around 16th in terms of USDA research funding coming
into the state.
In 2006, there was also a renewed interest in investing in research
after a deadly E. coli outbreak linked to packaged spinach rocked the
entire produce industry--and consumer confidence. Three people died,
and 276 people were hospitalized. The disaster fueled an intense food-
safety push across Salinas Valley and the rest of the produce industry.
It also helped energize a diverse coalition of growers that had started
to organize to ask Washington for a greater share of spending in the
farm bill, the law that every 5 years sets the agenda for the
Agriculture Department. They demanded that more money be invested in
food safety and other types of research. Producers of commodities like
dairy and grains were less than pleased to have another group vying for
a part of the Federal pie, according to Congressional aides.
``It was a hell of a fight,'' said Humiston.
But Big Produce's political push has paid off. In 2008, the farm
bill for the first time included a section dedicated to specialty
crops. There's now a $72 million fund to promote various specialty crop
projects, like building hoop houses to extend the growing season. Fruit
and vegetable farmers are also starting to get access to the same
government-subsidized insurance policies that other commodities have
enjoyed for years. But the biggest growth for specialty crops in recent
years has been in research spending.
The USDA now dedicates some $400 million to studying specialty
crops each year--a big increase, though still a modest fraction of the
nearly $3 billion the government invests in agricultural research each
year. That pot of money is spread among USDA's in-house research, land
grant universities and other public research institutions. The USDA
couldn't provide specialty crop research estimates from before 2008.
The Obama Administration and its intense focus on healthy eating
was also a boon to the specialty crop sector. The Administration not
only backed allocating more money to the crops, but it also promoted
more fruits and vegetables in school meal programs that serve 30
million children each day, and in the Women, Infants and Children
program, which provides nutritional support for \1/2\ of all babies
born in the United States.
While much of the new Federal boost for produce investment is
motivated more by the industry's business needs than any push to combat
the nation's crippling obesity epidemic, public health advocates with
little political clout are thrilled to see the needle moving, however
it happens.
``If what we want is for people to eat fruits and vegetables, we
have to make it easier, we have to make it taste better,'' said Marion
Nestle, a food studies professor at New York University and author of
the popular blog Food Politics.
``It's about time produce got some attention.''
______

Supplememntary Material Submitted by James Field, Jr., Director of
Business Development, Frey Farms, LLC
March 23, 2017

Hon. Rodney Davis, Hon. Michelle Lujan Grisham,
Chairman Ranking Minority Member,
Subcommittee on Biotechnology, Subcommittee on Biotechnology,
Horticulture, and Research Horticulture, and Research
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.

Dear Chairman Davis and Ranking Member Grisham:

Thank you Chairman Davis and Ranking Member Lujan Grisham for the
opportunity to provide supplemental comments for the record of the
March 9 hearing of the Biotechnology, Horticulture, and Research
Committee on the topic of specialty crops in the farm bill. It was a
privilege to represent my business and the United Fresh Produce
Association as a witness at that hearing and I hope these additional
comments will be useful to the Subcommittee Members as you craft
proposals in the farm bill relevant to specialty crops.
Specifically, I would like to address questions that were posed to
me during the hearing. As you know, I am the Director of Business
Development at Frey Farms, based in Keenes, Ill. We specialize in
growing, packing, and shipping fresh market produce, including
cantaloupes and watermelons, but we are best known as the nation's
largest fresh pumpkin producer. Our farms and facilities are
strategically located in Florida, Georgia, Missouri, Arkansas, Indiana,
West Virginia, Wisconsin, and Illinois.
During the hearing, the issue was raised about how Congress might
help multi-state operations such as ours be more functional. Within the
farm bill, there are two programs in particular that have a strong
multi-state component that the specialty crop industry believes need to
be maintained and strengthened. In the 2014 Farm Bill, Congress
improved the $85 million Specialty Crop Block Grant Program to include
a Multi-State Program. Under this initiative, grants are offered to
participating State Departments of Agriculture in any of the 50 states.
These grants address regional or national level issues such as food
safety, plant pests and disease, research, crop-specific projects
addressing common issues and marketing and promotion. In addition,
Congress allotted $80 million annually for the Specialty Crop Research
Initiative which addresses industry-specific issues such as plant
breeding and genetics, pest and disease threats, production efficiency,
technological innovation and methods to address food safety hazards.
These programs take a broad view toward enhancing the competitiveness
of the specialty crop sector through regional and national initiatives
that are beneficial to multi-state operations in areas that producers
are not able to act on by themselves. The specialty crop industry
supports these initiatives and urges Congress to protect and maintain
them.
As I mentioned in my testimony and which was mentioned by others
who provided testimony, the single most urgent and impactful issue
today with respect to specialty crops is labor; more specifically, the
challenges that specialty crop providers have in securing and retaining
a skilled labor force. There is a broad consensus within our sector
that, while there may be varying opinions about how best to do so,
there needs to be reforms to the current Federal H-2A program, which is
currently the only Federal program that provides agricultural guest
workers. There is also broad agreement that our nation's immigration
system is not truly functional and is badly in need of improvement. The
Agriculture Workforce Coalition (AWC), of which United Fresh is a
founding member, is currently in the process of developing a set of
recommendations for improvements to H-2A, as well as how to improve our
nation's immigration policies that are relevant to agriculture labor.
The AWC has pledged to work with policymakers to craft legislative
proposals that ensure an effective, efficient and humane program that
provides appropriate assurances for workers and allows providers to
succeed in business.
A major part of why ag labor is such a pressing issue for our
industry, is that unlike other sectors, mechanization is not used often
in the harvesting of fruits and vegetables. With the harvesting of our
crops being so time-sensitive and their marketability being highly
dependent on appearance, the vast majority of fruit and vegetable crops
are brought in from the field by workers with the experience and skill
to know when the time is right to harvest a commodity. However, because
the labor challenges in the specialty crop sector are long-standing and
will require time to resolve, there is a need for more research on how
to mechanize key parts of the fruit and vegetable production chain.
There is agreement within our industry that there needs to be more
research on innovations such as mechanization, through programs such as
the Specialty Crop Research Initiative.
Improvements to our nation's immigration policies and development
of new and innovative technology such as mechanization would help
mitigate some of the unique risks that specialty crop providers
experience. As this Subcommittee examines other farm bill policies that
provide risk mitigation to agricultural producers, such as crop
insurance, that may affect specialty crops, our industry asks that
Congress restrict the use or development of policies that affect our
industry in a market distorting way, ensure the consistent availability
of insurance products to all growers of the same commodity and conduct
a thorough analysis of the potential market impacts of a new insurance
product.
While risk mitigation is one area in which the specialty crop
sector often has a unique perspective, another area in which we
frequently collaborate with our counterparts in other crop sectors is
regulatory reform. United Fresh has joined with agriculture
organizations in the grain and livestock sectors to support initiatives
such as the withdrawal of the WOTUS rule and ensuring that regulation
of crop protection products is based on proven scientific evidence and
not on a politically driven precautionary principle. As policymakers
consider regulatory policy for agriculture, we urge a consistent
consideration of data driven by science and not politics.
Finally, I would like to note that United Fresh has been the leader
among specialty crop stakeholders in promoting nutrition policies that
help the under-served and also provide opportunities for produce
providers. A cornerstone of that nutrition policy has been the Fresh
Fruit and Vegetable Program (FFVP) which provides a fresh fruit or
vegetable snack to nearly four million schoolchildren across the
country, 107,000 alone in Frey Farms' home state of Illinois.
Unfortunately, this program has been under attack by efforts to dilute
its mission of providing America's children with much-needed exposure
to fresh fruits and vegetables. I, and the rest of the fresh produce
industry, implore you to resist these efforts and do all you can to
defend this program and keep it as it is--fresh.
These, of course, are just a small sample of the plethora of issues
that Congress will need to consider when addressing specialty crops.
However, even with the diversity within the specialty crop sector,
there is a great deal of agreement about the general regulatory and
policy landscape needed to allow specialty crop providers to succeed.
United Fresh is the coordinating body of the Specialty Crop Farm Bill
Alliance, a national coalition of nearly 120 specialty crop interests
who have worked together for over 15 years to review specialty crop
farm bill programs and provide policy recommendations to Congress. As
Congress and interested stakeholders head into crafting and debating
the next farm bill, the Alliance will be conducting its own review of
specialty crop farm bill programs and how to make them work even
better. The Alliance's review will be thorough, encompassing all
relevant programs, with a particular focus on key priorities such as
nutrition, trade, pest and disease mitigation, block grants and
research. In addition, the Alliance will be determining if there are
ways to improve public and private partnerships that can promote
specialty crops, how the land-grant university system might be better
utilized to assist specialty crop providers and how work done in the
private-sector might be useful in enhancing the ability of our
producers to ensure Americans have a steady and abundant supply of
fresh fruits and vegetables.
As the Alliance presents its recommendations to Congress, we in the
fresh produce industry look forward to working with the House and
Senate to pass legislation that maximizes the capacity of fruit and
vegetable growers to do what they want to do: improve the nutritional
well-being of America and have thriving businesses that contribute to
the surrounding communities. Thank you again for the opportunity to
comment further and I am happy to provide any additional information
you may need.
Sincerely,

James Field, Jr.
______

Submitted Statement by Charles Wingard, Director of Field Operations,
Walter P. Rawl & Son, Inc.
Thank you, Subcommittee Chair Davis and Ranking Member Grisham, for
the opportunity to testify before the Biotechnology, Horticulture, and
Research Subcommittee on the specialty crop provisions of the farm
bill. My name is Charles Wingard and I am Vice President of Field
Operations for Walter P. Rawl & Sons in Pelion, SC. Three generations
of our family have farmed in this area since the 1920s, and ten family
members oversee our operations today in a hands-on manner. We
specialize in southern leafy greens such as collards, kale, mustard &
turnip greens, and also produce a variety of summer vegetables in
season along with a few other year round vegetable crops.
We have farm operations in several South Carolina counties and
Florida and have farming relationships in Wisconsin, Florida, Virginia,
Mississippi, and New York. Our produce is marketed and delivered
throughout the eastern United States, and about \1/2\ of our leafy
greens are washed and packaged in our own facility and sold as fresh-
cut chopped greens, with the rest sold in bulk.
While I am here to represent myself as a specialty crop provider, I
am also here as a member United Fresh Produce Association. As you know,
United Fresh has been in existence since 1904 and is the only fresh
produce association based in Washington, D.C. with members in all 50
states, and that represents all aspects of the fresh fruit and
vegetable production chain. I serve as Chairman of United Fresh's
Government Relations Council which provides public policy guidance to
the association. United Fresh is also helps coordinate the Specialty
Crop Farm Bill Alliance, a 120 member coalition devoted to advocating
for specialty crop programs in the farm bill.
The specialty crop industry is very grateful to you for all that
this Committee has done to support and advocate for the needs of the
specialty crop sector through the farm bill, which is the single
largest Federal investment in the fresh produce industry. You have
recognized the immense value our sector brings to America's
nutritional, economic and social well-being and we are very
appreciative of that support.
It is in that context that I must address an issue of primary
importance to our industry and one which our sector will be looking to
you with high expectations for support. It will be no surprise to you
that I am referring to immigration policy. The farm bill matters
tremendously to specialty crop producers; it has done a great deal to
advance the goal of ensuring Americans have access to an abundant
supply of fresh fruits and vegetables. However, that goal cannot be
attained without the seasonal workers needed to get crops from the
field to consumers. While it is virtually impossible to know the exact
numbers, this workforce is overwhelmingly foreign-born and not properly
authorized. We in the produce industry have long advocated for changes
to our nation's immigration system to address this. The Federal
agriculture guestworker program, known as H-2A, as often as not, does
not provide adequate numbers of workers in a timely manner, often
leading to crops going unharvested. Federal immigration policy must
balance enforcement with a humane and effective program to allow
foreign-born workers to come here to do the produce harvesting and
processing jobs that Americans simply won't. If that does not happen,
then to be blunt, it doesn't matter what you do for us in the farm
bill. If America's fruit and vegetable providers cannot retain or
attract the skilled, dedicated workforce needed to get crops to the
marketplace, then programs like Specialty Crop Block Grants won't help
us a bit. Produce providers will be closely watching the progress of
the farm bill and action on immigration reform; if immigration reform
does not show progress soon, I expect that if you haven't already, you
will be hearing specialty crop producers advocate for action on ag
labor within the farm bill.
As you know, this Administration has begun to pursue stricter
immigration policies. We in the produce industry are well-aware that
enforcement of the law is needed and we support ensuring that our
nation's borders are secure. However, I can tell you that the change in
policies has created a real sense of fear within the immigrant
community and that has begun to result in increasing problems for
produce providers in being able to retain workers. With workers
increasingly reluctant to come to work, the ability of produce
providers to stay in business is increasingly threatened. And it is not
just simply those foreign-born seasonal workers who will feel the
impact of an enforcement-only policy. While the vast majority of
workers who hold jobs in the fields and packing sheds are foreign-born,
the workers who hold jobs on down the chain, in areas such as
transportation and retail, generally are American citizens. If workers
at the front of the chain leave and they have no replacements, it is
only a matter of time before those American workers down the line will
also suffer.
We are aware that under the House of Representatives' rules of
jurisdiction, immigration policy is not under this Committee's purview.
But it is this Committee's constituency that will be among the hardest
and first-hit by policies that lack an effective agriculture labor
component. Congress has completely failed to act on agriculture's
legitimate needs and all indications are that more enforcement and
security-oriented policy changes will be coming. If the current
situation continues or gets worse, produce providers are expecting you
to ACT on their behalf, jurisdiction or no jurisdiction. Many Members
of this Committee have repeatedly conveyed that you are aware of
agriculture's needs and that is encouraging and is appreciated.
However, there will come a time when saying the right things simply
won't be enough--if policymakers continue down an enforcement-only
path, the fruit and vegetable industry will expect you to take the
actions necessary to step in and ensure that further policy changes do
not become finalized without an effective agriculture labor component
included.
Without the dedicated and skilled workers to harvest the fruit and
vegetable crops grown here in this country, logic dictates that we as a
nation will then have to source those commodities from other countries,
and for the first time in our history, make us unnecessarily dependent
on other nations for something as fundamental as food. But this would
be an economic and national security disaster that can be averted; as a
nation, we do not have to choose between food security and border
security--it is possible to have both. But only if Congress will
actually take actions to craft a set of reforms to our nation's
immigration policies that strengthen security at the border and
internally, and simultaneously provide a way for agriculture workers
who are here currently to stay here legally, as well as policies that
provide for a future legal workforce. As I mentioned, the fresh produce
industry supports making America's borders as secure as possible and
upholding our nation's immigration laws. But we also believe that by
making much-needed improvements to America's immigration system,
Congress will significantly strengthen the policy foundations laid
through the farm bill that enable America's specialty crop producers to
be among the world's most productive.
Regarding the farm bill, as I mentioned before, United Fresh is the
coordinating body of the Specialty Crop Farm Bill Alliance. For each
successive farm bill, the Alliance has provided a set of
recommendations about how those programs could maximize the ability of
specialty crop producers to be successful. The Alliance is grateful
that in the 2014 Farm Bill this Committee acted on our recommendations,
which our industry believes are sound policies that will enhance our
ability to meet America's nutritional needs.
Briefly, a few highlights of the 2014 Farm Bill that enhance the
work of specialty crop providers include:

$80 million a year for the Specialty Crop Research
Initiative for industry-specific research; this program
addresses the critical needs of the specialty crop industry by
developing and disseminating science-based tools to address
needs of specific crops and their regions;

$75 million a year for the Plant Pest and Disease Program to
eradicate harmful pests and diseases. These projects aim to
prevent the introduction or spread of plant pests and diseases
that threaten U.S. agriculture and the environment, as well as
ensure the availability of a healthy supply of clean plant
stock;

$85 million per year for the Specialty Crop Block Grant
program, including a multi-state program;

Technical Assistance for Specialty Crops (TASC)--Authorized
under the 2002 Farm Bill, TASC has been used to address
barriers prohibiting or threatening the exports of U.S.
Specialty Crops. The program has had constant funding of $9
million since the 2002 Farm Bill[; and]

Market Access Program (MAP)--To improve access to overseas
markets for America's agriculture producers. The program is
funded at $200 million per year.

Furthermore, I want to highlight what has been done through your
collaboration with United Fresh to promote Federal feeding programs in
the Farm Bill Nutrition Programs
The role of investment in Federal nutrition programs cannot be
overstated, this investment in nutrition programs increases consumption
of fruits and vegetables which benefits the specialty crop industry.
For example, the Fresh Fruit and Vegetable Program which will reach
more than four million low-income elementary school children nation-
wide this coming school year. This highly effective program provides
young students with a fresh fruit or vegetable snack every day at
school and increases their overall consumption of a wide variety of
fresh fruits and vegetables. My State of South Carolina received $3.27
M this school year to implement the Fresh Fruit and Vegetable Program;
this allows 153 elementary schools to participate and 60,000 students
to benefit. How does this program translate to my business which is
growing collard greens and other vegetables? Walter P. Rawls & Son has
been a leader in the Fresh Fruit and Vegetable Program since 2008. We
have worked with South Carolina's Child Nutrition Director to ensure
successful implementation, we have traveled to school districts all
over our state to promote the program and help local schools
effectively implement it, and we have developed fresh-cut vegetables
and fruits in kid-friendly packs designed specifically for schools to
use in the Fresh Fruit and Vegetable Program and in school lunch. We
are South Carolina's champions for the Fresh Fruit and Vegetable
Program! This program is a Win-Win-Win for agriculture and the produce
industry, our kids and public health.
I'd also like to highlight the impact of FINI (Food Insecurity
Nutrition Incentives) on helping SNAP families purchase more fresh
fruits and vegetables. Providing produce incentives to SNAP families is
an effective strategy to increase their fruit and vegetable consumption
and improve the quality of their diet especially when the produce
incentives can be used at grocery stores and supermarkets where these
families shop and have access to a wide variety of fresh fruits and
vegetables are available year round. Increasing fruit and vegetable
consumption for 40 million SNAP recipients is another big WIN for
specialty crops and public health.
In many instances farm bill specialty crop programs provide
services and resources that growers are not always able to get on their
own. For example, since 2008, the Clean Plant Network has provided
nearly $30,000,000 in support of 35 initiatives in the critical mission
of providing clean planting stock which is essential to preventing
highly dangerous pests and pathogens from destroying crops. Another
example is the language in the 2014 Farm Bill providing for a multi-
state program in the Specialty Crop Block Grant program that allows for
the kind of regional response to threats such as plant disease that
farmers cannot do individually.
While the lack of needed immigration policy reform is the greatest
overarching current threat to America's specialty crop sector, the
programs I just mentioned are also critical to addressing other
important needs for fruit and vegetable production. This Committee has
done tremendous work to address our needs regarding market
competitiveness, research, pest and disease management, opening foreign
markets and nutrition programs that promote consumption. As a result,
the produce industry is much better equipped to address these issues,
and we believe that these tools are vital to helping providers do what
they can to keep their operations viable and successful. Knowing that
Congress is working to address significant budget constraints, we in
the industry pledge to work with you to do all we can to keep these
programs at their current funding levels. Our industry looks forward to
working with you to promote American production of specialty crops.
Thank you for the opportunity to speak to you today and I will be happy
to answer any questions.

THE NEXT FARM BILL

(AGRICULTURAL RESEARCH)

----------

THURSDAY, MARCH 16, 2017

House of Representatives,
Subcommittee on Biotechnology, Horticulture, and Research,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Rodney
Davis [Chairman of the Subcommittee] presiding.
Members present: Representatives Davis, Gibbs, Yoho, Bacon,
Dunn, Lujan Grisham, Lawson, Panetta, McGovern, Blunt
Rochester, and Peterson (ex officio).
Staff present: Bart Fischer, Caleb Crosswhite, Callie
McAdams, Haley Graves, Stephanie Addison, Keith Jones, Kellie
Adesina, Troy Phillips, and Carly Reedholm.

OPENING STATEMENT OF HON. RODNEY DAVIS, A REPRESENTATIVE IN
CONGRESS FROM ILLINOIS

The Chairman. This hearing of the Subcommittee on
Biotechnology, Horticulture, and Research, entitled, The Next
Farm Bill: Agricultural Research, will come to order.
Good morning and welcome to today's Biotechnology,
Horticulture, and Research Subcommittee hearing. I would like
to welcome our three witnesses and all of the guests today.
This hearing continues our series where each of the six
Subcommittees is looking at all aspects of the current and the
next farm bill.
The focus of today's hearing is on agricultural research.
As we kick off the discussion, try to imagine where the United
States, as a whole, and American agriculture in particular,
would be without the massive productivity gains that have
resulted from more than a century of investment in ag research.
We enjoy the safest, most affordable, and most abundant food
supply in the world in large part due to sustained public
investment in agricultural research. In fact, USDA describes
the rise in agricultural productivity as the single most
important source of economic growth in the entire U.S. farm
sector.
USDA's Research, Education, and Economics mission area
includes four agencies that serve as the Federal lead for our
research, education, and extension activities. USDA's
Agricultural Research Service conducts research and develops
solutions for ag problems of high national priority. The
Economic Research Service, through science-based economic
research and analysis, informs public policy and other
decisions about agriculture, food, rural development, and
environmental challenges. The National Agricultural Statistics
Service conducts hundreds of surveys every year and prepares
reports covering virtually every aspect of U.S. agriculture.
And, the National Institute of Food and Agriculture supports
research, education, and extension programs in the land-grant
university system and other partner organizations. Together
with state-level and private-sector funding, the U.S. ag
research system is the envy of the world.
And while private-sector research investment is substantial
and growing, public funding for ag research in the United
States has been on the decline for the past decade.
Agricultural research increasingly occupies a smaller share of
the United States' public research portfolio. And at the same
time, other countries like China are rapidly outpacing U.S.
public investment. Given that public research is often the
foundation upon which private research is built, public
investment is essential to maintaining our competitiveness in
our U.S. ag economy.
We have a tremendous legacy of supporting public
agricultural research in this country. While we have a lot of
difficult decisions to make, ag research will be a vital part
of ensuring the success of America's agricultural sector over
the next century.
I look forward to the testimony of our witnesses today in
exploring the importance of ag research, in addressing ag
research priorities, and in examining the effectiveness of
public-private research partnerships. To that end, I welcome
their thoughts on the next farm bill as well.
[The prepared statement of Mr. Davis follows:]

Prepared Statement of Hon. Rodney Davis, a Representative in Congress
from Illinois
Good morning and welcome to today's Biotechnology, Horticulture,
and Research Subcommittee hearing. This hearing continues our series
where each of the six Subcommittees is looking at all aspects of the
next farm bill.
The focus of today's hearing is on agricultural research. As we
kick off the discussion, try to imagine where the United States as a
whole--and American agriculture in particular--would be without the
massive productivity gains that have resulted from more than a century
of investment in agricultural research. We enjoy the safest, most
affordable, and most abundant food supply in the world in large part
due to sustained public investment in agricultural research. In fact,
USDA describes the rise in agricultural productivity as the single most
important source of economic growth in the entire U.S. farm sector.
USDA's Research, Education, and Economics mission area includes
four agencies that serve as the Federal lead for our research,
education, and extension activities. USDA's Agricultural Research
Service conducts research and develops solutions for agricultural
problems of high national priority. The Economic Research Service--
through science-based economic research and analysis--informs public
policy and other decisions about agriculture, food, rural development,
and environmental challenges. The National Agricultural Statistics
Service conducts hundreds of surveys every year and prepares reports
covering virtually every aspect of U.S. agriculture. And, the National
Institute of Food and Agriculture supports research, education, and
extension programs in the land-grant university system and other
partner organizations. Together with state-level and private-sector
funding, the U.S. agricultural research system is the envy of the
world.
While private-sector research investment is substantial and
growing, public funding for agricultural research in the United States
has been on the decline for the past decade. Agricultural research
increasingly occupies a smaller share of the United States' public
research portfolio. At the same time, other countries like China are
rapidly outpacing U.S. public investment. Given that public research is
often the foundation upon which private research is built, public
investment is essential to maintaining the competitiveness of U.S.
agriculture.
We have a tremendous legacy of supporting public agricultural
research in this country. While we have a lot of difficult decisions to
make, agricultural research will be a vital part of ensuring the
success of American agriculture over the next century.
I look forward to the testimony of our witnesses today in exploring
the importance of agricultural research, in addressing agricultural
research priorities, and in examining the effectiveness of public-
private research partnerships. To that end, I welcome their thoughts on
the next farm bill as well.
With that, I turn to Ms. Lujan Grisham for any opening comments
she'd like to make.

The Chairman. With that, I turn to my friend and my
colleague, the Ranking Member, Ms. Lujan Grisham, for any
opening statements she would like to make.

OPENING STATEMENT OF HON. MICHELLE LUJAN GRISHAM, A
REPRESENTATIVE IN CONGRESS FROM NEW MEXICO

Ms. Lujan Grisham. Thank you, Mr. Chairman, and good
morning to everybody at the hearing. And thank you very much
again to the panel witnesses this morning.
There is no question, and thank you, Mr. Chairman, you made
an incredibly valid point which is the public money that we are
investing in research gives us the best public-private
partnering, so that we are getting resources into private
research firms, we are getting those resources into
universities, and we are creating an environment where we have
a huge return in the ag industry, and then, of course, into the
U.S. economy as a whole.
It is imperative that we continue to talk about ways to
reverse, or at least slow, the decline in research funding. I
am hoping that we will discuss strategies to increase funding,
establish priorities, and to dedicate ourselves to identifying
the places where additional research would be useful.
Let me give you an example. A Dr. Ian Ray, who is a plant
breeder at New Mexico State University, has developed a
drought-resistant, or an arid climate resistant variety of
alfalfa, named Billy Melton. It is commercially available for
the first time this season. Let me put that release in
perspective, Mr. Chairman. New Mexico is in the middle of a 100
year drought, and we need every kind of water sipping crop that
we can obtain. Alfalfa is one of New Mexico's mainstay crops.
Economists conclude that if we were to be able to get the
Billy Melton variety established as a predominate variety, we
could save $2 million in water costs in the state. Mr.
Chairman, we are being outspent by China, who is continuing to
increase and bolster its research investments, and Brazil and
India are catching up in their research investments. That means
that the demand for agricultural scientists is increasing, and
many of America's best and brightest are being poached by
foreign research firms and universities.
After reading your testimonies, it is certainly clear to me
that we have to do more. However, after getting a glimpse of
the President's current budget, it looks to me that the current
Administration is cutting agricultural discretionary spending
by about $4.7 billion, and that absolutely will impact our
research priorities.
Mr. Lawson. Percent----
Ms. Lujan Grisham. Yes. I am concerned about that, and
would love for the witnesses to try to address that in today's
hearing.
Such cuts can impact our ability to recruit and train our
own ag scientists, and to get young people into the ag
industry. And while we are doing better at promoting women and
minorities into ag research and ag work, these cuts would
further diminish our efforts.
Mr. Chairman, it is critical that we continue to discuss
these areas. Thank you very much for your support for research.
And with that, Mr. Chairman, I yield back.
The Chairman. Thank you, Ranking Member Lujan Grisham.
The chair would request that other Members submit their
opening statements for the record so the witnesses may begin
their testimony, and to ensure that there is ample time for
questions.
I am going to go ahead and introduce all three of our
witnesses, and then allow each of you to make opening
statements.
I would first like to welcome Dr. Jay Akridge, the Glenn W.
Sample Dean of Agriculture at Purdue University, one of the
secondary land-grant universities, to the University of
Illinois, of course. And Purdue, as you know, is in West
Lafayette, Indiana. Good luck in the NCAA tournament. We are
playing in the NIT, so I know you will wish us luck there. I
know Dr. Akridge is here on behalf of the Association of Public
and Land-grant Universities. Thank you for being here. Mr.
Richard Wilkins, the Chairman of the American Soybean
Association, from Greenwood, Delaware, on behalf of the
National Coalition for Food and Ag Research. And my friend, Dr.
James Carrington, the President of the Danforth Research Center
in St. Louis, Missouri, that I and our colleague on this
Committee, Congressman Mike Bost, had the chance to tour
together just a few short months ago. So welcome to all three
of you.
I would remind the witnesses that there will be a clock in
front of you. We would appreciate it if you would keep it to 5
minutes. We will try to do the same up here. And if you hear a
little tap, that means that you haven't looked at the clock,
and need to speed up a little bit. We will make sure you do.
So with that, Dr. Akridge, please begin when you are ready.

STATEMENT OF JAY T. AKRIDGE, Ph.D., GLENN W. SAMPLE DEAN OF
AGRICULTURE, PURDUE UNIVERSITY; CHAIRMAN, POLICY BOARD OF
DIRECTORS, BOARD OF AGRICULTURE ASSEMBLY, ASSOCIATION OF PUBLIC
AND LAND-GRANT
UNIVERSITIES, WEST LAFAYETTE, IN

Dr. Akridge. Well, thanks, Chairman Davis. The University
of Illinois is a great competitor, but also a great
collaborator in our academic enterprise.
The Chairman. And we have cooler colors of ties, right?
Dr. Akridge. Chairman Davis, Ranking Member Lujan Grisham,
and Members of the Subcommittee, again, my name is Jay Akridge,
I am Dean of the College of Agriculture at Purdue, and I
appreciate the opportunity to testify today.
I am here representing the Board on Ag Assembly of the
Association of Public and Land-grant Universities. The BAA
represents a national system that knits together more than 107
land-grants, and 60 non-land-grant universities.
While public support for agricultural research and
education comes from a variety of sources, my comments today
will focus on the extramural funds; capacity and competitive
funds provided by USDA through the National Institute of Food
and Agriculture, and authorized in the farm bill.
In my written testimony, I outline the case for public
investments and agriculture research and extension is
fundamental for global competitiveness of our U.S. agriculture,
and provide a brief overview of the key points here, but I
would be pleased to elaborate on these or provide Purdue
examples during the discussion.
As has been mentioned, the productivity story of U.S.
agriculture is extraordinary, and that productivity was fueled
by research and education. As just one small example, corn
yields in the 1930s were 30 bushels per acre, increasing to
about 100 bushels per acre while I was growing up on my
family's retail farm supply business in western Kentucky. Last
year, U.S. corn average yields was 175 bushels per acre.
However, there is no resting on our laurels as the world's
population is increasing. Forecasts hit 9+ billion in 2050,
which requires 25 to 100 percent more food. The Global Harvest
Initiative reports that Total Factor Productivity must grow by
1.75 percent per year for the world to double agricultural
production by 2050.
But how to drive that level of productivity has become much
more complex in the new century, and this has been alluded to
in the opening comments. More variable weather has brought new
challenges to the world's farmer. Access to new arable land is
limited. Availability and competition for water is increasingly
an issue. The environmental implications of farming practices
are being questioned globally. Some consumers have demonstrated
much deeper interest in how and where food is produced, and
societal acceptance of new technology cannot be taken for
granted.
Given these issues, what set of technologies and
investments and human talent will drive the type of agriculture
needed, and who will provide them? The science of the 21st
century agriculture will be built on data, collected in ways
and volumes unprecedented in our history. The word convergence
will characterize agricultural technology as biology, data
analytics, and automation, combined to provide the productivity
increases we need. Universities can play a unique role in
bringing these disciplines together and realizing this future.
At the same time, the next century will not be ours alone,
as other nations are investing heavily in public agriculture
research, and U.S. agricultural competitiveness will be a key
issue. As of 2011, for every dollar the United States invested
in public agriculture R&D, China, Brazil, and India combined
invested $2.15. In addition, U.S. agricultural competitiveness
will require both private and public investment. In 1950,
public spending on ag research was about 65 percent of the
total investment, and by 2010 that figure had declined to 35
percent. But public research is needed to address the questions
that the private-sector will not, and public-private
partnerships will be increasingly important.
While technology is important, technology in the hands of
farmers who know how to use it is even more important.
Cooperative extension plays a key role in disseminating
research to stakeholders. And as our stakeholders have evolved,
so has extension, with the traditional county-based extension
educator or agent, complemented by direct access to campus-
based extension specialists and a wide variety of e-learning
tools.
Competitiveness is built on human talent, and our colleges
of agriculture are focused on providing the talent needed for
the next century, with more than 175,000 students enrolled
across degree levels. 4-H, a youth development program of
cooperative extension, is a talent pipeline and reaches nearly
six million youth annually. New STEM, science technology
engineering and math programming, has taken the proven 4-H
volunteer-led model into exciting new areas.
What are some of the challenges looking ahead? Federal
funding for ag research has been stagnant over the past decade
in real terms. From 2005 to 2012, USDA funding for ag research
declined by 16 percent, falling from $2.9 to $2.4 billion. Our
system needs investments in capacity and competitive funds.
Federal capacity funds provide land-grant universities with the
human talent required to address local research and extension
needs, provide timely response in emergency situations such as
disease or pest outbreaks, and ultimately the capacity to
pursue competitively funded research.
Another significant challenge is the state of our
university infrastructure, and we face a current deficit of
about $8.4 billion there.
In closing, the most recent QS World University Rankings
show that ten of the top 15 ag and forestry universities
globally are located within the U.S. With a proven record of
impact and with appropriate levels of Federal funding, our
land-grant agricultural colleges are ready to address the
challenge of helping to ensure the agricultural competitiveness
of our U.S. agriculture.
I want to thank you for this opportunity today, and to
thank you for your past support of ag research and extension.
[The prepared statement of Dr. Akridge follows:]

Prepared Statement of Jay T. Akridge, Ph.D., Glenn W. Sample Dean of
Agriculture, Purdue University; Chairman, Policy Board of Directors,
Board of Agriculture Assembly, Association of Public and Land-grant
Universities, West Lafayette, IN
2018 Farm Bill_Research, Education, and Extension
Introduction
Chairman Davis, Ranking Member Lujan Grisham, and Members of the
Subcommittee, I am Jay Akridge, Dean of the College of Agriculture at
Purdue University in Indiana, and I appreciate the opportunity to
testify as you begin discussions for the next farm bill. I am here
today to represent the Board on Agriculture Assembly (BAA) of the
Association of Public and Land-grant Universities (APLU) and serve as
Chair of the Policy Board of Directors of the BAA.
APLU is a research, policy, and advocacy organization that is
dedicated to strengthening and advancing the work of public
universities across the nation. Annually, APLU's 238 member
institutions enroll 4.8 million undergraduate students and 1.3 million
graduate students, while employing over 1.2 million faculty and staff.
Each year, 1.2 million degrees are awarded, and institutions conduct
$43.5 billion in university-based research.
The purpose of the BAA is promotion and support of agriculture in
all of its phases (agriculture, food/nutrition, natural resources,
environment, veterinary medicine, forestry, international) and all
three missions (research, education, and extension) in the land-grant
and agricultural colleges in all 50 states, the District of Columbia,
the Commonwealth of Puerto Rico, the territories of the Pacific, and
the U.S. Virgin Islands. The APLU BAA includes the deans of
agriculture, and the leadership of academic programs, Cooperative
extension, experiment stations, and international agriculture in land-
grant and non-land-grant colleges of agriculture.\1\
---------------------------------------------------------------------------
\1\A land-grant college or university is an institution that has
been designated by its state legislature or Congress to receive the
benefits of the Morrill Acts of 1862, 1890, and 1994. Non-land-grant
colleges of agriculture (about 60) are public colleges and universities
that offer baccalaureate or higher degrees in agriculture, food, and
renewable resource education.
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The BAA has held several meetings on the farm bill beginning in
mid-2016 to discuss proposals submitted by BAA members and to identify
system priorities. This process is on-going. As a result of this
inclusive process, the Agriculture Committees can trust that the APLU
BAA priorities for the next farm bill will reflect a comprehensive
cross-section of agricultural research, education, and extension
stakeholders.
While public support for agricultural research and education comes
from a variety of sources, my comments today will focus primarily on
the extramural funds provided by USDA through the National Institute of
Food and Agriculture (NIFA) and authorized in the farm bill. These
extramural funds take two general forms: capacity funds (primarily
Hatch, Smith-Lever, McIntire Stennis, Evans-Allen, and 1890s extension)
and competitive funds (Agriculture and Food Research Initiative--AFRI).
Agricultural Research: Driving Competitiveness in a Global Economy
A Changing Agriculture
The agriculture of the 21st century will be as different from the
20th century as 20th century agriculture was different from the 19th
century. Over the 20th century, advances in genetics, machine power,
and chemical fertilizers and pesticides promoted staggering increases
in agricultural productivity. As an example, U.S. corn yields of 30
bushels per acre in the 1930s, were nearly 140 bushels per acre by
2000. The population of the world soared from 1.5 billion in 1900 to
six billion in 2000. While forecasts of mass starvation did not
materialize, more than 826 million were food insecure in 2000, despite
the profound increases in agricultural productivity.\2\
---------------------------------------------------------------------------
\2\``The State of Food Insecurity in the World''. FAO, http://
www.fao.org/docrep/x8200e/x8200e00.htm.
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Looking forward, agriculture still faces a fundamental question--
how to feed a growing world? But, that question has become much more
complex in the new century. More variable weather has brought new
challenges to the world's farmers. Access to new, arable land is
limited. Availability of and competition for water is increasingly an
issue. The environmental implications of farming practices are being
questioned globally. Farmers are finding new opportunities to produce
for non-food markets. Some consumers have demonstrated much deeper
interest in how and where food is produced, and societal acceptance of
new technology cannot be taken for granted. Obesity is a global public
health issue and not just in the high income countries. The average age
of the U.S. farmer is nearing 60 years old and questions are being
raised about where the next generation of farmers will come from.
What set of technologies and investments in human talent will drive
the type of agriculture needed to address our 21st century
challenges?\3\ The science of the 21st century agriculture will be
about precision: precise editing of genes to drive plant improvement,
precise use of inputs to give plants and animals exactly what they
need, precise management of resources to mitigate environmental
impacts. This precision will be built on data collected in ways and
volumes unprecedented in our history. The word `convergence' will
characterize agricultural technology as biology, data analytics, and
automation combine to provide the productivity increases we need to
address the challenges defined above. Technology will also help enable
an even more consumer-responsive agriculture. Note this 21st century
technology revolution is not just about large scale agriculture,
producers of all sizes will ultimately have access to many of these
technologies in some form as they build their farm businesses around
the markets they serve. At the same time, the next century will not be
ours alone as other nations are investing heavily in agricultural
research and U.S. agricultural competi[ti]veness will be a key issue.
---------------------------------------------------------------------------
\3\See Woodson, R. ``The Role of U.S. Research Universities in
Meeting the Global Food Security Challenge.'' 2016 AAAS Charles
Valentine Memorial Lecture, for an overview of some of these emerging
technologies.
---------------------------------------------------------------------------
Land-grant universities and colleges of agriculture have answered
the call for the research and education needed by our industry in the
past, and can in the future. We are prepared to play our role in
conducting the research required and the education needed to drive U.S.
agricultural competitiveness. Continued public investment in
agricultural research and extension is fundamental to addressing the
challenges outlined above, and ultimately supports the global
competitiveness of the U.S. agricultural sector. We have certainly
appreciated your support in the past, and look forward to your support
in the future.
Feeding a Growing World
According to the U.S. Census Bureau, the United States gains one
new person every 16 seconds; the world gains a new person about every
\1/2\ second.\4\ At present rates, the global population will reach 9.6
billion by 2050, and experts believe that agricultural productivity
must increase 25-100% from current levels to feed a global population
of that magnitude.\5\ The challenge here is more than producing
calories, it is about providing proper nutrition for a growing
population.\6\ And, this challenge is more than a food security issue,
it is a national security issue as food insecurity and political
instability are tightly linked.\7\ This task is also made more
challenging by a variety of factors: limited land and water resources,
increasingly variable weather, natural response to modern farming
practices (pests and weeds resistant to insecticides and herbicides,
for example), societal attitudes toward science and technology, and
barriers to adoption of improved farming practices
globally.8-9
---------------------------------------------------------------------------
\4\https://www.census.gov/popclock/.
\5\Hunter, M.C., R.G. Smith, M.E. Schipanski, L.W. Atwood, D.A.
Mortensen. ``Agriculture in 2050: Recalibrating Targets for Sustainable
Intensification.'' BioScience, February 22, 2017.
\6\Jones, A.D. and G. Ejeta. ``A New Global Agenda for Nutrition
and Health: The Importance of Agriculture and Food Systems''. Bulletin
of the World Health Organization. 2015-94: 228-229.
\7\Ejeta, G. ``Revitalizing Agricultural Research for Global Food
Security''. Food Security, Volume 1, No. 4 (2009).
\8\Glickman, D. ``A Food and Agricultural Research Agenda to Deal
with the Asteroids of the Future''. 2014 Charles Valentine Riley
Memorial Lecture, June 4, 2014.
\9\Baldos, U.L.C. and T.W. Hertel. ``Global Food Security in 2050:
The Role of Agricultural Productivity and Climate Change.''
Agricultural and Resource Economics. 58: 2014.
---------------------------------------------------------------------------
Figure 4: Sources of Growth in Ag Output Low-Income Countries, 1961-
2013

Source: USDA Economic Research Service (2016).
http://www.globalharvestinitiative.org/wp-content/uploads/
2016/09/p13_figure-4_Sources-of-Growth-in-Ag-Output_LowIncome-
300x226.jpg.
2016 GAP Report' Infographics.

The Global Harvest Initiative (GHI) has worked to quantify the
challenge of feeding a growing world and measuring the current status
of our ability to meet that challenge. The charts above and below are
from the GHI's 2016 Global Agricultural Productivity Report and
demonstrate the profound difference that Total Factor Productivity
(TFP) has made in the developed world over the past 50 years. TFP is
the ratio of agricultural outputs (gross crop and livestock output) to
inputs (land, labor, fertilizer, machinery and livestock). When TFP
rises, more output can be produced from a fixed amount of inputs. TFP
growth can result from increased effectiveness of inputs, more precise
use of inputs, or adoption of improved production practices.\10\
---------------------------------------------------------------------------
\10\2016 GAP Report: http://www.globalharvestinitiative.org/GAP/
2016_GAP_Report.pdf.
---------------------------------------------------------------------------
Figure 5: Sources of Growth in Agricultural Output High-Income
Countries, 1961-2013

Source: USDA Economic Research Service (2016).
http://www.globalharvestinitiative.org/wp-content/uploads/
2016/09/p13_figure-5_Sources-of-Growth-in-Ag-Output_HighIncome-
300x226.jpg.
2016 GAP Report' Infographics.

GHI reports that TFP must grow by 1.75% annually for the world to
double agricultural output through productivity gains by
2050.Investment in agricultural research will be a fundamental
determinant of whether or not this level of productivity growth is
achieved.
According to the GHI's 2016 Global Agricultural Productivity
Report, ``Agriculture research and development (R&D) and extension
programs are essential public goods and the principal drivers of TFP.
Along with private-sector and collaborative research, public R&D in
agriculture plays an essential role in fostering agricultural
innovation systems.'' The report goes on to state that publicly funded
agricultural research generates technologies and innovation that
enhance farmer productivity and competitiveness, reduce waste in the
food value chain, and ultimately benefit consumers through lower prices
and improved access to safe and nutritious food.
Investment Strategies of U.S. Competitors
Who will produce the food needed for a growing world and who will
bring the next generation of agricultural technologies to the market
are important questions. The U.S. is being quickly outpaced by other
countries in public agricultural research and development spending. The
chart below from USDA's Economic Research Service shows that China has
dramatically increased its investment in agricultural research at the
same time that U.S. public investment in agricultural research
stagnated. Between 1990 and 2013, the U.S. share of spending among
nations with major public agricultural research and development
investments fell from 22.5 percent to 13.4 percent, largely driven by a
decline in U.S. investment and rising spending from developing
countries such as China and India.\11\
---------------------------------------------------------------------------
\11\https://www.ers.usda.gov/amber-waves/2016/november/us-
agricultural-rd-in-an-era-of-falling-public-funding/.
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U.S. Public Sector Funding for Agricultural R&D Falls as Spending by
China and India Rises
Constant 2011 PPP$, Billions

PPP = purchasing power parity.
Source: USDA, Economic Research Service and Agricultural
Science and Technology Indicators (ASTI), Organisation for
Economic Co-operation and Development.
[https://www.ers.usda.gov/webdocs/charts/november16--
feature_clancy_fig03png/
november16_feature_clancy_fig03.png?v=42676.]

The chart below shows the shares of global public agricultural
research and development spending for the U.S. and Brazil, India, and
China. Pardey and Beddow note that ``key middle-income countries with
agricultural sectors (specifically Brazil, India, and China)
collectively overtook the United States in 1998. As of 2011, for every
dollar the United States invested in public agricultural R&D, those
countries invested $2.15.''
Shifting Global Public Share of Food and Agricultural R&D, 1960-2011

Source: Pardey, P.G. and J.M. Beddow, ``Revitalizing
Agricultural Research and Development to Sustain U.S.
Competitiveness.'' Farm Journal Foundation, InSTePP R&D
accounts version 3.8.

This shift in research and development spending has occurred
despite the consistent evidence of the large and pervasive societal
return on investment from U.S. public investment in agricultural
research. Pardey and Alston summarize much of this work and report that
``surveys of hundreds of studies quantifying the returns from
agricultural research suggest that rates of return in the range of 40-
60 percent per year. The most recent, comprehensive work by Alston, et
al., reconfirms that U.S. public investment in agricultural research
has paid off handsomely, with benefit-cost ratios of 20:1 or
higher.''12-13
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\12\Pardey, P.G. and J.M. Alston. ``For Want of a Nail: The Case
for Increased Agricultural R&D Spending''. American Enterprise
Institute.
\13\Alston, J.M., M.A. Anderson, J.S. James, P.G. Pardey.
Persistence Pays: U.S. Agricultural Productivity Growth and the
Benefits from Public R&D Spending. Springer, 2010.
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Public- and Private-Sector Research: A Needed Partnership
Addressing the global challenges outlined above will require both
increased levels of public investment as well as more private
investment in agricultural research. Over the past 50 years, there has
been a pronounced shift toward private funding of agricultural research
in the U.S. In 1950, public spending on agricultural research was about
65% of the total investment, by 2010 that figure had declined to about
35%.

Source: Pardey, P.G. and J.M. Beddow. ``Revitalizing
Agricultural Research and Development to Sustain U.S.
Competitiveness''. Farm Journal Foundation, February 2017.

Despite increased levels of investment by private firms in
agricultural R&D, public investment is still much needed. Private-
sector investment will rightly follow opportunities for short-term
return on the research investment. Public-sector investment is needed
to pursue questions/areas where the pay-off will ultimately happen,
just over a longer period of time than private investors would be
satisfied with. Examples include work on understanding the ways that
plants respond to environmental stress such as drought or heat at the
most fundamental level. Such work is typically deemed too exploratory
and hence too risky to be the focus of private-sector research. But,
unless such basic research questions are answered, it is impossible to
breed better plants. In addition, some critical questions are more
applied and/or have immediate societal payoffs, even if short-run
returns to an individual or a private firm are modest. Examples here
would include research on farming practices that enhance water quality.
Such research may well have no immediate commercial value, but the
value of clean water to a community, a state, or our nation is obvious.
Importantly, public and private investment in agricultural research
is not an `either/or' situation, and private investment in university
agricultural research now accounts for about 23-24% of the total
funding.14-15 Such public-private partnerships will in all
likelihood be even more important in the future.
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\14\Monke, J. ``Agricultural Research: Background and Issues.''
Congressional Research Service, October 6, 2016.
\15\Clancy, M. K.O. Fuglie, P.W. Heisey. ``U.S. Agricultural R&D in
an Era of Falling Public Funding.'' Amber Waves, ERS-USDA, Vol. 14,
Issue 10, November 2016.
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Cooperative Extension: Providing Research-Based Insights
Cooperative extension is the unique pillar of the three that make
up the land-grant system (research, education, extension). Reaching the
more than 3,000 counties in the U.S. with research-based insights, the
stakeholder connections provided by extension help insure relevancy of
the land-grant system's applied research and education activities. In
rural counties, extension provides a lifeline to unbiased insights on
agricultural, health, and community development questions. In urban
areas, increasing interest in urban agriculture as well as health and
wellness issues are addressed through extension. As stakeholders have
evolved, so has extension with the traditional county-based extension
educator or agent, complemented by direct access to campus-based
extension specialists and a wide variety of e-learning tools. More on
the impact of extension can be found here: https://extension.org/.
Recent research has quantified the societal returns to investments
in agricultural extension and finds the payback is both large (returns
on investment of over 100%) and quick (in many cases a year or less
given the fact that extension influences current decision making).\16\
---------------------------------------------------------------------------
\16\Huffman, W.E. ``New Insights on the Impacts of Public
Agricultural Research and Extension''. Choices, 1st Quarter 2016 (31):
1.
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Building Human Talent
The land-grant system and our non-land-grant colleges of
agriculture have a fundamental role in training the next generation of
talent for the food and agricultural industry. The most recent data
(2013) show more than 175,000 students (BS, MS, Ph.D.) enrolled at
land-grant and non-land-grant colleges of agriculture, and demand for
that talent remains strong. A recent study by Purdue and NIFA reported
an annual demand for 57,900 BS and higher degree graduates per year
through 2020 in the areas of food, agriculture, renewable natural
resources, or the environment.\17\ While enrollments at colleges of
agriculture have been growing, the total supply of agriculture
graduates is expected to be 35,400 annually--leaving a gap (39%) to be
filled by graduates with other degrees. Beyond the supply and demand
situation, the fact that these students enrolled in colleges of
agriculture are being trained by individuals who have research or
extension appointments (or both) brings state of the art science and/or
stakeholder relevance to students in a unique way, enhancing their
educational experience.
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\17\``Employment Opportunities for College Graduates in Food,
Agriculture, Renewable Natural Resources, and the Environment, United
States, 2015-2020.'' USDA and Purdue University, 2015.
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Extension also has a fundamental role in developing human talent
and the 4-H program provides an important example. 4-H is the largest
youth development program in the U.S., reaching nearly six million
youth annually, who are supported by 500,000 volunteers, and 3,500 4-H
professionals. 4-H has a well-documented impact building life-skills in
youth.18-19 Importantly, 4-H members pursue higher
education at a higher rate than do high school students in general.\20\
While traditional 4-H projects remain a fundamental part of 4-H, new
Science, Technology, Engineering, and Math (STEM) programming is taking
the proven 4-H volunteer-led, research-based model into an exciting new
areas. In Indiana, the fastest growing 4-H clubs are in urban centers
such as Gary and Indianapolis. We now have more than 70 counties with
robotics 4-H clubs in Indiana.
---------------------------------------------------------------------------
\18\Mulroy, M., Kraimer-Rickaby, L. ``The Impact and Sustainability
of 4-H Youth Development Programs: A Synthesis Report'' University of
Connecticut Center for Applied Research, 2006.
\19\4-H Study of Positive Youth Development: http://
3t61of1t6u3x3af7ir2y91ib.wpengine.
netdna-cdn.com/wp-content/uploads/2016/02/4-H-Study-of-Positive-Youth-
Development-Full-Report.pdf.
\20\Ratkos, J. ``4-H Makes a Difference in Post-secondary Education
Enrollment.'' http://msue.anr.msu.edu/news/
4_h_makes_a_difference_in_post_secondary_education_enrollment, Posted
December 19, 2014.
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The Land-Grant System: Leveraging Resources
It is essential to understand the leverage that Federal funding for
research and Cooperative extension enjoys as a result of the network of
land-grant and non-land-grant Colleges of Agriculture that exists. We
are part of a national system that knits together more than 107 land-
grant colleges and universities and 60 non-land-grant universities.
This network allows us to share best practices, collaborate on research
and extension initiatives, avoid duplication in our efforts, and at the
same time drill down to address local needs. In fact, 25% of our
Federal capacity fund investments in agricultural research programs
must be spent on projects that span multiple states. In addition,
competitive funds drive multi-institution collaboration as researchers
build the most competitive teams they can to put the best possible case
forward for limited available funding.
The total public investment in agricultural research and extension
is a partnership between Federal, state, and county sources--with a
mandatory match of the Federal funds dollar for dollar with state funds
required (for most states, the match is much higher).\21\ Without
Federal support, this partnership collapses, and stressed state budgets
will simply not be able to support even current levels of investment,
much less what is needed.
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\21\Clancy, M., K.O. Fuglie, P.W. Heisey.
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As pointed out earlier, public investment in agricultural research
is also leveraged with private-sector investment--in 2013, for every
dollar the Federal Government invested in university research, the
private-sector invested 49.\22\ Again, without Federal investment in
capacity and competitive funds, these private-sector investments in
agricultural research at universities do not happen at this level.
---------------------------------------------------------------------------
\22\Clancy, M., K.O. Fuglie, P.W. Heisey.
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An Indiana Example
I will provide an Indiana example of the importance of Federal
funding for agricultural research that demonstrates the critical role
of partnerships and the leverage of available Federal funding. Purdue
University made a $20 million commitment to a new Plant Sciences
Institute based in our College of Agriculture, one of only two research
investments made as part of a set of ten university level strategic
initiatives called Purdue Moves. The focus of this Institute is
improved plants--plants that yield more, plants that are more tolerant
of drought, plants that use nutrients more effectively, and plants that
have improved nutritional profiles. This investment was made because
our President and Trustees recognized the importance of plant
agriculture as we look to the future, for all of the reasons
highlighted above. However, beyond the importance of the problem, the
University also invested because our College had deep strength in plant
agriculture research and extension, which was built on and supported by
Federal capacity funding.
This University investment included new faculty positions, some new
facilities and equipment, a focus on bringing discoveries to the
marketplace, and new student training initiatives. The $20 million was
intended to be platform investment, to help attract others to invest--
and, that is happening. Our Indiana corn and soybean farmers through
their check-off funds have supported the construction of a new field
scale plant phenotyping facility to help us both drive plant
improvement and take the idea of precision agriculture to an entirely
new level through sensor development and new data analytics. Other
industry partners, including firms far outside of agriculture such as
Verizon and IBM, have joined us as well. Multiple start-up companies
have been launched since the University made the commitment in 2014. In
addition, we have launched a pre-college educational experience in the
summer to help attract young men and women to plant agriculture, as
well as an undergraduate research fellows program for students on
campus.
None of this would have happened without the Federal capacity
funding that supported the salaries and research of our plant
scientists. Bringing this full circle, one of our soybean breeders
recently received a large AFRI grant to put the new phenotyping
facility to work in improving soybean genetics. Looking forward, it
will take enhanced levels of Federal capacity and competitive funds,
leveraged with farmer, industry, foundation, and state funds, to drive
the kind of research and education program we need to feed a growing
world.
Looking Forward: Opportunities and Issues
Funding Levels
Advances in food, agricultural, and environmental sciences depend
upon research through the USDA NIFA. However, current USDA funding for
food and agricultural research at $2.4 billion per annum, is not
sufficient to address the challenges outlined earlier. In fact, Federal
funding for agricultural research has been stagnant over the past
decade, and has declined in real terms.\23\ From 2005 to 2012, USDA
funding for agricultural research declined by 16% in real terms,
falling from $2.9 billion to $2.4 billion in constant 2014 dollars.
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\23\Pursuing a Unifying Message: Elevating Food, Agricultural, and
Natural Resources Research as a National Priority. Charles Valentine
Riley Memorial Foundation, November 2014.
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Like agriculture, modern advances in health care depend upon
research advances from the public sector, supported with investments of
more than $32 billion per annum directed through the National
Institutes of Health. Much of this research takes place at public
universities, and depends upon state of the art facilities for
conducting research, and is enhanced by funding from private-sector
interests. Over the 1990-2012 period, funding for NIH increased 135%
while USDA funding increased 21% over that same period.\24\ There is no
doubt that medical research addressing health issues in our country is
a national priority, but one can question the relative investment in
research addressing the security of our food supply.
---------------------------------------------------------------------------
\24\Charles Valentine Riley Memorial Foundation.
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Another instructive trend is the split of Federal and state support
for agricultural research and development. Since 1950, the share of
publicly funded research and development carried out by state-based
land-grant universities and other agencies has increased from 61
percent in 1950 to 73 percent in 2013--leading to more dependence on
state-funding and facilities, an increasingly tenuous position given
the status of state budgets.
Capacity and Competitive Funding Are Equally Important
Federal support for both capacity (Hatch, Smith-Lever, McIntire
Stennis, Evans-Allen, and 1890s extension) and competitive funding
(Agriculture and Food Research Initiative--AFRI) is essential. Federal
capacity funds provide land-grant universities with the human talent
and support needed to address local research and extension needs,
provide timely response in emergency situations such as a disease or
pest outbreak or weather event, and ultimately the capacity to pursue
research supported by other funding sources including competitive
Federal funds, foundation funding, and private funding. AFRI is NIFA's
flagship competitive funding program, but has never been funded at its
authorized level of $700 million. As a result, many research proposals,
deemed both important and deserving of funding, are not funded. In
fiscal 2015, more than 2,600 proposals were submitted for AFRI funding,
requesting almost $1.8 billion. Through a rigorous peer-review process,
over 1,400 were recommended for funding, but only 569 could be
supported with the funds available.
Infrastructure Challenges
Another significant challenge faced by our land-grant universities
is the state of our research and education infrastructure. In 2015, the
APLU BAA commissioned a study into deferred maintenance\25\ which
estimates that the land-grant system faces a deferred maintenance
backlog of $8.4 billion. The study delivered three key findings:
---------------------------------------------------------------------------
\25\http://www.aplu.org/news-and-media/News/2015/10/15/
sightlinesaplu-study-finds-84-billion-in-deferred-maintenance-at-
schools-of-agriculture-in-us.

1. The level of deferred maintenance identified is significant and
---------------------------------------------------------------------------
conditions exist for it to grow.

2. There are three main areas identified that are contributing to
the growth of deferred maintenance:

a. The majority of space was constructed during a period of
rapid, poor qual-
ity construction.

b. Most buildings have received insufficient capital investments
as they have
aged.

c. 80% of campuses are investing at such a low level that
deferred mainte-
nance will grow annually.

3. These conditions are consistent across the country.

A major driver of deferred maintenance at land-grant institutions
is the age profile of buildings. Of the 15,596 buildings included in
the study, containing 87\2\ million gross of space, 53% were built
between 1951 and 1990, the period when buildings were built ``quickly
and with lower quality standards and materials.'' Facilities built in
this time period account for 68% of the total $8.4 billion in deferred
maintenance costs across the system. The replacement cost of all
research and education space in the system is estimated at $29 billion.
The study also found that the capital investment needed to renovate
these buildings is also falling well short. ``Over 80% of the schools
of agriculture were spending at levels that meant they are deferring
projects on an annual basis'' the study said. The average capital
spending per year at schools of agriculture was $1.82 per gross 1\2\,
compared to $4.40 per gross 1\2\ for the broad database of U.S.
colleges and institutions--significantly lower.
As just one example of this issue at Purdue University, we recently
completed a study of infrastructure needs at our eight research farms
strategically located around Indiana. The 2014 study showed that more
than $25 million is needed by 2020 to address the backlog of deferred
maintenance and to equip the farms to do the contemporary applied
research needed by farmers in our state.
Efforts to Unify under a Common Message for Research
Purdue and other land-grant universities, along with partners at
non-land-grant schools, research societies, agricultural organizations
and many others, have actively been engaged in national discussions on
how we take a different approach to ensure a sustainable future in
food, agricultural and natural resources. Led by the Charles Valentine
Riley Memorial Foundation, this effort envisions the opportunity for a
convergence of efforts that result in development of a unified
message--one that calls for making public investment in food,
agricultural and natural resources research a higher national priority.
A common thread of these dialogues has been exploring the formation of
a broad coalition committed to develop the compelling case for enhanced
investment in research. The times call for an inspiring vision, bold
action and a heightened sense of purpose. We believe these continuing
discussions underscore the need to think differently about how
agriculture speaks out on the need to fund research at the priority it
deserves--by speaking together on the benefits made possible for the
public good and our common future.
Challenge of Change Commission
To advance the goal of feeding the world, the APLU has established
the Challenge of Change Commission,\26\ which aims to examine
challenges to food security and make recommendations on the actions
required by public research universities to meet global food needs by
2050. The commission's charge is three-fold:
---------------------------------------------------------------------------
\26\http://www.aplu.org/projects-and-initiatives/international-
programs/challenge-of-change/ChallengeofChangeCharge.pdf.

1. Identify and prioritize the key challenges that our public
universities can successfully address that will advance
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food security in North America and the world.

2. Recommend how our public universities can align their resources
to address the challenges identified by the Commission.

3. Determine the resources required for our public universities to
address the challenges identified by the Commission.

There is an obvious synergy among the land-grant system's research,
education, and extension mandate and the agriculture industry's charge
to feed the growing population. APLU is ready to lead the discussion
and address the challenge with the direction and support of Congress.
Closing Comments
Up for the Challenge . . .
Despite these challenges, the nation's land-grant universities and
agricultural colleges remain the world's premier source of research,
education, and extension programs benefiting the agricultural industry
from producer to consumer. The recent QS World University Rankings
provide evidence of this fact with ten of the top 15 agricultural and
forestry universities globally located in the U.S.\27\ With a proven
record of impact, and with appropriate levels of Federal investment,
APLU members stand ready to address the challenges of feeding a growing
world.
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\27\https://www.topuniversities.com/university-rankings/university-
subject-rankings/2017/agriculture-forestry.
---------------------------------------------------------------------------
Thank you for this opportunity to share the nature of the food
security challenge in front of us, the reasons public investments in
agricultural research and extension are important, and some of our
system's successes and challenges. Thank you for your past support of
agricultural research and extension. The Association of Public and
Land-grant Universities is available to assist the Agriculture
Committee, and the broader industry, in any way possible, and we look
forward to the culmination of the next farm bill.

The Chairman. Thank you, Dr. Akridge.
Mr. Wilkins, you are recognized for 5 minutes.

STATEMENT OF RICHARD WILKINS, CHAIRMAN, AMERICAN SOYBEAN
ASSOCIATION; VICE PRESIDENT, NATIONAL
COALITION FOR FOOD AND AGRICULTURAL RESEARCH, GREENWOOD, DE

Mr. Wilkins. Good morning, Mr. Chairman, and Members of the
Subcommittee.
My name is Richard Wilkins, and I am a farmer from
Greenwood, Delaware; the state that continuously ranks first in
the nation in gross farm revenue per acre of farmland.
I am pleased to testify today in my capacity as Vice
President of the National Coalition for Food and Agricultural
Research. My written testimony is provided for the record, and
I will use my time today to offer a few highlights.
NCFAR is a customer-led coalition that advocates sustaining
and increasing public investment, and food and agricultural
science. Our support encompasses the entire USDA Research,
Extension, and Education mission area, including extramural and
intramural programs. By customer, I mean not only my farm
business, but all the other stakeholders who need and benefit
from the scientific outcomes that are produced by our nation's
publicly funded agricultural research. I would suggest that all
of us are customers, including the Members of this
Subcommittee.
While I am not a researcher, I do appreciate the vital role
that researchers play. Modern agriculture is a science-based
business. I know that I can do what I do better because of
advancements made possible by Federal investments in
agricultural research.
The research title of the farm bill represents the nation's
signature Federal investment in the future of the food and
agricultural sector. The success of every other title in the
farm bill is connected to scientific outcomes made possible
through the research title.
I respectfully submit that we as a nation are not investing
enough in publicly funded research to regain and then maintain
our nation's place as the leader in agricultural research. That
is a major reason I invest a significant amount of my time in
NCFAR, the American Soybean Association, and other groups, to
help make the case for public investment in food and
agricultural research.
Investment in food and agricultural science is not only
good business, it is good for business. One recent report
estimates a return on investment of ag research dollars of
about 67 percent. Yet, Federal funding for agricultural
research has been essentially flat for over 20 years, despite
much greater demonstrated needs, and has reportedly declined by
about 25 percent in real terms since 2003. Our nation's
competitiveness in global markets is at risk, as investments in
agricultural research by our global competitors have been
growing rapidly.
NCFAR has several activities underway with the objective of
better informing our leadership and others in laying the
groundwork for a strong research title and the necessary
funding. One new initiative I am pleased to announce is that
NCFAR is involved in planning for a Summit on Integrated
Research, Education, and Extension Priorities To Advance
American Agriculture. The aim of the summit is to engage
stakeholders in developing a vision for what the agricultural
research enterprise should look like to best serve the needs of
the food and agricultural system in the 21st century. The
summit will focus on four critical areas: fueling growth in the
agricultural economy through rapid adoption of innovations;
harnessing the power of big ag data in research and extension;
advancing the health of U.S. consumers and environmental
quality; and assuring the security of United States agriculture
and food systems. Additional information will be made available
in the near future.
We appreciate the longstanding leadership of this
Subcommittee in authorizing and overseeing implementation of a
strong research title, and we look forward to working with you.
I appreciate the opportunity to share our views, and would
be pleased to respond to any questions.
[The prepared statement of Mr. Wilkins follows:]

Prepared Statement of Richard Wilkins, Chairman, American
Soybean Association; Vice President, National Coalition for Food and
Agricultural Research, Greenwood, DE
Mr. Chairman and Members of the Subcommittee,

My name is Richard Wilkins. I am a farmer from Greenwood, Delaware.
I farm 400 acres of soybeans and 400 acres of corn annually and produce
250 acres of wheat, 100 acres of barley, 300 acres of vegetables, and
400 acres of hay. I also raise 120 head of beef cattle.
I am pleased to testify today in my capacity as Vice President of
the National Coalition for Food and Agricultural Research (NCFAR), a
nonprofit, nonpartisan, consensus-based and customer-led coalition that
brings food, agriculture, nutrition, conservation, and natural resource
stakeholders together with the food and agriculture research and
extension community. NCFAR serves as a forum and a unified voice in
support of sustaining and increasing public investment at the national
level in food and agricultural science as a top national priority. A
membership list is attached. More information about NCFAR is available
at http://www.ncfar.org.
NCFAR's support encompasses the entire U.S. Department of
Agriculture (USDA) Research, Extension, and Education (REE) mission
area, including extramural programs in the National Institute of Food
and Agriculture (NIFA)--such as the Agriculture and Food Research
Initiative (AFRI), and capacity funds to support Experiment Stations
and Cooperative extension--and intramural programs in the Agricultural
Research Service (ARS), Economic Research Service (ERS), and National
Agricultural Statistics Service (NASS), as well as the U.S. Forest
Service research program. NCFAR urges a balanced portfolio, as the
various programs serve important and complementary roles. NCFAR
supports mandatory programs in the farm bill that provide funding for
research. It is important to include investments in both fundamental
and applied research, as well as translational education. In addition,
publicly funded research serves critically important objectives that
private-sector research cannot fulfill in a number of areas. For
example, the results of publicly funded research are available to the
public, including policy makers. Companies are often unable to fund
fundamental research that lays the foundation for much of our nation's
applied research.
With the farm bill reauthorization process in its early stages,
NCFAR has several activities underway with the objective of better
informing our leadership, other stakeholders, the Congress, and the
Administration in laying the groundwork for a strong research title and
supporting funding.
One longstanding initiative is our signature `LunchNLearn'
seminar series in which our team works to inform hill staff and other
stakeholders by featuring the publicly funded work of leading-edge
scientists on a diverse array of disciplines and timely topics. Over
the past decade, we have convened 125 seminars with nearly 8,000
attendees. A document providing highlights of the seminar series is
attached. More detail is available at http://www.ncfar.org/
Hill_Seminar_Series.asp.
Mr. Chairman, we greatly appreciate the support of your staff as
well as staff from other Committee Member offices in helping to arrange
the Agriculture Committee hearing rooms for these seminars. Thank you.
NCFAR is taking additional action on several fronts to inform the
current farm bill reauthorization process and be a more effective voice
for a strong research title.
First, NCFAR's Research Outreach Committee has convened a farm bill
task force, which is in the early stages of developing recommendations
on the reauthorization of the farm bill research title for our Board to
consider. We are also collaboratively engaging allied groups with the
objective of providing timely recommendations to this Subcommittee and
the Congress.
Second, I am pleased to announce that NCFAR is involved in planning
for a Summit on Integrated Research, Education, and Extension
Priorities to Advance American Agriculture. The aim of the Summit is to
engage stakeholders in developing a vision for what the food and
agricultural research, extension and education enterprise should look
like to best serve the needs of the food and agricultural system in the
21st century and capitalize on the robust potential of the
agricultural, food, and resource sectors to fuel further growth in the
United States economy. The summit will focus on four critical areas;
fueling growth in the agricultural economy through rapid adoption of
innovations; harnessing the power of big Ag data in research and
extension; advancing the health of U.S. consumers and environmental
quality; and assuring the security of U.S. agriculture and food
systems. We will provide additional information in the near future.
Third, NCFAR is actively involved in other collaborative efforts
intended to inform and support the reauthorization of a strong farm
bill research title, including (1) the unified messaging effort led by
the Riley Memorial Foundation, and (2) launch of the Breakthroughs 2030
study, being managed by the SoAR Foundation in conjunction with the
National Academies of Science (NAS), to produce a 10 year agenda for
food and agricultural research.
I mentioned earlier that NCFAR is ``customer-led.'' By ``customer''
I mean my farm business and all other the stakeholders who need and
benefit from the scientific outcomes that are produced by our nation's
publicly funded research, extension and education system in our own
work.
Research is an important means to critical ends--providing science-
based information and tools that help us in the food and agricultural
system do our jobs for the ultimate benefit of consumers, the nation's
economy, and the world.
The same holds true for a myriad of other ``customers''--such as my
fellow farmers and ranchers across the nation; the agricultural input
industry; food processors; professionals in the fields of nutrition and
health; natural resources and environment; rural communities; and
ultimately all consumers of food and natural fiber around the world.
Furthermore, this Subcommittee and other Members of Congress and
policy makers at all levels of government are important ``customers''
of research, extension and education made possible through the research
title.
This is indeed an exciting time for me and our family farming
operation. The challenges our farm family is experiencing--and indeed
across our nation's food and agricultural system--have brought into
fresh focus the need for a robust public investment in research,
extension and education.
I am not a researcher, though I do some experimenting in my farming
operations. However, I do appreciate the vital role that researchers
and extension specialists play in our society. Modern agriculture is a
science-based business. I need what research and extension can provide
in my operations. I know that I can do what I do better because of
advancements made possible by Federal investments in food and
agricultural research.
The research title of the farm bill represents the nation's
signature Federal investment in the future of the food and agricultural
sector. In fact, the success of every other title in the farm bill and
those who are charged with carrying out their respective missions is
arguably dependent in significant part on scientific outcomes and tools
generated by programs authorized through the research title, and then
funded by Congress.
Research is not an end in itself--rather it is a vital means to
help achieve many national priorities. The research title is critical
in providing advancements in food and agricultural research, extension
and education that help provide the tools needed to sustain and
strengthen America's food and agricultural sector, rural communities,
and the national economy. Public investment in food and agricultural
research, extension and education today and in the future must
simultaneously satisfy a range of needs, including food quality and
quantity, resource conservation, producer profitability, and food
safety and security, and helping to improve health.
At the risk of oversimplification, Federal funding is the fuel for
USDA's REE engine and determines how effectively the important goals of
the research title are realized. I respectfully submit that we as a
nation are not investing enough in publicly funded research to permit
discovery necessary to regain and then maintain our nation's place as
the leader in agricultural research. That is a major reason I invest a
significant amount of my time in NCFAR, the American Soybean
Association and other groups to provide input as a stakeholder and
leadership in urging increased public investment in food and
agricultural research, extension and education.
Investment in food and agricultural science is not only good
business, it's good for business. By any measure, publicly funded food
and agricultural science represents an outstanding investment. Public
and private investments in U.S. agricultural research and practical
application of results have paid huge dividends to the United States
and the world, especially in the latter part of the 20th century. The
CARD report entitled ``Measuring Public Agricultural Research and
Extension and Estimating their Impacts on Agricultural Productivity:
New Insights from U.S. Evidence'' (Jin & Huffman, 2016) presents a
summary of the most recent returns on investment of agricultural
research dollars to have a rate of return of approximately 67 percent.
However, the unparalleled success story in the food and
agricultural system is in large part the product of past investments in
food and agricultural research and extension. Federal funding for food
and agricultural research, extension and education has been essentially
flat for over 20 years despite much greater demonstrated needs, and has
reportedly declined by about 25 percent in real terms since 2003. At
the same time support for other Federal research has increased
substantially. Our nation's competitiveness in global markets is at
risk, as investments in food and agricultural science by our global
competitors have been growing rapidly.
The 2008 and 2014 Farm Bills recommitted to an authorized level of
$700 million annually for AFRI. Yet 8 years later, for FY16,
appropriations were about $350 million. NCFAR is on record in support
of funding AFRI at the fully authorized level as soon as practicable.
Increases in AFRI should represent an addition to funding for REE
programs and not come at the expense of other REE programs. NCFAR is
expressing support for $375 million in FY17, the same level reported
out by both the House and Senate Appropriations Committees. We urge the
Congress to include that amount in any final budget reconciliation. Our
position on FY18 funding for the REE mission, including AFRI, is
currently under development.
Increased Federal investments in the USDA, REE mission area will
lead to advances and breakthroughs in agricultural productivity,
improved animal, plant and soil health, and nutrition and lead to
healthier citizens, a healthier agricultural economy, and a stronger
and more globally competitive America.
Tools provided through publicly funded research, extension and
education are needed to help achieve safer, more nutritious, convenient
and affordable foods delivered to sustain a well-nourished, healthy
population; more efficient and environmentally friendly food, fiber and
forest production; improved water quality, land conservation, wildlife
and other environmental conditions; less dependence on non-renewable
sources of energy; expanded global markets and improved balance of
trade; and more jobs and sustainable rural economic development.
Societal demands and expectations placed upon the food and
agricultural system are ever-changing and growing. Examples of current
and future needs include addressing bio-security; food-linked health
costs; development of vaccines and diagnostics, antibiotics, de-
wormers, antifungals and parasiticides, antimicrobial use strategies,
control and therapy for diseases and infections, transboundary disease
and foreign animal disease; environment and conservation; water
quality; farm income and rural revitalization; biofuels and climate
change; the increasing world demand for food and fiber and improved
diets; and needed advances in biotechnology and genetic resources
research. A United Nations report projects that we will need to double
food production to feed nine billion people by 2050, and that 70
percent of the increase must come through research developing new
technologies and increased productivity.
We appreciate the longstanding support this Subcommittee, the full
Committee and its Members have demonstrated over the years to authorize
and oversee implementation of a strong research title that can compete
more effectively in the funding process, both within the Administration
and in the Congress.
NCFAR looks forward to working as a customer-led coalition with
this Subcommittee, the full Committee, Congress, the Administration and
other stakeholders to help ensure that the USDA REE mission moves
forward as envisioned and receives the resources and funding needed to
achieve scientific outcomes that are necessary for the food and
agricultural sector to address multiple demands, challenges and
expectations.
I appreciate the opportunity to share our views.
Attachments
Witness Disclosure Form.*
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*The documents referred to are retained in Committee file.

Wilkins Biography.*
Attachment 3
National Coalition for Food and Agricultural Research Members List

Member Organizations

Academy of Nutrition and Dietetics International Food Information
American Pulse Association and USA Council (IFIC)
Dry Pea and Lentil Foundation Iowa State University--CALS
Agricultural Retailers Association Kansas State University
(ARA)
American Seed Trade Association Michigan State University
(ASTA) Mississippi State University
American Society for Horticultural Monsanto
Science (ASHS) National Association of State
American Society for Nutrition Departments of Agriculture (NASDA)
(ASN)
American Society of Agricultural National Association of Wheat
and Biological Engineers ASABE) Growers (NAWG)
American Society of Agronomy (ASA) National Corn Growers Association
American Society of Animal Science (NCGA)
(ASAS) National Council of Farmer
American Society of Plant Cooperatives (NCFC)
Biologists (ASPB) National Grain and Feed Association
American Soybean Association (ASA) (NGFA)
American Veterinary Medical National Oilseed Processors
Association (AVMA) Association
National Pork Producers Council
Animal Agriculture Alliance Animal National Potato Council
Health Institute (AHI) Noble Research Institute, LLC
Association of American Veterinary North American Millers' Association
Medical Colleges (AAVMC) (NAMA)
Biotechnology Innovation North Central Regional Association
Organization (BIO) of State Agricultural Experiment
Cargill Station Directors (NCRA)
CoBank Northeastern Association of State
Corn Refiners Association Agricultural Experiment Station
Council for Agricultural Science & Directors (NERA)
Technology (CAST) SoAR Foundation
Council for Biotechnology Soil Science Society of America
Information (CBI) (SSSA)
Council on Food, Agricultural, and Southern Association of
Resource Economics (C-FARE) Agricultural Experiment Station
Directors (SAAESD)
Sustainable Agriculture Coalition
(SAC)
CropLife America Syngenta
Crop Science Society of America The Cotton Foundation
(CSSA)
Experiment Station Committee on The Fertilizer Institute
Organization & Policy (ESCOP) The IR-4 Project
Extension Committee on Organization University of Arkansas
& Policy (ECOP) University of Idaho
Farm Foundation University of Kentucky
Federation of American Societies University of Nebraska
for Experimental Biology (FASEB) University of Tennessee
FASS, Inc. Weed Science Society of America
Illinois Farm Bureau (WSSA)
Institute of Food Technologists Western Association of Agricultural
(IFT) Experiment Station Directors
(WAAESD)

Individual Members

Dr. Jerry Baker Dr. John Patrick (Pat) Jordan
Dr. Gale Buchanan Dr. Martin A. Massengale
Dr. Nancy M. Cox Kristina Owens
Dr. William Danforth Michael Newman, D.V.M.
Kellye Eversole Dr. Fred Stormshak
Dr. Barbara Glenn

Sponsors

Academy of Nutrition and Dietetics Experiment Station Committee on
Agronomy, Crop and Soil Science Organization & Policy (ESCOP)
Societies Extension Committee on Organization
American Bakers Association & Policy (ECOP)
American Phytopathological Society Institute of Food Technologists
American Seed Trade Association Michael Newman, D.V.M.
American Society of Plant National Council of Farmer
Biologists Cooperatives (NCFC)
Bayer CropScience
Biotechnology Innovation National Farmers Union
Organization (BIO) National Milk Producers Federation
Corn Refiners Association National Oilseed Processors
Association
Council for Agricultural Science North American Millers' Association
and Technology (CAST) (NAMA)
Council for Biotechnology Riley Memorial Foundation
Information (CBI) Syngenta
Council on Food, Agricultural, and United Soybean Board
Resource Economics (C-FARE) University of Wyoming
CropLife America Weed Science Society of America
Dr. William Danforth Western Skies Strategies
Eversole Associates

7/10/2017.

Attachment 4
`LunchNLearn' Hill Seminar Series Highlights
http://www.ncfar.org/Hill_Seminar_Series.asp

Goal: Inform Hill Staff & other policy stakeholders about the value
of public investment in food & ag research through hill seminars
featuring leading edge researchers on topics of high interest. Helps
staff make more informed recommendations about federal funding for Food
and Ag RE&E.

478 attendees at 6 seminars in 2017. Over 8,300 attendees
over past 12+ years through 130 seminars.

Leading presenters from over 60 institutions (http://
ncfar.org/HSS_Past_Speakers_Institutions.pdf) across the
nation-wide range of disciplines and topics.

(http://www.ncfar.org/Hill_Seminar_Series_2017.asp)
2017 Titles
Farm Economy Update--Pressures on Repayment & Spending * Plant
Breeding and Genetics Accelerating the Path To Improving Public Health
Through Food Based Solutions Robotic Weed Wars * Digital Agriculture *
Why Does Honey Bee Health Matter?
2017 Lineup` (http://www.ncfar.org/Hill_Seminar_Series_2017.asp)
---------------------------------------------------------------------------
`Editor's note: the hyperlinked presentations have been retained in
Committee file.
---------------------------------------------------------------------------
Why Does Honey Bee Health Matter? (http://www.ncfar.org/
HSS_20170619_
Presentation.pdf)--The Science Surrounding Honey Bee Health Concerns
and What We Can Do About It, Dr. Marla Spivak, U. of Minnesota (June
19-146).
Digital Agriculture (http://www.ncfar.org/
HSS_20170612_Presentation.pdf)--Technology Innovation in Complex
Production Environments, Dr. Harold van Es, Cornell (June 12-62).
Robotic Weed Wars (http://www.ncfar.org/
HSS_20170522_Presentation.pdf)--A New Game, New Players, New Rules, Dr.
Steven Fennimore, UC-Davis (May 22-43).
Accelerating the Path to Improving Public Health Thr[o]ugh Food
Based Solutions (http://www.ncfar.org/HSS_20170512_Presentation.pdf)--
Leveraging Collaborations between Government and Academia to Create a
More Convenient and Healthful Food Supply, Dr. Mario Ferruzzi, North
Carolina State; and Dr. Janet Novotny, USDA, ARS (May 12-45).
Plant Breeding and Genetics (http://www.ncfar.org/
HSS_20170322_Program.
pdf)--The Need for Ag Innovation to Sustainably Feed the World, Dr.
Stephen Baenziger, U. of Nebraska-Lincoln; and Dr. Rita Mumm, U. of
Illinois (Mar 22-62).
Farm Economy Update_Pressures on Repayment & Spending (http://
www.ncfar.org/Hill_Seminar_Series_2017.asp)a--Cooperative Extension
Translates Scientific Research to Help Farmers and Ranchers Manage
Financial Risk, Dr. Jason Henderson, Purdue; Dr. Allen Featherstone,
Kansas State; and Dr. Jeff Hopkins, USDA, ERS (Feb 13-120).
---------------------------------------------------------------------------
aEditor's note: the Farm Economy Update--Pressures on Repayment &
Spending subject is broken up into three presentations: Henderson
(http://www.ncfar.org/HSS_20170213_Presenta
tion_Henderson.pdf); Featherstone (http://www.ncfar.org/
HSS_20170213_Presentation_Fea
therstone.pdf); Hopkins (http://www.ncfar.org/
HSS_20170213_Presentation_Hop
kins.pdf).
---------------------------------------------------------------------------
2016 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2016.asp)
Implications of Trade Disruptions (http://www.ncfar.org/
HSS_20161208_Pres
entation.pdf)--The Impact of Asynchronous Trade Approvals for Biotech
Crops on Agricultural Sustainability, Trade and Innovation, Dr.
Nicholas Kalaitzandonakes, U. of Missouri (44).
The Latest Innovation in Plant Breeding (http://www.ncfar.org/
HSS_20160919_Presentation.pdf)--Genome Editing, Dr. Anne Blechl, USDA,
ARS (65).
Give Me a Break! (http://www.ncfar.org/
HSS_20160722_Presentation.pdf)--Using Forest Windbreaks to Reduce Crop
Gene Flow, Dr. Carol Auer, U. of Connecticut (70).
The Economics of Drought--Realities and Policy Choices,b Dr. Rob
Johannson, USDA; Dr. Ariel Dinar, UC-Riverside; & Dr. Steve Wallander,
USDA, ERS (100).
---------------------------------------------------------------------------
bEditor's note: the Realities and Policy Choices presentation is
not posted on the NCFAR website; however, the program has been retained
in Committee file and is available at: (http://www.ncfar.org/
HSS_20160711_Program.pdf).
---------------------------------------------------------------------------
Climate Smart Precision Agriculture (http://www.ncfar.org/HSS_2016
0627_Presentation.pdf)--Dr. Raj Khosla, Colorado State (91).
Food From Thought (http://www.ncfar.org/
HSS_20160620_Presentation.pdf)--ARS Mission, Programs and Challenges,
Dr. Chavonda Jacobs-Young, USDA, ARS (101).
Losing Track! (http://www.ncfar.org/
HSS_20160610_Presentation.pdf)--Do You Really Know from Where Your
Lunch has Come?, Tejas Bhatt, Institute of Food Technologists (75).
Including the U.S. Economy By Adding Fiber (http://www.ncfar.org/
HSS_20160429_Presentation.pdf)--Challenges of Adding Industrial Hemp
Production, Dr. Ron Turco, Purdue & Dr. Janna Beckermann, Purdue (51).
U.S.-Cuba Agricultural Trade (http://www.ncfar.org/
HSS_20160321_Presenta
tion1.pdf)--Economic Policy Implications of a Changing Trade
Environment, Bryce Cook, USDA, ERS & Dr. William Messina, U. of Florida
& Dr. Luis Ribera, Texas A&M (84).
More Crop for the Drop! (http://www.ncfar.org/
HSS_20160208_Presentation.
pdf)--Technology Implementation in Agriculture for Enhancing Crop Water
Productivity, Dr. Suat Irmak, U. of Nebraska-Lincoln (71).
Preventing the Next Kudzu (http://www.ncfar.org/
HSS_20160222_Presenta
tion.pdf)--A Life-Cycle Approach to Low-Invasion Potential Bioenergy
Production, Dr. Jacob Barney, Virginia Tech (62).
2015 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2015.asp)c
---------------------------------------------------------------------------
cEditor's note: the Can Staple Food Crops Reduce the Incidence of
Chronic Diseases in Humans? subject, not listed in this document (but
listed on the NCFAR website) presentation entitled, Dry Edible Beans
Can Reduce Chronic Diseases in Humans and Improve Human Nutrition, Mark
Brick, Colorado State University; has been retained in Committee file
and is available at: http://www.ncfar.org/
HSS_20151016_Presentation.pdf.
---------------------------------------------------------------------------
Battling the Wicked Problem of Herbicide Resistance (http://
ncfar.org/HSS_20151204_Presentation.pdf)--The Human Dimensions of
Herbicide Resistance Evolution, Dr. David Shaw, Mississippi State (55).
Partners for Life (http://ncfar.org/
HSS_20151113_Presentation.pdf)--The Untapped Potential of Plant
Microbiomes in Agriculture, Dr. Jan Leach, Colorado State (53).
Choices (http://ncfar.org/HSS_20151105_Presentation.pdf)--Improving
Nutrition Among Low-Income and Food-Insecure Individuals, Dr. David
Just, Cornell (85).
Role of U.S. Agriculture in Chinese Markets (http://ncfar.org/HSS_
20151026_Presentation.pdf)--Factors Affecting Chinese Food and
Agricultural Markets,e Dr. Holly Wang, Purdue (106).
---------------------------------------------------------------------------
eEditor's note: the Glauber presentation, not listed in this
document (but listed on the NCFAR website) Trends in China Grains,
Oilseeds and Fibers S&D, has been retained in Committee file and is
available at: http://www.ncfar.org/
HSS_20151026_Presentation_Glauber.pdf.
---------------------------------------------------------------------------
Warning: This Food Label May Cause Confusion (http://ncfar.org/
HSS_20151005_Presentation_Messer.pdf)--Process Labeling of Food:
Consumer Behavior, the Ag Sector and Policy Recommendations, CAST Issue
Paper, Dr. Kent Messer, U. of Delaware (100).
Biotechnology: Great Potential Stifled By Good Intentions (http://
ncfar.org/HSS_20151005_Program_Folta.pdf)--Arresting Application of
Genetic Engineering Solutions,f Dr. Kevin Folta, U. of Florida (100).
---------------------------------------------------------------------------
fEditor's note: the hyperlink is not to the Arresting Application
of Genetic Engineering Solutions presentation; the title of the linked
presentation is Reframing Agricultural Biotechnology Communication.
---------------------------------------------------------------------------
The Future of Food: Optimal Or Orwellian? (http://ncfar.org/
HSS_2015
0921_Presentation.pdf)--How Plant Breeding Decisions Made Today Will
Determine the Future of Food, Dr. William F. Tracy, U. of Wisconsin
(66).
What Are Children Eating at School Lunch? (http://ncfar.org/
HSS_2015
0911_Presentation.pdf)--5 Years After the Healthy, Hunger-Free Kids
Act, Dr. Bethany Yon, U. of Vermont (68).
Climate Change: So What's Up With Dinner? (http://ncfar.org/
HSS_20150720_Presentation.pdf)--Climate Changes and Its Impact on our
Diverse and Abundant Food Supply, Dr. Michael Hoffmann, Cornell
University (39).
Bees on Their Knees? (http://ncfar.org/HSS_20150615_Presentation_
Pettis.pdf)--Factors Affecting Honey Bees and Other Pollinators,g Dr.
Kevin Hackett and Dr. Jeff Pettis, USDA, ARS (120).
---------------------------------------------------------------------------
gEditor's note: the subject Bees on Their Knees? has two
presentations; the Pettis presentation, hyperlink above, and the
Hackett presentation which has been retained in Committee file and is
available at: http://www.ncfar.org/
HSS_20150615_Presentation_Hackett.pdf.
---------------------------------------------------------------------------
A Case For Soil Health (http://ncfar.org/
HSS_20150518_Presentation.pdf)--Opportunities to Change the Face of
Agriculture and How We Feed Our Nation, Bianca Moebius-Clune, USDA,
NRCS (63).
Waste to Wisdom (http://ncfar.org/HSS_20150420_Presentation.pdf)--
Using Agriculture and Forestry Residues to Create Bioenergy and
Biochar, Dr. Deborah Page-Dumroese, USDA, USFS (45).
Trends in Farms, Food and Markets (http://ncfar.org/
HSS_20150303_Pres
entation.pdf?v2)h--USDA's Economic Research Service Findings, Dr. Mary
Bohman, Administrator, USDA, ERS (71)
---------------------------------------------------------------------------
hEditor's note: the hyperlink for the Trends in Farms, Food and
Markets subject is incorrect it is (http://www.ncfar.org/
HSS_20150323_Presentation.pdf).
---------------------------------------------------------------------------
The Wisdom of Crowds (http://ncfar.org/
Hill_Seminar_Series_2015.asp)]--Can the Public Guide Research and
Extension Programs?, Dr. Robert Kallenbach, U of Missouri (26).
---------------------------------------------------------------------------
]Editor's note: the hyperlink for the The Wisdom of Crowds subject
is incorrect it is (http://www.ncfar.org/
HSS_20150303_Presentation.pdf?v2).
---------------------------------------------------------------------------
2014 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2014.asp)
You Can't Eat What Doesn't Grow (http://ncfar.org/
HSS_20141117_Presenta
tion.pdf)--The Contributions of Pesticides to Pest Management in
Meeting the Global Need for Food Production by 2050, Dr. Stephen
Weller, Purdue (66).
NIFA Vision (http://ncfar.org/HSS_20140923_Presentation.pdf)--User
Inspired Science Transforming Lives, Dr. Sonny Ramaswamy, USDA, NIFA
(62).
Cornucopia in the Cities (http://ncfar.org/
HSS_20140728_Presentation.pdf)--Growing Urban Agriculture with Trees,
Gary Bentrup, MLA, U.S. Forest Service, National Agroforestry Center
(72).
From Farm to Cell (http://ncfar.org/
HSS_20140718_Presentation.pdf)--Integrating Agriculture, Food and
Nutrition Sciences to Develop Improved Food Products Delivering
Nutritional Quality, Dr. Mario Ferruzzi, Purdue (48).
Carving the Path for the Nation's Future for Natural Resources
(http://ncfar.org/HSS_20140616_Presentation.pdf)--A Science, Education
and Outreach Roadmap, Dr. John Hayes, Colorado State (64)
Farm Animal Research in Crisis (http://ncfar.org/
HSS_20140606_Presenta
tion.pdf)--A Neglected Research Resource for Advancing Human Health and
Animal Agriculture, Dr. James Ireland, Michigan State (74).
Shifting Winds in International Agricultural Development (http://
ncfar.org/HSS_20140519_Presentation.pdf)--What's Behind Africa's
Turnaround?, Dr. William Masters, Tufts University (18).
Detours on Road to Sustainable Feedstock Production for Cellulosic
Biofuel (http://ncfar.org/HSS_20140508_Presentation.pdf)--Assessing
Multidimensional Policy Approaches, Dr. Madhu Khanna, U. of Illinois
(23).
To Label Or Not To Label (http://ncfar.org/
HSS_20140428_Presentation.pdf)--The Potential Impacts of Mandatory
Labeling for Genetically Engineered Food, CAST Report, Dr. Alison Van
Eenannaam, UC-Davis (67).
Cooperative Extension (http://ncfar.org/
HSS_20140408_Presentation.pdf)--Innovation for the Next Century, Dr.
Jimmy Henning, U. of Kentucky (32).
Easy As ABC, 123! (http://ncfar.org/
HSS_20140331_Presentation.pdf)--Integrating Nutrition and Activity in
Early Childhood Learning to Build Lifelong Healthy Habits, Laura
Bellows, Ph.D., Colorado State (40).
More Crop for the Drop (http://ncfar.org/
HSS_20140324_Presentation.pdf)--A Global Search Through the National
Plant Germplasm System for Drought Tolerant Soybeans, Tommy Carter,
Ph.D., USDA, ARS (45).
2013 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2013.asp)
From Childhood Obesity to SNAP (http://ncfar.org/
HSS_20131204_Presenta
tion.pdf)--Opportunities and Challenges in Nutrition Research, Robert
M. Russell, M.D. Former Special Advisor to NIH
Did a Cow Just Eat My Dinner? (http://ncfar.org/
HSS_20130923_Presenta
tion.pdf)--Animal Feed vs. Human Food: Challenges in Sustaining Animal
Ag Toward 2050, Dr. Jude Capper, Montana State.
Got Trees? (http://ncfar.org/HSS_20130909_Presentation.pdf)--
Building Climate-Ready Agriculture, Dr. Michele Schoeneberger, USFS.
Safely Crossing the Food Chain (http://ncfar.org/
HSS_20130801_Presenta
tion.pdf)--The Economics of Reducing Food Risk, Dr. Julie Caswell, U.
of Massachusetts Amherst.
Ag Sustainability, Field to Market (http://ncfar.org/
HSS_20130715_Presenta
tion.pdf)--Role of Sustainable Agriculture in Global Economic
Competitiveness, Dr. Marty Matlock, U. of Arkansas.
Goldilocks and Risk Management (http://ncfar.org/
HSS_20130624_Presenta
tion.pdf)--Impact of the Precautionary Principle on Feeding Current and
Future Generations, Dr. Gary Marchant, Arizona State U.
Applied Bee-Nomics (http://ncfar.org/
HSS_20130617_Presentation.pdf)--How the Honey Bee Project is
Revolutionizing Pollinator Research, Dr. May Berenbaum, University of
Illinois.
Market Forces Or Regulation? (http://ncfar.org/
HSS_20130513_Presentation.
pdf)--Organization of Ag & Natural Resource Markets, Dr. Rachael
Goodhue, UC-Davis.
Watershed View of Ag Conservation (http://ncfar.org/
HSS_20130426_Presenta
tion.pdf)--Effectiveness of Ag Conservation Practices at the Watershed
Scale, Dr. Deanna Osmond, North Carolina State.
Safe Food (http://ncfar.org/HSS_20130408_Presentation.pdf)--
Research to Practice, Dr. Elizabeth Andress, North Carolina State (57).
Balancing Nutrients: A Growing Need (http://ncfar.org/
HSS_20130318_Pres
entation.pdf)--Food, Fuel & Plant Nutrient Use in the Future, Dr. David
Zilberman, UC-Berkeley & Dr. Bruce Dale, Michigan State (47).
Invasive Weeds and Bioenergy Crops (http://ncfar.org/
HSS_20130307_Pres
entation.pdf)--Economic Boon or Environmental Disaster?, Dr, Jacob
Barney, Virginia Tech.
2012 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2012.asp)
The Next 40 Years (http://ncfar.org/
HSS_20120928_Presentation.pdf)--The Challenge of Feeding 9.6 Billion,
Dr. Robert Thompson, Johns Hopkins U. (80).
Out of the Trash and Onto Trays (http://ncfar.org/
HSS_20120914_Presenta
tion.pdf)--Increasing Fruit & Vegetable Consumption in the School Lunch
Program, Dr. David R. Just, Cornell (75).
Location, Location, Location! (http://ncfar.org/
HSS_20120730_Locating_Buff
ers.pdf)--Putting Forested Buffers in Their Place, Dr. Michael Dosskey,
U.S. Forest Service (87).
What Would Lincoln Do? (http://ncfar.org/
What_Would_Lincoln_Do_7_12_12.
pdf)--The Critical Value of Extension in Translating Agricultural
Research, Dr. Douglas Steele, Montana State (104).
Safeguarding the Seeds of Our Food Security (http://ncfar.org/
Germplasm_
Presentation_062512.pdf)--The U.S. National Plant Germplasm System, Dr.
Peter Bretting, USDA, ARS (109).
Healthy Animals, Confident Consumers (http://www.ncfar.org/Animal_
Health_Food_Safety_Hurd_FINAL.pdf)--The Direct Relationship Between
Animal Health and Food Safety Outcomes, Dr. H. Scott Hurd, Iowa State
(79).
American Agriculture Cooperates (http://www.ncfar.org/Economics_Re
search_and_Structure_of_Farmer_Owned.pdf)--Economics, Research and
Structure of Farmer Owned Cooperatives, Dr. Phil Kenkel, Oklahoma State
(63).
Hands-On Science in the Wild (http://www.ncfar.org/
Lila041612.pdf)--Discovery of the Innate Plant-Protective Properties of
Plants, and Delivery to the U.S. Marketplace and Beyond, Dr. Mary Ann
Lila, North Carolina State (57).
A Diagnosis of Troubled Waters (http://www.ncfar.org/
SWQ_Huggins_Pres
entation.pdf)--Impacts of Ag Land Management Change on Water Quality,
Dr. Donald Huggins, Kansas Biological Survey, U. of Kansas (81)
Can Processed Foods Be Healthy? (http://www.ncfar.org/
food_processing_pres
entation.pdf)--How Do Processed Foods Fit into a Healthy Lifestyle, Dr.
Eric Decker, U. of Massachusetts, Amherst (96).
Invasion Persuasion (http://www.ncfar.org/
Leafy_Spurge_022712.pdf)--A Review of a Successful USDA Program For
Defeating a Wide-Spread Invader: TEAM Leafy Spurge, Dr. Rodney Lym,
North Dakota State (48).
Putting Energy In To Get Energy Out (http://www.ncfar.org/Corn-
Soybean_Energy_CAST_012312.pdf)--Energy Issues Affecting Corn/Soybean
Systems: Challenges for Sustainable Production, Dr. Doug Karlen, USDA,
ARS (82).
2011 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2011.asp)
Clearing the Air on Greenhouse Gases_Can Ag Help? (http://
www.ncfar.
org/Climate_Change_103111.pdf)--Carbon Sequestration and Greenhouse Gas
Fluxes in Ag: Challenges and Opportunities, Dr. Jack Morgan, USDA, ARS.
Agriculture_Science for All Americans (http://www.ncfar.org/
Soybean_Tiffany10_24_11.pdf)--Promoting Ag Science Through the Food and
Ag Research Experience for Teachers (RET) Program, Drs. Jon Peterson &
Tiffany Heng-Moss, U. of Nebraska.
Providing for Tomorrow's Food Days--The Critical Role of Food and
Agricultural Research,G Dr. Lowell Catlett, New Mexico State.
---------------------------------------------------------------------------
GEditor's note: the The Critical Role of Food and Agricultural
Research presentation is not posted on the NCFAR website; however, the
program has been retained in Committee file and is available at:
(http://www.ncfar.org/NC-FAR_Program_093011.pdf).
---------------------------------------------------------------------------
The Air We Breathe (http://www.ncfar.org/MITLOEHNER_091911.pdf)--
Air Issues Associated with Animal Agriculture, Dr. Frank Mitloehner,
UC-Davis.
Mapping for the Future of Our Food (http://www.ncfar.org/NC-
FAR_Semi
nar_Program_072511.pdf)--Harvesting Opportunities from Lessons Learned
in the Maize (Corn) Genome Project,F Dr. Patrick Schnable, Iowa State.
---------------------------------------------------------------------------
FEditor's note: the Harvesting Opportunities from Lessons Learned
in the Maize (Corn) Genome Project presentation is not hyperlinked in
the document; however, the program has been retained in Committee file
and is available at: (http://www.ncfar.org/Schnable-C-FAR.pdf).
---------------------------------------------------------------------------
i-Trees (http://www.ncfar.org/2011_7_11_iTree_CFAR.pdf)--
Maintaining Health-
y Cities, Dr. David J. Nowak, USDA Forest Service.
Guess What's Coming to Dinner? (http://www.ncfar.org/
Science_and_Regula
tion_of_Food_from_GE_Animals_No_Intro.pdf)--The Science and Regulation
of Food from Genetically Engineered Animals, Dr. Eric Hallerman,
Virginia Tech.
Public Research Agenda for Agriculture (http://www.ncfar.org/
NCFAR_Me
dia_Advisory_REE_Action_Plan_0606.pdf)--USDA's Action Plan for
Research, Education & Extension, Under Sec. Cathie Woteki, USDA.
---------------------------------------------------------------------------
Editor's note: the USDA's Action Plan for Research, Education &
Extension presentation is not hyperlinked in the document; however, the
program has been retained in Committee file and is available at:
(http://www.ncfar.org/6-6-11_NC-FAR_-_Woteki.pdf).
---------------------------------------------------------------------------
Food Fraud (http://www.ncfar.org/MSU_acapp_Spink_NCFAR_2011.pdf)--
Do You Know What You Are Eating?, Dr. John Spink, Michigan State.
Eating Out and Overeating (http://www.ncfar.org/
Lusk_presentation_050211.
pdf)--Effects of `Fat Tax' and Calorie Information on Restaurant Food
Choices, Dr. Jayson Lusk, Oklahoma State.
We Reap What We Sow (http://www.ncfar.org/AgResearch_FINAL.pdf)--
Better Future Through Public Ag Research, Dr. George Norton, Virginia
Tech.
Waging War On Invasive Grasses (http://www.ncfar.org/
Wa_DC_talk_Feb_
%2711_FINAL.pdf)--Preventing--Not Just Controlling--Rangeland Fires in
the West, Dr. Richard Mack, Washington State U.
2010 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2010.asp)
---------------------------------------------------------------------------
Editor's note: the presentations for the 2005-2010 Lineups were
not included in the submitted document; however, the presentations are
linked on the NCFAR website and were available they will be included in
this publication and retained in Committee file.
---------------------------------------------------------------------------
Turning Today's Crops Into Tomorrow's Fuel (http://www.ncfar.org/
NC-FAR_Presentation_091310.pdf)--Infrastructure Requirements for
Harvest, Transportation and Storage, Dr. Jerry Fruin, U. of Minnesota.
Dynamic Duo! (http://www.ncfar.org/AgroforestryNCFARSeminar_FINAL.
pdf)--Agroforestry, Sustainable Agriculture Through the Blending of
Trees and Agriculture, Andy Mason, USDA AgroForestry Research Center.
Solving Africa's Weed Problem (http://www.ncfar.org/
NCFAR_Africa.pdf)--Key to Improving Women's Lives and Increasing Food
Production, Leonard Gianessi, CropLife Foundation
Local Foods Across the Country and Close to Home--The Implications
of Local Foods Supply Chains, Dr. Robert King, U. of Minnesota.
Animal Rights and Wrongs (http://www.ncfar.org/IP46Thompson.pdf)--
Ethical Implications of Animal Biotechnology: Considerations for Animal
Welfare Decision Making, Dr. Paul Thompson, Michigan State.
From Specialized Farming To Your Fork (http://www.ncfar.org/
HillAgri
culture_Structure.pdf)--Implications for Competition and the Changing
Structure of Agriculture, Dr. Brian Buhr, U. of Minnesota.
The Road To 2012--Budgeting to Provide Sound Science to Meet Future
Challenges, Under Secretary Molly Jahn, USDA.
One Fish, Two Fish, Food Fish, Feed Fish (http://www.ncfar.org/
Mar22_N-CFAR_Briefing_032210.pdf)--Meeting Nutritional Challenges in
Aquaculture & Aquatic Resources Management, Dr. Jesse Trushenski,
Southern Illinois U.
Feeding Our Future--Role of Research in Updating Child Nutrition
Programs, Dr. Suzanne Murphy, U. of Hawaii.
Agriculture's Perfect Storm--Agricultural Productivity Strategies
for the Future, Dr. Gale Buchanan, U. of Georgia.
World Security At Risk? (http://www.ncfar.org/
US_vulnerability_to_Ug99-Jan_2010.pdf)--The Race Against Ug99 Stem Rust
in Wheat, Dr. Jim Peterson, Oregon State.
2009 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2009.asp)
The Green Connection (http://www.ncfar.org/200_%2003-Hill_seminar-
Moon_
b.pdf)--Nanotechnology and Wood, Dr. Robert Moon, USDA, FS, U.S. Forest
Products Lab, Madison, WI & Purdue.
One Health? (http://www.ncfar.org/
April_17_Seminar_Presentation.pdf)--Ag Research Protecting Human,
Animal, and Enviro. Health, Dr. Marguerite Pappaioanou, AAVMC
Porcine Nirvana?--Scientific Assessment of the Welfare of Dry Sows
Kept in Individual Accommodations, Dr. John McGlone, Texas Tech.
Are Local Food Consumers Civic Minded Or Seeking Assurances?
(http://www.ncfar.org/DC-presentation.pdf)--Policy Implications &
Research Agenda, Dr. Dawn Thilmany McFadden, Colorado State.
Soybean Fields Forever--Sustainability of U.S. Soybean Production:
Conventional, Transgenic and Organic Production Systems, Dr. Bryan
Young, Southern Illinois University.
When Good Food Goes Bad--Food Safety and Fresh Produce: An Update,
Dr. William McGlynn, Oklahoma State.
Food Traceability--Finding Our Way (And Our Food), Dr. Chris
Thompson, U. of Kentucky.
Animal Productivity And Genetic Diversity--Cloned and Transgenic
Animals, Dr. Robert Wall, USDA-ARS and University of Maryland.
The Endangered Species Act--Interfacing With Agricultural and
Natural Ecosystems, Bernalyn McGauhey, Compliance Services
International.
Water, People and the Future--Water Availability for Agriculture in
the U.S., Dr. Sharon Megdal, University of Arizona.
2008 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2008.asp)
Blowin' In The Wind--Implications of Gene Flow in Commercial Use of
Biotech-derived Crops (CAST Issue Paper), Dr. David Gealy, USDA, ARS,
Dale Bumpers, Natl. Rice Resource Center.
Choices_Climate Change & Agriculture (http://www.ncfar.org/
Presentation_1591McCarl_Sohngen-3-31.pdf)--Outlook & Investigation on
Climate Change, Ag & Natural Resources, Dr. Bruce McCarl, Texas A&M &
Dr. Brent Sohngen, Ohio State.
Shots Are for the Birds--Avian Influenza Vaccines Using DNA Tech
(CAST Reports) Dr. Karen Burns Grogan, Chicken Scratch, LLC & Dr.
Robert Silva, USDA, ARS.
Water, Water Everywhere & Not a Drop To Spare (http://
www.ncfar.org/June_9_Presentation.pdf)--Issues for Turfgrasses in Urban
Landscapes, (CAST Report), Dr. Michael Kenna, Director, Green Section
Research, USGA.
You Humans Think You're Thirsty? Try Life As A Plant! (http://
www.ncfar.org/Specht_July_14_Presentation.pdf)-The Quest to Improve
Crop Plant Use & Drought Tolerance, Dr. James Specht, U. of Nebraska-
Lincoln.
Food Nanoscience??? (http://www.ncfar.org/
Nanotech&Food_Presentation0908
08.pdf)--How Tiny Particles Have a Big Impact, Dr. Bernadene Magnuson,
University of Toronto & Cantox Health Services.
$Valuing Your Diet--Effects of Rising Food Prices on Food
Insecurity & Diet Quality, Dr. Parke Wilde, Tufts University & Deborah
Rhoades, R.D., University of Maryland Extension.
From Stump to Pump--Cellulosic Biofuels from America's Forests
Ready to Make the Leap Forward, Dr. Theodore Wegner, USDA Forest
Service, Forest Products Laboratory.
Living Off the Fat of the Land--Convergence of Energy &
Agriculture: III. Considerations in Biodiesel Production, Dr. Jon Van
Gerpen, University of Idaho.
2007 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2007.asp)
Biofuel Feedstocks (http://www.ncfar.org/
Presentation_DiTomaso_11_09_
07.pdf)--The Risk of Future Invasions, CAST Report, Dr. Joseph
DiTomaso, UC-Davis & Convergence of Ag & Energy (http://www.ncfar.org/
Presentation_Fales_11_09_07.pdf)--Cellulosic Biomass for Biofuels, CAST
Report, Dr. Steven L. Fales, Iowa State University.
What You Don't Know Won't Hurt You!--CAST Report on Probiotics &
Human Health, Dr. Mary Ellen Sanders, Dairy & Food Technologies,
Centennial, CO.
Wild Pigs and Spinach--Food Safety Microbiological Concerns of
Fresh Produce and Microbiological Issues, Imported Foods, Dr. Michael
Doyle, University of Georgia.
Our Vulnerablility To Animal Diseases (http://www.ncfar.org/
July_16_
2007_Presentation.pdf)--Zoonotic Diseases and Their Potential for
Infecting Humans, Dr. James Roth, Iowa State University.
If Pollinators Are In Trouble, So Are We!--Insect & Other Animal
Pollinators and Their Vital Role in Ag & Healthy Ecosystems, Dr. May
Berenbaum, University of Illinois.
Health May Be a Different Animal--CAST Report on the Role of
Transgenic Livestock in the Treatment of Human Disease, Dr. Carol L.
Keefer, University of Maryland.
Create-Ing a Better Future for Agriculture--CREATE-21, Dr. Robert
Steele, Penn State University & Dr. L. Washington Lyons, Association of
Extension Administrators.
Why a National Institute for Food and Agriculture--Fundamental
Research Benefiting Food, Fiber, Fuels and the Environment, Dr. William
Danforth, Washington U.-St. Louis West.
Cultivating Our Competitive Edge--Research, Extension and the
Future of Agriculture, Dr. Philip Pardey, University of Minnesota & Dr.
Julian Alston, UC-Davis.
2006 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2006.asp)
Agriculture Trade Policy--Responding to a Moving Target, Dr. David
Blandford, Penn State University, Dept. of Agricultural Economics and
Rural Sociology.
Genomics? Bioinformatics? Translation Please!--Realizing the
Promises of Bioinformatics, Dr. William Beavis, Chief Scient. Ofcr.,
Natl. Ctr. for Genome Research, Santa Fe, NM.
Purple Carrots--A Kaleidoscope of Carrots for Nutritional Needs and
Market Niches, Dr. Philipp Simon, USDA, ARS & Professor, Dept of
Horticulture, University of Wisconsin.
Eden Works! (http://www.ncfar.org/EDEN_Cong_Pres.pdf)--A National
Network In Disaster Readiness, Dr. Edwin Jones, EDEN Chair, North
Carolina State University.
Turning Green Into Yellow--Improving Plants for Use as Home-Grown
Biofuels, Dr. Kenneth Keegstra, Director, Plant Research Laboratory,
Michigan State U., Dept of Energy.
Drink the Best and Drive The Rest--Optimizing Biomass as a
Renewable Resource, Dr. Sharon Shoemaker, California Institute of Food
and Agricultural Research, UC-Davis.
Rebuilding the Food Chain for Nemo--An Integrated Approach to
Sustainability in Aquaculture, Dr. Wendy Sealey, Hagerman Fish Culture
Experiment Station, University of Idaho.
2005 Lineup (http://www.ncfar.org/Hill_Seminar_Series_2005.asp)
Mad Cows and Bt Potatoes: Global Public Goods In The Food System
(http://www.ncfar.org/Mad_Cows_and_Bt_Potatoes.ppt)--Dr. Laurian
Unnevehr, Department of Agricultural and Consumer Economics, University
of Illinois.
Powering An Enhanced Green Revolution With Protein-Packed Corn, Dr.
Daniel Gallie, Department of Biochemistry, University of California-
Riverside.
Down To Earth Science From Outer Space (http://www.ncfar.org/
May13Earth.ppt)--Applying NASA Technologies to Advance Agricultural
Science and Natural Resource Management, Dr. David Shaw, Mississippi
State University.
Energy_Our `Growing' Need (http://www.ncfar.org/
Apr11Bioenergy.ppt)--Expanding the Use of Biomass to Produce Renewable
Fuels and Biodegradable Plastics, Dr. Lonnie Ingram, University of
Florida.
Diet By Design--Nutrigenomics to Revolutionize Wellness and Disease
Management, Dr. John Milner, National Cancer Institute & Dr. Leena
Hilakivi-Clarke, Georgetown University.

The Chairman. Thank you, Mr. Wilkins.
Dr. Carrington, you are recognized for 5 minutes.

STATEMENT OF JAMES C. CARRINGTON, Ph.D., PRESIDENT, DONALD
DANFORTH PLANT SCIENCE CENTER, ST. LOUIS, MO

Dr. Carrington. All right, thank you. And good morning,
Chairman Davis, Ranking Member Lujan Grisham, and Members of
the Subcommittee.
My name is Jim Carrington, and I am the President of the
Donald Danforth Plant Science Center in St. Louis, Missouri. We
are a research-intensive organization of about 240 scientists
and staff, working every day to improve the human condition
through plant science. Thank you for the invitation to discuss
the vital role of research as you prepare for the next farm
bill.
First, let me state very clearly, providing food security
for a growing, changing world, while at the same time
preserving our natural resources, like water and soil, and
maintaining a healthy environment for this and future
generations, is among the grandest of grand challenges for the
21st century.
My colleagues and I believe we can meet this challenge, by
attracting the best minds to the problem, by continuing to grow
and support Federal investments in research, and by delivering
innovations to the marketplace through the private-sector.
The role of public investment by the USDA in research to
meet this challenge cannot be overstated. Past research in
agronomy, genetics, genomics, computer science, data science,
and many other fields, means that now we have technologies to
breed improved crops and livestock much more quickly and
effectively, to preserve more soil and water resources, to
reduce the cost of production, to maintain quality and
affordability for the consumer. These all start with
investments in fundamental science.
Publicly funded agricultural research, as has been pointed
out, has extensive economic payback, and as has been well
documented by USDA. And we can see a glimpse of future returns
just by looking in the neighborhood around the Danforth Plant
Science Center in St. Louis, where Federal research, private
capital, entrepreneurs, and community support have attracted
and grown nearly 40 high-tech, ag-tech companies just within
the past few years.
As you consider the next farm bill, I strongly encourage
recommitting to and strengthening research within USDA. And I
will restrict the remainder of my comments specifically about
competitive research funded through and supported by the
Agriculture and Food Research Initiative, or AFRI program,
within NIFA.
As the flagship USDA Competitive Grants Program, AFRI
should have a budget that reflects the program's broad scope
and responsibilities, and its mission that affects every U.S.
citizen. We stand with many other organizations in supporting
continued growth of competitive research funding, through
mechanisms that Congress determines to be most appropriate and
stable. Currently funding levels are modest, to put it plainly,
and not on par with other agencies like NIH that fund research
supporting other national priorities. To illustrate, I will
give you an example from the Danforth Center, consider that
over the past 2 calendar years, from January 2015 to present,
we have been awarded about $21.7 million in new competitive
Federal grants from three agencies; NSF, Department of Energy,
and the USDA through AFRI. Of that $21.7 million, only $1.1
million, or five percent, of those new awards came from the
AFRI program. This was not due to the funded topical areas,
which align extremely well with our center's mission and
capabilities, but rather to the modest size of the AFRI budget.
I have a few comments that we can talk about in more detail
later. They have to do with structural and managerial aspects
of AFRI. I would refer the Subcommittee to a 2015 National
Research Council report that I was honored to coauthor called
Spurring Innovation in Food and Agriculture: A Review of the
USDA Agriculture and Food Research Initiative Program.* We
pointed out many strengths of the program, and why it exists
and why it should remain, but we also made several
recommendations such as developing a dedicated leadership team
with sole responsibility for AFRI, and putting in place
stronger mechanisms to align the scientific community with
national priorities. We also recommended that AFRI reconsider
its indirect cost recovery policies, which are capped at 30
percent of overall awards. This funds only part of the real
costs to support AFRI-funded research. For example, for every
dollar that we receive in direct funding, the Center needs to
contribute 22 from other sources to fully fund the project.
That is non-sustainable for us and for other AFRI-recipient
organizations.
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*This report is retained in Committee file and available at:
https://download.nap.edu/cart/download.cgi?record_id=18652.
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Finally, I will make the case that competition for AFRI
funds should be on a level playing field, and that provisions
in the 2014 Farm Bill, which authorizes a dollar-for-dollar
matching requirement only for non-land-grant university
institutions, like the Danforth Center or Washington
University. We recommend that that be reconsidered in future
legislation and not be included.
So with that, I will thank you for listening, for inviting
me here this morning, and for inviting these remarks. Thank
you.
[The prepared statement of Dr. Carrington follows:]

Prepared Statement of James C. Carrington, Ph.D., President, Donald
Danforth Plant Science Center, St. Louis, MO
Good morning, Chairman Davis, Ranking Member Lujan Grisham, and
Members of the Subcommittee. My name is Jim Carrington and I am the
President of the not-for-profit Donald Danforth Plant Science Center in
St. Louis, Missouri. We are a research-intensive organization with over
240 scientists and staff working to improve the human condition through
plant science. I am also a scientist working to understand how plants
work, and to apply that knowledge in ways that help people and
communities. Thank you for the invitation to discuss the importance of
agricultural research and innovation as you prepare the next farm bill.
First, let me state this clearly: Among the most important Grand
Challenges of the 21st century is to provide food security to a
growing, changing world while, at the same time, preserving our vital
natural resources and maintaining a healthy environment for this and
future generations. I and my colleagues at the Danforth Center and
across the nation strongly believe we can meet this challenge by
attracting the best minds to the problem, by continuing and growing
Federal investments in research, and by delivering innovations to the
marketplace through the private-sector.
The role of public investment in research by the USDA--through
intramural, cooperative state, and competitive funding--in fueling
agricultural advances cannot be overstated. Just over my lifetime, that
is since 1960, U.S. agricultural productivity (Total Factor
Productivity) has more than doubled, meaning that we are producing over
twice as much with the same total inputs. This was due almost entirely
to technological advances and innovations, based on science!
Let's examine this in a different way. What would happen if we
eliminated all of those technological advances and brought back the
U.S. farm of 1960 to serve our needs today?

We would need over twice as much farm and pasture land
compared to what we use today, or roughly 900 million new
acres, for a total of approximately 1.8 billion agricultural
acres. That would be almost the area of the entire continental
United States;

We would need nearly twice as much irrigation water from
lakes, rivers and groundwater sources;

We would suffer annual instability in most row and specialty
crops due to lack of disease-resistant, drought-tolerant and
climate-resilient varieties.

Past research in agronomy, biochemistry, genetics, genomics,
quantitative and computer sciences, and many other scientific fields
that bear on agriculture means that we now have technologies to breed
improved crops and livestock more quickly, lower the use of fresh
water, reduce emissions, preserve soil and water quality, reduce costs
of production and maintain quality for the consumer. These all start
with investments in fundamental science, which is as critical now as it
was in the past. I also stress the importance of USDA competitive
research funding that encourages and supports creative science by a
broad spectrum of institutions and scientists.
Federal investments in science underlying agriculture have
extensive economic payback, as has been well documented by the USDA and
others organizations. They are also paving the way for future returns,
as is now clearly evident in the neighborhood around the Danforth
Center in St. Louis. Research investments at the Center, combined with
private capital, entrepreneurs, and corporate and community investments
have fueled a vibrant innovation ecosystem focused on agricultural
technology in our region. Just within a \1/4\ mile radius around the
Danforth Center, there are now nearly 40 high-tech companies delivering
products to improve crop productivity with fewer inputs, like water and
fertilizer; facilitate better decision-making on the farm; and produce
high-value natural products for food and industrial uses.
Therefore, I strongly encourage strengthening and growing
competitive research through the Agriculture and Food Research
Initiative (AFRI) program in the next farm bill, with recommendations
in three areas.
1. Quality, Quantity and Impact of AFRI-Funded Research
As the flagship USDA competitive research program, AFRI should have
a budget that reflects the vital importance of food and agriculture for
every U.S. citizen, and the fact that science provides the foundation
to assure food safety, improve food quality, grow agricultural
productivity, and preserve soil, water and air quality as impacted by
agriculture. We stand with many other organizations in supporting
continued growth of competitive research funding through the mechanisms
that Congress determines to be most appropriate and stable. AFRI should
be on par with programs in agencies, like NIH, that fund fundamental,
competitive research in support of other national priorities. By
comparison, current authorized and appropriated AFRI funding levels are
modest.
To illustrate the comparatively modest levels of available AFRI
funding, consider competitive research grants awarded to my
organization, the Danforth Plant Science Center, from Federal agencies
over the past 2 years. During this period, we were awarded new grants
totaling $21.7 million from the NSF, DOE and USDA (AFRI) to understand
plant responses to changing environments, improve sustainability of
food and bioenergy crops, and develop next generations of technology to
measure crop performance in the field. AFRI grants comprised only $1.1
million, or 5%, of new Federal grant awards to the Center. This was due
to the modest size of the AFRI budget for plant science research
funding, not to the mandated or funded topical areas, which align
extremely well with our expertise and capabilities.
2. Structural and Managerial Aspects of AFRI
In 2015, I co-authored the National Research Council report
``Spurring Innovation in Food and Agriculture: A Review of the USDA
Agriculture and Food Research Initiative Program.''* I refer the
Subcommittee to our analysis of strengths of AFRI, as well as to the
recommendations to improve structure and management of AFRI. For
example, we recommended that AFRI have dedicated leadership and staff
with sole responsibility for competitive research, and that better
mechanisms be put in place to align the scientific community with
national priorities.
---------------------------------------------------------------------------
*This report is retained in Committee file and available at:
https://download.nap.edu/cart/download.cgi?record_id=18652.
---------------------------------------------------------------------------
I strongly recommend that AFRI indirect cost recovery rates be
brought in line with most programs at other agencies, like NIH, NSF and
DOE, that fund research at public and not-for-profit institutions.
Current AFRI indirect cost rates capped at 30% fund only part of our
actual indirect costs (determined using our federally negotiated rate).
For every dollar of AFRI direct research funding received, the Danforth
Center needs to contribute $0.22 to fully fund the project. That is a
non-sustainable funding model for us and most other AFRI grant
recipient institutions.
3. Access to Grants
I strongly argue that the public, which includes both consumers and
agricultural producers, benefit when scientific research funding is
awarded through open competition played on a level field. The
scientific community is most effective when talented people with the
best ideas are encouraged to participate and compete. The 2014 Farm
Bill authorizes a dollar-for-dollar matching requirement only on AFRI
funds awarded to non-land grant university institutions, like the
Danforth Plant Science Center and universities like Washington
University. It is recommended that discriminatory matching requirements
not be included in future legislation affecting the AFRI program.
Thank you for inviting these comments, and for supporting science
that helps assure food, environmental and economic security in the U.S.

The Chairman. Thank you, Dr. Carrington. And thank you to
all the witnesses.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. And I appreciate the
Members' understanding.
And I am going to forego asking the first round of
questions because my colleague to my left, your right, Mr.
Gibbs, has another hearing to go to, so I recognize him for 5
minutes.
Mr. Gibbs. Okay. Thank you, Mr. Chairman. Thanks for your
indulgence.
Mr. Wilkins, I love your perspective on the per acre thing.
I mean the glass is half full, right?
Dr. Akridge, you really hit it on the nose about the
changes when you talked about the yield and that. It just kind
of symbolizes or illustrates all the change we have seen in
agriculture in our lifetimes. And I have always used that
example. I have always said 1950, the national corn crop
average was 50 bushels. When I started farming in 1975 my goal
was to have an 100 bushel corn crop, and I have reached 195 in
some years. And I don't have that Illinois soil.
My question, and I think everybody on this Committee is
going to do what they can to make sure that R&D research is
funded for our agriculture as what we think it should be. The
question, as you know, the money is tight, resources are tight,
and so we have to do the best we can. Dr. Akridge, we have seen
the changes in agriculture, and we have seen farms get bigger.
Farms that didn't get bigger, they either found a niche or got
out of business, or they supplement their income. I am curious,
because you brought up the issue about extension. On the bigger
operations, can you explain the interaction of disseminating
that material to the larger operations, are they working
closely with the land-grants, or are they going more to the
private-sector, or what is the interaction there?
Dr. Akridge. I would be pleased to. Certainly, looking back
in time, every farmer knew their county extension agent and
they provided advice and insight, as counties were populated
primarily by farmers. And certainly, as you described, that has
changed dramatically with the size and scale and sophistication
of the operations. There are two or three ways that the
extension is really critical to that group now. One is, many of
those operations will connect directly with our extension
specialist on our campus. Those are people funded by Smith-
Lever funds that are available to them, many times doing
applied research, and that producer wants to ask a question
directly of that extension specialist who actually did the
work. We see that in the agronomic side, we see it on the
business management side where those producers want to engage
with economists who, again, are very focused on where the farm
economy is going.
The other thing that is really important to understand is
we also partner with the private-sector on extension. So many
of the CCA's certified agronomists that are in the countryside
are trained ultimately by their land-grant university and/or
use materials that were developed by the land-grant. Sometimes
we are in train the trainer mode as we engage with that
producer.
And then there are still other questions where they may go
to their local person about a soil issue, a conservation issue,
a practice. Extension remains relevant, although the way we
connect with them--and then the last thing I need to mention,
e-delivery has become a very important way of connecting with
those larger producers. They may not have time to come to
campus, but they will watch a webinar with their farm team,
talk about what that meant for their business, and go back to
work.
Mr. Gibbs. Yes.
Dr. Akridge. And so that has been another way we have
reached that kind of producer as well.
Mr. Gibbs. That is a great response. I wanted to get that
out so people in the public understand that.
You mentioned in your testimony how Federal dollars have
decreased. I suspect some of that has been offset because there
is a better partnership now with the private-sector, our
private-sector companies and their research departments working
with the land-grants and leveraging money. Can you expound a
little bit on how, in your case, Purdue has leveraged money
through the private-sector to build that private-public
partnership you talked about?
Dr. Akridge. Sure. So again, in many cases our faculty,
working on agricultural issues, paid for by capacity funds
provided by the Federal Government, they then engage with the
private-sector partners working on research projects that we
jointly identify as important. There are things the private-
sector is going to do that we shouldn't be involved in, because
it is unique and proprietary to them, but there is a big space
where we can work together on moving things forward. It
provides great training opportunities for graduate students to
work on those industry partnerships. And we are definitely
turning this into a partnership. These are not so much projects
anymore as long-term relationships, where we have goals and
metrics and regular meetings to try to make sure we are
advancing their agenda, our agenda, and ultimately the public
sees the value of the work.
So it has been a very important part of what we are----
Mr. Gibbs. Another benefit, Mr. Chairman, on that is that
relationship, that partnership, then you are really focusing on
really what the needs are. I used to work in that sector in my
early days, on the public side, and sometimes you would see if
one of the professors kind of goes off on a tangent and it is
good to file a report or a study, but maybe we have to
prioritize the dollars with the best part, that partnership is
great.
So thank you, Mr. Chairman. I yield back.
The Chairman. Thank you, Mr. Gibbs.
The chair would like to recognize the Ranking Member of the
entire Agriculture Committee, Mr. Peterson, for 5 minutes.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Well, thank you, Mr. Chairman. And thanks to
the witnesses for being here.
I have had a chance to be in both Purdue and in St. Louis.
You guys do great work, and as you said in your testimony, we
have made tremendous progress in production agriculture with
the research we have done. To some extent, that is driven by
the commodity groups and the folks that have had money to put
in with you guys, right?
The question I have is this, it doesn't seem to me that we
have done as much research and tried to use science to address
the conservation issues. Our friends in the environmental
community seem only to want to regulate us and stop us from
doing many good things. I don't see much coming from them on
using technology in conservation, like we have used technology
in crop production. Let me give you and example. We have people
in southern Minnesota that are upset because we are putting too
many nitrates into the water. Is there a way to capture that
nitrogen and put it back into the cropping system, rather than
letting it go to the river? Has anything been done to look at
that? By using tiling, we are able to deal with some of the
runoff issues. But nitrates don't really fall into that. Our
friends in the environmental community are also against tiling,
which is probably the best conservation thing we can do in
terms of cleaning up the water, but that is another story.
So my question is this, are people coming to you at the
universities to do research, to use your resources to try to
improve conservation and use technology in that area?
Dr. Akridge. And the answer is absolutely yes. Pick your
area. But use of cover crops as a conservation tool, and using
those in a sophisticated way. Breeding crops that are more,
again, efficient with nutrient utilization, using----
Mr. Peterson. Well, I understand that, but is that getting
us any place with these groups?
Dr. Akridge. Right. Well, and including----
Mr. Peterson. They seem to only want to regulate us.
Dr. Akridge. Well, in my mind, there is option for much,
much more work, but there is at least some foundation there to
build on. Trying to model a water shed to figure out which
practices are going to help us deal with this issue.
So there is some work going on. There is a need for much
more. But we are definitely engaged in that issue and it is
definitely front and center for Indiana farmers right now, and
they want more answers.
Mr. Peterson. Dr. Carrington.
Dr. Carrington. Yes, let me say a few words about this. I
am going to give a shout out to at least one environmental
organization, The Nature Conservancy, because they are actually
attacking this problem with research and with science. I don't
know how much interaction you have had with The Nature
Conservancy. In Minnesota, I believe they are quite active as a
state chapter. They certainly are in Missouri. But as the
largest environmental organization, I would encourage you to
interact with them because they have shifted their focus from
conservation for conservation's sake, land preservation, for
example, wildland preservation, and shifted their focus, their
entire organization, to serve human needs and to accommodate
human needs.
Mr. Peterson. Well, I am familiar with them, and largely
what they have done in my area is buy land. With the state----
Dr. Carrington. That is the old Nature Conservancy.
Mr. Peterson. They put rules against the DNR and other
people buying land, and then they turned around and sold it to
the DNR. And they went in and pushed all of this CRP land into
what is called the Beach Ridge in my area, and so we lost a lot
of the CRP land. Maybe I haven't seen the change.
Dr. Carrington. Yes.
Mr. Peterson. Maybe I am behind the times, I don't know.
Dr. Carrington. Yes. Look, I don't want to defend Nature
Conservancy too much here, but the other thing I do want to say
is that there are huge opportunities for research from
universities, research institutions, and the private-sector, to
improve the use of things like nitrogen and phosphorus, to be
more precise, this whole field of precision agriculture, which
we are very familiar with, is geared exactly at addressing the
types of problems. Can we use levels of fertilizer and water
that are most appropriate, as opposed to putting enough on a
field to ensure--let's put enough of what you need, but in a
way that assures the farmer they are going to get the most
yield that they can. This is an area we are very active in,
looking at it from the genetics side, but huge investments in
the private-sector in technologies to do this with equipment,
instrumentation, sensors, and so forth.
The Chairman. The gentleman's time has expired.
Mr. Peterson. Thank you, Mr. Chairman.
The Chairman. The chair would like to recognize Mr. Dunn
from Florida, who has another hearing to get to also, for 5
minutes.
Mr. Dunn. Thank you very much, Mr. Chairman, and obviously,
gentlemen, for sharing your time with us today in this hearing.
Dr. Carrington, can you discuss some areas of research
where Federal funding has the potential for the greatest near-
term return for the challenges that our farmers face today? The
greatest area.
Dr. Carrington. Well, there are a lot of things, and I
would very much look forward to hearing Mr. Wilkins talk about
this as a producer. But the farmer today, very broadly
speaking, is in a challenging business. Margins are slim,
production costs are not going down, commodity prices are
challenging in many cases. The intersection with natural
resources is more challenging, and by every measure and every
indicator it is going to get more challenging. Regulations----
Mr. Dunn. I guess I was thinking more of bench-type science
rather than research into the economics.
Dr. Carrington. Yes. We are very interested in research
that will lead in the relative short-term to more efficient use
of resources and lowered input costs.
Mr. Dunn. Excellent.
Dr. Carrington. This is to benefit the farmer. Precision
agriculture is one area. If we can lower the cost of
fertilizer, one of the major inputs for many crops, or lower
the use of water, not only a costly but a restrictive resource,
that will have immediate benefits for the farmer. We can do
this, because we have done it in the past. Water use efficiency
on the farm, broadly across agriculture in the U.S., is twice
as good as what it was the year I was born, 1960.
Mr. Dunn. That is good. Because the time is pressing, let
me turn the question to Mr. Wilkins.
When the USDA conducts its research, the research becomes
part of the public domain. Is that the situation around the
world, other governments when they fund research, do we get the
benefit of that?
Mr. Wilkins. That is a very good question. I am not sure
how other countries handle their public research dollars. I
would imagine that that differs between how free a market a
particular country is.
I can say that I have visited China on a few occasions, and
have actually visited one of their biotechnology research
institutes. Certainly, in that nation, anything that is derived
from public research is public property, but then everything
within their system is public property.
Mr. Dunn. Do the other members of the panel also have the
sense that there is a free flow of information, about the
research, around the world?
Dr. Akridge. It does vary country to country, but in
general, it finds its way into the public literature, with some
exceptions when there is really tight relationships with
industry through like contract research organizations where
they are really doing private work. And in those cases, it
would be held close.
Mr. Dunn. All right.
Dr. Carrington, I am a science junkie, can you give us an
example of some real cutting-edge research or discoveries made
at your center that would surprise me, my constituents, and how
that was relevant to us as consumers?
Dr. Carrington. Sure. We focus more on the fundamental end
of science, and so we are looking for ways to rapidly translate
that fundamental knowledge into stuff that is useful for all of
us.
To give you a few examples: we have a significant effort at
the center, looking to figure out a mechanism called gene
silencing. That might be something, as a science junkie you
might have heard about this. RNA interference. Fascinating
mechanism. Nobel Prizes were awarded about 10 years ago. It is
an area I have been very active in.
Why do we care? We care because it is the main antiviral
defense mechanisms of plants. It is the plant immune system
when they are infected by viruses. Turns out this has been used
to save the papaya industry in Hawaii. We wouldn't have papayas
grown domestically in Hawaii if it weren't for technology that
was based directly on gene silencing. We would not have----
Mr. Dunn. My time is about to expire, but I want to say
that you have satisfied the science junkie in me, so thank you
very much.
I yield back, Mr. Chairman.
The Chairman. The gentleman yields back.
The chair would like to recognize our colleague from
Florida, Mr. Lawson, for 5 minutes.
Mr. Lawson. Thank you very much, Mr. Chairman. First, I
would like to congratulate Purdue for making the big dance. I
will be sure to watch Florida State tonight too.
I would like to say my colleague, Congressman Dunn, and I
know Congressman Yoho, he and I both share land-grant
institutions in Florida. Congressman Dunn is about a block away
from the land-grant institution in Tallahassee, so we both
represent them, even though they say it is in my district.
But what I would like to ask, and my question is similar,
and anybody can respond, in the President's request today,
there was about a 21 percent reduction in the budget for
agriculture. How does that really affect research at the
institutional level? I know you all have a lot of experience in
that. But that is quite a bit of reduction going to land-grant
universities. I will start with you, Dr. Akridge.
Dr. Akridge. Sure. A reduction of that magnitude hits us
really in two ways. On capacity funds or those funds that come
to our campus via formula, and we pay salaries, so those are
salaries of our researchers, their staffs, et cetera, and
ultimately, that is the capacity we have to respond to local
needs, to respond to emergencies that hit our farmers with
weather or crops or pests, or to compete for Federal money. So
that kind of a hit means a headcount, ultimately, and reduced
capacity.
The other place, obviously, it would hit us is in the
competitive funding, and a reduction of something like that.
And we already know that we have already talked about the AFRI,
our competitive program funding, there is tremendous
competition for those dollars currently. Roughly 2,700
proposals last year, about 600 funded, and about 800 were
deemed worthy of funding and we weren't able to fund them at
the current levels. We already have intense competition for the
available monies, and further cuts just simply put us in a
place where we have less ability to fund worthy research.
Mr. Lawson. Mr. Wilkins? Dr. Carrington, do you care to
respond to that?
Dr. Carrington. I will give you a very quick financial
overview of the Danforth Center. Fifty percent of our overall
budget, which is about $28 million per year, comes from
competitive grants. Top three funding foundations; Bill and
Melinda Gates Foundation, Department of Energy, and National
Science Foundation. If there is a decrease in funding available
or that we can compete for, that affects that 50 percent of our
budget every year.
The other half of our budget, by the way, comes directly or
indirectly through philanthropy; annual gifts or gifts that
have gone into our endowment that help us support us being an
institution. Projects funded by research, competitive research
funding, institutions supported by the endowment and
philanthropy.
Every cut affects our ability to deliver on our mission.
Mr. Lawson. Okay, and I see I have a little time. Since I
represent Florida A&M University, I have the important focus of
the National Institute of Food and Agriculture. Can you discuss
the importance of a strong capacity building and grant program?
Dr. Akridge. So those capacity funds, again, ultimately
help us fund salaries of our faculty and staff that, again,
provide the capacity to do the work we do. Whether that is
answering farmer problems in the field, conducting applied
research, working with the 4-H through the youth development
organizations, those salaries provide that kind of capacity.
And then they also provide the capacity for us to compete for
competitive dollars. Without that capacity that establishes a
baseline of, again, people who do the work, we can't go after
competitive funds. So they are incredibly important to us to
serve our farmers, the people of our state.
Mr. Lawson. Okay. And, Mr. Chairman, because of the time
restraint here, I yield back, but if you get a chance, I had
one other question that I did not get to, it dealt with
LunchNLearn, and maybe somebody else can discuss it, but I
yield back.
Mr. Yoho [presiding.] The gentleman from Florida yields
back.
Thank you guys for being here. I am Ted Yoho, I represent
Florida's Third Congressional District. No offense, but I feel
it is the best part of Florida. We have the University of
Florida there and IFAS, which is world-renowned. The work that
the land-grants do is phenomenal. And if you look at the ag
population, which is less than one percent of the population of
our country, but yet they feed so many, they are so productive
that we have to be a strong voice to protect, not just the
family farms, but all the agriculture in the United States. And
ag is focused so hard on BMPs, those days of indiscriminate use
of fertilizers, water, insecticides, herbicides, is gone
because, number one, the cost, and it just makes better sense
to use less.
And if you look at what we are producing as far as beef, we
are producing the same amount of beef, with \1/3\ of head and
\1/3\ amount of land being used. And this comes from best
management practices, genetics, things like that.
One of the big things in our state is citrus greening. As
you know, Florida was a leader in citrus, still is in oranges
and grapefruit. And 100 percent of our crop has been affected,
and it is going to happen throughout the country, any place
that has citrus. And I know that there is a lot of research
being done on that.
With the research that you are doing at the universities, I
know there is transgenic work being done on the psyllid, there
is work being done on the trees, there are antibacterials being
used for the trees, and different methods, we have to continue
that. And one of the big things that has come up is the
pollinators. One of the effects of pollinators, there are a lot
of controversies are insecticides bad? Yes, they can be. We met
with one of the top researchers from the University of Florida,
Dr. Jamie Ellis, and we sat down to find out exactly where the
problem is with the honey bees and what is leading to the
colony collapse. And out of the top ten reasons of colony
collapse, insecticides are number six.
What I found interesting, and I would like to hear your
opinion on this, is the genetics of the bees. I work cattle, I
am a large animal veterinarian, and I know if you don't change
the genetics with your bulls in your herd, it gets diluted,
your gene pool. But we haven't been able to import honey bees
into this country, which I find just kind of baffling, to get
the new genetics because of the threat of germs and bacteria.
What are your thoughts about the best way to move forward
to where we can ease restrictions, in your experience? I would
like to hear from each of you on that. Go ahead, Dr. Akridge.
Dr. Akridge. The restrictions are obviously a bigger issue,
maybe with respect to regulation and the legal side of it, but
I did want to comment on this genetics point because it is
critically important.
Mr. Yoho. Absolutely.
Dr. Akridge. We have an individual working on honey bee
genetics at Purdue. His focus has been the Varroa mite, which
as you know is probably the single most important parasite that
is affecting colony collapse disorder. What he has identified
is bees that have a grooming behavior where they basically kill
the mites on other bees. He has looked at the genetics of this,
he has identified the genes that are responsible for it, and he
is breeding better bees in this country, and it has doubled the
survival rate in the hives they have tested in Indiana.
So the point is you can put sophisticated biology to work
on something like this issue, create a better bee, and that may
then also provide evidence that we need to be looking at
bringing bees in from other countries to give us maybe broader
genes to work with, with respect to accomplishing it in this
way.
Mr. Yoho. I agree.
Mr. Wilkins?
Mr. Wilkins. Thank you. Although I don't grow cribit crops
myself, I have many neighbors and colleagues in my state that
do farm cribit-type crops, a class of crops that are very
dependent upon pollinators. We, as farmers, we understand this
issue probably better than anybody else. The banning of
particular types of classes of chemistries, crop protectant
materials, and as you just stated, insecticides are the number
six cause for colony collapse disorder.
That would be a knee-jerk reaction. There are best
management practices that we all follow as far as to the time
of day that we apply these crop protectant materials. We know
that we are dependent upon pollinators for successful harvests
of different types of crops, so it is in our best interest to
protect our pollinators, and that is what we do.
Mr. Yoho. Dr. Carrington, do you want to weigh-in, or have
they already said what you need to?
Dr. Carrington. Yes, I don't have too much to add. Research
is going to help. And to the extent that everyone can
contribute, add a little bit of native landscaping, provide a
little more native habitat for bees.
Mr. Yoho. Thank you. And I know you guys are very cognizant
of this, the work you are doing on GMOs, you guys are the
forefront of getting that word out. And we know that over 100
Nobel laureates are on our side. The science is on our side. We
need your help getting the information of what a GMO is or
isn't. Our goal up here is to get to USDA to have a marketing
program on that.
I want to just comment like a Schoolhouse Rocks on how a
bill becomes a law so that everybody is educated of the
benefits of GMOs.
And with that, we are going to go to our great Member, Mr.
Jimmy Panetta from the State of California.
Mr. Panetta. Thank you. I haven't been introduced as great
before, so thank you. I appreciate that. Thank you, Congressman
Yoho. Gentlemen, thank you very much for being here. I
appreciate your time, your efforts. I know it takes a lot of
preparation to come here, and so thank you very much. I
apologize for being late.
I am Jimmy Panetta. I represent the Central Coast of
California. We have a large agricultural industry in
California, as all three of you, I am sure, know. We have some
of the most fertile valleys in the world, San Juan, Pajaro,
and, of course, the Salinas Valley, otherwise known as the
salad bowl of the world.
We are fortunate enough to have our own Agricultural
Research Service station in Salinas, and its focus is on
specialty crops. I have talked to many of the growers in that
area, and they realize how lucky they are to have their own
research station that focuses on their crops.
But also, Salinas Valley is in the shadow of Silicon
Valley, and we are currently trying to develop bridges between
the two, when it comes to R&D and the advances in technology
for agriculture. In fact, we have an annual ag-tech conference.
I know they are working on mechanization, but I was wondering
if you are familiar with any other efforts between Silicon
Valley and the agricultural industry, in particular Salinas
Valley, of course, but in other areas as well? Further
research, be it in mechanization or be it in producing better,
healthier crops.
Dr. Carrington. As a native Californian, I will be first. I
am from the Los Angeles area, but I love your part of the
state.
Mr. Panetta. Thank you.
Dr. Carrington. This is very much on the radar of Silicon
Valley. It is particularly on the radar of the investment
community centered in Silicon Valley. All of the major venture
firms and private capital firms that you would know are looking
at ag-tech, and they are looking at it for the simple reason
that it is a great challenge to solve through technology.
Where we are seeing, and where we cross paths frequently
are with the investment community. Looking to fund startups,
looking to put investments in, and companies that are
developing technologies to lower animal meat consumption, for
example, artificial meat based on plants. They are looking at
companies in the precision ag space, like we have talked about,
they are looking at companies that get us to a point where
natural resources are far less of a constraint in agriculture.
They are also very much, and this has been a bit of a shift
compared to the early days of ag-tech, they are looking at
things that have a much more direct impact on the consumer. A
lot of the early ag-tech very much benefitted the farm and the
farmers, and possibly in the grand scheme of things, this
didn't help public perception. Silicon Valley is very aware of
this, and we are looking to put investments in technology
related to ag that interfaces directly with the consumer.
Dr. Akridge. I wish we had more time to talk about it
because this is one of the most exciting and dynamic areas in
agriculture today. Purdue has put a major investment in this
space, we are able to measure things about growing plants in
ways we have never been able to do that before, created
incredible sets of data. And that is what so many of the tech
companies are able to work with us on, manipulating and using
that data in a predictive way to better manage a crop. Our
Indiana farmers have made a major investment in that area. We
are partnering with IBM, Verizon, HP Enterprises, I mean these
companies are bringing what they know about managing big data
and the analytic tools in to helping us do a better job of
running farms, and it is a pretty exciting space.
Mr. Panetta. Great. I just have a few seconds left. I was
fortunate enough to graduate from UC Davis, one of the land-
grant schools, and am glad to say that for the first time, they
have made the NCAA tournament as well. They drew Kansas, I
don't know if they can compete with Kansas on the basketball
court, but, I am sure they can compete with them when it comes
to agricultural research.
Thank you, gentlemen. I yield back my time, Mr. Chairman.
The Chairman [presiding.] And anybody who yields back 7
seconds is a great Member of this Subcommittee.
Mr. Panetta, I wish you luck, and I remind you that one
year I picked Arizona to win the bracket, and they lost in the
first round to Santa Clara. So it could happen today, you just
never know.
I would like to recognize our colleague from Nebraska, Mr.
Bacon, for 5 minutes.
Mr. Bacon. Thank you very much. And I appreciate all of you
being here today and sharing your expertise.
I will tell you, what an exciting stance to go from 30
bushels 90, 80 years ago, to now 175, and some places near 200.
That is incredible. There is no farmer more efficient than the
American farmer. While not necessarily in the purview of this
particular Subcommittee, but it is a reminder how hard we have
to work on trade policy out of the Agriculture Committee,
because we can produce, but we have to make sure the demand is
there, and the American farmer can do that.
I wanted to ask a little bit about AFRI. And I appreciate
some of the comments mentioned earlier that we need to invest
more there. My understanding is that an AFRI grant, to be
approved under NIFA, must clear a lot of different processes, a
lot of layers of approval there. Approval from the leadership
of the relevant NIFA institute, the NIFA senior executives, the
NIFA policy office, then the Office of the Chief Scientist. Are
there too many layers in this for approval, can we do better
there, and how does this compare to other Federal agencies when
it comes to research? Thank you. And I just open it up to any
of the three that would care to answer.
Dr. Carrington. There are a lot of layers. Honestly, before
preparing for this, I didn't realize how many layers there
actually were. Now, my brief comment would be if they are
simply check-off layers, that is one thing. If they are layers
of impediment, that would be a different problem. If they are
stifling innovation and the most creative science, that would
be a problem. I actually don't know if that is the case.
I will make one broader comment, because you are touching
on the organization of NIFA and the competitive grants program
within the context of the broader agency. There is a lot of
room, a lot of study, and some very interesting proposals that
have been made to consider restructuring how research, broadly
within USDA, is structured and managed. Can we elevate
competitive research and scientific research in the agency, and
appropriately structure the management such that it is more
efficient, there is tighter link between the Secretary and
research, and there are some very interesting proposals to do
that. I would be in strong support of that. And the best model
in my opinion for looking at this would be NIH.
Mr. Wilkins. I worry that, certainly, that there is the
need for levels of review in order to advance a potential
project for funding, is in part due to the competitiveness,
there are only so many dollars appropriated.
One of my worries is whether it is a graduate student,
whether it is an untenured research professor, that it is only
about a 25 percent success rate of getting funding for an
innovative idea, that they lose their creativeness, that they
lose their desire to innovate and think about new ways to solve
challenges. Therein lies another reason why National CFAR is
constantly asking to fully appropriate the AFRI funding at the
amount that is authorized.
Dr. Akridge. And I can't compare NIFA to other agencies on
this, but clearly, anything we can do to make processes more
streamlined, is important, and to lower the barriers for folks
to apply.
I know NIFA has made investments in trying to upgrade some
of their information technology, simply to make that better,
but down the road, it would certainly be an area to continue to
focus on.
Mr. Bacon. One brief question I will focus a little more
towards Dr. Carrington. The farm bill currently requires grants
to be matched by non-land-grant institutions. It is often
waived. Are you a proponent for removing that out of the next
bill? Could you expound on that? Thank you.
Dr. Carrington. Well, through appropriations there is
agreement with the notion, since it is being waived, so I would
question or suggest that if it is being waived against what is
in the authorizing language, why put it in. It is a
discriminatory element in the authorizing language that I
struggle to find a purpose for. It puts organizations like us,
and private universities and non-land-grant universities at a
competitive disadvantage. It also creates a problem with
faculty and scientists even applying, if their organizations
are saying, ``Well, you have to raise a dollar-for-dollar
match,'' it impedes and inhibits the creative applications that
come from a broad diverse range of institutions.
Mr. Bacon. Okay, thank you.
And I yield back my minus 20 seconds there to you, Mr.
Chairman.
The Chairman. You would have been a great Member if you
wouldn't have gone over time. No, a great new Member from
Nebraska. Thank you for your comments.
I would like to recognize our colleague from Delaware, Ms.
Blunt Rochester, for 5 minutes.
Ms. Blunt Rochester. Thank you, Mr. Chairman. And thanks to
the panel. Excuse me for being late. I have three hearings
going on at the same time. I really wanted to get here so that
I could recognize a Delaware farmer. I am from the State of
Delaware, and we are so very proud of our farming industry. We
also have two land-grant institutions, and focusing on research
is really important to our ag sector.
I just want to ask a question of Mr. Wilkins. We are aware
of the significance of research in agriculture as a field, but
can you talk about specifically the impact that research has
had on you in terms of supporting and expanding your actual
operation?
Mr. Wilkins. Thank you. As a young farmer just starting out
in the 1970s, I relied very much upon the cooperative extension
system, the land-grant universities, as a disinterested third
party, so that when a salesman, a manufacturer of farm inputs
was giving me data to support the reason why I should use their
product, I could look to the public research system for whether
they had actually tested, tried, and proven, whether that was
an input that I should employ in my operation.
Ms. Blunt Rochester. Yes.
Mr. Wilkins. Even today, I rely very strongly upon my
county extension agent for advice. The industry has evolved and
changed, we are much larger farming operations than we were 30
or 40 years ago, and we do a lot of our own on-farm practical
studies and research.
Ms. Blunt Rochester. Yes.
Mr. Wilkins. But most of the time, we reach out to our
extension agents to involve them so that we can actually aid
and assist in the public research field with our own practical
on-farm studies.
Some of the things that more recent, evolutions, the
studies to determine the optimum rates of input nutrients to
apply to my crops, and not just the optimum rates but the
timing of those rates. We have employed a lot more irrigation
on our farm. That is removing that as a barrier to reaching
economic yield capacity.
Ms. Blunt Rochester. Yes.
Mr. Wilkins. That way enables us to be able to determine
what is the proper stage, how much nutrients does the crop need
at each stage of growth, and then we can deploy those nutrients
through the irrigation water. And then we proof that using
tissue analysis.
Now, I would not have known about all of these tools and
analytical things that were available to me had it not been for
the research that had been done at public land-grants.
Ms. Blunt Rochester. Yes. Great, thank you.
I am not sure if Mr. Lawson was going to ask this question,
he started to mention the LunchNLearn Series.
Mr. Lawson. Yes, he did, go ahead.
Ms. Blunt Rochester. Great. Can you talk to us a little bit
about the LunchNLearn Series and some specifics on that as
well?
Mr. Wilkins. I would be happy to, yes. For a number of
years, National CFAR has sponsored these LunchNLearn Series
here, and we appreciate very much the House Committee on
Agriculture making their facilities available to us for that.
As you know all so well, the youth and spirit that works
here on the Hill, and their desire to absorb as much knowledge
as they possibly can. These LunchNLearn Series that we
conduct are an opportunity for us to bring researchers,
scientists, experts, just the vestibules with a wealth of
knowledge and information, into these chambers and to be able
to share that information about what we are doing in the field
of agricultural and food research to your legislative
correspondents, legislative assistants, and many times Members
of Congress themselves attend.
Ms. Blunt Rochester. Okay, thank you.
I yield back the balance of 40 seconds.
The Chairman. The great Member from Delaware yields back 39
seconds. So, no, thank you.
The great part about being in the chair is I get to stay
here the whole time and now you get to answer my questions. And
it is great to have you here.
Look, today's hearing is another example of where we can
find bipartisanship here in Washington that many in this
country don't think exists, but it does exist right here on
this Committee, and especially within this Subcommittee. The
questions that have been asked have been about the subject at
hand, and that is what we are here for. We are here to talk
about the successes of our last farm bill, which I believe
everybody around this horseshoe, and that serves on this
Committee, can find something in that bill that is working
extremely well. And I would like to remind everyone here that
the Congressional Budget Office estimated that taxpayers would
have only saved $23 billion in mandatory spending with the
passage of that bill, and in reality in 3 years, the CBO now
says we have saved $104 billion in taxpayer dollars. When we
change words on pieces of paper here in Washington, D.C., it
actually has an impact on taxpayers in this country. And what
we have heard from each of you and from my fellow colleagues is
a back-and-forth on how we make those words on pieces of paper
better within the research community. Thank you all for being
here today to do that.
And now, Dr. Carrington, since we asked you to be here, I
would want to make sure that I start with you. I am very
impressed by your facility. I meant that in my introduction of
you earlier today. I saw some of the cutting-edge research that
has been done there. I know my colleague, Mr. Dunn, asked a
similar question about framing the importance of ag research. I
think it was you, Dr. Carrington, forgive me if I was wrong,
brought up the discrepancies and lack of parity between ag
research and public investment in ag research versus public
investment in other research priorities of this Congress. I
would like to see more invested in NIH too, don't get me wrong,
but they have had steep increases. I would like to see more
invested in energy research, but they have had steep increases.
Whereas, where we have seen ag research remain somewhat steady,
and some cases go down.
You mentioned an example of cutting-edge research with the
papaya, I believe, to Mr. Dunn's question. Are there any other
examples that you would like this Committee to understand that
have come through the Danforth Center? And then I would open it
up to the other two witnesses too to talk about any cutting-
edge research that you are a part of.
Dr. Carrington. Sure, I will keep it on the RNA gene
silencing theme, and just keep giving you more examples that
should relate to consumers. Consumers should care about these.
If you care about your diet and the types of oils and
lipids you are eating, you care about having a high oleic acid
diet, gene silencing turns out to be a terrific way to
rebalance in certain crops the levels of good oils versus bad
oils. And through research in this area, we learned that nature
already figured out how to do that. And breeding stocks and
soybeans, for example, use this gene silencing mechanism and we
now have improved crops with a better oil profile.
To give you one other example, and this one is a global
example. If you care about our friends overseas, in particular
those individuals in less-developed countries, gene silencing
is being used in research at our institution with partners in
East Africa to address a problem affecting 30 to 50 million
small-holder farmers that depend on cassava as a staple crop.
Cassava is highly susceptible to viruses, however, and it is
the biggest threat to food security for people in Tanzania, in
Uganda, and Kenya.
Now, it is not in our immediate backyard, but I will make
the case that if we can use research that we are doing here to
improve food security around the world, we are doing something
that is going to have direct benefits to the United States and
United States citizens.
The Chairman. And just one quick follow up before I go to
the other two witnesses, what percentage of ideas do you think,
because of a lack of funding, end up on the cutting room floor?
Dr. Carrington. The majority of ideas do not make it to
funding. I will give you just a few stats. You have the funding
rates, AFRI, depending on the stats, it is somewhere between
ten and 20 percent of the applications get funded. NSF it is 23
percent, NIH 17 to 18 percent. But if you look at the success
rate at a funding agency like NSF, and I assume it is
comparable through AFRI and other competitive grant programs,
at NSF the success rate for an individual investigator applying
for grants over a 3 year period, that is applying for grants
every year, is only 35 percent. What that is saying is that the
majority of investigators, most of them have pretty good ideas,
some have great ideas, but \2/3\ of these scientists are not
being funded when their ideas are pitched to the competitive
grants programs.
And I can tell you, having served on panels, having served
as President of a research institution where I sign off on
every proposal that gets submitted, there are a heck of lot of
great ideas that are never funded, and it is very unfortunate.
It is a reflection of capacity that we have in this country
that is, I will say largely untapped, because the resources
aren't available to fund most of those ideas.
The Chairman. Thank you.
Dr. Akridge?
Dr. Akridge. Yes, just a couple of quick examples. I
mentioned this whole issue of what we can measure now and use
in management decisions. We have some researchers working on
using cameras of a very particular type that can detect insect
damage maybe a week or 10 days before the human eye can ever
see it. And now we start to determine or identify problems
before we would ever normally catch them in the field, which
gives us a chance to pursue solutions maybe with different
forms of pesticides or lower levels, or maybe even avoiding
pesticides, because of the fact we can, again, detect this
damage early. So that would be one example.
Another international example, and you will appreciate
this, we have a corn breeder working on orange corn. Very, very
bright orange corn.
The Chairman. The Illini orange corn?
Dr. Akridge. Yes, it would definitely be something an
Illini would appreciate. And what is going on there is they,
again, through sophisticated biology, elevated the vitamin A
content in that corn. That is a major issue in developing
countries, low vitamin A leads to blindness in children. And
this particular corn then can be served, it is biofortified, it
is another important area of research, again, helping us
address child blindness in the developing world because of,
again, some work done here.
The Chairman. Curing child blindness with orange corn.
Dr. Akridge. You bet.
The Chairman. Very interesting.
Mr. Wilkins, did you have anything you wanted to add to
this particular question too?
Mr. Wilkins. Yes. Although, as I said, I am not a
researcher, but through my capacity with the American Soybean
Association and National CFAR, I have met great researchers.
One of the shameful things that has occurred in our society the
last few years has been the inability to commercialize
innovative ideas because of the cost to bring a new, whether it
is a GMO or something that is from gene silencing and gene
editing to the marketplace.
The Chairman. What is the single most cost-prohibitive
element of the research process in moving that product to
market that you would like to see us address?
Mr. Wilkins. Time. The amount of time that it takes for the
innovation to make it through the regulatory process. That
ultimately is what is causing the most amount of expense.
The Chairman. Is it too many agencies have their fingers on
the research to have to sign off on, or is it just the overall
compliance and regulatory environment that is in place already?
Mr. Wilkins. I think there are several factors. One of
those is the desire at the government agencies to be sure that
when they are sued by another NGO, that what they have done,
the work that they have done, every ``i'' has been dotted,
every ``t'' has been crossed, and they don't have to be
embarrassed by something that they may have forgotten.
We need some protections on the science and technology that
will allow good regulators, good government officials to have
some safeguards that they are going to be able to do their job
and not be weighed down by insignificant review processes of
their decisions.
The Chairman. Insignificant review processes, and you
brought up legal challenges and legal issues.
Mr. Wilkins. Yes.
The Chairman. Is this more of an issue with NGOs or certain
organizations having problems with industry-based research
partnerships?
Mr. Wilkins. Once we can get past this point of time in our
society of not trusting science and technology and food,
everybody wants the latest, greatest science technology on
their smart phone, the latest technology in their
pharmaceutical, but they are apprehensive when we try to use
science and technology in food production.
It has been proven that Omega-3 and Omega-6 fatty acids
leads to greater heart health. These are solutions to human
health conditions that we can provide through healthier oils,
healthier vegetable oils. But that innovation is sitting on a
shelf because the marketability of that idea, that the
potential return on the investment has been determined to be
less than what it will cost to go through the process to be
able to commercialize it.
Citrus greening: there are solutions to citrus greening
using biotechnology, but because citrus fruit is something that
is directly consumed by humans, there is a fear that the
millions of dollars spent trying to bring this to market will
be wasted because of lack of public acceptance of the
technology.
The Chairman. Well, thank you. And I would remind the
witnesses, what you and everybody in the room are saying too,
is even with public investment in research, you have to have an
ROI.
Mr. Wilkins. Yes.
The Chairman. All right, thank you.
I know I took a lot of time, but that is the Chairman's
prerogative.
I will now turn it over for a second round of questions to
my colleague from Florida, Mr. Lawson, for 5 minutes.
Mr. Lawson. Thank you very much.
My questions deal with the STEM fields. Here is my
question. Models have been changing for the universities over
the last century. Curricula offerings have grown more diverse
to reflect a very different society than it was in the 1800s.
Is agriculture becoming lost in the mix? What road do you see
the colleges in agriculture and STEM education reaching non-
traditional agricultural student, especially minority men or
opportunities for women as an example? This is a very, very
important issue for the next century, in my opinion.
Dr. Akridge. Yes, and I can't agree more that it is a
critical issue in this century because everything we have
talked about to this point depends on human talent, and having
the people in place to do the research that we need to address
the challenge.
We have been working hard as APLU and as local
institutions, to help position ag as front and center for
science, technology, engineering, and math. Our President will
talk about STEAM periodically. He puts an A in the middle of
that for agriculture. And that is happening with respect to the
curriculum, and it is very science-focused in general now in
terms of preparation.
You put your finger on the challenge though is how do you
help young men and women see their passion for science
addressing food and agricultural issues. 4-H is one way that
that is playing out across the country. Six million youth, they
have taken on STEM and STEM projects as an important part of
their overall curriculum. Just to give you Indiana examples, it
is taking us into downtown Indy, into Gary, Indiana, where
maybe traditional 4-H kinds of things just didn't fit, but when
you start talking about fluid power, biotechnology, or
renewable energy, young men and women get really excited about
the science happening there, and the 4-H volunteer model, with
the science underneath it, has been working very effectively.
We have a lot of work to do there, but I would say nationally
it is a priority for us to help young men and women find their
passion for science and agriculture, and vehicles like 4-H can
help us do that.
Dr. Carrington. Yes, two quick points. First of all, we see
a big issue attracting people into agriculture and agriculture-
related scientific fields. We have taken on, even though we are
not a university, we are not a degree-granting institution, we
have taken on our part of that challenge and asked what can we
do to motivate and stimulate young minds to consider plant
science and agriculture as a career. We believe, as do many
others, that one of the most important things to do is to get
people experiencing what plant science and agriculture is.
Bring them to the center, get their hands dirty, and very
importantly get materials, talent, STEM-compatible educational
supplements into the schools.
We have wonderful schools in St. Louis. We also have some
schools that, for historical reasons, have been under-served.
And we have identified those as big opportunities. We, for
example, have outreach and education programs in schools in the
City of St. Louis, 16 schools. These are programs that in some
cases are very simple, in other cases are a little more
sophisticated. We have a program called Green Means Grow, and
it provides students with the experience of planting a seed,
watching it grow, and learning where their food comes from.
This is not an inner-city problem, it is not a problem unique
to anywhere, it is a problem that Americans have because so few
of us grew up on a farm. We don't know where our food came from
in most cases, and it is a huge problem that affects the
problem that Mr. Wilkins referred to as well.
So this is a big issue, getting people experiencing STEM
education, agriculture through STEM experiences is a very
important part of the solution.
Mr. Lawson. Mr. Wilkins, would you like to comment?
Mr. Wilkins. I would love to, yes. STEM education, it is
very dear to me, to my heart, that as a layman scientist myself
that decided to be a producer rather than going into scientific
research. My colleagues and I, we work very closely with our
high school, our public school systems, to try to provide
opportunities for students to be able to visit our farms, to be
able to be initiated to what it means to produce food. Many
times we support in our rural areas, both financially and
through advocacy, for small school farms or small school
gardens to be able to assist the educators there in introducing
our future consumers to way that modern food production is
done.
I do stress modern food production. Oftentimes, what
happens in many of these situations is someone with another
agenda tries to impress that upon these impressionable minds at
an early stage. I think that we as administrators of social
programs need to be cognizant that we need to head that off and
not allow that to happen, because science, technology,
engineering, and math, we are deficient in that field here as a
nation, and we need to develop that in order for us to continue
to be an economic superpower in the world.
The Chairman. Thank you, Mr. Lawson. And thank you again to
our panel.
I have just a couple more questions, if you three could
bear with me.
Dr. Akridge, some of our biggest competitors in the global
commodity markets are the same countries that are investing
billions in their domestic agricultural research, to say
nothing of the billions in trade distorting subsidies to their
growers. This includes, as you mentioned and others, countries
like China, India, and Brazil. What are the short-term and
long-term implications of their growing investment compared to
our U.S. investment in ag research?
Dr. Akridge. Yes, it comes back to many of the points that
we have been making to this point in the hearing. Ultimately,
research drives productivity, it drives competitiveness. There
are always lags in research, from the time that dollar is spent
until we ultimately see it in Mr. Wilkins's farm or benefitting
the consumer in some way. Sometimes we don't see those things
in the short-run because we are living on investments that we
have seen in the past, but the kind of investments that China,
India, and Brazil are making right now are definitely going to
pay off long-term for their sectors, making them more
competitive, again, helping feed a growing world. The question
for us then becomes will we make the commitment today,
obviously, to benefit the future as we think about the lags
that these research investments are going to take.
Additionally, as we think about research, it is also about
human talent, and the dollars we invest, again, today are
helping train the next generation of scientists that ultimately
find their way into the companies that are going to do much of
that work.
So again, if we don't have that talent coming into the
pipeline today because they don't see a future, these
frustrations for funding rates, et cetera, drive them into
other places, we undermine the human talent, the human capital
that is in this industry. And again, that has really important
long-term impacts.
The Chairman. Dr. Carrington?
Dr. Carrington. One quick comment on this. Everyone
appreciates what China, in particular, is doing to build its
scientific infrastructure and its scientific talent base. They
are putting huge investments in.
Two effects that are acute right now. First, it is
increasing the competition globally for talent. This cannot be
overstated. Second thing it is doing even closer to home, I
know that the dean, no doubt, deals with this issue, because
funds are being invested in China, talent is being drawn away
part-time from the United States, and it is being done in a
couple of ways. Here is a common way. You are a talented
professor at Purdue University or Washington University,
perhaps you are of Chinese origin, perhaps not. You are being
hired on a part-time basis perhaps for 2 months out of the year
to work at a Chinese university. Now, if you think about the
implications of that, on the surface, what is the problem? We
are sharing, we are an international scientific community, but
the reality is that we are also losing time, we are losing
intellectual capacity. There are teams that are being built
around these individuals who are getting these part-time
appointments, and those are teams that are being built in
China, not in the United States.
I want to make sure that my comments are not misconstrued
as objectionable to investments that the Chinese are making,
hats off to them, but there are impacts on our institutions,
our scientists, and our scientific capacity here in the United
States.
The Chairman. And would you agree that there are going to
be impacts on our producers, impacts on their ability to sell
in the global marketplace too if products are available that
are cutting-edge, that are developed in other countries, that
give them a competitive advantage over all producers?
Dr. Carrington. That is exactly right. And whether or not
we see that this year, next year, or the following year versus
5, 10 years out, I can't give you a timeframe but the dean is,
I believe, quite accurate in his assessment on the long-term
impact.
The Chairman. Mr. Wilkins, since you are part of what I
call one of my special crops; soybeans, in Illinois, rather
than specialty crops, are you concerned, in your capacity with
the American Soybean Association, as a leader of producers,
that America's economic edge that we talked about, I know I
talked about in my opening statement, when it comes to ag and
the ag sector, that we are going to be losing that
competitiveness in the global marketplace because other
countries are investing more public dollars into their own
research?
Mr. Wilkins. Well, I would argue that we have just recently
celebrated over 100 years of our cooperative extension system.
As I have participated in international trade missions and
helped to host trade teams from other countries that have come
to the United States, they often look at our model of how we
conducted agricultural research, food research, and how we
disseminate that information to producers, that 100 year model
that has been part of what has led to the success of our
agricultural industry in this nation. I think that that
behooves us to recognize that we have been falling short in
maintaining that strength within our agricultural sector.
Am I worried about losing market potential? I think that
the statisticians tell us that the global population is
growing, and we in this country alone are not going to be able
to fulfill that growing need for not just calories, but proper
and good nutrition.
It may be a double-edged sword. If other nations are
investing dollars in public research, and if a component of
that research is modern biotechnology and other production-
enhancing tools, and if that leads to greater consumer
acceptance, then in the long-run that may help us to be able to
bring our creative innovation ideas to the marketplace even
more quickly and with less economic expense.
We are a great nation, the United States. We are very good
at innovation. There is a reason why other countries try to
steal our intellectual property, because we have such great
ideas. In order to solve some of these problems of global needs
for food and nutrition, I think that there are opportunities
for us to cooperate, but at the same time making sure that
trade is very near and dear to me, but we need to make sure
that when we are involved in international trade, that it is
not only free and open access, but that it is fair, fair for
all of us.
The Chairman. Well, thank you.
One last question for those of you who have participated in
the AFRI application process. This Subcommittee is, I believe,
part of our Congressional organization that has to get into the
weeds on certain issues that really impact the ability of
public dollars to be able to go further, and in this case, go
further with research. I am concerned that there might be some
processes in place with our public research dollars and the
institutions that govern them, that slow down your ability to
actually get new ideas into the testing stage and out into the
marketplace. Are there any suggestion, Dr. Akridge or Dr.
Carrington, any suggestion you would give us as policymakers,
as we move into this next farm bill, to make the process go
more smoothly, because I heard earlier that time, time was the
biggest hindrance to getting products through the research
process. How do we make your time better spent, and how do we
do that with something as simple as the application process and
the grant administration process? Whoever wants to start.
Dr. Akridge. Well, maybe just two suggestions and thoughts.
First, preproposals can be a way to short-circuit this process
and help screen ideas. Where the process is, let's get the
essence of the idea in front of somebody, let's get a quick
read whether or not it is useful or not, and then we let that
person elevate and put more effort in it if it has merit, as
opposed to spending tons and tons of time writing full
proposals that, in the end, the success rate is really low.
The second one, and we have seen this some in Europe where
the response by the government to industry investments in ag
research is very quick. If industry is willing to put some
money on the table, the Federal Government in those cases will
match that money very quickly. There is not an elaborate
process. And it allows you to move at the speed of industry in
some cases where, again, our normal processes wouldn't do that.
So more effective ways of thinking--more creative ways of
thinking about how we handle the industry match might be
another possibility.
The Chairman. Thank you, Dr. Akridge.
Dr. Carrington?
Dr. Carrington. Yes, I would echo those comments. I don't
know if you have actually held in your hand an AFRI application
before.
The Chairman. Is it like the Tax Code?
Dr. Carrington. It is in some ways worse than the Tax Code.
It takes an average investigator putting together a $500,000
proposal, it takes roughly a month of their time working
seriously on it. It takes institution's time. It is a pretty
onerous process. The preproposal notion is a very good one, and
it is used very effectively in many different agencies,
including some within NIFA.
How we handle budgets at the preproposal stage. It used to
be that all grants to all agencies had full vetting of the
budgets internally, and had to be developed at the proposal
stage. NIH had the great idea to just do budgets modularly,
just give us a guess on how much it will cost. And if the
proposal was meritorious and recommended for funding, then we
will figure out the budget pieces, but we only devote the time
to figuring out a budget after the fact.
The Chairman. Have you seen that reduce that compliance
time and the length it takes?
Dr. Carrington. For agencies and programs that have a low
budget preparation requirement at the submission stage, let's
put it this way, it is a big morale boost in the finance
department.
The Chairman. Well, I am not here to look for morale
boosters in the finance departments at the institutions, I want
to know though, Dr. Carrington, what would you estimate the
time savings is, and is there an increase in the amount of time
once that so-called pre-application is put in, because I have
known some other government agencies that will have a
simplified introductory process, but then the second-tier
process doubles what the previous process would have taken if
you would have provided more specifics on the front-end?
Dr. Carrington. Yes, that----
The Chairman. How do we make that better on all ends?
Dr. Carrington. Yes, doubling the work by saving work up-
front and doubling it at the end, that doesn't sound very good
either.
The Chairman. No.
Dr. Carrington. The reality is that when these proposals
are put together, it takes a large institutional investment,
all the way from certifications to budgets to just making
commitments, and the biggest investment on the part of the
investigator who is pitching the idea. A standard 15 page
proposal or a ten page proposal isn't really a ten or 15 page
proposal, that is just the research plan part. A typical
proposal is 60, 70, 80, 100 pages, with other stuff in it. It
is a big burden so we could really get in the serious weeds if
we wanted to here. I don't think you really want to, but I will
offer to provide suggestions at a future time if you do
reconsider this.
The Chairman. Thank you. Well, I would like to get into the
weeds, but I don't think anybody else in the room would, so we
will take your suggestions to make the processes better. Please
feel free to submit those. We would love to work with you on
those.
I know I said that was my last question, but I have thought
of another one, Mr. Wilkins. Obviously, our Subcommittee has
jurisdiction over NASS. We have had NASS Administrators in, in
our oversight responsibilities, talking about some of the
surveys, the Census documents that they require our producers
to fill out. You are a producer too, right?
Mr. Wilkins. Yes, sir.
The Chairman. Give me an estimate, how many hours a year do
you spend filling out NASS documents, besides the one Census
survey, how many would you guess that you would fill out a year
on average?
Mr. Wilkins. Chairman Davis, I must confess that the amount
of time that I spend on filling out the reporting and documents
that I know are required of me and that are going to keep me in
compliance with programs, including crop insurance, what I am
referring to is risk management administration production
reports.
The Chairman. Yes.
Mr. Wilkins. I spend a lot more time on those documents
because I know that they are subject to an audit and review,
and I want to make sure that the information that I provide on
those reports is accurate to \1/10\ of a bushel. I confess that
when NASS reaches out to me with a survey, because of the
number of irons that I have in my fire, and the amount of time
that I must commit to my business and my family, maybe not
always giving the specific and most accurate information that I
can. Oftentimes I may not have the time to do the written
report, so then NASS follows that up with a telephone call. And
if I am in the pick-up truck on my way to a field or on my way
to a cow that is giving birth, I am going to try to make that
call as short as possible. I am not always referring back to my
records and relaying completely accurate information.
That being said, I am grateful for the number of producers
in our country that do take the time and do have the time to be
able to provide accurate information to NASS, because when I
look at NASS data in its aggregate for the country as a whole,
it usually is spot-on, it is usually pretty accurate at
predicting what the planted acres may be, predicting what
production may be, or proving what production actually is.
However, when you drill down to the individual survey area,
whether that be a state or a county, it is oftentimes simply
dependent upon the accuracy and the number of respondents to
that survey that they get the information from.
The Chairman. Well, thank you. Obviously, as we move
forward, we want to make NASS more accountable and get the data
that is going to allow better ag research possibilities in the
future too. Thank you for answering that question that I
probably bet you never thought you would get here today. But I
appreciate your honesty, I truly do, Mr. Wilkins, in responding
to that, because that does make a difference for policymakers
like us to talk to the agencies in charge to make those surveys
more friendly and drill down on what is important. In our
oversight hearing, the first question I asked the
representative from NASS was, on a scale of 1 to 10, do you
consider yourself a risk-taker. The gentleman responded he
thought he was a 5, but his wife would say more closer to a 10.
He couldn't answer the question, it was question 17, on their
Census of Agriculture. At what point does the psychological
condition of the producer at that point in time matter to the
overall dataset? To me it doesn't, and if we can work together
to reduce those issues then you are going to better provide
more accurate information to NASS, and then the researchers can
use that information in a much more consistent and better way.
As we move forward, we may ask for your assistance.
I see we have no more Members ready to ask questions. My
closing remarks are thank you to each and every one of you.
This is truly essential information that we are going to be
able to take back to our colleagues and also the folks that
work in our Agriculture Committee to write a better farm bill.
If there is anything that we have not asked you that you would
like to provide to us, please feel free to follow up with us.
I know that some of my colleagues today wanted to mention
the President's budget. While we haven't seen a lot of
specifics on the President's budget and how it is going to
impact ag overall, one specific line that has been put forth is
the research title. And it looks to me, luckily, like the
research title is going to remain stable. That is good news for
what we are discussing here today, and I am just as interested
as the rest of my colleagues to find out what the funding
levels are for the rest of the ag title.
So with that, I want to say thank you again to our
witnesses. Mr. Lawson, thanks for sticking around with me and
sticking it out today.
And under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member, or any other
information you would like to offer us.
This hearing of the Subcommittee on Biotechnology,
Horticulture, and Research is adjourned.
[Whereupon, at 11:51 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Roger Johnson, President, National Farmers Union
March 16, 2017

Hon. K. Michael Conaway, Hon. Collin C. Peterson,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.;
Hon. Rodn,ey Davis Hon. Michelle Lujan Grisham,
Chairman, Ranking Minority Member,
Subcommittee on Biotechnology, Subcommittee on Biotechnology,
Horticulture, and Research, Horticulture, and Research,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.

Dear Representatives Conaway, Peterson, Davis, and Grisham:

Thank you for holding today's hearing entitled, The Next Farm Bill:
Agricultural Research. As you are well aware, research plays a vital
role in advancing the agricultural sector. The United States has long
maintained the world's premier agricultural research and development
(R&D) system. However, since 2009, public agricultural R&D investments
have declined. National Farmers Union (NFU), as directed by its member
driven policy, advocates for maintaining and increasing public
investments in agricultural R&D.
Public agricultural R&D promotes advancements in the sustainability
and productivity of United States agriculture. NFU believes the
Agricultural Research Service, the National Institute of Food and
Agriculture, the land-grant universities and the cooperative extension
system each play a significant role in the success of modern-day
agriculture.
The R&D investments made from 1948 to 2013 contributed to a 169
percent increase in U.S. agricultural output despite decreases in
agricultural land and labor.\1\ With world population expected to grow
to nearly 10 billion by 2050,\2\ agricultural productivity must
increase to unprecedented levels. As America's farmers and ranchers
carry a heavy burden in closing an estimated 70 percent food gap by
2050,\3\ they require significant public investments in research that
promotes further productivity, improves resistance to pests and
climate, and increases overall sustainability.
---------------------------------------------------------------------------
\1\Matthew Clancy, Keith Fuglie, and Paul Heisey, U.S. Agricultural
R&D in an Era of Falling Public Funding. November 10, 2016. https://
www.ers.usda.gov/amber-waves/2016/november/us-agricultural-rd-in-an-
era-of-falling-public-funding/.
\2\United Nations, Department of Economic and Social Affairs,
Population Division. 2015. World Population Prospects: the 2015
Revision, Key Findings and Advance Tables. July 29. https://esa.un.org/
unpd/wpp/Publications /Files/Key_Findings_WPP_2015.pdf.
\3\Janet Ranganathan, et. al. 2016. ``Shifting Diets for a
Sustainable Food Future.'' Creating a Sustainable Food Future. World
Resources Institute. http://www.wri.org/publication/shifting-diets.
---------------------------------------------------------------------------
Some may argue that the decline in public agricultural R&D spending
is offset by the subsequent increase in the private-sector. However,
private companies have little incentive to invest in new technologies
that do not lead to financial gain. There is little motivation for a
corporation to invest in research in products that cannot be profitably
commercialized. Furthermore, private industry cannot be relied on to
share the knowledge they gain with the general public. Because of these
factors, private R&D is fundamentally different than its public
counterpart.
NFU believes family farms most benefit from the findings and by-
products of publicly funded research that remain in the public domain.
Since Congress passed the Hatch Act in 1887, land-grant universities
have served as the driver of American agricultural innovation. The
research conducted at these universities has directly contributed to
improved success of family farmers and has promoted greater stability
in the food supply chain.
No-till farming is one of the many examples of how the land-grant
system and the Cooperative Extension Service (CES) drive innovation in
American agriculture. The world's first research on no-till farming was
conducted at the Ohio State University, a land-grant institution, in
1962.\4\ Once the benefits of no-till farming were understood, the
Cooperative Extension Service (CES) disseminated information
encouraging farmers' adoption of the practice. Today, no-till farming
is widely practiced by farmers across the country. Research by the
Agricultural Research Service shows no-till farming provides
significant carbon storage and soil stability and productivity
benefits.\5\
---------------------------------------------------------------------------
\4\Rafiq Islam and Randall Reeder, ``No-till and conservation
agriculture in the United States: An example from the David Brandt
farm, Carroll, Ohio,'' International Soil and Water Conservation
Research, 2.1 (2014): 97-107.
\5\Humberto Blanco-Canqui, et al. ``Regional study of no-till
impacts on near-surface aggregate properties that influence soil
erodibility,'' Soil Science Society of America Journal, 73.4 (2008):
1361-1368.
---------------------------------------------------------------------------
The agricultural sector is rapidly evolving, and the challenges
facing the industry are growing. Public research and development is
vital to effectively and efficiently responding to new challenges. The
United States should strive to regain our position as the world leader
in agricultural R&D investment. We must correct the trend of declining
investments and make R&D a priority in the next farm bill.
Thank you again for the opportunity to testify. NFU stands ready to
provide any additional support that may be helpful to this committee in
supporting the future success of America's farmers and ranchers.
Sincerely,

Roger Johnson,
President, National Farmers Union.
______

Submitted Statement by American Veterinary Medical Association
Chairman Davis, Ranking Member Lujan Grisham, and Members of the
Subcommittee,

The American Veterinary Medical Association (AVMA) submits this
written statement for the record for the March 16 hearing before the
Committee on Agriculture, Subcommittee on Biotechnology, Horticulture,
and Research entitled, ``The Next Farm Bill: Agricultural Research.''
The AVMA is one of the oldest and largest veterinary medical
organizations, with more than 89,000 member veterinarians worldwide,
engaged in a wide variety of professional activities and dedicated to
the art and science of veterinary medicine. The mission of the AVMA is
to lead the profession by advocating for its members and advancing the
science and practice of veterinary medicine to improve animal health
and welfare and human health.
As the Subcommittee turns its attention to reauthorizing the farm
bill, the AVMA urges Congress to redouble our nation's commitment to
the entirety of USDA's Research, Education, and Economics (REE) mission
area. Increased Federal investments in REE will lead to advances and
breakthroughs in agricultural productivity, improved animal health and
welfare, better nutrition, and increased food safety and a strong
agriculture economy. A renewed commitment to sound scientific research
and technology transfer--the foundation upon which we succeed
nationally and globally--is necessary as China has surpassed the U.S.
in research funding and is nipping at our heals as it seeks to become
the global leader in agriculture. The AVMA encourages the Committee to
require consideration of the health and welfare of the animals
explicitly in all research proposals, including not only the well-being
of animals used in research but the advancement of welfare standards
beyond existing minimums and norms.
USDA REE Programs in Veterinary Medicine and Animal Health
USDA's extramural programs in the National Institute of Food and
Agriculture (NIFA) are of paramount importance to veterinary medicine.
Several of these programs are exceedingly small but powerfully
important. The Food Animal Residue Avoidance Databank (FARAD) is a tiny
food safety and animal health program that helps to keep milk, meat and
eggs free of drug and pesticide residue. This program receives just
$1.25 million--\1/2\ its authorized level--but increases are needed to
bolster FARAD's ability to provide expert advice in situations
involving accidental or intentional contamination of food producing
animals; validate higher-level mathematical approaches for determining
safe withdrawal periods, validates withdrawal estimates and expand into
contaminant exposure; broaden the Department of Homeland Security data
elements and analyses to help mitigate the impact of intentional acts
of bioterrorism on the nation's food supply; and strengthen the Global
Veterinary Drug Database to ensure that imported foods are safe to eat
and expands the U.S. domestic exports.
This Subcommittee need not be reminded how important it is to
educate and train veterinarians for careers in research as well as to
provide medical care that keeps all different kinds of animals healthy,
including livestock and poultry in rural America. Two programs
administered by NIFA prepare and/or incent veterinarians to practice
what is needed most and where services are in short supply. The
Veterinary Medicine Loan Repayment Program (VMLRP) incents
veterinarians to practice food animal medicine in rural American or
public practice in areas of need like diagnostic laboratories and State
Departments of Agriculture. Since 2010, USDA has issued 388 VMLRP
awards to veterinarians. AVMA urges the Committee to include a
provision in the next farm bill that would exempt VMLRP awards from
withholding taxes. Had awards been exempted since 2010, roughly 130
more veterinarians would have been placed into service in rural
America. The other key program is the Veterinary Services Grant Program
(authorized in the 2014 Farm Bill) which helps educate and prepare
veterinarians for rural practice and sustains private practice
veterinarians serving in rural America.
USDA's Research Enterprise
When Congress and the USDA strengthen investment and devote more
attention to the animal diseases the result will be improved animal
health and welfare. Advancements in detection, treatment, eradication
and recovery for the animal diseases outlined below will also save
billions of dollars for the U.S. agricultural economy.
Competitive research administered by NIFA's the Agriculture and
Food Research Initiative (AFRI), and the Animal Health and Disease
Research (which is only competitively awarded when funded above $5
million), as well as intramural research at the Agricultural Research
Service is essential to the advancement of animal health and welfare.
It is imperative that USDA devote increased resources to the
development of biological agents (vaccines) and diagnostics,
antibiotics, anthelmintics (de-wormers), antifungals and parasiticides;
antimicrobial use strategies, control and therapy for diseases and
infections; transboundary disease and foreign animal disease; water
quality; animal welfare, including animal handling and management;
biosecurity for agro-tourism and prevention, surveillance and response
to agro-terrorism; food security; improving genetics; management and
transport of food producing animals; microbiome; and organics.
Development of a vaccine bank/stockpile for Foot-and-Mouth Disease,
African Swine Fever, and Avian Influenza, and research on novel
technologies to detect, manage and eliminate foreign livestock pests
and other devastating animal diseases. The U.S. faces constant threats
from animal disease that could cripple American animal agriculture.
This threat demands increased attention to the proactive study of
contagious animal diseases and vaccine development and stockpile and
improvement of diagnostic capabilities. Although novel technologies
(e.g., gene modification for disease resistance) will play a role in
managing animal disease, no technology is completely effective.
Therefore, the AVMA strongly urges the USDA to also focus attention on
vaccine development and stockpiles. In addition, because many
infectious animal diseases have the potential to cross into the human
population and impact human health, USDA is urged to collaborate with
biomedical researchers to support assessments of human impacts. Disease
outbreaks lead to millions of sick animals, many of which must be
culled and cost the U.S. billions in production losses and response
costs.

Highly Pathogenic Avian Influenza (HPAI): During a 7 month
span beginning in Dec. 2014 in the Pacific Northwest, a highly
pathogenic avian influenza (HPAI) outbreak spread across 21
states, affected 211 commercial and 21 backyard poultry flocks
and resulted in the depopulation of 7.5 million turkeys and
42.1 million egg-layer and broiler chickens. The outbreak cost
over $1 billion, not including downtime losses faced by
producers. There are currently four commercially available
vaccines for AI licensed in the U.S. but there are several
problems associated with their use. They are primarily in
injectable form which makes their utilization in the face of a
major disease outbreak labor and cost intensive. Additionally,
their use must be approved by the USDA and state veterinarian
because vaccination can have negative trade implications.
Vaccinated animals cannot be differentiated from naturally
infected animals. Importing countries view the presence of
antibody as evidence of prior or active infection. Additional
funding to further develop both the DIVA vaccination strategy
for AI as well as continued research into the development of an
effective vaccine against avian influenza that can be
administered via aerosol or water would greatly benefit the
United States and its poultry industry.

Foot-and-Mouth Disease (FMD): It is estimated that an
uncontrolled outbreak of Foot-and-Mouth Disease (FMD) would
have a $200 billion impact over 10 years. FMD is a highly
contagious viral disease causing fever, blisters on the feet
and mouth, loss of appetite, drooling, and lameness impacts in
cows, pigs, sheep, goats, deer and all other domestic and wild
animals with cloven hooves. FMD is considered one of the most
economically devastating diseases in the world. Most affected
herds are culled, as was the case in 2001 in Great Britain when
over ten million animals were destroyed. While the U.S. has
been FMD-free since 1929 there is no guarantee the disease
won't return--an outbreak would devastate the livestock
industry. USDA is urged to redouble investment in the
development of a universal vaccine for FMD as well as
biotherapeutic countermeasures that will provide immunity.
There are seven different types of FMD viruses and more than 60
subtypes, so vaccines must be highly specific, matched to the
type and subtype present in an outbreak, to protect animals
against developing clinical signs of disease. Resources need to
be devoted to investigating ways to differentiate between
vaccinated and infected animals. Current diagnostic testing
methods are only validated for single sample/single animal
testing. To have any hope of responding to an outbreak, pooled
sample/multi-animal diagnostic tests must be developed and
validated.

African Swine Fever (ASF): African Swine Fever (ASF) is a
highly contagious hemorrhagic disease of pigs that produces a
wide range of clinical signs and lesions that closely resemble
those of classical swine fever. There is no treatment for ASF,
and all attempts to develop a vaccine have so far been
unsuccessful. Prevention depends on ensuring that neither
infected live pigs nor pig meat products are introduced into
areas free of ASF. All successful eradication programs have
involved the rapid diagnosis, slaughter, and disposal of all
animals on infected premises. Introduction of this disease into
the United States would have a devastating effect on the
American swine industry. USDA has developed surveillance
programs for the early detection of FMD and ASF. These programs
are awaiting validation in order to be approved for deployment
to the veterinary diagnostic laboratories. In addition, the
current sample types (oral swabs for FMD and whole blood for
ASF) are not routinely included in most swine diagnostic
samples submitted to the veterinary diagnostic laboratories.
Additional sample types (such as oral fluids or tonsil) need to
be developed and validated. The funding necessary to support
surveillance enhancement, validation and implementation need to
be prioritized.

Cattle Fever Tick (CFT) and Bovine Babesiosis: Babesia are
emerging health threats to both animals and humans in the U.S.
Accelerated research at USDA is needed to prevent catastrophic
economic losses due to cattle fever tick (CFT) and bovine
babesiosis. Additionally there are impacts from human
babesiosis due to cattle-associated Babesia divergens and
Babesia divergens-like organisms which has led to an increase
in the number of cases of human babesiosis over the past 25
years. Research on novel technologies to manage and eliminate
foreign livestock pests and tick-borne diseases from south
Texas is needed to protect the U.S. cattle industry from
suffering losses similar to those faced by Brazil ($3 billion)
and Mexico ($573 million). Movement of CFT infested wildlife
(i.e., white-tailed deer and nilgai across the Mexican border)
exacerbates our need to protect the U.S. cattle industry and
human health. At present, Texas is issuing temporary preventive
quarantines on multiple premises in the CFT-free zone of the
U.S.; however, that is not a permanent solution. We need
methods for integrated eradication to control and eliminate CFT
outbreaks involving wildlife, expedited area-wide tests of
innovative technologies to control CFT infestation, and to
adapt protocols for research in wildlife. Technology innovation
involves anti-tick vaccines; longer-acting acaricide
formulations; safer acaricides; alternative acaricide delivery
systems; tick growth regulators; acaropathogenic fungi and
nematodes; remote surveillance and delivery systems; and
algorithms to assess return on investment for the
implementation of adaptive area-wide integrated CFT eradication
protocols. Resistance to acaricides commonly used to prevent/
treat CFT infestation renders those treatments ineffective, and
drugs to prevent bovine babesiosis are not approved for use in
the U.S. Funding is needed to research new methods to prevent
further spread of CFT and to mitigate the risk for the re-
emergence of bovine babesiosis.

Amplifying USDA's attention to these animal diseases will improve
animal health and welfare, help protect the U.S. food animal-
producing industries from economic harm, and protect U.S.
consumers from contamination of the domestic food supply.
Additionally, the AVMA urges Congress to ensure the USDA has
leadership and oversight for activities associated with control
of all animal diseases. It is imperative for the Agency to
assure the availability of sufficient numbers of Federal
veterinarians who are trained to recognize and diagnose exotic
and endemic animal diseases. Currently, the U.S. Department of
the Interior's Fish and Wildlife Service sets disease standards
for imported animals and interstate movement of those animals.
As the world's population continues to grow and the demand for
animal protein increases, animals that are not currently
considered to be part of animal agriculture will play a bigger
role in meeting those demands. It is imperative that the USDA
take a leadership role in developing resources to support
related activities.
USDA & Animal Welfare
The welfare of animals used in or impacted by agricultural
practices is an under-emphasized subject area. Much of the research
that does exist is fragmented or industry-funded which reduces its
influence in the public sphere. There are multiple areas which require
concerted and transparent research efforts including: validation of
welfare assessment methods and certification schemes; stress reduction
during transportation of animals; the role of genetics on welfare;
outcomes for neonatal animals such as male chicks and dairy calves;
welfare-friendly and practical animal housing; reduction of the use of
painful procedures; and development rapid depopulation methods that are
humane and acceptable to society. In order to protect the
sustainability and reputation of the agricultural sector the AVMA
encourages the Committee to support and fund USDA research
opportunities in the aforementioned areas.
National Animal Health Laboratory Network (NAHLN)
Infrastructure investments in the U.S. network of animal health
laboratories are critical. Laboratories must be expanded and
strengthened to ensure sufficient capability and capacity for both
routine and emergency diagnostic needs. Improvements across-the-board
are needed to ensure robust connections among all component
laboratories (Federal, state, university, and commercial labs)
contributing to the diagnosis of animal and zoonotic diseases. All
parties involved--Federal and state governments, and universities--must
prioritize investment in labs participating in the NAHLN.
The 2014 Farm Bill recognized the importance of the NAHLN, the 62
member laboratory network serves as the nation's surveillance and
emergency response system during animal disease outbreaks and recovery
phase, by establishing a $15 million discretionary budget line
specifically for the Network. A fully functional NAHLN needs Federal
investment of more than $40 million annually to expand surveillance and
surge capacity. This funding would bolster the number and level of
participating state labs; to spur development of infrastructure for
electronic transmission of data between sample collectors, labs and
state and Federal databases; and increase efficiency and effectiveness
of lab personnel training and employment both regionally and
nationwide. In addition, states should double their support for the
NAHLN.
The USDA needs to invest more in the development of technologies
that will improve and increase the efficiency, effectiveness and
accuracy of the NAHLN and other animal diagnostic laboratories, and
allow them to communicate rapidly and efficiently regarding food animal
outbreaks and antibiotic resistance. USDA as well as states ought to
encourage and support rapid assay development, standardization,
validation, and adoption of new technologies for the prevention,
detection, and diagnosis of animal diseases and zoonoses.
Additionally, Congress should encourage the USDA, all 50 states and
U.S. territories, as well as private industry to explore how they may
assist unaccredited laboratories in preparing to achieve the standards
for accreditation and determine how such laboratories can be prepared
to complement Federal efforts and the NAHLN in the face of food animal
outbreaks.
Conclusion
Thank you for the opportunity to provide this information to the
Committee on Agriculture, Subcommittee on Biotechnology, Horticulture,
and Research. The AVMA stands ready to be of assistance in any way
possible. For more information please contact Ms. Gina Luke, Assistant
Director, Governmental Relations Division, at [Redacted] or via e-mail
to [Redacted].

THE NEXT FARM BILL

(FORESTRY INITIATIVES)

----------

THURSDAY, MARCH 16, 2017

House of Representatives,
Subcommittee on Conservation and Forestry,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:23 p.m., in
Room 1300 of the Longworth House Office Building, Hon. Frank D.
Lucas [Chairman of the Subcommittee] presiding.
Members present: Representatives Lucas, Thompson, LaMalfa,
Allen, Abraham, Kelly, Walz, Kuster, Nolan, O'Halleran, and
Panetta.
Staff present: John Weber, Josh Maxwell, Patricia Straughn,
Stephanie Addison, Evan Jurkovich, Liz Friedlander, Troy
Phillips, Faisal Siddiqui, and Nicole Scott.

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

The Chairman. This hearing of the Committee on Agriculture
entitled, The Next Farm Bill: Forestry Initiatives, will come
to order.
Good afternoon. I want to welcome everyone to today's
Conservation and Forestry Subcommittee hearing. Today, we will
continue our farm bill Subcommittee hearings by discussing
another important issue, our nation's forests. Our nation's
forests are a great natural resource, and today we will examine
farm bill provisions that work to ensure our National and
private forests remain healthy and productive.
While I may not have as many trees in my backyard as some
of my colleagues, or maybe for that matter, my whole district,
we are all concerned about the benefit from healthy forests,
timber, clean air, clean water, habitat, recreation, and a
variety of forest products and much more.
Since its creation by President Teddy Roosevelt, the Forest
Service has grown significantly and now manages 193 million
acres across 154 National Forests and 20 National Grasslands,
in 43 states and Puerto Rico.
Our forestlands, whether Federal, state, or private, are
huge economic drivers in many communities. The forest products
industry is estimated to employ 900,000 people and is among the
top ten manufacturing sectors in 47 states. Unfortunately, we
have seen a decline in timber harvested over the years. As
timber harvest has decreased, so too have jobs and local
businesses connected to this natural resource. I believe the
U.S. Forest Service, housed at the Department of Agriculture,
should return to its original purpose of conserving natural
resources through sustainable use. In short, a working,
productive forest.
In the 2014 Farm Bill, we made some meaningful reforms,
from Good Neighbor Authority to addressing insect and disease
concerns. These reforms were intended to help further the
better management that our forests so desperately needed at the
time. However, there is more work needed to improve forest
management in every region of the country. As the recent
rangeland wildfires in Oklahoma, Texas, Kansas and Colorado
remind us, wildfires can wreak incredible havoc, destroying
livelihoods all along the way.
As a Committee, we need to do everything in our power to
give the Forest Service the flexibility to act to reduce fuel
loads. Not only is the productivity of our forest and
rangelands at risk, also the lives of those who live and work
on these lands.
As we begin these farm bill discussions, we cannot forget
the importance of the private forestlands in all aspects of the
farm bill. We should continue to support the voluntary
conservation efforts that our forest owners make on their
lands, and we should continue to support innovation through
advanced forest products and fuels.
I look forward to hearing from our panel on how we can
better address our resource concerns, protect our private
forestlands and get our National Forests working again.
[The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress
from Oklahoma
Good afternoon. I want to welcome everyone to today's Conservation
and Forestry Subcommittee hearing.
Today, we will continue our farm bill Subcommittee hearings by
discussing another important issue--Our Nation's Forests.
Our nation's forests are a great natural resource, and today we
will examine farm bill provisions that work to ensure our National and
private forests remain healthy and productive.
While I may not have as many trees in my backyard as some of my
colleagues, we all benefit from healthy forests--timber, clean air and
water, habitat, recreation, a variety of forest products and much more.
Since its creation by President Teddy Roosevelt, the Forest Service
has grown significantly and now manages more than 193 million acres
across 154 National Forests and 20 Grasslands, in 43 states and Puerto
Rico.
Our forest lands--whether Federal, state or private--are huge
economic drivers in many communities. The forest products industry is
estimated to employ 900,000 people and is among the top ten
manufacturing sectors in 47 states.
Unfortunately, we have seen a decline in timber harvested over the
years. As timber harvest has decreased, so too have the jobs and local
businesses connected to this natural resource.
I believe the U.S. Forest Service, housed at the Department of
Agriculture, should return to its original purpose of conserving
natural resources through sustainable use. In short--a working,
productive forest.
In the 2014 Farm Bill, we made some meaningful reforms--from Good
Neighbor Authority to addressing insect and disease concerns. These
reforms were intended to help further the better management that our
forests so desperately need.
However, there is more work needed to improve forest management in
every region of the country.
As the recent rangeland wildfires in Oklahoma, Texas, Kansas and
Colorado remind us, wildfires can wreak incredible havoc, destroying
livelihoods along the way.
As a Committee, we need to do everything in our power to give the
Forest Service the flexibility to act to reduce fuel loads.
Not only is the productivity of our forest and rangelands at risk,
but also the lives of those who live and work on these lands.
As we begin these farm bill discussions, we cannot forget the
importance of the private forestlands in all aspects of the farm bill.
We should continue to support the voluntary conservation efforts
our forest owners make on their lands, and we should continue to
support innovation through advanced forest products and fuels.
I look forward to hearing from our panel on how we can better
address our resource concerns, protect our private forestlands and get
our National Forests working again.
I now recognize Mr. Walz, for his opening statement.

The Chairman. And with that, I would now like to recognize
Mr. Walz, the acting Ranking Member today, for his opening
statement.

OPENING STATEMENT OF HON. TIMOTHY J. WALZ, A REPRESENTATIVE IN
CONGRESS FROM MINNESOTA

Mr. Walz. Well thank you, Chairman Lucas. It is a pleasure
to be back with you, having gone through the last farm bill
cycle with you, and this is a place that the Chairman is truly
bigger than life in this room.
The Chairman. Isn't it inspiring?
Mr. Walz. Always keeps me honest looking over my shoulder
here.
Ms. Fudge was unable to be here today. Our current Ranking
Member is doing a fabulous job on this. But thank you, Mr.
Chairman, for holding today's hearing.
Forestry issues are an important piece of the farm bill.
They play a critical role in our conservation efforts, habitat
development, for industries that support rural communities
across the country. In Minnesota, forestry plays a vital role,
and my colleague from Minnesota, Mr. Nolan, has created many,
many good paying jobs through his work in forestry over the
years, and he is going to share, I am sure, about his personal
experience on why it is critical.
Our private forestlands and National Forests provide clean
water, clean air, and greatly contribute to our states'
economy. This is all despite the decline in the timber industry
we are seeing, and we must work to reverse this. Today's
hearing is an important opportunity to look at how the forestry
programs and authorities in the farm bill are working on the
ground and areas that we can improve on from our experts'
testimony.
Today, we are also going to take a look at how conservation
programs, which include forestry practices, are working for the
private landowners, as the Chairman mentioned.
It is clear our forests need a lot of work. The farm bill
can help provide the tools for that work to be accomplished by
the Forest Service and other private forest owners. We can't
talk about how tools are working and what tools might be needed
to address our forest health until the Forest Service has the
resources and personnel to fully utilize the tools they already
have. This means Congress and the Committee must address
wildfire funding issues that plague the Forest Service. I will
have to say, in a first look at the President's budget, it is
called a skinny budget because it is skinny on the USDA. It
cuts it by 21 percent, so every part of the Forest Service is
already hurting because of runaway fire budgets and fire
borrowing. Roads and trails that provide recreation access to
sportsmen, community and urban forestry initiatives, and the
ability of the Forest Service to be able to carry out timber
contracts, tree marking and the necessary environmental
reviews. Every aspect is not performing as it could or should
because of budget levels that are going to get exponentially
worse. We need to fix the fire funding issue so the Forest
Service can do the work we expect of it, and then we should
have the discussions on additional management tools and
strategies that make sense to get our forests healthy again.
As we discuss forestry and the farm bill, it is incredibly
important to keep the budget challenges at the forefront and
top of our mind. This Committee solves big and challenging
problems, and there is no reason wildfire funding and the
health of our Forest Service can't be addressed also.
I look forward to working with Members of this Committee,
and having a robust discussion about how our farm bill forestry
programs are working, and what we can do to give tools to folks
to make it even better.
Again, I thank the Chairman. He has proven a person who can
make these things happen, and I look forward to the testimony
today. I yield back.
The Chairman. I thank the acting Ranking Member, and I note
for everyone's benefit, you can tell the Ranking Member and the
Chairman want to get to your information, your insight, so we
are prepared to go.
The chair, in that spirit, would request that other Members
submit their opening statements for the record so the witnesses
may begin their testimony, and to ensure that there is ample
time for questions.
With that, I would like to welcome our witnesses to the
table. Mr. George Geissler, Oklahoma State Forester, Vice
President of the National Association of State Foresters,
Oklahoma City, Oklahoma; Ms. Susan Benedict, Managing Partner,
Beartown Family Limited Partnership, State College,
Pennsylvania; Mr. Jim D. Neiman, President and CEO, Neiman
Enterprises, Incorporated, Hulett, Wyoming; Ms. Becky
Humphries, Chief Conservation and Operations Officer, National
Wild Turkey Federation, Edgefield, South Carolina; and Mr. Tom
Harbour, retired National Director, Fire and Aviation
Management, U.S. Forestry Service, Falls Church, Virginia.
And with that, Mr. Geissler, you may begin. You are
recognized for 5 minutes.

STATEMENT OF GEORGE L. GEISSLER, C.F., FORESTER AND DIRECTOR,
FORESTRY SERVICES DIVISION, STATE OF
OKLAHOMA; VICE PRESIDENT, NATIONAL ASSOCIATION OF STATE
FORESTERS, OKLAHOMA CITY, OK

Mr. Geissler. Thank you, Chairman Lucas, acting Ranking
Member Walz, and Members of the Subcommittee for the
opportunity to appear in front of you today on behalf of the
National Association of State Foresters. You have a copy of our
written testimony, and I would like to provide you some
background and share with you some key points.
NASF represents our nation's state and territorial forestry
organizations, and about \1/3\ of the United States is
forested. Of those forested acres, approximately 60 percent are
state and private forests, which are the purview of our
nation's State Foresters, who provide landowner technical
assistance, forest management, and wildland fire suppression.
state and private forests provide 90 percent of the nation's
wood supply, in addition to critical ecological and quality of
life benefits. Through farm bill authorized programs, State
Foresters work with landowners to achieve sizable economic and
environmental benefits.
Last year in 2016, 82 percent of the nation's wildfires
occurred on state and private lands, which accounted for about
\1/2\ of the forested acres burned nationally. State Foresters
and local fire departments, many of which are volunteers, are
responsible for suppressing those fires.
While private forestlands are steadily being converted to
other uses, State Foresters work to find landowners access to
markets and assistance to manage their forest in order to keep
forests as forests for the benefits of America.
There are 136 million acres of urban and community forests
in the United States. These reduce energy costs, increase
property values, mitigate storm water, enhance air quality, and
support jobs, among many other things. Through the Urban and
Community Forestry Program, State Foresters support this vital
green infrastructure. All of us at NASF believe that the farm
bill is a unique opportunity to support rural America's
economic backbone and improve the quality of life for all
Americans through enhancing support for America's trees and
forests.
In generating ideas for your consideration in the 2018 Farm
Bill, NASF is honored to lead the Forests in the Farm Bill
Coalition, along with the partners that are here with us today.
Your State Foresters are recommending that in the farm bill, we
address six points, and these points are in no particular
order.
Priority item one, provide support to the State Foresters
to update our state forest action plans. These collectively
serve as a powerful strategic plan for the nation's forests.
This should include Federal agency direction, making these all-
lands plans a foundation and priority for driving decisions and
resource allocations. Forest action plans highlight and define
critical issues, prioritize available funding and resources,
and encourage coordination between organizations and
individuals.
Priority two, provide Federal and state forest managers
with tools that increase the pace of active forest management,
including cross boundary work and rapid and effective response
to insects, disease, and wildfires, expanding the use of Good
Neighbor Authority, the insect and disease designation areas,
and categorical exclusions will go a long way. In Oklahoma
alone, four insect and disease designation areas have
contributed to both forest and economic health by thinning high
density forests and expediting timber sales, which sent wood
cut by local loggers to local mills.
Priority three, support biomass energy, America's original
renewable energy source, as well as legislation which
encourages tall timber buildings and increased use of wood in
construction.
Priority four, support the initiative to reforest America,
to address not only forest lost from commercial and residential
development, but also from the impacts of wildfire, insects,
and disease.
Priority five, support the conservation title programs that
provide assistance to private landowners, including funding of
the Regional Conservation Partnership Program.
Priority six, to the extent that the farm bill can
contribute to this, as many have said, we need to provide a
comprehensive wildland fire funding fix.
The nation's State Foresters look forward to working with
the House Agriculture Committee, our partners with us here
today, our Federal partners, including the USDA Forest Service,
and the Natural Resources Conservation Service in developing
the 2018 Farm Bill. I thank you for the opportunity to testify
here today, and for this Committee's work on this bill.
[The prepared statement of Mr. Geissler follows:]

Prepared Statement of George L. Geissler, C.F., Forester and Director,
Forestry Services Division, State of Oklahoma; Vice President, National
Association of State Foresters, Oklahoma City, OK
Thank you Chairman Lucas, Ranking Member Fudge, and Members of the
Subcommittee for the opportunity to appear before you today on behalf
of the National Association of State Foresters (NASF). NASF represents
our nation's state and territorial forestry organizations. There are
some 750 million acres of forested land in the United States or about
\1/3\ of the continental U.S. Of those forested acres, approximately 40
percent are Federal forests and the other 60 percent are state and
private forests, the purview of our nation's State Foresters.
Here are some facts about state and private forests:

State and private forests provide 90 percent of the nation's
wood supply and critical benefits such as clean water and air,
wildlife and fish habitat, recreation opportunities and more.

Forest-based industry is consistently in the top ten
manufacturing sectors in 45 of the 50 states and, in terms of
total economic compensation, larger nationally than the motor
vehicles and parts manufacturing industry.

In 2016, 82 percent of the nation's wildfires occurred on
state and private lands which accounted for about half of the
forested acres burned.

Unlike public lands, private forest lands are steadily being
converted to other uses, fragmented, and developed--these
landowners need access to markets and technical and financial
assistance to manage and maintain their forests for the public
good.

There are 136 million acres of urban and community forests
in the U.S. that reduce energy costs, increase property values,
mitigate storm water, enhance air quality, support jobs and
more. The tree-trimming industry alone has revenue of $17
billion annually. These forests are vital infrastructure that
provide social, economic and environmental benefits to families
and communities.

Call To Action: State Foresters believe that the farm bill is a
unique opportunity to support rural America's economic backbone and
improve the quality of life for all Americans by enhancing support for
America's trees and forests. State Foresters recommend that the 2018
Farm Bill address these six priorities (please note that these are not
listed in order of importance to State Foresters):

(1) Provide support to State Foresters for updating state Forest
Action Plans that collectively serve as a powerful
strategic plan for the nation's forests. This should
include Federal agency direction making these all-lands
plans a foundation and priority for driving public lands
decision-making and resource allocation.

(2) Provide Federal and state forest managers with tools that
increase the pace and on-the-ground results of active
forest management, cross boundary work, and rapid and
effective response to insects, disease and wildland fire.
This includes but is not limited to expanded use of Good
Neighbor Authority, the Insect and Disease Area
Designations and categorical exclusions.

(3) Support the development of new and expanded markets for forest
products to provide all landowners, public and private,
with more forest management options.

(4) Strengthen forestry outreach, education, research and inventory
programs that enhance the ability of State Foresters to
assist private landowners and deliver Federal and state
programs serving all lands across the rural to urban
spectrum. This is fundamental in supporting trees and
forests as America's green infrastructure. State Foresters
support an initiative to reforest America to begin to
address the emerging threat of forest loss from commercial
and residential development as well as from the impacts of
wildfire, insects and disease.

(5) Include strong provisions for forests in conservation title
programs that provide technical and financial assistance to
private landowners, including reauthorization of the
Regional Conservation Partnership Program.

(6) Provide for a comprehensive wildland fire funding fix. This is
critically needed to address the increasing cost of
wildfire suppression and the challenges this poses to the
USDA Forest Service and the Department of the Interior
capabilities. To the extent that the farm bill process can
help facilitate a Congressional solution to this issue,
NASF would support those efforts.

Strong partnerships between state forestry agencies and the Federal
agencies are critical to helping landowners manage their forests and to
keeping the forests on the landscape that benefit all Americans. The
following are farm bill programs of particular importance to State
Foresters which have had significant positive impacts for America's
forests.
Positive Impacts of Previous Farm Bills on America's Forests
Farm bill authorizations have been instrumental in protecting and
enhancing the ecological health of America's trees and forests and the
economic health of rural America. State Foresters applaud the Committee
for current and past efforts. The Forest Stewardship Program, which was
first enacted in the 1990 Farm Bill, supports the states' field
foresters who deliver technical assistance and stewardship plans to the
nation's private forest owners. A forest owner with a forest
stewardship plan is almost three times more likely to actively managing
his or her land than a forest owner without a plan. This program
produces significant quantifiable results in terms of actively managed
forests and all of the ecological and economic benefits that ensue for
rural America.
The Urban and Community Forestry program, also authorized in the
1990 Farm Bill, provides funding to care for the trees and forests
closest to our nation's communities. Studies show direct linkages
between trees and human health benefits, significant storm water
treatment savings, absorption of pollutants, reduced crime rates,
increased residential and commercial energy savings (heating and air
conditioning), increased business activity and more. Investments in
America's infrastructure needs to include support for the accompanying
green infrastructure and encourage utilization of products from
America's forests. Rebuilding America's green infrastructure starts
with support for this program.
Recent farm bills have also been instrumental in elevating the role
of forestry in conservation title programs. The financial and technical
assistance provided through programs such as the Environmental Quality
Incentives Program (EQIP) and the Conservation Stewardship Program
(CSP) is invaluable in supporting small private landowners in their
forest management objectives. State forestry agencies are proactively
involved in working with the Federal agencies in successfully
implementing these programs. NASF appreciates the ongoing program
support and attention in the farm bill that is responsible for
significant on-the-ground results due to these partnerships.
Helping Lead the Forests in the Farm Bill Coalition
In generating ideas for your consideration in the 2018 Farm Bill,
NASF is honored to be helping to lead the Forests in the Farm Bill
(FIFB) coalition along with the American Forest Foundation, the
National Wild Turkey Federation and The Nature Conservancy. The FIFB
coalition includes almost 100 participating organizations who are
working together to provide input on key provisions to help our
nation's trees and forests and the American people who depend upon
them.
Recent Farm Bill Provisions--Impacts and Possibilities
(1) Broader Application of State Forest Action Plans
NASF thanks the Committee for including in the 2008 Farm Bill the
direction for State Foresters to develop Statewide Forest Resource
Assessments and Strategies, now known as state Forest Action Plans.
Together these publicly vetted plans covering all ownership categories
provide foundational guidance for managing America's forests. They have
helped our state agencies focus limited resources on areas of greatest
concern; e.g., an area where there is particularly high fire danger or
threat of an insect outbreak. NASF would like to see these Forest
Action Plans used as foundational documents in land management planning
at all levels of government so that State Foresters can work with our
Federal and local partners to focus our limited resources on areas with
the most critical challenges. State Foresters will be updating these
plans, as required by Federal law, and as such request the Committee
authorize Federal funding in order to assist State Foresters in this
important process.
(2) Encouraging Improved Federal Forest Management To Support Forest
Health and Resilience Across All-Lands
Without well-managed Federal forests, active management of state
and private forests will be difficult in parts of the nation,
especially the West. Insects and disease know no boundaries, and
neither do wildfires. Actively managed forest land can reduce
deleterious impacts on both sides of a property line. Several farm bill
authorities have significantly helped address the management challenges
mounting on Federal lands, and additional changes to these authorities
would yield significant positive results.

a. Expanding Use of Good Neighbor Authority (GNA) that was
permanently authorized in the 2014 Farm Bill, allowing
states to act as ``good neighbors'' to the USDA Forest
Service (Forest Service) and the Bureau of Land Management
(BLM) to accomplish cross-boundary work. Today there are
Good Neighbor agreements in 24 different states. A
challenge that has emerged in the implementation of this
authority is that the 2014 Farm Bill specifically excluded
GNA projects with ``construction, reconstruction, repair,
or restoration of paved or permanent roads.'' This
significantly limits the use of this authority since most
forest management projects require road repair such as
culvert replacement. It should be remembered that any
project which would be eligible for a GNA agreement with
the State Forester, would have been approved in a Federal,
publicly vetted National Environmental Policy Act (NEPA)
process. If states have marking crews and project
administrators in place, it makes little sense to have the
Federal Government expend funds to hire, train and
transport additional field staff. Including an exception
for road work limits the use of this authority in places
where GNA could make significant improvements to the health
and resilience of Federal forests. This is simply good
government.

b. Addressing Insect and Disease Infestations on Federal forests is
another important accomplishment of the 2014 Farm Bill. To
date 36 governors have identified over 400 ``treatment
areas'' in their states totaling over 55 million acres. In
the Forest Service report to Congress for 2016 on
implementation of this program, the agency identified 74
projects that had been completed using the streamlined
planning authorities as provided. State Foresters are
encouraged by this work and urge broader use made of this
authority.

As an example, in Arkansas, the State Forestry Commission
worked in partnership with the Ouachita National Forest to
prepare the reasoning for the treatment areas based on
National Insect and Disease Risk Maps (NIDRM), aerial
reconnaissance and site visits by staff from both agencies,
informing the Governor on his designation requests.
Subsequently, through Categorical Exclusion (CE)
authorities granted by the farm bill, the Ouachita National
Forest in Arkansas has been able to treat almost 1,000
acres of priority insect-infested acres through eight
individual projects, with another 2,000 acres planned in
2017. With strong partnerships and good communication, the
Commission was successful with the authorities provided in
the farm bill.

c. State Foresters would also like the Committee to consider a
similar authority where there is significant wild fire
threat. NASF proposes that Governors would identify and map
forested areas at the highest risk to wild fire, and that
Federal agencies be provided with similar streamlined
planning authorities; e.g., categorical exclusions of up to
3,000 acres, to accomplish work in those areas identified
on wildfire risk maps.
(3) Expanding Markets
Without markets for wood products, the nation's forests will not be
actively managed and the wildlife, watersheds, and rural Americans
which depend on those forests will suffer. State Foresters are looking
for opportunities to expand the use of biomass as a most basic source
of renewable energy. State Foresters also support the Timber Innovation
Act of 2016, which encourages additional use of wood products in
building as well as research into additional market opportunities.
(4) Reforesting America
As we look at the challenges facing the millions of private forest
owners in this country, primary among these is the impending conversion
of forest land, especially in the South, to residential and commercial
development. The conversion and fragmentation of forestland associated
with land development is a well-documented issue that defies one simple
or programmatic solution. We do know that timely and targeted
reforestation can be a helpful mitigating measure. In addition,
assisting and encouraging local planning authorities to incorporate
forest resource information in land use planning decisions could
promote more favorable outcomes for forestland. Reforestation is also
essential on landscapes and communities across the nation which have
been impacted by fire and/or insects and disease, as well as in urban
areas where trees provide critical green infrastructure and benefits.
We need to look at programs to encourage the replanting of America's
communities and forests and target those investments wisely as
identified in state Forest Action Plans.
(5) Reauthorize funding for the Regional Conservation Partnership
Program
Thanks to the work of this Committee, the 2014 Farm Bill created
the Regional Conservation Partnership Program (RCPP). This program has
been used across the country to leverage state and local resources to
support the needs of local forest landowners. In Virginia, an RCPP
grant of $1.3 million leveraged with matching funding from Virginia's
Reforestation of Timberlands Program, has supported over 200 forest
owners holding a total of 20,000 acres in improving the health,
condition and habitat of their forested lands through dedicated
Environmental Quality Incentives Program (EQIP) funding. The RCPP
program enabled the Virginia Department of Forestry to look at the
needs of the landowner base, and develop a program of work in
partnership with NRCS that was tailored to successfully reaching the
maximum number of landowners with Federal assistance.
(6) Pass a Wildfire Funding Fix
It will be challenging to address the management needs across
America's private and public forests with a shrinking pool of available
Federal funding. In 1995 wildfire firefighting costs constituted 16
percent of the Forest Service budget. Today over 50 percent of the
budget is consumed by fighting wildfires and the pool of funds
available to support vital agency programs which can prevent some of
the devastation and help America's forests is thus impacted. To the
extent that the farm bill process can help facilitate a Congressional
solution to this issue, we ask Congress to please find a comprehensive
wildfire funding solution quickly for the USDA Forest Service and the
Department of [the] Interior. A comprehensive solution would address
both late-season wildfire funding transfers and the erosion of agency
budgets over time due to increasing wildfire suppression costs.
Conclusion
As we look to the challenges facing the millions of private forest
owners in this country, we see many opportunities for this farm bill to
assist in the stewardship of these lands. State and private forests
provide many societal benefits including jobs and economic development,
clean air and water, wildlife habitat for both game and non-game
species and so much more.
In summary, State Foresters believe the farm bill is an opportunity
to support rural America's economic backbone and improve the quality of
life for all Americans by enhancing support for America's trees and
forests. State Foresters are asking the Committee to focus on these
five key areas:

(1) Support State Foresters in updating state Forest Action Plans
that collectively serve as a powerful strategic plan for
the all of nation's trees and forests, including Federal
lands.

(2) Increase the pace and on-the-ground results of active Federal
forest management, cross boundary work, and rapid and
effective response to insects, disease and wildland fire.

(3) Support the development of new and expanded markets for forest
products.

(4) Strengthen the ability of State Foresters to assist private
landowners and deliver Federal and state programs serving
all lands across the rural to urban spectrum. Support a
``Reforest America'' initiative to begin to address forest
conversion to development as well as the impacts of wild
fire and insects and disease.

(6) To the extent that the farm bill process is able, facilitate a
Congressional comprehensive wildfire funding solution

We look forward to working with the House Agriculture Committee,
our partners with us here today and our Federal partners, including the
USDA Forest Service. Our common goal is the same: to support the health
of America's trees and forests and the rural and urban communities
which rely on them. Thank you for this opportunity to provide
testimony. We look forward to working with you to provide the
collective insights of the nation's State Foresters in developing the
2018 Farm Bill.

The Chairman. Thank you very much.
The chair now recognizes Ms. Benedict for 5 minutes. You
may proceed when you are ready.

STATEMENT OF SUSAN S. BENEDICT, MANAGING PARTNER, BEARTOWN
FAMILY LP; MEMBER, TAX POLICY
SUBCOMMITTEE, NATIONAL PUBLIC AFFAIRS COMMITTEE, AMERICAN
FOREST FOUNDATION, STATE COLLEGE, PA

Ms. Benedict. Thank you for the opportunity to testify
today. I am a tree farmer from central Pennsylvania, where my
family owns 2,087 acres of forestland. I am also here on behalf
of the American Forest Foundation, which helps the nation's 22
million family forest owners care for our land. AFF has helped
me better manage my land, and I feel so strongly about their
forestland owners support that I have been an active volunteer
for over 6 years.
AFF co-chairs the Forests in the Farm Bill Coalition with
the National Association of State Foresters, the National Wild
Turkey Federation, and The Nature Conservancy. This Coalition
has identified five key issues for the next farm bill in a
letter signed by over 40 organizations. I would like to ask
that this letter be inserted into the hearing record.
The Chairman. Without objection, the letter is made part of
the official record.
[The letter referred to is located on p. 547.]
Ms. Benedict. Thank you.
Taking care of our woods requires money. Even though we
regularly harvest timber, this income is often not enough to
pay the taxes, let alone pay for forest management. Our timber
markets aren't what they used to be. Currently, we are selling
wood for the same actual dollars as we received in the 1980s.
On top of these challenges, landowners have significant
risks we can't plan for. Our land was hit from 2006 to 2008 by
a gypsy moth outbreak, which ultimately destroyed over $1.2
million worth of timber on our land. This is why farm bill
conservation programs are so important for woodland owners like
me. We enrolled our family land in the Conservation Stewardship
Program in 2005. It helped us continue management during a very
tough economic time for us. We also have used the Environmental
Quality Incentives Program. With the EQIP funds, leveraging our
own, we were able to afford what is called a crop tree release,
which allows competing trees to be removed and desirable trees
to flourish. This benefits both wildlife and our oak
regeneration. We are so grateful for this Committee's work to
include forest owners in these conservation programs.
My story is not unique. I am one of 22 million people
across rural America who, like my family, own and care for
woodlands. Recently, AFF assessed the biggest issues facing
family woodland owners. In the West, we found that wildfire is
the biggest challenge. In the Northeast and South, we found
that wildlife, in particular, the growing number of species
that are either already listed or could be listed in the near
future was one of the biggest issues.
I would like to ask your help in five key areas today to
help us tackle these issues. First, we ask you to maintain
funding and support for woodland owners in forestry and
conservation programs. We know that budgets are tight. We ask
that you prioritize funding for the Environmental Quality
Incentives Program, the Conservation Stewardship Program, and
Conservation Reserve Program, which provide support for
woodland owners. Additionally, we strongly support the Regional
Conservation Partnership Program, and authorities that
encourage targeted application of conservation program funding
to priority landscapes to achieve measurable outcomes. We ask
that you support cross-boundary landscape scale efforts to
tackle forestry issues, especially wildfire.
Because forests are often a patchwork of small parcels and
different public and private ownerships, it won't be enough if
just one or two landowners in a landscape are managing. New
tools for USDA agencies are needed so they can more efficiently
work across ownership boundaries and targeted landscapes, and
with willing landowners to address these issues. We ask you to
provide support and regulatory assurance for landowners
managing for at-risk wildlife. And last, the farm bill can help
support a strong, diverse forest products industry. Markets are
essential for landowners, good management, and growing rural
jobs and rural economies. One way you can do this is support
for the Timber Innovations Act, which many of you are sponsors
of. Although largely outside the jurisdiction of the
Agriculture Committee, we respectfully ask that you continue to
work with the relevant committees and enact a wildfire funding
fix.
Thank you for considering these ideas, and I look forward
to questions.
[The prepared statement of Ms. Benedict follows:]

Prepared Statement of Susan S. Benedict, Managing Partner, Beartown
Family LP; Member, Tax Policy Subcommittee, National Public Affairs
Committee, American Forest Foundation, State College, PA
Mr. Chairman, Ranking Member Fudge, Mr. Vice Chairman, Members of
the Subcommittee, thank you for the opportunity to testify before you
today regarding the upcoming reauthorization of the farm bill.
I'm a Tree Farmer from central Pennsylvania, where my family and I
own 2087 acres of forestland in the headwaters of the Chesapeake Bay.
I'm also here on behalf of the American Forest Foundation (AFF), a
nonprofit forest conservation organization helping the nation's 22
million family forest owners care for our land and continue to provide
the clean air and water, wildlife habitat, and wood products that all
Americans benefit from. AFF also operates the American Tree Farm
System', which my family is a part of, you have probably
seen the green and white sign on the side of the road. ATFS is the
nation's oldest and largest sustainable family woodland system in the
world with some 74,000 landowners who own 20.5 million acres
participating in the program. It provides woodland owners with the
assurance that we're practicing good forestry and provides people that
buy our timber the assurance that our forests are managed to the
highest of standards.
AFF co-chairs the Forests in the Farm Bill Coalition, alongside the
National Association of State Foresters, the National Wild Turkey
Federation, and The Nature Conservancy. This Coalition, with a
diversity of landowner, industry, forestry, and conservation interests,
is currently developing detailed farm bill recommendations for your
consideration. The Coalition has identified five key issues for the
next farm bill in a letter to the Subcommittee. Most of the Coalition's
issues are consistent with my testimony. I'd like to ask that this
letter be inserted into the hearing record.*
---------------------------------------------------------------------------
*Editor's note: the letter referred to follows this prepared
statement as Attachment.
---------------------------------------------------------------------------
My Story
Our land has been in our family for three generations and I'm
hopeful we can make it five when we pass it to my children and
grandchildren. Keeping our land in forest and ensuring it is well
managed is important to me and my family but it's also important to my
community and the millions of people that rely on the Chesapeake Bay
watershed for their clean water.
Our woods are also home to a number of at-risk or declining
wildlife including the golden winged and cerulean warblers and the
timber rattler.
Our woods also support our local rural economy. To help us manage
our woods, we directly employ a consulting forester and four loggers.
We harvest timber annually. We also have both a wind farm and a natural
gas lease on our property, which of course supports the local economy
and provides our family with income.
Taking care of our woods requires money. Even though we regularly
harvest timber and lease the land for energy, this income is often not
enough to pay the taxes let alone pay for management. We regularly must
put money into maintaining our 8 miles of roads and into management
practices necessary to keep the deer herd in check, so our trees
survive. Additionally, the conservation practices, like managing for
the at-risk wildlife noted above, also cost money.
Our timber markets aren't what they used to be. We used to have
five mills that bought our wood, now we only have three. The remaining
mills are a good distance from our woods, so hauling costs cut into our
margins. These remaining mills, which now take the wood of the closed
mills too, often have gluts of wood that suppress our prices further.
Because of the loss of mills, finding loggers to do the work is very
difficult because many can't afford the equipment.
On top of these challenges, landowners have significant risks that
we can't plan for. Our land was hit in 2006 and again in 2008 by gypsy
moth, which then trigge[re]d root rot and destroyed over $1.2 million
worth of timber. We are now dealing with the Emerald Ash Borer. Timber
insurance is just too expensive, so these are uninsured losses we will
never recoup. We also can't take a loss for tax purposes because it's
naturally regenerated timber with no tax basis. Essentially we lost a
generation's retirement and have no way to recover it.
This is why farm bill conservation programs are so important for
woodland owners like me. We enrolled our family land in the
Conservation Stewardship Program (CSP) in 2005. Because we were
struggling financially to cover the costs to manage our land well on
top of covering ``life's costs'' like health insurance, we decided CSP
was the right program for us. It rewarded us for the good stewardship
we were already doing, helped defray some of our management costs, and
encouraged us to do more. I recognize we can't provide this support to
every landowner all the time, but it helped us get through some hard
times when we weren't sure if we were going to be able to keep all the
land that had been in our family for so long.
Additionally, the Environmental Quality Incentives Program (EQIP)
has helped my family out. With EQIP funds, leveraging our own, we were
able to afford what's called a ``crop tree release'' which removes
competing trees, allowing desirable trees to flourish. This benefits
both wildlife and our oak regeneration.
In my day job, I'm an accountant and my husband is recently
retired. We care passionately about keeping this land and managing it
well for all the benefits for our family and our community. However,
sometimes, we can't afford managing it without some help.
My story is not unique. I'm one of the 22 million people across
rural America who like my family, own and care for woodlands. Families
own more than \1/3\ of the forests in the U.S., more forests than
what's owned by the Federal Government or by private companies. And our
families work hard every day to pay the taxes, stay on the land, and
continue to provide all the many benefits we and our rural communities
thrive on-the-jobs, wood products, clean water and air, wildlife
habitat, and places to hike, hunt, and fish.
What Challenges do Family Woodland Owners Face Today?
Recently, AFF conducted assessments in the West, South, and
Northeast to determine the biggest issues facing family woodland owners
and threatening the water, air, wildlife and wood that comes from our
land that every American, thousands of businesses, and millions of
rural jobs rely on.
While every piece of land is unique, AFF found some recurring
themes.
In the West, we found that wildfire is the biggest challenge.
Often, when we think of wildfire in the West, we think of public lands.
AFF's analysis found that more than \1/3\ of the western lands with the
highest wildfire risk-covering an area the size of the state of
Kansas--are owned by families and individuals. While wildfire threatens
homes, lives, wildlife, and much more, AFF found that wildfire risk on
family and individual lands threatens the water supplies of nearly 22
million Americans in the West. Given the pattern and frequency of
drought across the West, this poses grave risk to major cities, rural
communities, agriculture, and many other businesses.
Why aren't more landowners doing something about this wildfire
risk? We found landowners are motivated to act, they know the risks,
but there are two major barriers standing in their way: the cost of
treating their land can be in the thousands per acre and the worry that
even if they act, if their neighbors, including their public land
neighbors, don't act, then their work is for nothing.
The farm bill can help address these issues--and is already. NRCS
and the USFS, through state forestry agency partners, can provide
technical and financial assistance to help leverage the money that
landowners put in, to treat their land.
But there will never be enough government funding to fully solve
this problem, so we need other solutions too, including markets for the
wood coming from these lands. Because many of the mills have
disappeared across the West, landowners have little outlet to sell
their trees and cover at least some of their treatment costs. The farm
bill can help support markets.
In the Northeast and South, we found a different story. We found
that one of the biggest issues facing family woodland owners was
wildlife--in particular the growing number of species that are either
already listed or could be listed in the near future.
In the South, for example, we could see more than doubling of the
number of forest-dependent wildlife listed under the Endangered Species
Act. These wildlife are not at risk because of forestry, but because
they rely on forests for their habitat, family woodland owners could
face additional regulatory burdens if these wildlife are listed.
We found that some 35 million acres of important wood supply on
family lands in the South also happens to be habitat for these at-risk
wildlife. The South's wood supplies could also be impacted by addition
species regulations. Since families supply more than 50% of the wood
harvested in the south to feed mills, this could have serious
implications on the South's rural, forest-based economies.
When we talked to landowners, we found that in fact, we can manage
for wood and wildlife. We found that landowners that harvest timber are
doing more for wildlife than landowners that aren't.
In the Northeast, the story is slightly different. There are about
36 wildlife species that rely on forests that are at-risk and could
face listing, impacting significant amounts of family lands in the
northeast. But in the Northeast, our forests are facing a ``midlife
crisis.'' For a variety of reasons including historic land management
and lack of markets, we are lacking younger forests and older forests
in the region but have a prevalence of ``middle aged'' forests. Again,
not a consequence of today's land management, but something that
today's landowners, many of whom own their land for wildlife benefits,
are faced with.
Because my family has been fortunate to work with foresters and do
the management mentioned above, our land doesn't face this problem--we
have diverse wildlife habitat. But we are unique--only 20% of woodland
owners are working with a forester or professional, meaning most don't
know the value of active management.
Landowners, across the board, want to manage for wildlife. In fact
85% site wildlife as the top reason for owning woodlands in the first
place. The same is true for my family--we value our woods for the
income as well as the opportunity to hunt, hike, and fish on the land.
We want to be part of the solution, but need voluntary tools, to help
us do so.
Similar to the situation with wildfire, markets for timber, that
help defray the cost of management and encourage harvesting that helps
create younger forests, will mean better habitat for wildlife in the
Northeast.
So again, the farm bill can help with this. Providing technical and
financial assistance and programs and policy that support markets, will
help landowners tackle these challenges and have the added benefit of
supporting the rural economy. In partnership with the U.S. Fish and
Wildlife Service, these programs should also provide landowners with
regulatory assurances that protect them from future regulation if the
species they are managing for is listed under the Endangered Species
Act.
While families like mine want to do our part to supply the nation
with the wood we all consume, the air we breathe, the water we drink,
and the wildlife we all hunt and fish, we need some help. We want to
support our rural communities and make them both economically viable
and enjoyable places to live, but we can't do it alone.
2018 Farm Bill Priorities
While the issues in the regions are somewhat different, the
solutions are similar. I'd like to ask you're your help in five key
areas today. I know others on the panel will talk about other forest
priorities, so I'll focus on topics that uniquely help family woodland
owners and the challenges we face. Also, we have not yet finished
gathering feedback from our landowners, so this may not reflect a
complete list of priorities for family woodland owners.
Maintain Funding and Support for Woodland Owners in Forestry and
Conservation Programs
We know that budgets are tight. For those programs that need
reauthorization in the next farm bill, we ask that you prioritize
funding for the Environmental Quality Incentives Program, the
Conservation Stewardship Program, and the Conservation Reserve Program,
which provide support for woodland owners. In the last several farm
bills this Committee made changes to these programs to allow forest
owners to participate. We greatly appreciate these changes and hope
you'll maintain these improvements while also further expanding the use
of these programs for forestry.
We also ask that you consider funding the Healthy Forest Reserve
Program, or other strategies to help address the growing at-risk
wildlife concerns.
Additionally, we strongly support the Regional Conservation
Partnership Program and authorities that encourage targeted application
of conservation program funding to priority landscapes to achieve
measurable outcomes. While individual landowners taking action is
important, if many landowners in a landscape take action, our
individual actions are amplified. For example, if I implement a
wildlife habitat practice and my neighbors do the same, our combined
action can reduce the need to list species because we're providing
sufficient habitat. This helps all of us.
Improve Technical Assistance and Program Implementation for Woodland
Owners
The Agencies should be applauded for having made significant
progress including forest owners in these programs. However, we still
have challenges with forestry technical assistance and program
implementation as they apply to woodland owners. Tackling these
challenges will result in more efficient delivery of program resources
in ways that increase the benefits produced on issues like those
mentioned above: wildfire, water quality and quantity, and at-risk
wildlife habitat.
Forestry technical assistance and program implementation issues
include:

Education and technical assistance, not tied to specific
EQIP or CSP contract, is limited. Woodland owners often need
significant help up front, before they can be ready to talk
about EQIP or CSP practices. Most landowners don't even know
they need to be managing their woods, let alone how to get a
plan or implement a practice. Conservation Technical Assistance
funding is a key precursor to efficient and effective
implementation of Financial Assistance such as EQIP or CSP.
NRCS staff is challenged to fill this roll, suggesting that
additional resources be allocated to provide the necessary
capacity, whether within NRCS or through a partner.

NRCS forestry expertise is limited, forestry partnerships
needed. Some states have NRCS forestry experts on staff, others
do not. As a result, not all forestry practices are informed by
forestry experts. Stronger partnerships with state forestry
agencies could help fill this gap. In some states, NRCS has
contracted with the state forestry agency to deliver forestry
assistance, a collaboration that should be encouraged.

Technical Service Providers are limited and focus on already
managing landowners. While TSPs can be a great solution to
getting more forestry assistance delivered, the incentive for
TSPs to engage new landowners and to target landowners with the
most need is limited. Often, TSPs are private consultants who
rightly need to make a living. There is little incentive for
them to work with landowners who aren't already engaged and
paying clients. There is also little incentive for TSPs to
focus their effort on the highest priority lands. Consideration
should be given to streamlining the TSP program itself and
focusing resources on partnerships with state forestry agencies
and other partners for the initial work to engage landowners.

Most NRCS staff are tied up in getting contracts out, with
little time to focus on outcomes. Because NRCS staff are
pressed to get their funding out each year and have limited
time to do so, there is little time for NRCS to focus on
helping landowners who own lands that will accomplish the most
significant outcomes. They often must focus on those contracts
that come in the door rather than those contracts that have the
most impact.

Forest Management Planning recognition still a challenge.
The U.S. Forest Service and NRCS, along with State Foresters
and conservation districts have worked together to develop a
shared template for forest management planning, so landowners
don't need multiple plans to participate in various Federal and
state programs. While about half of the states have adopted
mutual plan recognition, there is still more work to be done to
streamline forest planning.

Paperwork and process are difficult. Most forest owners
aren't used to working with NRCS or FSA and even those
landowners that are very astute have difficulty working through
all the steps necessary to participate in a program. Often
landowners must turn to the Agencies to fill out their
paperwork, an inefficient use of agency resources. We must find
ways to streamline this process.

To solve some of these challenges, AFF has been working alongside
NRCS and many partners including state foresters and the National Wild
Turkey Federation, in targeted landscapes, to reach woodland owners,
educate them on the need for active forest management and get them
access to technical assistance and planning assistance. The idea is to
get many landowners engaged, interested in management, and if and when
they are ready to implement practices, NRCS can then work with them to
develop a contract. This work is highly targeted, focused on lands with
the best opportunity to deliver on water, wildlife, or other goals. But
this is the exception, not the rule, and funding for this work is
limited. Aligning resources with this important up-front work with
landowners will enhance the important conservation outcomes achieved
through financial assistance.
While we don't have all the answers, we ask the Committee to work
with us to solve these issues.
Support Cross-Boundary, Landscape Scale Efforts To Tackle Forestry
Issues, Especially Wildfire
As mentioned above, all landowners will be better off if we aren't
the only ones in our landscape that are tackling these issues. Whether
we're trying to reduce wildfire risk or protect at-risk wildlife
populations and avoid listings, because forests are often a patchwork
of small parcels and different public and private ownerships, it won't
be enough if just one or two landowners in a landscape are managing.
New tools for USDA agencies are needed, so they can more efficiently
work across ownerships boundaries, in targeted landscapes and with
willing landowners, to address these issues. We ask that the following
new tools be included in the next farm bill:

Landscape-Scale Restoration Program: currently the U.S.
Forest Service, using a patchwork of Congressional authority,
is implementing a Landscape-scale Restoration Program in
partnership with state forestry agencies. This program is
targeting landscapes identified in state forest action plans
and wildlife action plans, helping improve management on both
public and private land, in a way that measurably addresses key
outcomes. Rather than just working on one parcel here or there,
this is allowing the agencies to scale the work needed to the
scale of the problem. We ask that you clarify and create
permanent direction and authority for U.S. Forest Service and
state forestry agencies to continue this work and to carry it
out in partnership with NRCS and FSA, including with the
Regional Conservation Partnerships Program.

Cross-Boundary authority in USFS Hazardous Fuels Program:
currently, the U.S. Forest Service has limited authority to
work with nearby landowners, when doing wildfire mitigation
work. With the patchwork of public and private lands in the
West for example, to fully protect communities, water supplies,
and homes and lives, work is needed on all these lands, not
just the Federal lands. Expanding the U.S. Forest Service
ability to work with adjacent landowners will better enable the
scaled wildfire mitigation that's needed. Our intention is not
to reduce funding for work on Federal land but as funding
increases for hazardous fuels, to proportionately more funds to
be used on private lands.
Provide Support and Regulatory Assurance for At-Risk Wildlife
In addition to the above mentioned program improvements, there are
two important policy improvements that we believe will significantly
increase landowners ability to manage for wildlife, especially at-risk
wildlife, to avoid the need for listing.

Increase tools for prescribed burning. Often, to maintain
habitat for wildlife, especially in forests in the south like
longleaf and shortleaf pine ecosystems that are home to
significant at-risk wildlife populations, prescribed burning is
necessary. Unfortunately, even as we're seeing increased
interest in restoring these habitats, landowners are not
conducting the burning that's needed to maintain and improve
the habitat long-term. While liability insurance is certainly
an issue, the biggest barrier is lack of burning professionals
that can do the work. We ask that you consider new approaches
to help tackle this barrier.

Provide landowners with regulatory assurance. As noted
above, landowners want to manage for wildlife, we want to do
the right thing, but often lack the tools and assurance that we
won't face future regulations. NRCS has been working with the
U.S. Fish and Wildlife Service to provide landowners in some
instances with such regulatory assurances if they are
participating in NRCS programs. We see significant
opportunities for expansion of this work to provide landowners
who undertake conservation actions, with protection from
further regulatory burdens for both listed and at-risk
wildlife. The Healthy Forests Reserve Program offers safe
harbor protections and could be expanded and other programs
could adopt similar protections.
Support a Strong, Diverse Forest Products Industry
As noted above, markets are essential for landowners, good
management, and growing rural jobs and rural economies. Landowners need
a diversity of markets to sell their wood into: markets for high
quality trees on their land and markets for low-grade pulp wood and
residual tops and limbs.
Markets can be one of the biggest tools for tackling the wildfire
and wildlife challenges noted above. For example, in the West, if
landowners had more opportunities to sell low quality wood, more
landowners would be able to reduce their wildfire risks. In the
Northeast, as pulp-wood markets have disappeared, landowners aren't
thinning their forests and creating younger forest habitat needed for
certain wildlife.
While not all of these issues can be addressed in a farm bill, but
we offer three suggestions for your consideration:

Support the Timber Innovation Act. Many of you have already
agreed to cosponsor the Timber Innovation Act, thank you. This
legislation clarifies authority and directs the U.S. Forest
Service to conduct research and development into new and
improved forest products, such as products for building tall
buildings out of wood. New and improved forest products mean
more landowners can sell their wood and afford good
stewardship.

Support forest-based facilities in Energy titles, especially
in areas where we've lost forest markets. The Energy titles
grants, loans, loan guarantees can be aimed at facilities that
will use forest materials in areas where there are little or no
markets left.

Encourage Rural Development that uses forest materials.
USDA's rural development programs that fund building
construction could be encouraged to use agriculture-based
materials, including wood products. While this may not be a
significant market by itself, it will encourage architects and
engineers to learn how to use wood, which will then impact
private markets.
Wildfire Funding Fix
In addition to enacting the above recommendations in the upcoming
farm bill, there is one other policy issue that we ask for your support
on, although largely outside the jurisdiction of the Agriculture
Committee. If not addressed, this issue could impact the success of
improvements you enact in the farm bill.
As you all know, wildfire fighting is literally consuming the U.S.
Forest Service budget. While it may seem tangential to today's hearing
discussion, it is far from it. As more and more of the Forest Service
budget is used for wildfire fighting, less funding is available for the
technical assistance and research that the U.S. Forest Service, in
conjunction with state forestry agencies, delivers. This support is
fundamental to successfully implementing the farm bill programs. We
respectfully ask that you continue to work with the relevant committees
and enact a wildfire funding fix that stops the erosion of the Agency's
budget and stops the persistent ``borrowing'' the Forest Service must
do when they run out of funds for firefighting.
Thank you again for the opportunity to testify and I'm happy to
answer any questions you may have.
[Attachment]
March 16, 2017

Dear Chairman Lucas and Ranking Member Fudge:

On behalf of the millions of forest owners, conservationists,
hunters, anglers, forest industry, and natural resource professionals
represented in the Forests in the Farm Bill Coalition, we ask for your
continued support of forest priorities in the upcoming farm bill
reauthorization.
The Forests in the Farm Bill Coalition is a diverse group of
interests that has worked together for over 15 years to build consensus
forest sector platforms for the last three farm bills. We are greatly
appreciative of the Committee's increasing support for forests over
these last three farm bills. You have made significant policy
improvements that are making a real difference on the ground.
Unfortunately, our work is not yet done, as we aim to ensure that
the nation's forests continue to support rural economies and almost one
million direct jobs while also providing much of the clean air and
water, wildlife habitat, and recreational opportunities that every
American enjoys. With over \1/2\ of the forestland (475 million) in the
United States in private ownership, including individuals, families,
corporations and Tribal forest landowners, it is especially important
that the farm bill continue to support these owners, many of whom
provide these public benefits at little or no cost to consumers.
There are challenges that the farm bill can help address, which
limit opportunities for forests to provide economic and other public
benefits including:

As much as 34 million acres of forestland are projected to
be converted to development by 2060.

While not attributed to forestry activities, there is the
potential, particularly in the South, to nearly double the
number of listed species subject to the Endangered Species Act;
such listings could, however, significantly limit forest
management opportunities.

Wildfire occurrence (average acres burned) has increased by
160 percent from 1985 to 2015 and burns about 7 million acres
of forestland each year.

In the West, more than \1/3\ of the high wildfire risk acres
are family-owned lands, largely because these families lack
resources and markets to reduce firerisk.

Approximately 81 million acres of forests are subject to
increased mortality from insects, disease and invasive plant
infestation.

About 80 percent of the 22 million family-owned forest
landowners in the U.S. have not utilized assistance from
professional foresters in making decisions about forest
management and marketing opportunities.

Addressing these issues requires a combination of strong markets,
effective technical and financial assistance, informed forest
landowners, land managers, and communities, and continued research and
education.
The Forests in the Farm bill Coalition asks that you include
policy, programs, and funding support in the 2018 Farm Bill that will:

Increase the long-term protection and conservation of forest
resources from threats such as wildfire, insects and diseases
including the use of fire as an important forest management
tool,

Conserve and enhance wildlife habitat through voluntary
conservation activities, particularly habitat for at-risk
species, to prevent the need to list species under the
Endangered Species Act,

Encourage the retention and perpetuation of forestland and
associated values, goods, and services,

Increase employment, manufacturing, rural jobs, and
sustainable forest management through a strong forest products
industry, and

Improve forest conservation program effectiveness and
availability to private landowners and land managers to address
many of the above issues.

As in the past, we understand that the Agriculture Committees will
be challenged with limited budgets and options. Given the work that
your Committee has already done to reduce farm bill spending, we urge
you to resist additional cuts to farm bill programs that will limit
opportunities to craft responsive forest policy.
We also recognize that for many of the above noted issues to be
fully addressed, the wildfire funding issues currently plaguing the
U.S. Forest Service must be dealt with. As you know, as wildfires have
grown, the increased costs of fighting these wildfires has consumed an
increasing portion of the Forest Service budget. Today, wildfire
fighting costs consume over 50% of the budget, whereas in 1985, these
costs were only 15% of the Agency's budget. With more funds going to
fight wildfires, less funds are available for Forest Service programs
and activities that support the nation's private forest owners and
forest industry. While much of the solution to this funding challenge
lies in other Committee's jurisdiction, we ask that you continue to
serve as an advocate to fix this issue, so improvements your Committee
cho[o]ses to make in the upcoming farm bill can be fully utilized.
While each of our organizations has priorities within and in
addition to these recommendations, we agree that a focus on these key
priorities will help ensure that forests and the people that live in
and work in them, can continue to contribute to the nation's economy
and environment. The Forests in the Farm Bill Coalition looks forward
to providing more detailed recommendations to address the above
priorities as work on the farm bill continues.
Thank you for your consideration. We look forward to working with
you as you develop the 2018 Farm Bill.Sincerely,

Alliance of Landowner Hardwood Federation Ruffed Grouse Society
Associations
American Bird Land Trust Alliance SCJ General Services
Conservancy
American Chestnut Lyme Timber Company Society of American
Foundation Foresters
American Forest National Alliance of Southeastern Lumber
Foundation Forest Owners Manufacturers
Association
American Forests National Association of Sustainable Forestry
Conservation Districts Initiative
American Wood Council National Association of Sustainable Northwest
Forest Service
Retirees
Association of Fish and National Association of The Center for Heirs'
Wildlife Agencies State Foresters Property
Boone and Crockett Club National Association of The Conservation Fund
University Forests
Resources Programs
CarbonVerde National Bobwhite The Nature Conservancy
Conservation
Initiative
Environmental and National Wild Turkey Trust for Public Land
Energy Study Institute Federation
Environmental Defense National Wildlife Theodore Roosevelt
Fund Federation Conservation
Partnership
Forest Resources National Woodland Western Pennsylvania
Association Owners Association Conservancy
Forest Stewards Guild Northern Forest Center Weyerhaeuser Company
Forestry Association of Resource Management Wildlife Mississippi
South Carolina Service
Green Diamond Resource
Company

CC:

House Agriculture Committee, Conservation and Forestry Subcommittee
Members.

The Chairman. Thank you.
Mr. Neiman, you are recognized for 5 minutes.

STATEMENT OF JIM D. NEIMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, NEIMAN ENTERPRISES, INC.;
PRESIDENT, FEDERAL FOREST RESOURCE COALITION, HULETT, WY

Mr. Neiman. Chairman Lucas and acting Ranking Member Walz,
if I am recognizing the right person here, thank you for the
opportunity to speak here today on behalf of all my fellow
purchasers of National Forest timber, and to discuss the next
farm bill. I am extremely honored.
I am Jim Neiman, President--and I am a third generation.
This is our 80th year, going on 81 in business. It is a family-
run business that employs nearly 500 people in four small
communities in Wyoming, South Dakota, and Colorado. We are
almost entirely dependent on timber off the National Forests,
and in our states, the Forest Service manages almost all of the
timber in those states because of the high elevation. I am also
President of the Federal Forest Resource Coalition. Our members
operate in 32 states, employ nearly 400,000 employees, and
provide over $19 billion in payroll. And all of us rely on a
dependable, predictable supply of timber off our National
Forests. It is very critical.
Unfortunately, the health of many of our National Forests
is declining. Millions of acres have been devastated by
catastrophic insect epidemics and wildfires. The Forest Service
estimates that another 82 million acres, 82, are at an elevated
risk of fire and insect outbreaks. In the Black Hills, we have
already lost over 100,000 to outbreaks of bugs and 100,000 to
fire. In Colorado, we have lost hundreds of thousands of acres
to the spruce beetle.
Across the National Forest system, foresters are selling
less timber and managing fewer acres than called for in the
forest plans. When the Forest Service backed away from active
forest management in the 1990s, harvests declined rapidly,
mills closed, and communities suffered. Meanwhile, the trees
kept growing, which led to overstocking, drought, insects, and
catastrophic fires. This Committee recognized the magnitude of
the crisis, and in the 2014 Farm Bill adopted the most
significant forestry reform since the Healthy Forest
Restoration Act in 2003. Unfortunately, these authorities,
while a much appreciated first step, have yet to be implemented
at a rate that will meaningfully improve the situation of our
National Forests.
For instance, the Insect and Disease Treatment Areas
Authority identified over 56 million acres in 37 states as
needing treatment. Yet at the current pace of treatment, it
will take over 440 years to treat all 56 million acres
designated in 2014. This is treatment for one time. It does not
include growth.
Our written testimony provides a number of specific
recommendations for the next farm bill. The enormity of the job
facing the Forest Service, which is horrendous, and the current
slow pace of action indicate the much broader adoption and
streamlined approaches are needed if we are to restore the
health of our forests. We urge the Committee to adopt greatly
expanded categorical exclusions and to treat insects and
disease outbreaks, reduce fire danger, create early seral
habitat, and increase the pace and scale of management. The
Forest Service should be given broad new authorities to use
streamlined NEPA approaches on all acres that are not set aside
in wilderness or other protected categories. Unintended
obstacles to the use of the Good Neighbor Authority should be
removed, such as the requirement that work be done on acres
adjacent to state and private lands, and the restrictions on
modest road repair and reconstruction should be removed.
Our members are extremely grateful for the work that this
Committee did in the 2014 Farm Bill. We continue to encourage
the Forest Service to more fully utilize the authorities
provided in this landmark bill. The above recommendations would
allow the Forest Service to do more across the landscape, do
more work better and faster, which will result in lower costs,
more community support, more jobs, healthier forests, and
potentially higher returns to the Treasury. A failure to act
means that the alarming trends in declining forest health, loss
of forest industry jobs, continued catastrophic fires are a
virtual certainty. We urge you to take the opportunity offered
by the next farm bill to help move the trend towards more,
better, and faster management.
Thank you, Mr. Chairman, and all the Committee Members.
[The prepared statement of Mr. Neiman follows:]

Prepared Statement of Jim D. Neiman, President and Chief Executive
Officer, Neiman Enterprises, Inc.; President, Federal Forest Resource
Coalition, Hulett, WY
Building on the Success of the 2014 Farm Bill for Federal Forests
Thank you, Chairman Lucas and Ranking Member Fudge. My name is Jim
Neiman, and I am President and CEO of Neiman Enterprises. We have four
sawmills, one each in Hill City and Spearfish, SD, one in Hulett, WY,
and one in Montrose, Colorado. These mills create 475 direct jobs, and
help support 250 contractors.
I am also President of the Federal Forest Resource Coalition,
representing purchasers of Forest Service timber from 32 states.
Collectively, our members employ over 390,000 people, and provide over
$19 billion in payroll. Our members purchase, harvest, transport, and
process National Forest and BLM timber into renewable wood, paper, and
biomass energy products.
The 2014 Farm Bill was the most significant Forest Service reform
legislation at least since the passage of the Healthy Forest
Restoration Act in 2003. Among other provisions, the 2014 Bill
included:

Permanent reauthorization for Stewardship Contracting,
including reforms that protected contractors from unlimited
fire liability;

Expanded Good Neighbor Authority from a two-state pilot to a
nation-wide program;

Authority to use Designation by Prescription and Designation
by Description, streamlining timber sale preparation and
reducing costs; and

Creation of new Categorical Exclusions and streamlined
Environmental Analyses to implement forest insect and disease
treatments on certain National Forest acres.

These provisions, while much appreciated, have yet to yield
significant progress in reversing alarming trends in forest health on
our National Forests. The relatively low level of use suggests that
greater flexibility is required in order to move the National Forests
closer to forest plan objectives, including healthier forests, reduced
fire danger, and increased timber outputs.
As you well know, millions of acres of National Forests have been
affected by insect epidemics and catastrophic fires, and the Forest
Service estimates that over 82 million acres of National Forests are at
elevated risk of catastrophic wildfires, insect, or disease outbreaks.
Last month, the Colorado State Forest Service estimated there are 834
million dead trees in the state, mostly from devastating insect
epidemics. California is dealing with a large and rapidly growing
mortality event, with as much as 10 billion board feet dead on just two
of their overcrowded National Forests. Large scale wildfires cost
billions annually to suppress, and cities such as Denver have been
forced to spend tens of millions of dollars restoring damaged
watersheds.
In other National Forests, such as those in the Lake States and New
England, passive management has allowed forests to develop into closed
canopy stands where little sunlight reaches the forest floor. These
forests have limited value as wildlife habitat and are susceptible to
fire and insects, while populations of species that require early
successional habitat, such as the ruffed grouse and Kirtland's Warbler,
continue to decline.
The extent of the problem is not in doubt. The Government
Accountability Office recognized the urgency of the need to reduce
hazardous fuels in 1991. The Forest Service acknowledges that over 73
million acres of their lands are a high priority for management and
that ``one time treatment of all high fire risk areas would not fully
address the fuels problem, as landscapes continue to change over time
and fuels would build up on many lands currently in historic condition,
without periodic maintenance treatments.'' The Western Governors'
Association has adopted numerous resolutions acknowledging the extent
and severity of the problem, and urging rapid action to address it.
These problems are often the most severe in states which have lost
most of their wood using industries due to constrained supplies from
Forest Service lands. We've learned through painful experience that
efforts to rebuild the industry infrastructure in such places is a
slow, laborious process. Efforts to increase the pace and scale of
management are often stymied by this problem--a classic chicken-or-egg
problem. The Forest Service must demonstrate it will reliably offer
viable projects to attract investment, and it's difficult for the
Forest Service to offer these projects under current authorities.
Current Forest Plans allow for roughly twice the current level of
harvest from our National Forests. Increasing the pace and scale of
management to meet the roughly 6 Billion Board Feet called for in
current plans will not only create American jobs in frequently hard
pressed rural areas; it will reduce fire hazards and improve wildlife
habitat coast to coast.
Current authorities do not allow the Forest Service to plan and
implement needed management projects in a timely fashion. Badly needed
projects to thin hazardous fuels can take years to plan, at which point
groups opposed to management file lawsuits that cause further delays.
Many National Forests are woefully behind on meeting forest plan
objectives, particularly those associated with young forests. At best,
it takes the Forest Service at least a year to plan and begin
implementing salvage projects. Worse yet, the Forest Service has, in
our view, been slow to implement streamlined authorities provided in
the 2014 Farm Bill.
The Insect & Disease Treatment Areas authority created by the 2014
Bill is a case in point. The authority allowed states to petition the
Secretary of Agriculture to designate certain NFS lands as ``Insect &
Disease Treatment Areas,'' where the Forest Service would then be
allowed to use expedited NEPA tools--including Categorical Exclusions
of up to 3,000 acres--to reduce fuel loads and increase stand health.
37 states petitioned for the inclusion of over 56 Million acres of
National Forest lands. Since the petition process ended in May of 2014;

41 Categorical Exclusions have been decided in 12 states,
covering a grand total of about 78,000 acres of treatments,
including 26,000 acres of timber harvest.

An additional 28 projects--using Categorical Exclusions and
focused Environmental Assessments & Environmental Impact
Statements--covering an additional 127,000 acres--are in the
works.

This May, it will be 3 years since the close of the designation
period. At this rate, the Forest Service is treating just over 26,000
acres per year. If we assume that the additional 127,000 acres will be
decided entirely in this fiscal year, that would represent a
significant ramp up. However, even at that higher rate, it will take
over 440 years to treat all 56 million acres designated in 2014.
We are flummoxed at the low rate of use of these new authorities in
regions that have had significant forest mortality events. Region 2,
where my businesses are, has only used the new authorities on 1,600
acres for mechanical treatments, despite the fact that we've had
millions of acres of damage from Mountain Pine beetles and Spruce
Beetle epidemics. Oregon, for another example, had over 6.5 million
acres designated as treatment areas, yet has completed only had two
projects covering a few thousand acres, with only 5,100 acre in
progress.
Likewise, we are concerned that Good Neighbor Authority Master
Agreements are only in place in 18 states (Alabama, Alaska, Arizona,
California, Colorado, Florida, Idaho, Indiana, Louisiana, Michigan,
Minnesota, Montana, New Hampshire, Ohio, Oregon, South Dakota,
Tennessee, Texas, Vermont, Wisconsin and Wyoming). The Forest Service
should have Master Agreements with every state that includes NFS lands.
Moreover, we are concerned that implementation of the current Good
Neighbor Authorities has exposed limitations which are hampering
program effectiveness. Overlapping and conflicting authorities present
this Committee with the opportunity to fix problems we didn't foresee
in 2014.
Recommendations for the Next Farm Bill
We learned from experience that the farm bill is a viable vehicle
for meaningful reforms of our National Forest System. We urge this
Subcommittee to continue this commitment to ensuring better management
of the 191 million acres of National Forests, working closely with your
counterparts on the Natural Resources Committee and, of course, your
colleagues in the other chamber.
In order to address the continuing forest health crises these
Federal lands are experiencing, we urge you to take the following steps
in the next farm bill:
Create Additional Categorical Exclusions: Additional CE authority
through new categories or expansion of existing categories would mean
fewer projects would require detailed NEPA analysis. In adopting new
CE's, Congress should specify that the Forest Service has the
discretion to determine when and how to apply ``extraordinary
circumstances'' reviews to the projects, and clarify that projects
conducted pursuant to new and existing CE's do not require
documentation of cumulative impacts. We recommend the following new or
expanded CE's:

Early Seral Habitat Creation on up to 10,000 acres'.

Expansion of Insect & Disease Treatment Area CE's to 10,000.

Improve wildlife habitat on up to 10,000 acres.

Allow the FS to conduct projects consistent with the Insect &
Disease CE: The existing Insect & Disease CE's could be improved by (1)
allowing the Forest Service to move forward with projects on lands that
it determines meet the criteria for designation; (2) expand its
application to all acres outside of designated wilderness, roadless, or
on which removal of vegetation is prohibited by law; and (3) making the
authorities permanent; and (4) authorizing projects in lands in Fire
Regime IV.
Clarify NEPA Responsibilities at the Forest Service: GAO has found
that the Forest Service does more NEPA compliance, produces more EIS's,
and takes longer to do so than most other Federal agencies whose
projects have inherently more lasting impacts on the landscape, for
instance through creation of permanent infrastructure. Congress should
clarify that at the Forest Service:

Application of NEPA should be restricted to truly ``major''
actions, not routine land management: Thinning of forests in
general forest or ``suited for timber production'' acres under
existing forest plans should presumptively not be considered a
major action. Taking steps to rapidly address hazard trees
after wildfires, ice storms, or wind throw events should not
presumptively be considered ``major.''

Clarify that (1) environmental impact statements only
require an agency to analyze the proposed action and a no
action alternative, and that consideration of additional
alternatives is solely at the discretion of the Forest Service;
and (2) environmental assessments done by the Forest Service do
not require analysis of a no action alternative.

Clarify Problems Restricting Use of Good Neighbor Authority: Due to
a rapidly unfolding series of events, Congress enacted two different
Good Neighbor Authorities during 2014. Unfortunately, both of these
authorities contain language that, as explained in Forest Service
guidance, limits the ability of the Forest Service to use these
authorities. In our view, an effective, single National Good Neighbor
Authority is needed to strengthen the Forest Service relationships with
the states, create program efficiencies, and maximize program
effectiveness. A single new Good Neighbor Authority should:

Allow the Forest Service to use GNA for projects anywhere on
the National Forest System, not just those that meet abstract
and poorly defined adjacency requirements; and

Remove restrictions on road repair and rehabilitation.
Current practice defines road reconstruction so broadly that
even limited road work triggers concern when the Forest Service
uses GNA. This leads to poorly designed timber sales and
precludes some projects altogether.

Clarify Congressional Intent on Stewardship Contracting:
Stewardship Contracting is one tool for achieving land management
goals; in many cases, the same land management results can be--and are
currently being--achieved with traditional timber sale contracts.
Congress recognized this when they made the authority permanent in the
2014 Farm Bill, saying that Stewardship Contracting authorities is not
intended to replace or supplant other contracting tools. The Forest
Service and BLM can achieve greater program efficiency and transparency
in the use of Stewardship Contracts, while ensuring local support for
the projects performed using this important tool. These reforms will
also help attract a broader variety of potential partners who want to
support and participate in Stewardship Contracting projects. The next
farm bill should:

Make retention of existing wood products infrastructure a
co-equal objective with other goals of Stewardship contracts
and agreements.

Provide clearer criteria to help the Forest Service
determine when to use Stewardship Contracts, Stewardship
Agreements, or other contracting mechanisms. In general, if a
project is located in the suitable timber base and can be a
viable, commercial timber sale, it should be offered as such.

Clarify the Forest Service and BLM ability to use ``best
value'' or ``lowest cost, technically acceptable'' criteria
when making contract awards.

Where Stewardship contracts or agreements result in payments
to the Forest Service, 25% of those gross payments should be
directed to the County where the project is being performed.

Congress must remind the Forest Service that funds collected
under the Knutson-Vandenberg Act may be used beyond the sale
area boundary, and direct the Forest Service to reduce overhead
costs charged against K-V collections.

Provide Greater Certainty for Project Level Decisions: The House
Agriculture Committee played a key role in providing some of the
judicial review relief for certain Forest Service decisions in the
Healthy Forest Restoration Act of 2003. In addition to creating a
streamlined ``objection'' process (expanded to all Forest Service
projects in 2011), HFRA encouraged courts to provide deference to the
Forest Service for a narrowly defined set of projects, required
participation in the administrative objection process in order to be
eligible to file suit, required courts to consider the ``balance of
harms'' from a proposed project versus the harms that could be caused
if a project wasn't done, and provided that injunctions be limited to
60 days. In the next farm bill, the Congress should:

Expand HFRA judicial review provisions to all Forest Service
vegetation management projects, except on acres where timber
management is prohibited by law or the Forest Plan[.]

Provide for alternative dispute resolution mechanisms,
including ``baseball'' style arbitration, for some projects on
a pilot basis.

Restrict EAJA payments to reasonable limits for hourly
reimbursement, and provide stricter controls to ensure that
payments do not go to losing plaintiffs or organizations which
have substantial financial resources.

Conclusion: The Federal Forest Resource Coalition is extremely
grateful for the work this Committee did in the 2014 Farm Bill. We
continue to encourage the Forest Service to more fully utilize the
authorities provided in that landmark bill. However, we've also become
aware of some key missing elements and unforeseen challenges as the
Forest Service has worked to implement these authorities. The above
recommendations would allow the Forest Service to more rapidly propose,
analyze, and implement needed forest management projects across the
landscape. Doing more work, better, and faster will result in lower
costs, more community support, and potentially higher returns to the
Treasury.
If we fail to act, however, the alarming trends in declining forest
health, loss of forest industry jobs, continued catastrophic fires,
destroyed watersheds and degraded wildlife habitat are a virtual
certainty. While the Congress has consistently provided streamlined
authorities since 2003, we've seen that they have yet to succeed in
moving the Forest Service far enough, fast enough to address its many
and serious problems.
We urge you to take the opportunity offered by the next farm bill
to help move the trend towards more, better, and faster management.

The Chairman. Thank you, and the chair now recognizes Ms.
Humphries for 5 minutes.

STATEMENT OF REBECCA A. HUMPHRIES, CHIEF
CONSERVATION AND OPERATIONS OFFICER, NATIONAL WILD TURKEY
FEDERATION, EDGEFIELD, SC

Ms. Humphries. Thank you, Chairman Lucas. I am Becky
Humphries. I am the Chief Conservation and Operations Officer
for the National Wild Turkey Federation, and previously I was
the Director of the Michigan Department of Natural Resources
that managed 4\1/2\ million acres of state forests and wildlife
lands.
The National Wild Turkey Federation is a national nonprofit
conservation organization. We have 230,000 members located
across the country, and we have chapters in every state of this
country. We have a team of wildlife biologists and foresters
that focus on doing actual on the ground conservation work,
putting conservation on the ground, as we say. We have had a
formal partnership with the U.S. Forest Service since 1986, and
with NRCS for more than a decade. We are a leader in
stewardship contracting, having the first stewardship contract
and 93 successful contracts since, and we are in the top 20
purchasers of Federal timber by volume each and every year,
ranking as high as fifth. In conjunction with NRCS, we provide
technical assistance to over 900 landowners, and as was
mentioned, we are co-chair of the Forests in the Farm Bill
Coalition.
Wildlife biologists know that forest diversity at the
landscape level is key to diversity, and it takes active
management of our forests. It creates younger forests. It
reduces the risk of wildfire, insects, disease, and improves
our water quality across the country. And it creates jobs and
economic vitality for many of our rural communities. The pace
of creating young forest habitat needs to be greatly increased.
It is one of the must vulnerable landscapes we have right now.
The farm bill is a really important legislative priority for
conservation work and forestry and conservation titles
authorize critical programs and funding for both the U.S.
Forest Service and the NRCS to implement active management.
There were a lot of good things in the 2014 Farm Bill, and
we appreciate the authorities and tools that have been granted.
The end result is increasing the scale and pace of good
conservation work.
Looking forward to the next farm bill, we are recommending
the following. First, to focus on landscape level opportunities
and program delivery, to enhance collaboration, particularly
between state wildlife agencies and Federal agencies to ensure
management helps achieve fish and wildlife population
objectives. To continue to incentive, mid-contract management
of forestry practices to maximize long-term wildlife habitat
value, and to increase adjusted gross income limits for
participation in farm bill conservation programs, and increase
payment limits for conservation activities to better reflect
the larger family farm budgets. This will increase
participation on large blocks of land and landscapes.
Program-specific recommendations that we are advocating for
include Environmental Quality Incentive Program, or EQIP as we
all call it, to increase the minimum amount of EQIP funds for
wildlife-related practices from five to ten percent. Eligible
land should include lands capable of production, in addition to
those that are in production. This was allowed in WHIP, but not
included when the programs were combined.
The Regional Conservation Partnership Program, or RCPP, as
we call it, we have participated in a number of these projects
and we see tremendous potential with this new program. We
support reauthorization and maintaining funding levels. We have
seen and had concerns with implementation of the program that
limits our ability to fully participate. Funding to offset a
portion of the recipient's administrative costs should be
allowed. There is a true cost to partners to deliver these
practices on the ground.
The forestry title, we support expansion of stewardship end
result contracting to all Federal agencies, not just the
current U.S. Forest Service and BLM.
We appreciate this Committee and the House's work in the
last Congress to address how fire funding and wildfire was
addressed, but a fix is still needed because borrowing takes
away from active management. The House Committee on Agriculture
has a long history of addressing large multi-committee issues
and developing the farm bill, and we are fully supportive of
using the farm bill as a vehicle for true forest management and
wildfire funding reform.
In conclusion, our recommendations will improve current
programs, and we think benefit wildlife species, help improve
forest health and water quality, reduce wildfire. We thank you
for your time and your attention to addressing these critical
issues. Thank you.
[The prepared statement of Ms. Humphries follows:]

Prepared Statement of Rebecca A. Humphries, Chief Conservation and
Operations Officer, National Wild Turkey Federation, Edgefield, SC
Introduction
Mr. Chairman, Members of the Subcommittee, I am Becky Humphries,
Chief Conservation and Operations Officer of the National Wild Turkey
Federation (NWTF), and I appreciate the opportunity to testify as you
begin discussions for the next farm bill. Founded in 1973, the National
Wild Turkey Federation is a national nonprofit wildlife conservation
organization dedicated to the conservation of the wild turkey and
preservation of our hunting heritage. The National Wild Turkey
Federation is 230,000 members strong and maintains local chapters in
every state. With the successful restoration of the wild turkey
complete, the National Wild Turkey Federation has focused its efforts
on our ``Save the Habitat. Save the Hunt.'' initiative, which connects
both parts of our mission by recognizing the importance of quality
habitat for wildlife conservation and its' significance to our hunting
tradition. Through this initiative, our ``Save the Habitat'' efforts
are largely focused on creating and maintaining healthy forests through
active management.
NWTF is unusual among conservation organizations. We do not simply
advocate for what we want, we actually do serious forestry work and put
conservation directly on the ground on private and Federal public
lands. The NWTF has over fifty professional conservation staff located
across the nation, including nine professional foresters. These staff
work daily with state agencies, Federal agencies, and private
landowners to implement forest management and other wildlife habitat
projects on the ground. The NWTF has a long-standing formal partnership
with the United States Forest Service (USFS) dating to 1986 and with
the Natural Resources Conservation Service (NRCS) for over a decade. We
have worked together to deliver thousands of projects benefiting
wildlife and wildlife based recreation. The NWTF has been a leader in
stewardship contracting, implementing one of the first projects by a
nonprofit organization a decade ago. Since, we have partnered with the
USFS on 93 successful stewardship contracts and agreements. These
projects demonstrate the benefits of partnership and have resulted in
thousands of acres of sustainable forest management and enhanced
wildlife habitat. As a result of these agreements, over the last decade
the NWTF has consistently been one of the top 20 purchasers of Federal
timber on a volume basis, ranking as high as fifth. We understand
first-hand the power of collaboration and partnerships, the value of
categorical exclusions to getting work done in an efficient manner, and
the challenges faced by the Federal agencies and private landowners in
getting active management implemented on the ground.
Professionally trained wildlife biologists know that forest
diversity at the landscape level is the key to proper management to
achieve robust species diversity. There are four fundamental criteria
each forest species needs for survival: food, water, shelter, and
space. Depending on how a forest is managed, various amounts of these
criteria become available to the animals living there. Wildlife
managers consider active management the best solution to meet the
habitat requirements of the largest variety of species. Active
management creates young forest habitat, which provides adequate food
sources, nesting habitat, and hiding places for forest dependent
wildlife. Throughout the U.S. we are losing this diversity on a
landscape-level scale, in many cases because our forests are becoming
more homogenized and over-mature. The U.S. Forest Service and the
Natural Resources Conservation Service have recognized the need for
young forest habitat, and thanks to this Committee's work, those
agencies provide funding and guidance to provide habitat for imperiled
species such as the golden-winged warbler, New England cottontail,
gopher tortoise, and red-cockaded woodpecker. These benefits extend to
numerous other species of wildlife, and result in a greater diversity
of plants and animals.
2014 Farm Bill--What Was Good
The National Wild Turkey Federation recognizes and appreciates the
authorities and tools that have been granted in recent years by the
Agriculture Committees to expand the ability of private landowners to
manage their lands and Federal agencies to manage Federal forestlands.
We believe that the 2014 Farm Bill provides important tools aimed at
streamlining processes, increasing multi-party collaboration, directing
closer cooperation with state fish and wildlife agencies in order to
achieve fish and wildlife population objectives, transitioning towards
landscape-level (``all lands'') management while respecting private
landowners property, building capacity, improving watersheds,
addressing forest health risks (e.g., fire risk and insect/disease
infestations), and generally enhancing the pace and scale of management
for healthy forests. The permanent authorizations of Stewardship End-
Result Contracting and Good Neighbor Authority, along with the
establishment of Insect and Disease Area designations in the 2014 Farm
Bill are very helpful additions. The specific focus of each tool
varies, but all strive to increase the pace and scale of restoration on
forest lands by addressing contracting and process inefficiencies;
dealing with specific ecosystem/forest health concerns within
designated geographical units on public lands; allowing for
coordination of management activities on Federal lands and adjacent
private lands within a watershed; and enabling non-governmental
organizations and state agency partners to provide additional resources
through cooperative agreements for the mutual benefit of all parties.
If utilized to their fullest extent, such programs and authorities will
lead to healthier forests, which in turn will provide quality wildlife
habitat, much needed economic benefits, clean water, and public
recreational opportunities.
2018 Farm Bill Priorities
As in previous farm bills, NWTF is a steering-committee member of
the Forest in the Farm Bill Coalition. We are working cooperatively
with conservation and forestry stakeholders toward common goals that
help producers and landowners better manage their lands for forestry
and wildlife. While the Forests in the Farm Bill Coalition is still
developing its specific recommendations, I can say now that NWTF's
general ``asks'' of this Subcommittee will be to:
Continue landscape scale wildlife and habitat management consistent
with NWTF goals of large regional focal areas.
Enhance cooperation between Federal forest management agencies and
state fish and wildlife agencies to meet land/habitat management
objectives consistent with fish and wildlife population objectives.
Continue longleaf pine enrollment in CRP and ensure that proper
active management is applied to ensure maximum wildlife benefit.
Continue to improve mid-contract management on forestry practices
to require proper thinning, prescribed fire, and other management on
enrolled acres.
Continue to streamline the Technical Service Provider (TSP) rules
to reduce paperwork and make it easier to get conservation on the
ground and offer flexibility to landowners who want to manage for
forestry, wildlife, water quality, or other purposes.
Explore and implement further incentives for forest plan design by
collaboratives, including enhanced use of categorical exclusions as
contemplated by NEPA and administered under CEQ rule and policy. Also,
consider allowing road maintenance--not road building--for the purposes
of public safety or to enable hunter access be included in Stewardship
End Result Contracting authorities.
Consider increasing the Adjusted Gross Income (AGI) limits for
participation as well as updating payment limits on forestry and
conservation programs so larger landscape scale tracts could be
enrolled in programs that meet priority conservation objectives. If you
expand current payment caps to better reflect today's larger family
farm budgets, you will remove disincentives for larger conservation-
minded landowners to participate and enable landscape scale restoration
of habitat.
Management & Wildfire
This Committee has a history of addressing large multi-committee
issues as it develops long-term farm bills. Accordingly, this Committee
should develop a fix to the forest management and wildfire funding
issues faced by the U.S. Forest Service. We are agnostic on the budget
process that Congress chooses to accomplish this, but we need to
resolve the ``borrowing'' of appropriated funds designated for
wildlife, forest management, fire prevention, recreation, etc. to cover
catastrophic fire suppression costs. There also needs to be a cap on
the 10 year average of fire suppression costs used to calculate this
line item in the budget, otherwise as the costs of fire suppression
continue to escalate, budget items for wildlife, recreation, forest
management and fire prevention will continue to decline. The House--
with the support of this Committee--passed legislation (Westerman Bill)
in the 114th Congress to address both but that legislation failed to
pass the Senate.
NWTF fully supports using the farm bill vehicle for true forest
management and wildfire funding reform that would yield success. As we
have observed earlier, our current funding model for fighting
catastrophic wildfires remains a severe problem. Over the last 30
years, the length of the fire season has increased by more than 2
months. In addition, the intensity of many fires has increased largely
due to an increased fuel load that is a result of decreased timber
harvest and reduced active forest management. During the same time
period, the cost of wildfire suppression has increased an average of
more than 22% annually and now accounts for over \1/2\ of the U.S.
Forest Service's annual budget. Hundreds of millions of dollars are
spent annually to fight forest fires. Unfortunately, these fires often
result in scorched earth that all agree is not good for wildlife, water
quality, recreation, or local economies and jobs. Active forest
management to prevent wildfires costs less than suppression and is
proven to be extremely effective at preventing wildfires, as well as
helping reduce fire containment and suppression efforts. By reducing
the obstacles to sustainable forest management on our Federal lands,
not only can we reduce the likelihood of wildfires and the costs of
fighting them, but we can also realize additional benefits of improved
public safety, the protection of private and public property, quality
wildlife habitat, improved water quality, fewer invasive species,
enhanced recreational opportunities, and more robust local economies.
Environmental Quality Incentives Program (EQIP)
The EQIP program has been a bedrock conservation program that has
worked well. This Committee has worked to incorporate forest management
into the program and now around 5% of the program is used to improve
forested lands adjacent to farmland. That's where the wildlife lives
and is usually what helps control soil erosion and thus improve water
quality. We suggest that over the life of the farm bill, the Committee
increase the minimum amount of EQIP funds for forestry and wildlife
conservation practices to at least ten percent annually. We also
support incorporating state input to target EQIP wildlife funds towards
priority fish and wildlife species, as identified in State Wildlife
Action Plans. Further, we support increasing the availability of and
emphasis on long-term incentive payments and contracts (such as those
up to 10 years) to private forest landowners to encourage sustained
management for wildlife. We also believe that eligible land should
include lands capable of production in addition to those lands
currently in production. These lands were previously eligible for the
Wildlife Habitat Incentives Program (WHIP), but eligibility was not
carried over into the wildlife portion of EQIP in the 2014 Farm Bill.
We also support allowing forest landowners the option of managing their
forest land specifically for wildlife habitat, timber production, or
both, depending on their priorities.
Finally, we support including guidance reiterating the need for
USDA to convene State Technical Committee meetings on at least an
annual basis for the purpose of soliciting input from members on the
implementation of EQIP within the state. The timing of such meetings
should allow for meaningful input prior to final decisions being made
on program and practice implementation for the upcoming year.
Forestry
The direct forestry tools in the farm bill have ebbed and flowed
over time. Because of their critical nature in preserving wildlife
habitat, controlling soil erosion, and improving water quality, we hope
the Committee will continue to invest in forestry programs. We support
the continued authorization of the Healthy Forests Reserve Program
(HFRP) with mandatory annual funding at $12 million. An even more
important goal for the forestry title is to fully support utilizing
prescribed burning as an effective management tool and increasing the
financial and technical capacity for prescribed burning on private
lands to improve forest health and enhance wildlife habitat. The
Committee should also consider expanding Stewardship End Result
Contracting authorities to all Federal agencies.
Conservation Stewardship Program (CSP)
Unlike EQIP, the CSP program has not yet developed into a program
that fully supports wildlife and forestry. Recent changes to the
program may improve that, but it is too early to tell. The Committee
should insure that CSP rankings and payments reward enhancements and
practices with higher conservation benefits, regardless of whether they
are generated from new or ongoing conservation work. The program should
be focused on sustained conservation outcomes, not on the timing of
when a conservation activity was initially adopted. Like in EQIP, the
Committee should include guidance language reiterating the need for
USDA to convene State Technical Committee meetings on at least an
annual basis for the purpose of soliciting input from members on the
implementation of CSP within the state. The timing of such meetings
should allow for meaningful input prior to final decisions being made
on program implementation for the upcoming year. Further, lands
expiring from CRP with low-quality wildlife cover, such as monoculture
or low-diversity introduced grass cover, should not be given priority
to be re-enrolled into CSP.
Regional Conservation Partnership Program (RCPP)
NWTF has participated in a limited number of RCPP projects with
partners and we are seeing a tremendous benefit to private landowners
and to conservation through its use. We, however, have some concerns
with this program that are reducing our ability to participate fully.
We support reauthorization and maintaining funding levels for RCPP. We
believe that the Committee should allow a limited portion of partners'
administrative costs to be funded through RCPP and that USDA should be
provided with the necessary technical assistance and administrative
funds to implement the program. This amount should be a fixed
percentage of RCPP funding and not be negotiated after grants are
awarded to partners, as is the case now.
Conclusion
As shown through our continued partnership with conservation
programs within the USFS and the NRCS and our conservation efforts
through our ``Save the Habitat. Save the Hunt.'' Initiative, the
National Wild Turkey Federation is a strong proponent of active,
sustainable forest management and the conservation programs that
support these efforts. The benefits to numerous wildlife species, their
habitats, and forest health are matched with economic benefits that
contribute to vibrant local economies. Our recommendations above will
improve current programs that in turn will help farmers and private
landowners meet both production and wildlife goals. Members of this
Committee have much of which to be proud. You have helped conservation
and forestry with past legislation and the suggested updates will
improve that effort. Thank you for your time and consideration and for
your desire to address these critical issues. I would be happy to
answer any questions.

The Chairman. Thank you.
Mr. Harbour, you are recognized for 5 minutes.

STATEMENT OF TOM HARBOUR, NATIONAL DIRECTOR (RET.), FIRE AND
AVIATION MANAGEMENT, U.S. FOREST SERVICE, USDA; FOUNDER,
HARBOUR FIRE CONSULTING, FALLS CHURCH, VA

Mr. Harbour. Thank you, Mr. Chairman. Thank you for this
opportunity. I am Tom Harbour. I come here today as a citizen.
I retired from the Forest Service about 15 months ago. I am
here today to ask you to utilize the forestry title of the farm
bill to help build a better future with wildfire management in
these United States.
My written testimony in these 5 minutes all concern
wildfire. Your work on the 2014 Farm Bill provided some key
improvements in building a better future with fire, and I am
proposing you be even bolder with this farm bill.
I speak given a lifetime of experience, 47 years, inside,
atop, and beside the Wildland Fire Program. I am here today to
express the seriousness of the current wildfire situation.
Without improvements, fires are going to get much worse.
In the last 11 years of active duty, I was honored to
present our nation's flag to 163 families whose loved one had
fallen in the line of duty. As I presented the flag, saluted,
and then stepped back, I saw the tears and yearned for a
solution. I still do. Death represents the most compelling need
for action.
Today, wildfire is no longer an issue to be ignored,
organizationally or regionally. It is a national issue of
significance. There are over a billion burnable acres in the
United States. Wildfire damage is on the increase. There are
over 70,000 communities at risk. Wildlands are being converted
to places for homes at 3 acres per minute. Total estimated
wildfire damage exceeds $100 billion and direct suppression
costs exceed $5 billion. Agencies like the U.S. Forest Service
are being slowly transformed by fire to mutations of their
original intent. Most important to me, the stress of modern
wildfire is causing depression, suicide, and death in the women
and men who deal with wildfire.
We have the best fire suppression system in the world. We
need the best fire management system in the world. Fire
management is much more than fire suppression. It is thinking
about what we do before, during, and after any fire, acting for
both protection and long-term benefit.
In the context of this farm bill forestry title, there are
opportunities to invest $1 ahead of the fire instead of the
comparable $10-$100 after it. For example, utilizing incentives
to help promote practices which reduce risks on private lands
would benefit neighboring public lands. We need more incentives
and markets to remove small woody biomass from our forests. We
need more responsible active forest management on private and
public lands. We need to improve our understanding and practice
of risk management to help us determine where and when we take
effective action. We need to find ways to encourage and reward
local government for adopting land use policies and building
practices which reduce wildfire risk. We need to find ways to
facilitate local and state-based solutions to the problems of
wildfire within a national context. We need to adapt programs
which save firefighter lives, like the Everyone Goes Home
Program from the National Fallen Firefighter Foundation.
Wildfire problems in the U.S. are significant, but we can
solve them. We need improvements to do so. I have seen the
future of fire, and without change, it is bleak. In 1973 in
northern Arizona, I was on a really big fire, about 150 acres,
in the timber. In 2011, I went back to that same place to see a
fire burn 550,000 acres. Burned acres are a problem. Homes lost
are a problem. Expense and organizational transformation are a
problem. Lives lost are forever.
I urge you to use the farm bill forestry title to improve
our wildfire situation in America. I know you can do it, and we
need your help. Thank you. I will be happy to answer any
questions.
[The prepared statement of Mr. Harbour follows:]

Prepared Statement of Tom Harbour, National Director (Ret.), Fire and
Aviation Management, U.S. Forest Service, USDA; Founder, Harbour Fire
Consulting, Falls Church, VA
Fire and the Farm Bill--Lives and Landscapes
I'm Tom Harbour and I'm pleased to be asked to testify to Congress.
Wildland fire has been the focus of my professional life since 1970
when I picked up a shovel for the United States Forest Service (USFS)
in central California for my first wildfire. I spent 46 years with the
United States Forest Service (USFS). I had an opportunity to deal with
forest and rangeland fires in every region of these United States. I
represented our nation in international wildfire situations. I retired
in January 2016 after 11 years as the National Director of Fire and
Aviation Management (basically, the National Fire Chief) for the USFS,
the longest serving Fire Director in the Agency history. I worked my
way up from the bottom and over the course of my career had the
opportunity to serve in many capacities including duties at every
organizational level of the USFS and every component of the fire
program. I was an Incident Commander at the highest level, Area
Commander, Regional Director, and National Deputy Director. In 2014, I
was honored to have the State Foresters present me with the Earl
Peterson Current Achievement Award for Fire Protection. I believe this
was the first time a USFS Fire Director was honored with this award.
Now I am a concerned citizen with continuing interest in fire. Today I
have the notable privilege to interact with you.
We have the best fire suppression system in the world, the best
people, the best scientists, but we need the best fire management
system in the world. The fire management we need to do is more than we
as a nation are doing now. It is thinking about what we do before,
during, and after any fire, acting for the long-term, based on
accumulated wisdom. In too many ways we are bound to traditions and
past practices. The laws, rules, regulations and practices of the past
need to be evaluated and updated to deal with the future. Fire
management is more than fire suppression. We can be leaders in fire
suppression, as well as fire management, natural resource management,
forestry, and conservation, but only if we learn from what is happening
now.
We know fire played an important role in establishing the forests
and grasslands of our nation. Fire needs to play an important role in
sustaining and promoting healthy forests and rangelands. We've known
for years that a singular focus on fire suppression is not sustainable.
For example, forests in the southeastern part of our United States have
adopted aggressive prescribed burning programs, especially in pine
forests. Forests in the northeastern part of our United States have
their own interesting fire management concerns. Large blocks of Federal
lands out West are the ``poster child'' for unwanted wildfire.
Essentially, the USFS was ``born of fire'', but as early as the 1970s,
Federal agencies clearly understood fundamental principles of fire
management. By 1978, for example, the USFS changed the title of its
Fire Control division to Fire Management. General ideas about fire
management became more well known through the 80's and 90's. In 2001 an
update of a review done of Federal wildland fire policy resulted in
important guiding principles and endorsement of a key doctrinal
statement. That statement is:

``Fire, as a critical natural process, will be integrated
into land and resource management plans and activities on a
landscape scale, and across agency boundaries. Response to
wildland fire is based on ecological, social, and legal
consequences of fire. The circumstances under which a fire
occurs, and the likely consequences on firefighter and public
safety and welfare, natural and cultural resources, and values
to be protected dictate the appropriate management response to
fire.''

That statement encompasses the basics of wildland fire management.
Fire management includes wise suppression practices while encouraging
long term conservation principles. Fire management can be equally
applicable to private and public lands. Said collectively about our
United States, our conceptual understanding of fire management has
preceded and progressed faster than our practices. That is why the
forthcoming forestry title of the farm bill is an opportunity. We need
to help encourage policies and practices which move us more
aggressively to fire management. Without change, our nation faces a
future where wildfires increasingly darken our skies, degrade our
lands, destroy our homes, and empty our coffers. If that bleak future
happens, and it will without change, vibrant young women and men will
die more frequently as they put themselves between the flames and the
people they serve.
Wildfire has been a significant national concern since the
firestorms of 1910 in northern Idaho killed 87 people, burned several
communities, and consumed timber on 3 million forested acres. Building
on the concern of a nation that had 2,000 people die in a single
wildfire (Peshtigo) in northern Wisconsin in 1871, those 1910 fires
spawned a debate about how we deal with wildfire. That debate continues
today, but we have the benefit of over a century of learning,
perspective, and science to help us form better public policy and
improved practices about fire in our United States. As you know, we
simply can not put out every fire every time, nor is it wise to do so.
Fire has long been a concern of Congress. I know a better future
with fire is a concern of this Committee. After Congressional action, a
large group of partners affected by wildfire, led by Governors, County
Commissioners, Mayors, and the Secretaries of Agriculture, the
Interior, and Homeland Security have agreed upon broad goals to guide
future actions. This agreement is known as the National Cohesive
Wildfire Strategy (the Cohesive Strategy). The Cohesive Strategy has
three goals:

1. Resilient Landscapes.

2. Fire Adapted Communities.

3. Safe and Effective Wildfire Response.

The farm bill forestry title should be used, and added to, as one
of the pieces of good public policy, to promote positive action on all
these worthy goals. It has done so before and should in the future. In
the 2014 Farm Bill, key pieces of the forestry title, specifically
Stewardship Contracting, Good Neighbor Authority, State based Statewide
assessments, and Reimbursement of Funds to assist states were all good
enduring public policy and good practices with wide application.
Fire touches every state. Fire of the future, without change, will
be a significant detrimental impact in every Region of the United
States. As highlighted by the tragedy which befell Gatlinburg,
Tennessee in December, and by the prairie fires of last week, wildfire
is a continuing year round problem in our United States. Wildfire
threatens lives of civilians and firefighters, it threatens landscapes
which supply our water, our timber, and wild places. Fire can threaten
entire communities. It threatens agencies like the USFS who
increasingly see the bulk of their work directed towards fire
suppression. The kind of wildfire we are seeing today and which will
occur without a change in our approach, threatens not only firefighters
and the public, but our National Forestry conservation ethic and nearly
every other forestry initiative. Specifically:

Currently, around 75,000 wildfires per year burn between 5
to 10 million acres per year in the U.S. Without change, these
figures will rise in the future. Most of the fires occur on
private, local, and state lands. Most of the acres burn on
Federal lands.

Up to $100 billion damage to infrastructure, public health,
and natural resources may be occurring each year from wildfire.

An estimated 120 million people in over 46 million homes are
at risk due to wildfire.

About 3,000 homes per year are being lost. With more than
86% of undeveloped private lands proximate to public land,
future increased fire severity, and increased development, even
more homes will burn. In 2015, about 5,000 structures were
lost.

$5 billion per year (or more) in direct fire suppression
costs are being spent by local, state, and Federal agencies.
Future costs are likely to increase dramatically without a
change in approach.

The impact of high intensity fire on private lands can be
devastating to the property owner and of significant negative
impact to those ``downstream''.

The integrity of the forest and rangeland conservation
mission in some agencies, for example, the USFS, is threatened
by fire because of the extraordinary expense of fire
suppression. By the year 2025, \2/3\ of the USFS budget could
be devoted solely to fire. The need to deal with wildfire is
dramatically changing the USFS. Other agencies face similar
challenges.

Wildland firefighters die at a rate five to ten times higher
than their sisters and brothers who battle fires in buildings
and homes (structure firefighters)

Intense fire activity, extended time away from home, ``near
misses'', tragic deaths, and the nature of our personal
connections with other firefighters, have caused depression,
and suicide, in an increasing number of wildland firefighters.

Despite all our efforts, between 15 to 20 wildland
firefighters, vibrant young women and men, continue to die each
year in the line of duty.

Through a series of well intended decisions made over the last
several decades, wildfire has slowly become an increasingly significant
problem. Wildfire occurs too frequently at the wrong time in the wrong
places. More and more of the values we treasure, our lives, our homes,
and our landscapes, are being threatened by fire. The threat of fire is
increasing as many important and critical values increase on private
lands, not within the public domain, but very near.
Conundrums abound with our current approach. The ``wildfire
paradox'' (coined by Dr. Dave Calkin, et al.) is that ``current fire
suppression practices invariably lead to wildfires which can not be
suppressed''.
Increasingly volatile fire behavior in increasingly frequent and
difficult tactical situations endangers not only people, communities,
community improvements, and natural resource values, but the most
talented fire responders in the world. Increasing values on private
lands proximate to public lands are the focus of much of the threat of
wildfire and increasingly the place where our firefighters are
deployed. As an example in 2015, my last year of active duty, the
largest fire in terms of direct property loss (monetary property
damage) in the United States was the ``Valley Fire'' in California with
a loss of $1.5 billion. In 9 of the 10 years before 2015, a wildfire
(not a warehouse fire, not a building fire, not a depot fire, etc.) was
the largest single direct property loss fire of the year. The Mayor of
Gatlinburg, Tennessee estimated $500 million of damage to his town from
the recent ``Chimney Tops 2 Fire''. Unless we change, our future may
have been previewed in Canada when on May 1, 2016 a wildfire broke out
in the Alberta city of Fort McMurray. The fire became the costliest
ever Canadian natural disaster for insurers, with 1,600 buildings
destroyed. Two fatalities were attributed to the fire and the entire
population of about 90,000 were evacuated.
We have the best fire suppression system in the world, the best
people, the best scientists, but we need the best fire management
system in the world. Let's keep what we have for that amazing fire
suppression system, while we enhance fire management.
The forestry title of the farm bill can help shape a better future.
In the vernacular of fire, when a fire is running uncontrolled, we
decide where we can begin our work. We call it an ``anchor''. An
``anchor point'' in our world is somewhere where we can start, stay,
and endure safely. It is a place where we are sure things will
``hold''. Working as a team, we ``anchor'', then go from that point to
begin the long arduous process of dealing with the fire. As you debate
the new farm bill there are several ``anchor points'' to start from as
we focus on better fire management.
We need to invest $1 ahead of the wildfire instead of the
comparable $10 or $100 after. Utilizing farm bill forestry title
incentives to help promote practices which reduce risk on private lands
would benefit neighboring public lands. For example, we should
encourage prescribed burning on private lands by encouraging adoption
of statutes which promote burning. We need more incentives and markets
to remove small woody biomass from our forests, public and private,
large and small. Wood-based nanotechnology as a biomass use, by
creating high-value, high-volume markets, would create cost-effective
ways to enable enough hazardous fuels to be removed from America's
forests so wildfires remain smaller and begin again to be a tool for
improved forest health as opposed to destructive behemoths that destroy
lives, communities and landscapes. The future of nanotechnology may
revolutionize small woody biomass, but for now we need to remove it
since the ``small stuff'' is what causes the ``big stuff'' to burn. We
need more responsible, active, forest management on private and public
lands. We need to learn from the exciting insights of the best fire
scientists in the world to improve our understanding and practice of
risk management in the context of fire and natural resource management.
Those risk management practices could help us determine where and when
we take effective action. Since fire knows no boundaries, we need to be
even better in reaching seamlessly across jurisdictions ahead of
wildfire with treatments, planning, and coordination. We need better
ways, tools, and incentives for citizens to engage in understanding and
mitigating the risks to their homes and forest property. We need to
find ways to encourage and reward local government for adopting land
use policies and building practices which reduce wildfire risk. We need
to find ways to facilitate local and state based solutions to the
problems of wildfire. State and local voices will be important to
shaping a different future. We need a greater focus on improving
efficiency. We need to determine how we maintain a focus on natural
resource management while we strive for greater excellence in fire
management. We need to learn from programs which save firefighter
lives, for example, adapting the ``Everyone Goes Home'' program from
the National Fallen Firefighter Foundation for wildland fire.
We do need to light the candle at both ends! Doing ``nothing'', or
continuing to do what we have done, is a choice, one which brings
tragedy. There are local needs which can be incentivized and
encouraged, things like better planning, zoning, application of
existing codes, prescribed burning, improved forest management for
small landowners, training, coordination, and equipment. There are
state needs and there are national needs, like improving Federal/state/
local/private coordination, setting priorities, ensuring cross boundary
coordination, reducing the liability risk of burning, maintaining the
excellence of our firefighters and their assets, all while we implement
the goals of the Cohesive Strategy. The farm bill could play a role in
these important conservation activities.
I suppose in some sense, you could say my time to be of significant
influence in this debate about conservation, forestry, and wildfire has
passed. I retired from active duty with the USFS. However, I look into
the faces of my dear little granddaughters and I know what I want for
them. I want them to enjoy the fruits of our efforts in wildland fire
management and natural resource conservation. I want them to have the
benefit of water and timber and scenery and wildlife which comes from
the private and publics lands which comprise our nation's forests and
grasslands. If they are so inclined, I want them to be able to follow
in the footsteps of their Grandpa, their Smokejumper Dad/Uncle, and be
a professional in wildland fire. But I'm here today because if we don't
make some important changes, if we think today is ``good enough'', and
if we don't take this opportunity with the farm bill, our forests will
be forever changed and wildfire will be even more dangerous.

The Chairman. Thank you very much. The chair would like to
remind Members that they will be recognized for questioning in
the order of seniority for Members who were here at the start
of the hearing, and after that, Members will be recognized in
order of arrival. I appreciate Members' understanding.
And with that, I recognize myself for 5 minutes.
Before we touch on fire, Mr. Geissler, let's touch for a
moment on the 2014 Farm Bill that took steps to address insect
and disease issues by having the Governors identify treatment
areas. What has the effect of that been?
Mr. Geissler. Well, it is a program that could do some
fairly amazing things. A lot of states did participate in this.
The Forest Service is working through it. Like the example that
I gave you earlier, within our own state we took the time to do
this and the result by having these designated areas, it
allowed for just a quicker process to get the work
accomplished.
All across the U.S., we have insect and diseases issues. We
have wildfire issues, and using this type of a process allows
us to address them much quicker with less red tape.
The Chairman. Along that line, the additional categorical
exclusions, has that been effective in helping to address these
issues also?
Mr. Geissler. Yes, sir.
The Chairman. Okay. Let's turn for a moment just to the
fire issues, because you were very kind to leave the field in
northwest Oklahoma to come here for today, and I see you are
going back this evening.
Mr. Geissler. Yes, sir.
The Chairman. Between what has occurred in the 3rd
Congressional District and in Mr. Marshall's district in
western Kansas, and Congressman Thornberry's district in the
Northern Plains, we have had, what, approximately 1 million
acres of rangeland go up in the last week. Could you discuss
with the Committee just for a moment, when you have a fire of
that magnitude what the response is, state, Federal, local, how
we address these issues, just for a few minutes?
Mr. Geissler. Yes, sir. About 1.4 million acres. The bottom
line for us is that in this part of the state, there are no
Federal lands, as is most of the State of Oklahoma. We are a
private land state. The response to this is you have the
initial attack done by local fire departments. These are the
fire departments that the first one there was Slapout.
Slapout----
The Chairman. Volunteer department, for the record.
Mr. Geissler. Which is a volunteer fire department. A lot
of these departments receive volunteer fire assistance through
Federal programs.
Once it was recognized that this fire was going to be as
big as it was, the request comes in and then states get
involved. We brought in aircraft, we brought in our own
personnel, which you have there appearing on scene. These are
all programs that are part of state fire assistance, but it is
also part of the state's commitment to doing the suppression.
In addition to what we had there just between local and
state, we also have cooperative agreements with all of our
Federal partners. Additional aircraft were brought in that were
U.S. Forest Service aircraft, being single-engine air tankers,
as well as type one helicopters. And then we have since called
in type one incident management team, which is a Federal asset,
to manage that fire.
Basically what you take from this is it all starts
initially with the locals, but it is a system that goes across
the United States, and it involves all of these organizations
working together through cooperative agreements to get it done.
The Chairman. I would just note from my perspective, while
we have not had any injuries amongst the responders,
volunteers, the professional firemen, the various county agency
involved, six good citizens in the three states lost their
lives, and that is just tragedy.
Mr. Geissler. Yes, sir.
The Chairman. But the coordination and the training and
skill of the folks in the field, the actual firefighters,
considering the magnitude of this fire, it is just amazing. One
of the issues that I would bring up, reliving in the community,
not in the fire zone itself, the incredible fuel load that we
were addressing: 11 to 14 were in this drought from the
Southwest United States. Dramatic drop in not only the number
of cattle grazing, but also reduction in wildlife. The drought
starved them out. Then we had rebound weather last year,
unusually good rains, fewer animals to utilize the grasslands,
so we have had this tremendous dry over-winter grass growth and
plant growth, reminiscent in some ways of the forestry issues
where if you are not able to manage your assets efficiently, it
would appear to me, when you do have a fire, there is just
nothing to hold it back. While grazing patterns will get back
to normal at home, nonetheless, I can personally see some of
the similarities in some of the issues in the forestry areas.
If you don't manage that fuel load, once you have that
lightning strike or that accident that is just unintentional,
then as we have had in the three state area in the Southwest, a
heck of a mess, right, George?
Mr. Geissler. Yes, we have.
The Chairman. Heck of a mess.
With that, my time has expired and I will turn to the next
acting Ranking Member for her 5 minutes.
Ms. Kuster. Thank you very much, Mr. Chairman, and I want
to thank you for holding this hearing. I associate myself with
those remarks. Last year, I mentioned a few times during the
similar hearings that I have a brother who lives out in
Washington State in the Cascade Mountains in a town called
Twisp, and he not only lived in the town with some of the worst
fires and several deaths, but he lived on the road where those
deaths occurred. These were neighbors of his, friends in the
community, and the fire literally circled his house, but due to
the incredible courage of the crew that came out and was able
to soak the land around, he was able to keep his house. But I
have been out there to visit a few times this year, and there
is still a lot of trauma that has lasted.
I want to thank you for your testimony today, and I am sure
we will get into this at another time, but I would be remiss if
I didn't mention that the President has just submitted his
budget with a dramatic 21 percent decrease for 2017 annualized
continuing resolution for the Department of Agriculture, and
more specifically, reducing funding for lower priority
activities in the National Forest System, such as Federal land
acquisition and the budget focusing on maintaining existing
forests and grassland, and then it goes on eliminating the
duplicative water loan and grant programs. There are a number
of things that have to do with conservation with our forests
and the health of our forests, and ultimately can lead to fire,
and I am concerned about that.
I want to talk about this issue about the money that comes
out of the budget to deal with fire, and then is not available
for other purposes. My state, New Hampshire, is the second most
densely forested state in the country, and last year we had a
town, Milan, New Hampshire, small town just over 1,000 people.
We received a grant for planning a community forest project,
$400,000. But it was then put on hold because the funding in
the Forest Service was redirected to fire suppression
activities.
Can any of you comment on the impact and what you would
recommend our Committee consider working with Appropriations on
how to better manage these funds?
Mr. Geissler. Basically you are discussing fire borrowing
that occurs, and you are right. The amount that is pulled aside
during these periods of high fire expenses can have a dramatic
impact. Basically by doing a fire funding fix, what you are
doing is freeing up money within the Forest Service that goes
within the Forest Service as well as goes to programs like the
state agencies and our partners that are actually doing the
mitigation work ahead of time to try to keep the amount of fire
that we have on the ground and the damaging effects of fire to
a minimum, or at least reduce the risk.
It is kind of a chicken and the egg theory. You have big
fires so you have to spend more money, so you take away funding
from the programs that help eliminate the big fires. Going in
and trying to fix that funding, that is why we discussed this
as being so important to the overall picture.
Ms. Kuster. Well I thank you for that.
One last question. Mr. Geissler, in your testimony you
touch on how important NRCS conservation programs are to
forestry, and can you tell me how State Foresters engage with
NRCS, what the relationship is like, and is there anything
different that NRCS could be doing in regard to helping
forestland owners?
Mr. Geissler. Yes, ma'am. Right now, State Foresters are
typically engaging with NRCS through a lot of different
mechanisms. In our own state, we deal just on a state level
actually having discussions individually with our State
Conservationists, making arrangements so that forestry can be
included as part of EQIP and forestry practices are included in
EQIP.
In many cases, where the difficulties lie is this paperwork
between the different programs and making sure that we don't
have duplicative efforts. In some states, we do have issues
related to that. I am very lucky in my own state in that we
have been able to come to one plan which goes across both NRCS
programs, as well as U.S. Forest Service and state programs.
But there are some things that were within the farm bill which
would allow that to occur, just with a little bit of tweaks.
Ms. Kuster. My time is up, but I am sure the Committee
would appreciate your advice, going forward, with the farm bill
if there is anything that we should be doing to adopt that
model that you are suggesting. Thank you.
Mr. Geissler. And through the State Foresters, we will be
glad to submit some of that information.
Ms. Kuster. Thank you. I yield back.
The Chairman. The gentlelady's time has expired. The chair
now recognizes the gentleman from Pennsylvania, for 5 minutes.
Mr. Thompson. Thank you, Mr. Chairman. Thanks for all the
witnesses for your leadership, your expertise related to
healthy forests, and healthy rural economies when we do that
and do that right. It is very much appreciated.
I just wanted to share some good news to start with before
I ask my first question. We have heard some reflections on the
President's budget. The President's budget fully funds wildfire
preparedness and suppression activities at $2.4 billion. That
is 100 percent of the 10 year average for suppression
operations to ensure the resources necessary to protect life,
property, and hopefully prevent that large sucking sound coming
out of the rest of our National Forests in order to respond to
those terrible fires that we see in different parts of the
country, and specifically in the western part of the United
States. Mr. Chairman, I just wanted to share a little good news
to begin with, relative to the President's proposed budget
already submitted.
I want to start with Ms. Benedict. Thank you so much,
Susan. It is good to see you and your husband, and thank you
for being great tree farmers. It is always a privilege and an
honor to walk the mountains at your tree farm.
You had mentioned in your testimony that timber markets
aren't what they used to be, and I too am concerned about the
loss of mills, that infrastructure across the country. That is
one of the many reasons why I was happy to support and be one
of the sponsors to introduce the Timber Innovation Act, along
with a number of my colleagues from both sides of the aisle. As
you know, this bill aims to codify activities the Forest
Service is already doing in an effort to promote timber
research and development, as well as new markets specifically.
I have always said there are three aspects that we need for
timber. One is take the barriers away from proper management.
We need to do what we can to increase the value of timber, and
increase markets. And this, I hope, will serve that.
Susan, how might such research and development and new
markets help landowners like yourself and your family?
Ms. Benedict. Currently, it is very difficult to access
some markets. With the tall buildings research that is going
on, that would be a great market for timber, and particularly,
the type of timber that we grow. However, there is no cross
laminate factories anywhere near our area. I worked for a real
estate development company and they are looking at a large
project in State College, and they asked me about using wood in
it, but we don't have access to those cross laminate timbers
that would be needed. Unfortunately, that project is probably
going to be built with steel.
So research and development support for those new
factories, anything we can do to get them up and running and
getting those kinds of things out where they can be utilized
would be very beneficial.
Mr. Thompson. Thank you. In the 2014 Farm Bill, and this is
for anyone who would want to respond, there are a number of
categorical exclusions that we provided to the Forest Service
to encourage flexibility and better management. And so my
question is very straightforward. Do you support these
categorical exclusions, and in your view, does the application
of such CEs undermine environmental stewardship in any way?
Mr. Neiman. I can sure step in on that, if I could.
Mr. Thompson. Go ahead, Mr. Neiman.
Mr. Neiman. From my perspective as a company, it does not,
and if there is some limited concern, I would love to sit down
with any of the communities and address those.
When you look at the issues in the Black Hills and in
Colorado and look at the landscapes, you have hundreds of
thousands of acres of dead pine from beetle or spruce and lodge
pole, and you have complete valleys dead and you are limited to
3,000 acres. Look at the efficiencies you could create and how
you could go in and do a landscape treatment. There are some
discussions of a 10,000 acre CE or broader landscapes have been
suggested. There is just way more benefits there, and I hope we
could sit down with any of the environmental community and work
our way through that to make sure there are no environmental
concerns. If you look at the long-term health, it is of
benefit.
Mr. Thompson. Thank you. Ms. Humphries?
Ms. Humphries. Yes, I would like to add categorical
exclusions by their very definition are routine, reoccurring
actions with very little impact, and we have seen the Forest
Service over the years erode their ability and use of
categorical exclusions as intended under the National
Environmental Policy Act.
It was a good first step in the last farm bill to try and
define those and get more use of categorical exclusions. We
need to spend more time and effort on actually carrying out the
plans we spend so much time developing with the Forest Service,
so that we get good management on the ground. I think it was a
good first step, but more needs to be done.
Mr. Thompson. Thank you. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired. I now
recognize my next acting Ranking Member, the gentleman from
Arizona, for 5 minutes.
Mr. O'Halleran. Thank you, Mr. Chairman.
I have a couple of questions for Mr. Harbour, and I want to
start, though, by saying that from my front window, I have seen
four fires in the last few years. I live in the Sedona, Arizona
area. We almost lost the entire Oak Creek Canyon watershed the
other year. I have worked at and with many groups in the state
to come together to deal with stewardship projects on the
forests. The underlying issue has always been that we don't
have enough funding to work on these issues, and I would just
like to know what programs specifically if we were able to
change the way we fund firefighting, what specific programs are
available, do you think, that would help us prevent fires?
Mr. Harbour. I would say one of the big things that has to
happen there is making sure that the State Forester, in your
case, Mr. Jeff Whitney and the local folks, along with the
Forest Service get together. Setting priorities in these times
is really critical. I have seen probably more effective work
done where we could just get agreement across a broad spectrum.
It is so easy today to stop things. It is hard to actually do
things. The Forest Service is anxious. I know it hasn't changed
in the 17 months I have been out. The Forest Service is anxious
in southern Arizona, northern Arizona, all across the
Southwest, to work with State Foresters and local folks to
accomplish meaningful projects. That is why the Good Neighbor
Authority that you adopted in the 2014 Farm Bill was so
important to note.
Mr. O'Halleran. Thank you. A little follow up on that. We
already have a project, Four Fry Project it is called, four
forests in northern Arizona to be able to thin those forests
out. And yet, time and time again we run into problems, there
is agreement, Center for Biological Diversity, the cattlemen,
from one extreme to the other extreme are on board.
What my question is, since we have these agreements, but
our problem is always either, first, funding; or second, the
inability of the Forest Service to be able to let out contracts
in an extended process out past 5 year or 10 year cycle. Do you
have any comment about that?
Mr. Harbour. And I am going to throw him under the bus
because I know he is my friend, but sitting behind me here is a
guy that is the Deputy Regional Forester for the Southwestern
Region, and specifically how Four Fry operates in the current
issues and opportunities they have with Four Fry, I am sure Mr.
Jim Upchurch, who is in town for a couple of months, would be
more than happy to talk to you. Because I know, again, I was
the fire guy. There are lots of other disciplines in the Forest
Service, but the importance of active forest management so we
can have a better place for our firefighters to be safe, it is
very, very important.
Mr. O'Halleran. This is just a statement: when we have
these programs and we have the ability to get appropriate
management and thinning in the forests completed, time and time
and time again, and we find that we just don't have the funding
or we don't have the regulatory environment in which to do it.
It is frustrating for the citizens that live in these areas. I
live in the middle of a National Forest, and luckily, I decided
to have a fire-wise house, but people like Wally Cubbington
from Northern Arizona University have been stating this time
and time and time again. Rodeo Trudeski, which is the fire you
were referring to, 550,000 acres, that fire was preventable,
although it was set by people. It is a preventable fire because
of the issues involved.
I just had a fire in my district and the White Mountain
Apache were able to thin out a forest near one of our
communities, and that fire got close to that community and just
laid down on the ground because of the thinning that took
place. If we are going to try to save communities and create
jobs, we need to have a working process, going forward.
I yield back, Mr. Chairman.
The Chairman. The gentleman yields back the balance of his
time. The chair now recognizes the gentleman, Congressman
Kelly, for 5 minutes.
Mr. Kelly. Thank you, Mr. Chairman, and thank you,
witnesses, for being here.
First of all, to Ms. Humphries, I am disappointed because
my friends in the northeast Mississippi Hill Country Strutters
are having their banquet tonight, and I am here instead of
being there. That being said, I want to thank the National Wild
Turkey Federation for what you do and being so conservation-
minded, but also providing family and recreational
opportunities for so many. I just want to thank you, and I
truly mean I would rather be there than here.
Ms. Humphries. Thank you.
Mr. Kelly. Now in general, and any of you can answer, in
many of your written testimonies, several of you mentioned the
need to provide private landowners with regulatory assurance if
they manage for at-risk or listed wildlife. I know there is one
program, the Healthy Forest Reserve Program, that provides
landowners with safe harbor protections, but what else can we
do through conservation programs to provide this regulatory
relief?
Mr. Neiman. And your question is in reference to private
landowners only?
Mr. Kelly. Yes.
Mr. Neiman. Well, our company is 80, 90 percent dependent
on Federal land in some states, but we do a fair amount of work
on private, and some of the references to SIP and FIP programs
that we see come along in the past clearly can help some of
those areas. Change in the culture, some of the ranches that
look at that being a product that they are selling and figure
out to help them look like the Forest Service needs to out over
the next 25 and 50 years, and what do we want this landscape to
look like for the next generation? To thin, they are going to
need some support for thinning projects and stuff, whether it
is Forest Service or private, to thin some of those acreages.
Looking at what kind of programs, including FIP and SIP and
others that can help that private landowner to create healthy
forests, forest resiliency needs to be what we look at on our
Federal lands, and hopefully we can start educating our private
lands out West to look at that and look at the resiliency as a
very key part. What is their carrying capacity? They understand
that term, when you look at carrying capacity on their land,
and with the drought and other issues, we have less carrying
capacity. We have to recognize what kind of volume can we put
on these acreages, what can it withstand? Just like the
excellent examples earlier when there is nobody grazing the
grasslands, our forest is very much related to that.
Mr. Kelly. Mr. Neiman, this is for you, but any of the rest
can answer. The National Environmental Policy Act, in your
opinion, why does the NEPA process currently take so long, and
what can we do to speed it up? I think that is important. If we
do the controlled burns, we wind up not having as many
wildfires, so what can we do to speed that process up?
Mr. Neiman. Well, we clearly have talked a little bit about
CEs and expanding in those, but we really need to get the
decision making to the lowest level possible, instead of these
national standards with heavy weight from D.C. and the regional
level. Get the decision level and give them some protection
down at the forest level, if you can.
But unfortunately, the Forest Service has the most
extravagant process of doing EIS work of any agency. How we can
get them to be more standardized, and rightfully so with the
environmental community attacking timber sales and so many
lawsuits, they have had to come away with a perfectionist
attitude. They have to be 100 percent right. Nobody can be
perfect, so we have to take the handcuffs off. And then
internally, the Forest Service since the 1990s has started
putting their own handcuffs on too, beyond what the House and
Senate has done. We have to encourage them to take some risks,
and then give them support so we can move ahead. You can't do
it any other way. They can't be perfectionists and write
policy. You have to find more doers.
Mr. Kelly. I wholeheartedly agree, and it is better to do a
controlled burn and put too much smoke or pollution in the air
than to have an out of control wildfire which does much more
harm to the environment in the long run than controlled burns.
I agree. We need to get it at a local level.
Thank you, Mr. Chairman. I yield back.
The Chairman. The gentleman yields back, and in order to
maintain the custom for Ranking Member, the chair now notes
that the gentleman from California, Mr. Panetta, is not a
Member of the Subcommittee but has joined us today. I have
consulted with the Ranking Member, the various ones, and
pursuant to Committee Rule XI(e)(2), we are pleased to welcome
him to join us in the questioning process. And with that, you
are recognized for 5 minutes, sir.
Mr. Panetta. Thank you very much, Mr. Chairman. I
appreciate this opportunity. Thanks for squeezing me in.
First of all, thank you to all the witnesses who came,
prepared their testimony, and actually took the time to testify
today. Thank you very much. But I will let four of you off the
hook. A lot of my questions are going to be directed at Mr.
Harbour today.
That being said, the reason for that is because I represent
the central coast of California, Monterey, Salinas, Santa Cruz
area, and Mr. Harbour, as you probably know, this past summer
we had the most expensive wildfire in the history of our nation
called the Soberanes Fire. And it burned over 132,000 acres
along the Big Sur area where it started, kind of went south
down in the Monterey County area towards actually my home in
Carmel Valley where myself, my wife, and my two daughters could
actually look out our window and see the flames up in the hills
burning, fortunately quite a ways away.
One bulldozer operator during the fighting of that fire
lost his life, unfortunately, and there was a lot that was
asked about not just how to fight it, obviously, although that
was a big question, considering the steep terrain that it was
in and the fact that it burned so long, and how difficult it
was to battle. But also what could be done to prevent it?
And so obviously, that is what my questions are going to be
tailored around, Mr. Harbour. In regards to something like
this, in relation to management programs of Federal areas like
that area which I am sure you are familiar with, what can be
done to lessen the chance of a fire?
Mr. Harbour. Well, aggressive prevention programs certainly
are important, despite Smokey Bear's enduring message, still
nationwide 90 percent of fires are caused by humans, and you
need to keep the Bear active and his message going. The Los
Padres National Forest and the area in southern California
represents a special concern, because the vegetation is
flammable. The vegetation depends upon fire to regenerate and
reproduce in a natural sense, and much like the example, Mr.
Chairman, about too much grass, where we have over the last
several decades done what we thought was good public policy at
the time, we kept putting fires out. What we inadvertently did
in many of these areas, and it happens in the timber ground
too, is there is too much fuel. There is too much to burn on
those lands. And so when you get the right type of ignition in
the right place where the fire wants to go, you get these high
intensity fires that take lives, that threaten communities.
I would say in addition to the prevention efforts, we
certainly have to learn about what is reasonable for Cal Fire,
the Forest Service, the state agencies in general to do,
because it is wrong to put them all out all the time. In fact,
I am here to tell you we can't do it. We shouldn't be putting
them all out all the time. Mr. Kelly mentioned the importance
of prescribed fire and low intensity fire, and the kinds of
ecological regimes that happen around Carmel are important.
So there are complex issues complicated by Endangered
Species Act, complicated by wilderness, complicated by smoke
concerns, but we have the tools, sir. It is simply getting
local, state, and Federal folks together to agree to apply
those tools. I know Mr. LaMalfa has been particularly vocal
about how easy it is to stop projects, and I will tell you that
in the case of some of what has happened on the Los Padres
National Forest, Bob Berry, the forest supervisor there has
wanted to do more. It is tough sometimes to get those projects
actually off the ground.
Mr. Panetta. Thank you. I appreciate that. Within 10
seconds, please.
Mr. Neiman. Okay.
The Chairman. The gentleman has time to respond.
Mr. Neiman. It is okay, in a related story, and there are
some similarities to what you are seeing in Oklahoma and Kansas
and in California. In the Black Hills, on the north slopes of
the Black Hills, once they cut the grazing permits back to
about \1/3\ of what they were from historical highs in the
1960s and 1970s on the National Forests, we are now developing
huge understory brush, particularly, and of course with no
predators, the sheep have all left and the grazing permits on
cattle are cut back to about \1/3\, we are seeing understory
now getting into the 10, 15, 20 height. That should have had
some landscape controlled burns years ago, but now you have
three levels of ladder fuels into the overstory of old growth
forests that there is no way you are going to stop it without
going in with some kind of a treatment.
We have similar problems now with the dry conditions and
now you will have a wet spring, the grass gets 1 to 2 tall.
You have the 5 to 10, 15 understory of the shrubs and
everything, and then the ponderosa pine, and we have a disaster
waiting. Similar story to what you see. You nailed it on the
head. We need to figure out some way to have some controlled
burns on your hillsides in California.
I just visited San Diego a few weeks ago. I have been down
there seeing what the fires are doing north of there. It is
scary.
Mr. Panetta. Thank you. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired. The chair
now turns to the gentleman from Georgia, Mr. Allen, for 5
minutes.
Mr. Allen. Thank you, Mr. Chairman, and thank you, all of
you, for being with us today.
Several of you mentioned in your testimony that the
conservation programs are important to forest owners, just like
farmers. I know in my home State of Georgia, a lot is being
done there on these programs to provide landowners support and
tools to do conservation practices on their lands, like tree
planting, fire breaks, and improvement for wildlife habitat and
water quality.
Of course, the biggest thing that we have talked about here
today, which Mr. Harbour, in your testimony you were saying, I
was not surprised but the damage that we have had over the past
few years in our forest fires, wildlife fires and things like
that. Obviously, you mentioned ways to fix that problem. What
is keeping us from actually fixing it? Because it seems like
that if you tried to take care of this problem, you get on
somebody else's turf. You mentioned the wildlife and things
like that, but obviously, a forest fire is not good for
wildlife either. What is the answer to this problem?
Mr. Harbour. I wish I knew. I have been thinking about this
for 47 years. I do suggest that perhaps in concert with State
Foresters and others, maybe more of the answer now lies on
private land. Maybe more aggressive incentives and help for
tree farmers and private lands are going to be a significant
part of the solution, because we have been for decades trying
to figure out what we do, especially on National Forest system
lands. And we haven't fixed it, even though we know there is a
significant problem.
Mr. Allen. Ms. Humphries, I am from Augusta, and you are my
neighbor over there. And of course, you said that the cost of
wildfire, you described in your testimony, no, excuse me, I am
going to the EQIP program, as far as adequate flexibility to
meet the conservation and wildlife needs for our private forest
owners, what can you tell us about that and how can we improve
that program?
Ms. Humphries. Well, the EQIP program has been very
helpful, but it is really important, moving forward, that we
get on the ground technical assistance and that we look at ways
to get active management out on the ground on private lands.
Mr. Allen. And Ms. Benedict, in my district, we have, well,
everybody is buying all our sawmills, and I saw where you said
that you didn't have available sawmills to harvest your timber.
How did that take place, because I am a little concerned that
everybody wants to buy our sawmills now and I don't want them
to disappear. What happened there in your area?
Ms. Benedict. Well, there are a lot of factors at play.
Part of the problem is that during the economic recession that
began in 2008, there just wasn't enough activity to support a
hardwood market. A lot of that goes for furniture and fixtures
and paneling and so forth, and so the housing downturn really
hit that market. That, of course, puts a lot of economic
pressure on mill owners and loggers and everybody else, and so
investment, it just becomes too costly to maintain the
investment. The other thing that happens also is that there is
not enough--it would be helpful for landowners to have
technical assistance to be able to do appropriate land
treatments and then get that wood to a market.
Mr. Allen. Right.
Ms. Benedict. And when that market is evaporating, that is
where we have problems. The Timber Innovation Act that is
looking to build markets for timber would be very helpful in
that.
Mr. Allen. Mr. Geissler, you were shaking your head. Do you
have any comments in regard to that?
Mr. Geissler. Yes, sir. Bottom line----
Mr. Allen. How do we deal with cyclical economies?
Mr. Geissler. I know, and I have heard the other members
here on this panel describe it of getting additional technical
assistance on the ground, but a lot of it really involves with
the fact that if there are no markets out there, management of
private lands really does fall off. And so there are ways and
things that we can do to encourage the use of forest products
and to actually site mills.
One of the things which is not directly within the farm
bill, though, is the Forest Inventory and Analysis Program,
where we inventory all of our Federal and private lands, and
even that, though, is giving industry an opportunity to site
these mills around the United States in places where
sustainable forestry occurs. When you have a market for stuff,
you definitely get management in place, and that is where a lot
of what the state agencies do, as well as a lot of the folks at
this table, is when we are in the position where maybe there is
not a mill close enough yet, but looking for a market and still
maintaining the technical assistance with the idea that the
wood is there to encourage greater development in the future.
Mr. Allen. Good. Thank you for your testimony.
I yield back.
The Chairman. The gentleman's time has expired. The chair
now recognizes the gentleman from California, for 5 minutes,
Mr. LaMalfa.
Mr. LaMalfa. Thank you, Mr. Chairman, and thank you,
panelists, for being here today.
I come from the way north part of California where we have
a lot of mountain country and a lot of fires too, on the
eastern side of the Sierra and at the top of the state, so I
will try and get several questions here in my 5 minutes.
Mr. Geissler, again, thank you for being here. Obviously
California has so many dead and dying trees, over 100 million
or something, in our forest inventory there. We see insect
infestation, we have suffered from drought. We don't have
drought anymore. I can see the broken spillway from my front
window, to borrow a phrase from Ms. Palin, but the situation is
very, very fluid, changing all the time. There are a lot of
ways we can be going with this. We have trouble in California
even getting after salvage when there is a fire. We had \1/4\
million acres burn in the top part of the state in 2014. It was
a year and a half later before we could actually get through
the nonsense to start processing and getting some of that value
out of there while it still has value, instead of a negative.
So please just elaborate for a minute, what things do you
think we should be doing, especially since U.S. Forest Service
owns so much of the land in the West, so much of the land in
northern California. What can we break through, especially in
conjunction with what we are talking about with the good things
that were passed in the 2014 Farm Bill?
Mr. Geissler. Right. Well thank you. Like you said, the
bottom line for it is we do have insects and disease issues, we
have drought issues, we have wildfire issues that are out
there. We have a glut of wood that potentially is out there
that needs to be harvested and salvaged. It all comes down to
the need for having a mechanism in place. There are not enough
markets for this wood, and in a lot of cases throughout the
West, not just in California, the mills have left. If you look
at California and Wyoming, there are two mills in some of these
states for the entire state.
Mr. LaMalfa. Let's talk about markets now. We can even talk
about whole logs going on ships export, but let's look at the
whole picture, please, on that, export.
Mr. Geissler. Yes. What I was going to get to is that the
idea of developing these markets that are out there, but there
are also the limitations that are placed with even getting the
wood off, and that is where some of the things that are in the
farm bill related to the Good Neighbor Authority, insect and
disease areas, as well as if there was something related to
wildland fire, similar to the insect and disease, to
potentially shorten the timeframe that is necessary to get this
product off the----
Mr. LaMalfa. How much of this is California unique, because
I have colleagues that tell me like in other states that
salvage is a fairly simple operation to get to without this
much paperwork.
Mr. Geissler. I am sorry, sir?
Mr. LaMalfa. Well, this much paperwork, in other states,
they can actually get salvage done timely.
Mr. Geissler. Exactly.
Mr. LaMalfa. It is a California----
Mr. Geissler. California does have some rather extensive
laws related to that, but some of the things can be taken out
with red tape, just being clipped, if you want to know. There
are both state issues there, as well as Federal stuff that can
be addressed through Good Neighbor and some of the other
programs that are available.
Mr. LaMalfa. Yes, Good Neighbor Authority. All right.
Mr. Geissler. The capacity is there. State forestry can
provide assistance. Forest Service can provide assistance.
There is never going to be just purely enough money to
accomplish that.
Mr. LaMalfa. I would like to see the money come to the
private-sector by making money off the products than having to
come from the Treasury.
Mr. Harbour, again, thank you for being here and for your
many, many years of service dedicated to stopping wildfire and
limiting it, et cetera.
One of the things I am really interested in as well is
biomass, which just seems to be a huge opportunity for us to
have renewable power with something that puts jobs right in our
backyard, not importing wind mills or solar panels from
somewhere else, to have that be the renewable energy. Biomass
seems to be the key towards healthier forests, cleaner air:
many positive things. Jobs in our backyard, jobs trucking the
material from there to the power plants, the power plants we
could be building, and meeting these renewable mandates that
keep popping up and getting higher and higher. California wants
to go 100 percent renewable by 2050. They are throwing some
ideas around, and I don't even know where I am going to live
anymore after a while.
Would you touch on that a little bit, please, and also more
use of the Good Neighbor Authority? Is there more room for
Tribes, Indian Tribes to be able to be part of that Good
Neighbor Authority with compacts? Are you aware of that? Please
touch on those two things.
Mr. Harbour. Sure. Well first, let me talk about small
woody biomass. I am no scientist and I told folks for a long
time, I am interested in getting the small stuff off the ground
because it is what makes the big stuff burn. And when the big
stuff burns is when my guys, what used to be my guys, I still
think of them that way, women and men, that is what causes all
the problems with the huge conflagrations that we get into. You
are exactly right. I have listened to presentations on
nanotechnology. Utilization of biomass, as long as I have been
a forester, and that was a little ways into my fire career, is
the pot at the end of the rainbow. We have to take good wood
product off private and public lands, no question, but getting
that biomass, that small woody biomass off is just incredibly
important.
Two of the things that you did in the 2014 Farm Bill,
permanent authority of stewardship contracting and Good
Neighbor were all linked together in terms of this biomass
issue, and yes, Good Neighbor Authority needs to be expanded
and certainly, biomass needs to be a focus of what we do on
private and public lands. It is what provides the fuel to get
them started and sustainable.
Mr. LaMalfa. Mr. Chairman, are we going to have a second
round of questions? It is just us.
The Chairman. The chair would recognize the gentleman for
an additional 5 minutes.
Mr. LaMalfa. All right. Let's just keep rolling. Thank you,
my friend.
The Chairman. I can be positive sometimes.
Mr. LaMalfa. Good Neighbor. I see Jim maybe or George wants
to talk about it too, but it is----
Mr. Neiman. If you are done on that, I would like to let
you finish up on the Good Neighbor and anything we are doing on
biomass.
Mr. Harbour. And like I said, I want to just emphasize as
importantly as I can, I think that if you could utilize farm
bill forestry title incentives to help us on the biomass side,
it has so many beneficial impacts in terms of the fire program,
forest health, what can happen on private and public lands. It
is just an absolute key, but for too long the stuff has been
worthless. We can't get it off the ground. We got to pay too
much to get if off the ground----
Mr. LaMalfa. Let me jump in there, because we are so
heavily subsidizing solar and wind in this country. Everybody
is just gaga, ``Oh, it is the biggest thing.'' We have all this
material in our backyard. Is it going to go up in smoke like my
colleagues talked about, or it can be done in a controlled
fashion in a power plant, making green, renewable, anytime
baseline power you can turn on. You don't have to wait for the
wind to blow or the sun to come up. It seems like the perfect
world here to me. Put the jobs in our backyard, clean up
something that needs to be cleaned up, save the wildlife, save
the habitat. All those good things are going to come from this.
Maybe we need to have a subsidy that is directed towards
getting that material out of the woods to where it needs to go
where they can make money once it is on the landing at the
power plants. Is that a reasonable way to go? Anybody on the
panel, please. Mr. Harbour, you can finish up and anybody on
that panel.
Mr. Harbour. I will just say before Jim goes, that is the
whole key. It is just investing a dollar ahead of time to do
something like treating biomass so you don't have to pay $100
or $1,000 per acre in suppression costs. And I will shut up
here.
Mr. Neiman. If I could comment?
Mr. LaMalfa. Please.
Mr. Neiman. I appreciate it. When I look at the big picture
and I look at trying to figure out how to treat more and more
acres, a lot of times our focus is on biomass only, which has
to be subsidized, and you could be correct in that. But you
also mentioned how do we do it at the least amount of cost? If
you could find areas and attach--when that biomass is attached
to a saw log and you are focusing on highest and best use of
value of those trees and put the rest into biomass, that is
your best economic situation, and you can treat four to ten
times more acres by attaching that biomass. I am really
perplexed----
Mr. LaMalfa. You mean by taking a saw log that you are
making some money off of and the rest of it comes along with
it?
Mr. Neiman. Yes, the top or the whole thing. Bring it
along.
Mr. LaMalfa. I am all for it.
Mr. Neiman. Yes. I am perplexed by California, because you
used to have about 36 power plants and they are shutting down
right and left throughout the state. I have a lot of friends
out there, along with companies like SPI and different ones,
and I am frustrated with the lack of support that they did get
10 years ago. I like your thoughts there, but when you look at
biomass in our areas, they are heavily subsidized, whether it
is a power plant or pellets or whatever. You never know how
long that funding is going to go on. When you are looking at
investments for a pellet plant of $10 to $30 million, a co-gen
plant, 11 to 20 megawatts going to be from $50 to $75 million.
You have to really look at 20, 30 years minimum to finance
that.
Mr. LaMalfa. It is a long-term investment.
Mr. Neiman. There are a lot of elements here to look at.
Mr. LaMalfa. And let's really get real about who we are
subsidizing here. We are taking care of the public's land that
the U.S. Forest Service is unable to do, and so the cost is
going to be like the Fram filter guy, ``You can pay me now, or
pay me later.'' We can burn it all up and have to regenerate
and have all the stuff that gets in the streams from a
wildfire, or we can go $1 ahead of time, like you folks are
saying, and do it on the front end. These dollars are worth a
lot more in this than in any of the other la-di-da renewable
power we are talking about here. And so this is the message we
have to get across is we are saving the people from these
hundreds of millions of dollars of fire suppression we have to
pay for each year up front and putting jobs here. This is the
message we need to be doing. I don't understand why it doesn't
catch far more.
Anybody else?
Mr. Geissler. I would like to say, the idea of putting a
dollar up front, realize that it is not just the idea that we
are getting this wood out. We are lowering the risk to the
people and the property that is around there. Like you are
saying about whether it is biomass or investments in saw mills
or sending stuff offshore, getting as many tools as possible.
There is small scale biomass. There was a Fuels for Schools
Program. There are all of these different things. There was not
one single answer to the entire situation that we have found
ourselves in. But anything that can be done within the farm
bill which increases the number of tools that we have and the
availability of the markets out there will be a great asset to
it.
Mr. LaMalfa. Thank you. It is just one of these things that
you go hat in hand every year begging for the secure rural
school funding. Instead, we could be doing the work in the
forest and not have to do that.
Mr. Chairman, I thank you for your indulgence. I yield
back.
The Chairman. The gentleman has offered many observant
points, and his time has expired.
One of the privileges of being the Chairman of a Committee
or Subcommittee is I get to make the concluding remarks.
First and foremost, thank you to the panel for your
insight, your willingness to stay late as we voted on the
Floor, and to answer our myriad questions and offer your
observations and opinions and experience. I would be remiss if
I did not, as a good Oklahoman, note that while I talk many
times about the lack of trees in northwest Oklahoma, that we
have substantial forest resources in southeastern Oklahoma, and
have managed those well for 100+ years, and will continue to do
so.
I do observe on the fire issues that our challenge still,
not only in Oklahoma, but our quadrant, that next month will be
the 125th anniversary of the Cheyenne and Arapaho area land
run. Farmers did not come to my neighborhood until 125 years
ago the next month, and when I visit with my Cheyenne and
Arapaho and other descendants of Plains Indian Tribes, they
discuss how in their oral histories, now the written versions
of their oral histories, think about that for a moment, but
that is the way it works, their discussions about how before
Europeans the massive fires that occurred on the Plains in the
summertime. The fires they lit to attract the buffalo to
particular grazing areas or they lit as a part of a struggle
with some other band. Massive fires, and starting with the
arrival of farmers, we suppressed all of that. And through,
some might say, the misguided agrarian practices that led up to
the 1930s Dust Bowl, that were finally turned around in the
1950s and 1960s through education and the things that we have
accomplished here, now we are back to the point of addressing
Mother Nature where she was before we came.
These issues of fire, whether it is in the grasslands or
forests, simply won't go away, and it would appear, at least in
my experience in Oklahoma, we are doing an amazing job of
fighting the wildfires when they occur. But that underlying
issue about how to address the fuel load, whether it is to turn
it into another product or whatever, that is where we are. Just
having amazing amounts of grass or amazing amounts of timber
only makes these issues more complicated. In my area, we have
to duplicate what the buffalo did for eons before the farmers
arrived.
And with that, I thank the panel and we will continue to
move forward in this process of improving the farm bill as we
prepare for the next draft.
Under the Rules of the Committee, the record for today's
hearing will remain open for 10 calendar days to receive
additional material and supplemental written responses from the
witnesses to any question posed by a Member. This hearing of
the Subcommittee on Conservation and Forestry is adjourned.
[Whereupon, at 3:49 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Kathryn C. Browning, Boulder, CO
To: The U.S. House Subcommittee on Conservation and Forestry
From: Kathryn C. Browning
Date: 26 March 2017
RE: The Next Farm Bill: Forestry Initiatives Hearing--16 March 2017

As the Committee begins preparing the 2018 Farm Bill, I
respectfully urge its Members to fully fund programs that promote
forest conservation actions and innovation. Specifically I ask that the
Committee conserve or increase funding for the Conservation Stewardship
Program (CSP), the Environmental Quality Incentives Program (EQUIP)
including sufficient funds for the Wildlife Habitat Incentives Program
(WHIP), the Healthy Forest Reserve Program (HFRP), and the Conservation
Innovation Grants (CIG).
The 2014 Farm Bill marked the first decrease in funding for
conservation since 1985. These cuts decreased expected funding for
conservation programs by $4 billion and oversaw the consolidation of 23
different conservation programs into 13. These cuts exceed the
increases to conservation initiatives gained in the 2008 Farm Bill.
Further, when the $2.1 billion in automatic sequestration spending cuts
and changes in mandatory program spending are also considered, the
funding decrease also cancels out a significant share of the gains in
conservation funding from the 2002 bill. These funding reductions to
conservation programs constrain the ability of public and private
landowners to steward their forested lands in an economically and
ecologically sustainable manner.
These cuts have had--and will continue to have--real and tangible
effects that are felt deeply by landowners across the country. For
example, decreases in funding for the Conservation Stewardship Program
(CSP) will cause 28 million eligible acres not to be conserved over the
coming decade.\1\ This hurts both farmers and the sensitive lands they
wish to protect. Sufficient funds should be allocated for CSP in the
2018 Farm Bill and the Committee should take steps to reverse the
acreage limits from the current 10 million acres back to 12.8 million
acres or larger.
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\1\``What is in the 2014 Farm Bill For Sustainable Farms and Food
Systems?'' National Sustainable Agriculture Coalition What is in the
2014 Farm Bill For Sustainable Farms and Food Systems Comments. January
31, 2014. Accessed March 25, 2017. http://sustainableagriculture.net/
blog/2014-farm-bill-outcomes/.
---------------------------------------------------------------------------
The Environmental Quality Incentives Program (EQIP) is also an
important conservation tool that should be fully funded in the 2018
Farm Bill. EQIP provides resources to help landowners plan and
institute conservation practices that improve forest health and
productivity, such as forest stand improvement, riparian forest buffers
(5% of the program is used to improve forested land adjacent to
farmland), and invasive plants control, and provides funding to offset
the cost of implementing those practices.\2\ The program serves the
important and increasingly needed role of providing on-the-ground
technical planning and conservation assistance to help private
landowners actively manage their lands. As such, the 2018 Farm Bill
should increase funding for the EQIP program by at least 10% annually,
and maintain the 75% cost sharing provisions for developing forest
management plans and for the aforementioned conservation practices.
Where possible, the bill should place emphasis on long-term incentive
payments and contracts to encourage sustained management of wildlife.
---------------------------------------------------------------------------
\2\``Environmental Quality Incentives Program.'' Environmental
Quality Incentives Program, NRCS. Accessed March 25, 2017. https://
www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/financial/
eqip/.
---------------------------------------------------------------------------
The Wildlife Habitat Incentives Program, which was rolled into EQIP
as part of the consolidation of programs in the 2014 bill, should also
preserve its ability to provide both technical assistance and up to 75%
cost sharing assistance to private landowners for land stewardship,
including the establishment and improvement of fish and wildlife
habitat. The 2018 Farm Bill should make lands capable of production, as
well as lands already in production, eligible to receive funds, as they
were in the 2014 bill, and allow private landowners the option of
managing their forestlands specifically for wildlife habitat.
The 2018 Farm Bill offers a substantive and unique opportunity for
the Committee to strengthen the CSP-EQIP linkage. After the passage of
the 2014 Farm Bill, the NRCS began an administrative ``reinvention'' of
the CSP, making it more closely aligned with EQIP. As a result of this
administrative transformation, EQIP's conservation practices are now
more than ever a logical stepping-stone to the more advanced
conservation activities available through the CSP. The Committee should
be mindful and purposeful in realizing and strengthening this
relationship in order to maximize the benefits of both programs. It
should also keep a watchful eye on the effects of these recent changes
to the program to ensure that they achieve the desired effect of
transforming the program into one that fully supports wildlife and
forestry. This includes ensuring that rankings and payments reward
enhancements with higher conservation benefits that are focused on
sustained conservation outcomes.
The Healthy Forest Reserve Program (HFRP) is a central forest
initiative offered through the farm bill. The HFRP assists private
landowners in restoring, enhancing, and protecting forest resources on
their lands through easements, 30 year contracts, and 10 year cost-
share agreements.\3\ These provisions have the effect of promoting
biodiversity, controlling soil erosion, enhancing carbon sequestration,
improving water quality, and adding value to private lands.\4\ The 2018
Farm Bill should provide for at least $12 million in mandatory annual
funding for the HFRP to ensure continued delivery of this important
value to private landowners.
---------------------------------------------------------------------------
\3\``Healthy Forests Reserve Program.'' Healthy Forests Reserve
Program, NRCS. Accessed March 25, 2017. https://www.nrcs.usda.gov/wps/
portal/nrcs/main/national/programs/easements/forests/.
\4\``Healthy Forests Reserve Program--How to Apply and Benefits.''
Healthy Forests Reserve Program--How to Apply and Benefits, NRCS.
Accessed March 25, 2017. https://www.nrcs.usda.gov/wps/portal/nrcs/
detail/national/programs/easements/forests/?cid=nrcs
143_008410.
---------------------------------------------------------------------------
Finally, the Committee should strive to sustain or increase support
for Conservation Innovation Grants (CIGs). CIGs offers competitive
grant funding to EQIP-eligible non-Federal governmental or non
governmental organizations, American Indian Tribes, and individuals to
support the development and adoption of innovative approaches to
conservation on agricultural lands.\5\ The CIG program promotes
innovation while also increasing the value of Federal investments in
environmental restoration and protection. In short, CIGs facilitate
research into how future conservation investments by the Federal
Government can go farther and provide greater value to America's
private landowners, and should be fully funded in the 2018 Farm Bill.
---------------------------------------------------------------------------
\5\``Conservation Innovation Grants.'' Conservation Innovation
Grants, NRCS. Accessed March 25, 2017. https://www.nrcs.usda.gov/wps/
portal/nrcs/main/national/programs/financial/
cig/.
---------------------------------------------------------------------------
The Committee, in developing the 2018 Farm Bill, should take
seriously the opportunity to strengthen forest conservation programs
that support America's private landowners. It should work to reverse
the ill-effects of spending cuts mandated by the 2014 bill and to
strengthen the conservation initiatives provided in the Conservation
Stewardship Program (CSP), the Environmental Quality Incentives Program
(EQIP) including the Wildlife Habitat Incentives Program (WHIP), the
Healthy Forest Reserve Program (HFRP), and Conservation Innovation
Grants (CIG).
Thank you for your important work on the 2018 Farm Bill.

THE NEXT FARM BILL

(NUTRITION DISTRIBUTION PROGRAMS)

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TUESDAY, MARCH 21, 2017

House of Representatives,
Subcommittee on Nutrition,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:01 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Glenn
Thompson [Chairman of the Subcommittee] presiding.
Members present: Representatives Thompson, Crawford,
Hartzler, Davis, Yoho, Rouzer, Comer, Marshall, Faso, Conaway
(ex officio), McGovern, Adams, Evans, Fudge, Lujan Grisham,
Lawson, Panetta, Soto, and Maloney.
Staff present: Bart Fischer, Callie McAdams, Jennifer
Tiller, Mary Rose Conroy, Stephanie Addison, Kellie Adesina,
Lisa Shelton, Liz Friedlander, Troy Phillips, and Nicole Scott.

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

The Chairman. Good morning, and welcome to today's
Nutrition Subcommittee hearing on distribution programs. This
hearing continues the Committee's series where each
Subcommittee is undertaking a comprehensive review of the
current farm bill as we move to draft the next. I want to thank
you, everyone, for taking the time to be here, particularly our
witnesses for their participation and their respective
insights.
USDA's food distribution programs, The Emergency Food
Assistance Program, TEFAP, the Commodity Supplemental Food
Program, and the Food Distribution Program on Indian
Reservations, strengthen the nutrition safety net through the
distribution of USDA Foods and other nutrition assistance to
children, low-income families, emergency feeding programs,
Indian Tribal organizations, and the elderly. These programs
provide support to populations in need and help decrease food
insecurity in our low-income communities.
It is important to have a general understanding of these
three programs, how they differ from one another, how they
interact, and how they, along with our nation's largest anti-
hunger program, SNAP, Supplemental Nutrition Assistance
Program, work together to meet the nutrition needs of our most
vulnerable citizens. The panel we will hear from this morning
will offer insight based on their operational and policy
experience. These on-the-ground perspectives will be critical
as we look towards the farm bill reauthorization with a focus
on improving what works and reducing administrative burdens so
that program benefits reach those most in need in the most
effective and efficient manner possible.
The food distribution programs are each designed to meet
the needs of a particular population. TEFAP helps supplement
the diets of low-income Americans by providing them with
emergency food assistance at no cost. CSFP is targeted at
improving the nutrition of low-income elderly people at least
60 years of age by supplementing their diets with food
packages. In both programs, USDA purchases the food and ships
it to state agencies and provides support for administrative
costs. TEFAP and CSFP state agencies work closely with local
agency partners to distribute the USDA Foods in communities.
FDPIR provides USDA Foods to income-eligible households
living on Indian reservations, and to American Indian
households residing in approved areas near reservations or in
Oklahoma. Many households participate in FDPIR as an
alternative to SNAP because they do not have easy access to
SNAP offices or authorized food stores. FDPIR is authorized
locally by either Indian Tribal organizations or an agency of a
state government. USDA purchases and ships FDPIR foods to ITOs
and state agencies based on their orders from a list of
available foods and provides them with administrative funding.
These agencies store and distribute the food, determine
applicant eligibility, and provide nutrition education to
recipients.
We will also hear from Diane Kriviski, Deputy Administrator
for the Supplemental Nutrition and Safety Programs, who will
provide valuable insight into not only TEFAP, CSFP, and FDPIR,
but ultimately what is being done to improve access to healthy
foods.
I want to thank all of our witnesses for sharing their time
and expertise today, and making the trip here to Washington.
[The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good morning, and welcome to today's Nutrition Subcommittee hearing
on food distribution programs. This hearing continues the Committee's
series where each Subcommittee is undertaking a comprehensive review of
the current farm bill as we move to draft the next. Thank you to
everyone for taking the time to be here, particularly our witnesses for
their participation and respective insights.
USDA's food distribution programs--The Emergency Food Assistance
Program, the Commodity Supplemental Food Program, and the Food
Distribution Program on Indian Reservations--strengthen the nutrition
safety net through the distribution of USDA Foods and other nutrition
assistance to children, low-income families, emergency feeding
programs, Indian Tribal organizations, and the elderly. These programs
provide support to populations in need and help decrease food
insecurity in our low-income communities.
It is important to have a general understanding of these three
programs, how they differ from one another, how they interact, and how
they, along with our nation's largest anti-hunger program, the
Supplemental Nutrition Assistance Program, work together to meet the
nutrition needs of our most vulnerable citizens. The panel we will hear
from this morning will offer insight based on their operational and
policy experience. These on-the-ground perspectives will be critical as
we look toward farm bill reauthorization with a focus on improving what
works and reducing administrative burdens so that program benefits
reach those most in need in the most effective and efficient manner
possible.
The food distribution programs are each designed to meet the needs
of a particular population. TEFAP helps supplement the diets of low-
income Americans by providing them with emergency food assistance at no
cost. CSFP is targeted at improving the nutrition of low-income elderly
people at least 60 years of age by supplementing their diets with food
packages. In both programs, USDA purchases the food and ships it to
state agencies and provides support for administrative costs. TEFAP and
CSFP state agencies work closely with local agency partners to
distribute the USDA Foods in communities.
FDPIR provides USDA Foods to income-eligible households living on
Indian reservations, and to American Indian households residing in
approved areas near reservations or in Oklahoma. Many households
participate in FDPIR as an alternative to SNAP because they do not have
easy access to SNAP offices or authorized food stores. FDPIR is
administered locally by either Indian Tribal organizations or an agency
of a state government. USDA purchases and ships FDPIR foods to the ITOs
and state agencies based on their orders from a list of available foods
and provides them with administrative funding. These agencies store and
distribute the food, determine applicant eligibility, and provide
nutrition education to recipients.
We will also hear from Diane Kriviski, Deputy Administrator for
Supplemental Nutrition and Safety Programs, who will provide valuable
insight into not only TEFAP, CSFP, and FDPIR, but ultimately what is
being done to improve access to healthy foods.
I want to thank all of our witnesses for sharing their time and
expertise. I now recognize Mr. McGovern for his opening statement.

The Chairman. Now I am very pleased to recognize the
Ranking Member of this Committee, Mr. McGovern, for his opening
statement.

OPENING STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE
IN CONGRESS FROM MASSACHUSETTS

Mr. McGovern. Well thank you very much, Mr. Chairman, and
thank you for calling today's hearing on nutrition distribution
programs. I want to thank all the witnesses for being here. Mr.
Chairman, this is your first hearing as Chairman of this
Subcommittee. I want to congratulate you, and I hope recalling
the words of that great philosopher, Humphrey Bogart, in the
movie Casablanca when he said to Claude Raines, ``I think this
is the beginning of a beautiful friendship.'' I hope.
Anyway, The Emergency Food Assistance Program, TEFAP, the
Commodity Supplemental Food Program, and the Food Distribution
Program on Indian Reservations are all critical to ensuring our
most vulnerable neighbors have access to food, and they are
well-deserving of our support. In particular, I would like to
highlight the incredible work of food banks in my Congressional
district, the Food Bank of Western Massachusetts, and the
Worchester County Food Bank, in working to alleviate hunger in
central and western Massachusetts.
But with over 42 million Americans, including children,
seniors, veterans, and yes, some very poor childless adults,
too, living in food-insecure households, I think we can all
agree that more needs to be done to address hunger in our
country. We are the richest country in the history of the
world, and 42 million of our fellow citizens are hungry or
food-insecure.
Last Congress, this Subcommittee held 18 hearings on SNAP.
We heard more than 30 hours of testimony from over 60 experts.
We learned from these experts, conservative and liberal, that
SNAP benefits should not be cut and that current benefits are
inadequate. We also learned that SNAP does not discourage work,
and that case management and job training programs can be
successful in helping to move people out of poverty, but these
efforts require a well-funded, multi-year commitment.
Recently, I have read in the press that Chairman Conaway
will use the White Paper he compiled from these hearings to
make changes in our anti-hunger safety net. And I am reading
that a big part of these changes will impact 18 to 49 year olds
who do not have children, known as ABAWDs, able-bodied adults
without dependents. And while it is convenient to demonize this
group of vulnerable adults, the truth of the matter is we do
not have a clear picture of the ABAWD population. We know it is
a diverse group. We know that many have limited educational
experiences, and some have mental health issues, difficult
histories of substance abuse, or are ex-offenders with nowhere
else to turn. I now come to learn that up to 60,000 of them are
veterans, people who served our country.
Members of this Committee could benefit, I hate to suggest
another hearing, but I am going to suggest another hearing. But
maybe we could benefit from a hearing on this vulnerable
population. Maybe before we start kicking people who fall into
this ABAWD category off of Medicaid and out of the SNAP
program, we should have a hearing to explore this vulnerable
population and work to understand their struggles as opposed to
belittling them. Kicking vulnerable people off of food
assistance does nothing to help them find work. It just makes
them hungry. It is mean-spirited, and it is a rotten thing to
do.
If we are serious about ending hunger in this country, we
need to realize that while our states, charities, local
providers, and our Federal programs are all doing incredible
work to alleviate hunger, more needs to be done. Charities,
even with Federal support, cannot solve hunger alone. We need
to maintain the structure of SNAP, increase SNAP benefits, and
boost our anti-hunger safety net to reach those who are still
facing incredible hardship. And we need to commit to and fund
programs that provide an economic ladder to those struggling in
poverty.
I look forward to the distinguished panel of witnesses, and
I thank them for being here, and thank you, Mr. Chairman, for
yielding me the time. I yield back.
The Chairman. I thank the gentleman. The chair would
request that other Members submit their opening statements for
the record so the witnesses may begin their testimony to ensure
that there is ample time for questions, and I appreciate the
Members' understanding.
I would like to welcome our witnesses to the table. Ms.
Carrie Calvert, Director of Tax and Commodity Policy, Feeding
America here in Washington, D.C.; Mr. Frank Kubik, CSFP
Director, Focus: HOPE, from Detroit, Michigan; Mr. Jerry
Tonubbee, Director, Food Distribution Program, Choctaw Nation
of Oklahoma, Durant, Oklahoma; and Ms. Diane Kriviski, Deputy
Administrator, Supplemental Nutrition and Safety Programs, Food
and Nutrition Service, FNS of USDA located, here in Alexandria,
Virginia.
Ms. Calvert, go ahead with your 5 minutes of testimony when
you are ready.

STATEMENT OF CARRIE T. CALVERT, DIRECTOR, TAX AND COMMODITY
POLICY, FEEDING AMERICA, WASHINGTON, D.C.

Ms. Calvert. Great, thank you. This is actually my first
time officially testifying before a Congressional Committee, so
thank you very much for inviting me.
Mr. Chairman, Ranking Member McGovern, and Members of the
House Agriculture Subcommittee on Nutrition, I am thrilled to
be here today to talk about the nation's food distribution
programs, in particular, The Emergency Food Assistance Program,
also known as TEFAP. I represent Feeding America, which is the
nation's largest anti-hunger nonprofit, serving 46 million
people each year through our network of almost 200 food banks.
Our network serves every state in the country as well as the
District of Columbia, and supports 60,000 local agencies like
food pantries, after school and summer programs, senior meal
sites, and soup kitchens, providing four billion meals each
year to people in need. Our mission is to not only provide
emergency food assistance to those in need today, but to engage
the country in the fight to end hunger so that we can reduce
the number of families that must rely on charitable food
assistance tomorrow.
Since its inception in the early 1980s as a program to
connect surplus commodity products with emergency feeding
organizations, strangely enough, it was surplus cheese that was
the first product distributed through TEFAP. TEFAP has served a
dual purpose of providing nutritious food to the nation's
charitable community while supporting U.S. grown commodities.
As the program has proved its efficacy and efficiency, it has
expanded to become an essential part of how food banks and
other local organizations provide food to people in need.
Today, TEFAP has become a backbone of the nutritious food our
food banks are able to distribute.
The Feeding America network receives food from Federal
commodity programs like TEFAP and CSFP, as well as through food
donation partnerships with thousands of growers, food
manufacturers, retailers, and food service companies across
America. We also do purchase some of the food we distribute as
well when there is a shortfall or to serve specific populations
or dietary needs.
Feeding America food banks received 723 million pounds of
food from TEFAP in Federal Fiscal Year 2016, accounting for
about 600 million meals. These are meals that go straight into
the effort to fight hunger and to relieve food insecurity, but
should be viewed as part of an array of Federal nutrition
programs. We know the community members that we help are also
often relying on SNAP, school lunch, WIC, or senior meals to
meet their families' needs. Our work would not be possible
without the continued strong support of Federal nutrition
programs. In fact, Feeding America's entire food distribution
in 1 year equals only ten percent of the food purchases
provided by the SNAP program in 1 year.
We know from Feeding America's Hunger in America 2014
report that although 55 percent of the people we serve
participate at some time in the SNAP program, another 45
percent do not. Some of that population is likely eligible, yet
not participating, but millions of others make too much to
qualify for SNAP assistance, yet still need charitable food
assistance. This is where strong funding for TEFAP is essential
to our ability to fulfill our mission.
TEFAP works by directly supplying nutritious food purchased
by USDA to charities such as Feeding America food banks. In
addition to the food, USDA also provides funding to defray some
of the storage and distribution costs of getting the food to
hungry Americans. As you can see from the pie chart here, which
I apologize might be hard for you to read from where you are
sitting, the foods provided through TEFAP are highly nutritious
and represent household pantry staples, foods that you would
find in your home. In fact, protein items are the number one
category purchased, followed by fruits and vegetables. Our food
banks combine TEFAP foods with other donated and purchased food
to give food-insecure Americans access to a nutritionally well-
balanced grocery package.
The farm bill also authorizes funds for storage and
distribution, which helps defray part of the cost that food
banks incur getting TEFAP foods to people in need; however, it
is not mandatory funding and depends on an annual
appropriation, and unfortunately, the funds that are
appropriated are only \1/2\ of the authorized amount. There is
a significant shortfall that many of our food banks are dealing
with, and frankly, it means that they have to divert funds from
other valuable programs to meet that shortfall.
We hope to work with you as the next farm bill process gets
underway to not only show the significant, strong impact that
TEFAP foods have had, and the impact that the increase in TEFAP
foods provided by the last farm bill has had in communities,
but also to make the case that being able to fully fund TEFAP
storage and distribution would have a significant impact on our
ability to invest in other programs that we are doing, such as
mobile pantries, job training programs, SNAP outreach
assistance in communities. There are many, many valuable
programs that our food banks are actively working on, and so we
would definitely appreciate stronger funding for that.
And with that, I conclude my testimony. Thank you.
[The prepared statement of Ms. Calvert follows:]

Prepared Statement of Carrie T. Calvert, Director, Tax and Commodity
Policy, Feeding America, Washington, D.C.
Mr. Chairman, Ranking Member McGovern, and Members of the House
Agriculture Subcommittee on Nutrition, thank you for inviting me to
testify on the importance of The Emergency Food Assistance Program,
also known as TEFAP. I represent Feeding America, which is the nation's
largest anti-hunger nonprofit, serving 46 million people each year
through our network of almost 200 food bank members. Our network serves
every state in the country as well as the District of Columbia. Our
food banks support over 60,000 food distribution agencies, such as food
pantries, after school and summer programs, senior meal sites, and soup
kitchens. We have a network of two million volunteers and we are proud
to say that we provide four billion meals annually to people in need.
Our mission is to not only provide emergency food assistance to those
in need today, but to engage the country in the fight to end hunger, so
that we can reduce the number of families that must rely on charitable
food assistance tomorrow.
Since its inception in the early 1980's as a program to connect
surplus commodity products with emergency feeding organizations, TEFAP
has served a dual purpose of providing nutritious food to the nation's
charitable community while supporting U.S. grown commodities. As the
program proved its efficacy and efficiency, it expanded to become an
essential part of how food banks and other local organizations provide
food to people in need. Today, The Emergency Food Assistance Program is
the backbone of the charitable food system with an impact that is felt
in every state across the country.
The Feeding America network receives food from Federal commodity
programs like TEFAP and CSFP, as well as through food donation
partnerships with thousands of growers, food manufacturers, retailers,
and food service companies across America. We also purchase some of the
food we distribute as well when there is a shortfall. Feeding America
food banks received 723 million pounds of food from TEFAP in FY 2016,
accounting for about 600 million meals.
These are meals that go straight into the effort to fight against
hunger and to relieve food insecurity, but should be viewed as part of
an integral array of Federal nutrition programs. We know the community
members we help are also often relying on SNAP, school lunch, WIC, or
senior meals to meet their families' needs. Our work would not be
possible without the continued strong support of Federal nutrition
programs. In fact, Feeding America's entire food distribution in 1 year
equals only 10% of the food provided by the SNAP program. We know from
Feeding America's Hunger in America 2014 report that although 55% of
the people we serve participate at some time in the SNAP program,
another 45% do not. Some of that population is likely eligible yet not
participating, but millions of others make too much to qualify for SNAP
assistance, yet still need charitable food assistance. This is where
strong funding for TEFAP is essential to our ability to fulfill our
mission.
TEFAP works by directly supplying nutritious food purchased by USDA
to charities, such as Feeding America food banks. In addition to the
food, USDA also provides funding to defray some of the storage and
distribution costs of getting the food to hungry Americans. As you can
see from the pie chart, the foods provided through TEFAP are highly
nutritious and represent household pantry staples, foods that you would
find in your kitchen. Our food banks combine TEFAP foods with other
donated and purchased food to give food-insecure Americans access to a
nutritionally well-balanced grocery package.
Feeding America: TEFAP Food Categories FY 2016

There are two categories of TEFAP commodities, mandatory and bonus
commodities. Mandatory commodities are paid for through mandatory
funding authorized directly in the farm bill. Food banks, working with
their state agencies, order food directly from USDA, which contracts
with food producers to achieve significant cost savings. This is a
highly efficient purchasing program. Each pound of nutritious food by
USDA costs about 64.\1\ Food banks select these foods from a long menu
of options made available by USDA. Mandatory spending is essentially
demand driven.
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\1\Based on Feeding America analysis of USDA delivery order
reports.
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TEFAP Bonus commodity purchases are driven by the need for
commodity support as prices for commodity foods fluctuate. When the
price of an agriculture commodity falls so low that the market for it
is in danger, the Department of Agriculture spends money to purchase
enough of that commodity to stabilize the market. These purchased foods
are then distributed through the TEFAP program to those who need a
helping hand. This is a highly-efficient public-private partnership,
supporting agricultural markets, while allowing for the purchase of
nutritious food when it is at a very low price point. In FY 2016, USDA
made additional purchases under its market support authority of $297.44
million worth of food.\2\
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\2\USDA FY 2016 Bonus Purchases, published 9/30/16.
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The farm bill also authorizes funds to support the storage and
distribution of TEFAP commodities, although this is not mandatory
funding and depends on an annual appropriation. These are dollars spent
to help defray the cost of storing commodities and then moving them to
the distribution point so they can be accessed by our clients.
Unfortunately, the funds Congress has historically appropriated for
the purposes of TEFAP storage and distribution are significantly less
than the costs incurred by our food bank members. For years now,
Congress has appropriated these critical funds at around \1/2\ of the
authorized level of $100 million annually. TEFAP storage and
distribution's current funding level of $54 million only covers 23% of
the cost to our food banks of distributing TEFAP commodities--leaving
food banks to cover the difference. This is especially acute in food
banks with larger service areas and which are serving rural
populations.
Food banks help to make up the shortfall for the storage and
distribution costs by redirecting funding that would otherwise go to
other initiatives they run, such as veteran's programs and school
weekend back pack programs. If Congress were to appropriate the full
authorized amount of storage and distribution funds, food charities
would have additional resources to provide services in their
communities. The chart below illustrates the costs our food banks
report to us, and the small amount that is offset by TEFAP storage and
distribution.
TEFAP Storage & Distribution Funding Gap for Feeding America Food Banks

TEFAP foods and funds are distributed to states on the basis of
relative poverty and unemployment levels. In FY 2016, Congress provided
$318 million in funding for TEFAP food purchases,\3\ down from $327
million in FY 2015.\4\ This occurred because the 2014 Farm Bill called
for the gradual reduction of additional program funding. Because of the
reduction in funding, most states saw their TEFAP dollars shrink. The
2014 Farm Bill provided an additional $205 million in TEFAP funding
over 10 years. The chart below shows the impact this funding has had.
While we are grateful for the additional funding, the idea behind front
loading the funds was to provide assistance when demand was highest. As
our food banks can attest, the economic recovery has been uneven for
many of the working poor that we serve, and they continue to respond to
a high degree of demand. We would urge you to consider methods to
address the need for additional TEFAP support in a more stable manner
in the next farm bill.
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\3\USDA, ``Fiscal Year (FY) 2016 Food and Administrative Funding
for The Emergency Food Assistance Program (TEFAP),'' published 1/7/16.
\4\USDA, ``The Emergency Food Assistance Program,'' published June
2016.
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2014 Farm Bill: Additional Funding for TEFAP Mandatory Food

The food charities that distribute TEFAP foods are subject to
government oversight to ensure that the commodities are reaching low-
income consumers. State agencies develop uniform statewide criteria for
determining recipient eligibility.\5\ Local charities are required to
prove that they serve predominantly needy communities. States are
required to regularly review local charities to ensure effective and
efficient program operations. USDA conducts Management Evaluations of
states deemed to be at the highest risk of program deficiency.
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\5\USDA, ``The Emergency Food Assistance Program,'' published June
2016.
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In addition to the oversight from USDA and state agencies, Feeding
America contractually requires all of our food bank members to undergo
audits by our compliance team to ensure all Federal, state and local
regulations are complied with and that the food bank is operating in a
financially responsible manner. We also require a third party food
safety audit to ensure that we are distributing food in a way that
protects clients from potential food borne illness, which is especially
important as the amount of perishable food we distribute has increased.
The Emergency Food Assistance Program illustrates how a government
program, nonprofits, and the private-sector can work together to
provide targeted, accessible, and cost efficient food assistance that
is responsive to immediate need in local communities. TEFAP is a very
responsive program, because it can be accessed by struggling families
and individuals on an as needed basis. After a sudden emergency leaves
a family without money, there is a place to turn. For many of the
people we serve, the need for food assistance can be episodic and due
to unexpected expenses, such as a car breaking down or a sudden layoff.
TEFAP helps fill the gaps when this happens.
A story by CBS reported that most Americans said they would be
unable to handle a sudden $500 car repair bill.\6\ As we have seen, the
lack of well-paying jobs has left more people living closer to the
margin than they have ever before. Many are just one bad day away from
suddenly experiencing that strange sense of going from the middle
class, to wondering how they will feed their family.
---------------------------------------------------------------------------
\6\Picchi, Aimee, ``Most Americans can't handle a $500 surprise
bill,'' CBS News, 1/6/16.
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TEFAP provides a stop gap measure by empowering local organizations
to provide immediate food. This food is there today and is available
tonight. This sort of immediate response is so important, because
people live their lives day-by-day and not by government timelines. By
being there when people need it, TEFAP can be the steadying hand that
keeps a family stable through an emergency.
TEFAP food is also very healthy. Research conducted by USDA's Food
and Nutrition Service found that TEFAP provides extremely nutritious
foods. In fact, using the Healthy Eating Index, a tool developed by
USDA to measure diet quality, the food distributed through TEFAP earned
a score of 89 out of 100. By comparison the overall U.S. food supply
scored only 55 out of 100.\7\
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\7\USDA, ``White Paper on The Emergency Food Assistance Program
(TEFAP) Final Report,'' Published August 2013.
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The availability of nutritious foods is highly important to our
clients. According to our Hunger in America study, 79% of client
households report having bought the cheapest food available, regardless
of its nutritional content.\8\ This is especially concerning, because
nearly \1/2\ (47%) of our client households that contain seniors have a
member with diabetes.\9\ Feeding America works hard to provide those we
serve with food that is healthy and filling.
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\8\Weinfield, Nancy, et al., ``Hunger in America 2014,'' Feeding
America, Published August 2016.
\9\Ibid.
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As the Subcommittee works on a new farm bill, we look forward to
working with you to demonstrate how strong support for nutrition
programs and agriculture programs can strengthen communities
nationwide. We know that for many of America's growers, this has been a
difficult time with low commodity prices leading to many challenges in
rural America.
One of the misconceptions about food insecurity in America is that
it is only an urban problem; in fact, the counties identified as most
food-insecure by Feeding America's Map the Meal Gap report are in rural
areas. We believe that we can achieve a farm bill that helps strengthen
our agriculture economy, provides support to rural communities, and
reduces hunger through partnership and collaboration, and look forward
to engaging with you to achieve these shared goals.

The Chairman. Thank you very much.
Mr. Kubik, you are now recognized for 5 minutes.

STATEMENT OF FRANK KUBIK, DIRECTOR, COMMODITY SUPPLEMENTAL FOOD
PROGRAM, FOCUS: HOPE, DETROIT, MI

Mr. Kubik. Good morning, Mr. Chairman and Members of the
Subcommittee. Thank you for this opportunity you are giving me
today.
I work with the Commodity Supplemental Food Program in
Detroit for an organization called Focus: HOPE, which is a
human and civil rights nonprofit organization. I also work with
the National CSFP Association. I appreciate this opportunity to
speak on behalf of Focus: HOPE and its 41,000 monthly
participants of CSFP, as well as the 600,000 monthly CSFP
participants in 48 states, District of Columbia, and two Indian
Tribal organizations. Since 2010, CSFP has added ten additional
states. Thank you to Congress and FNS for your continued
support for the program.
In the Farm Bill of 2014, CSFP became an elderly-only
program. We thank the Subcommittee for the legislation that
enables us to exclusively serve our vulnerable senior
population.
CSFP is a discretionary program funded through annual
appropriations. While it is authorized in the farm bill, it
receives no mandatory money.
CSFP is a unique program which brings together Federal and
state agencies, along with public and private entities. By
using their buying power, USDA is able to provide the monthly
nutritionally balanced food package at a cost of less than $24
per box. That same food package goes for a retail value of
about $45 to $50. This makes CSFP a cost effective program. In
Fiscal Year 2016, CSFP provided services to more than 150
nonprofit community and faith-based organizations at 1,800
locations across the country.
State agencies provide administrative oversight in contract
with local and faith-based organizations to warehouse and
distribute food, certify eligibility, and provide nutrition
education to participants. These local organizations build
collaboration among nonprofits, health providers and their
agencies on aging, to provide easy access to the program. We
are able to reach isolated and homebound seniors.
A 2013 National CSFP Association survey showed that \1/2\
of the seniors who responded reported that they lived alone
with an average income of less than $750 a month. Seventy
percent of those senior respondents said they choose between
food and medicine each month.
Frederick is a 92 year old World War II veteran and
Tuskegee airman. He honorably served this country at a time of
its greatest need. We are now honorably trying to serve him at
a time of his greatest need. For the past 10 years, Frederick
and his wife have relied on their monthly CSFP food package
they have picked up at Focus: HOPE. Frederick has said, ``For
me and my wife, Focus: HOPE means food. It allows us to use our
fixed income on other needs, like housing and medicine, and
still eat at the end of the day.'' Frederick did not enroll in
CSFP until he was 82 years old. He only reached out to us when
he had no other choice. He needed help, and fortunately we were
able to provide him and his wife with a monthly food package. A
year ago, Frederick's son passed away and recently his wife
passed away as well. For many of us, Frederick is a hero. We
are privileged to be able to help him, especially for all he
has done for our country.
Barbara's story is a familiar one. Seniors who are forced
to take care of someone else, and in so many cases,
grandchildren. Barbara has recently signed up for the first
time to receive CSFP benefits. Her husband passed away
suddenly. Barbara says, ``At this time I'm at a point where I
can't afford to pay my medical bills, rent, utilities, and I
have a mentally challenged adult son who needs medication as
well as every day necessities.'' CSFP is a lifeline to Barbara
and other seniors in need.
Providing food assistance in many cases is not enough. Many
CSFP agencies network with other health providers and can bring
additional assistance to low-income seniors. Volunteer services
are increasing because we are able to partner with health
organizations and others to bring additional help to our
seniors. We have regular events at our sites such as blood
pressure checks, cholesterol screenings, eye exams, seasonal
flu shots, and mobile mammograms, as well as other screenings.
We are also increasing our additional help in other Focus: HOPE
sites. Income tax assistance, utility bill payment assistance
is also being offered to our community, and we are working with
our local food bank to provide additional food to our CSFP
participants, as many other CSFP programs do.
The stories I have described in this testimony are all too
typical for many seniors in this country. The lack of access to
high quality food, reliable public transportation, and adequate
healthcare and too often unsafe neighborhoods collude to make
the so-called golden years far less than golden. People who
have worked all their lives and contributed so much to this
nation are being neglected and left on their own in a time when
they need help the most. Indeed, there is much left to be done
to address the issues of hunger and poverty, both locally and
nationally.
On behalf of the nation's Commodity Supplemental Food
Program participants and volunteers nationwide, thank you for
this opportunity to present testimony for the record. Thank
you.
[The prepared statement of Mr. Kubik follows:]

Prepared Statement of Frank Kubik, Director, Commodity Supplemental
Food Program, Focus: HOPE, Detroit, MI
Mr. Chairman and Members of the Subcommittee:

I am Frank Kubik, the Commodity Supplemental Food Program Director
at Focus: HOPE, a civil and human rights nonprofit organization in
Detroit, Michigan. I also work with the National CSFP Association.
Thank you for the opportunity to speak on behalf of the Focus: HOPE
CSFP and its 41,000 monthly low-income senior participants in the
metropolitan Detroit area, as well as the 600,000 monthly CSFP
participants in 48 states, the District of Columbia, and two Indian
Tribal organizations.
The Commodity Supplemental Food Program (CSFP) began in 1969 to
supplement protein, calcium, iron, and vitamins A and C for low-income
pregnant and post-partum mothers and children under the age of 6. The
U.S. Department of Agriculture (USDA) purchases nutrient-rich foods at
wholesale prices to provide a nutritionally balanced monthly food
package. Pilot programs in 1982 added seniors as eligible participants.
In the Farm Bill of 2014, CSFP became an elderly only program. We thank
the Subcommittee for the legislation that enables us to exclusively
serve our vulnerable senior population.
CSFP is a discretionary program funded through annual
appropriations. While it is authorized in the farm bill, it receives no
mandatory money. As the issue of hunger among our elderly has grown,
more and more states have become interested in CSFP. In 1999, CSFP was
in 17 states, the District of Columbia, and two Indian Tribal
organizations. As a result of the work of interested states and local
agencies, Congress has increased the funding to allow expansion into
new states, and today CSFP is in 48 states, the District of Columbia
and two Indian Tribal organizations (Red Lake, Minnesota and Oglala
Sioux, South Dakota). Each month 697,865 participants are authorized to
receive a nutritionally balanced food box. The National CSFP
Association is working with the two remaining non-CSFP states to submit
their plans of operation to USDA and with the support of Congress they
will be able to provide CSFP food packages to their low-income seniors
in the near future.
CSFP is a unique program which brings together Federal and state
agencies, along with public and private entities. In FY 2016, CSFP
provided services through more than 150 nonprofit community and faith-
based organizations at 1,800 locations across the country. State
agencies provide administrative oversight and contract with local and
faith-based organizations to warehouse and distribute food, certify
eligibility, and provide nutrition education to participants. These
local organizations build broad collaboration among nonprofits, health
providers, and area agencies on aging to provide easy access to the
program. These partnerships reach even homebound seniors in both rural
and urban settings with vital nutrition and remains an important market
for commodities supported under various farm programs.
The 2013 supplemental report by Ziliak and Gundersen for the
National Foundation to End Senior Hunger: The State of Senior Hunger in
America 2011: An Annual Report, demonstrated that seniors continue to
face ever increasing food insecurity challenges despite the end of the
recession. For example, recent data from USDA's Economic Research
Service (ERS), Household Food Security in the United States in 2015,
Table 2, shows that 2.9 million (8%) households with seniors age 65 and
older experienced food insecurity while more than 1.2 million (9%) of
households composed of seniors living alone experienced food
insecurity.
A 2013 National CSFP Association survey showed that \1/2\ of the
seniors who responded reported that they lived alone with an average
income of less than $750 a month. One-half of respondents from two-
person households reported an income under $1,000 per month. Twenty-
five percent were enrolled in the Supplemental Nutrition Assistance
Program (SNAP) and 50% said that they ran out of food during the month.
Seventy percent of senior respondents said that they choose between
food and medicine.
Many national studies have indicated that malnourished elderly
patients experience more medical complications, have longer hospital
stays, and incur higher hospital costs than well-nourished elderly
patients. It should come as no surprise that proper nutrition promotes
good health, treats chronic disease, decreases hospital length of stay,
and saves health care dollars. Studies indicate that seniors are our
fastest rising group of hungry in this country. Programs like CSFP can
make a difference in fighting hunger among our elderly.
I have been with Focus: HOPE's CSFP since 1981. We provide CSFP
food packages to 41,000 senior citizens each month and distribute over
700 tons of food annually. We have four primary distribution centers in
our four county service areas, but we also work with almost 300
volunteer distribution agencies as well as individual volunteers to
reach those seniors who are unable to make it to our food centers.
Community outreach such as this allows us to reach many seniors who
would be unable to access the CSFP program and receive the nutritional
assistance that they need to maintain their independence and a
healthier lifestyle, thus lowering the need for assisted living and
increased medical care.
Unfortunately, many of our senior citizens find themselves
struggling to make ends meet. Low-income seniors living on fixed
incomes are facing an increasingly difficult time making their limited
resources stretch to meet all of their daily needs, particularly with
getting enough food to eat. They are making daily choices between
whether to eat, buy medication, or pay their utility bills because
their severely limited income does not allow them to adequately provide
for themselves. The average income for a senior on our program is under
$700 a month. Many of these individuals worked long and productive
lives as cooks, maids, janitors, and other low wage jobs but did not
have employers who paid into the [S]ocial [S]ecurity [S]ystem on their
behalf. Still others find that the companies that they retired from are
no longer in business and the pensions that they thought would be there
for retirement no longer exist. Many of our seniors are forced to buy
lower priced items at the supermarket, which by itself is difficult
considering the food deserts that exists in cities like Detroit, items
that are not as healthy for them as the higher priced items that are on
the same shelves in the store. Fortunately, USDA has done an
outstanding job in making the foods in CSFP healthier by lowering the
sodium, sugar, and fat content and that goes a long way to keeping our
seniors healthier and independent.
Frederick is a 92 year old World War II veteran and Tuskegee
Airman. He honorably served his country, at a time of its greatest
need. We are now honorably trying to serve him at a time of his
greatest need. For the past 10 years Frederick and his wife have relied
on their monthly CSFP food package that they have picked up at Focus:
HOPE. Frederick has said, ``For me and my wife, Focus: HOPE means food.
It allows us to use our fixed income on other needs, like housing and
medicine, and still eat at the end of the day.'' Frederick did not
enroll in CSFP until he was 82 years old. He only reached out to us
when he had no other choice. He needed help and fortunately we were
able to provide him and his wife with a monthly food box. A year ago
Frederick's son passed away and recently his wife passed away as well.
For many of us Frederick is a hero. We are privileged to be able to
help him with CSFP and to be a family to him, especially for all that
he has done for us and for our country.
My agency is fortunate that we partner with many others in our
community to help our senior participants receive the food that they
need. We are able to utilize businesses, schools, and other community
volunteers to pack and deliver boxes. Many of the volunteers come in to
build boxes for home deliveries and end up providing additional support
for the seniors. We've had food drives, donations of gloves, and
donations of hats and scarfs in the cold weather months, which are
really important because so many seniors dial down their homes in the
winter to keep from paying higher energy bills. Gloves, hats and scarfs
are not always a given when you have a limited income. Volunteers have
adopted low-income senior buildings and bought the seniors Christmas
presents. One volunteer group bought fans for seniors living in an
apartment building that didn't provide air conditioning to everyone
living there. We always encourage our volunteers to talk to the
seniors. That visit is sometimes just as important as the food that
they are delivering. It shows that someone cares about them and that
they are not alone. It also helps the volunteers to understand what
many low-income seniors in this country are going through. Not everyone
has enough to eat or enough money to pay their medical bills and other
daily living expenses. Not everyone has a reliable car or family and
friends to take care of them.
Barbara's story is a familiar one. Seniors who are forced to take
care of someone else and in so many cases, grandchildren. Barbara has
recently signed up for the first time to receive CSFP benefits. Her
husband passed away suddenly. Barbara says, ``At this time I'm at a
point where I can't afford to pay my medical bills, rent, utilities,
and I have a mentally challenged adult son who needs medication as well
as every day necessities.'' Stretching your own resources to take care
of yourself is challenging enough, adding someone else makes it almost
impossible. CSFP sites offer referrals to other programs and many have
connections with other agencies to provide additional help. As Barbara
said to us, ``After calling Focus: HOPE I was assured that they could
help me immediately. Not only did they assist me with food, they
treated me with respect and gave me resources to call for additional
assistance. I don't know if I could have made it through another day
with my crisis. Thank you for understanding and listening to my
concerns.'' Providing food assistance, in many cases, is not enough.
Many CSFP agencies network with other help providers and can bring
additional assistance to low-income seniors, but as Barbara said it's
also understanding and listening to concerns. Too many seniors are by
themselves and have no one to talk to. We stress how important it is
for our staff to listen and be respectful to the seniors we interact
with. Life is very difficult for too many of our seniors. Sometimes
they just need to be able to tell somebody their story.
As I stated earlier, volunteers play a crucial role in our program.
Volunteer services are increasing because we are able to partner with
health organizations and others to bring additional help to our
seniors. We have regular events at our sites such as blood pressure
checks, cholesterol screenings, annual eye exams, seasonal flu shots,
and mobile mammograms, as well as other screenings, which are
increasing in our food centers. Income tax assistance and utility bill
payment assistance is also being offered to our community, and we are
working with our local food bank to provide additional food to our CSFP
participants. However, without volunteers we would not be able to do
our jobs and reach as many seniors in need that we do. Many seniors are
unable to access the additional help that they may need. Reliable
public transportation is still an issue in Detroit and needs much
improvement. To make matters worse, there are those who prey on seniors
in a number of ways. Safety concerns are always a reality for too many
of our elderly people so they are often times trapped in their homes or
apartments and can't get out. Our volunteers and staff do an incredible
job reaching those seniors and bringing them the additional nutritional
help they need.
Phyllis is another senior on our food program. Phyllis worked for
low wages and took jobs that didn't always pay into [S]ocial
[S]ecurity. She needed work and sometimes those were the only jobs that
she could find. Now, without a pension and a small [S]ocial [S]ecurity
check, she worries about how she will make it from day to day. Phyllis
lives alone and has no one to help her. Phyllis says, ``If Focus: HOPE
would stop distributing food for seniors, I don't know what I would do
for food. I can barely afford to pay my household bills, medical bills,
property taxes, and car insurance. Once I pay my bills I have only a
few dollars left to my name.'' Phyllis worked all of her life. She did
everything right. Now she needs a helping hand. CSFP is a lifeline to
so many seniors like her.
One of the blessings of doing the work that we do is meeting the
seniors who are on CSFP and getting to know them. They don't complain,
they don't blame anyone, they are just grateful that programs like CSFP
exist. They don't like to ask for help and many times feel that they
are taking something away from someone that needs it more than them. I
delivered food each month for years to Annette who lived on Detroit's
eastside. Annette was legally blind, she couldn't see much of anything,
but, other than that, for the most part she was in pretty good health
and was happy to stay in her home by herself. She always loved canned
peaches and I would make sure that if we had them, she got them. By the
time I last visited with her she was 92 and sharp as she had ever been.
We would talk and she was always so grateful for the food and the
visit, and the truth is I probably got more out of visiting her than
she did. She would make you feel good about things no matter what was
going on because she was so positive, but the reality was that she
needed the CSFP food to get her through the month. Her family lived out
of state so she truly was by herself, but she didn't let that keep her
from being upbeat and happy to be alive. The reality is that when you
get attached to seniors, you know the day is coming when things may not
be so good for them. They may get sick, or worse, but you try not to
think about that because we are appreciative for what we have now. One
day I called Annette to let her know that I was coming by to bring her
monthly food box. Her phone was disconnected. I drove by her house and
it was empty. In the 30 days since I last saw her something obviously
had happened. I would like to believe that she came into a lot of money
or that one of her relatives from out of state came and moved her out
to a better situation, but I guess I'll never know. We grow close to
the seniors that we meet and deliver food to and sometimes we don't
know what happened to them, but we do it again and again because we
know what a difference that box of CSFP food makes for them. We know
that for a brief time they know someone cares for them and it makes
their day that much brighter. This is the very least that we can do for
our greatest generation.
The stories that I have described in this testimony are all too
typical for many seniors in this country. The lack of access to high
quality food, reliable public transportation, inadequate affordable
health care, and too often unsafe neighborhoods collude to make the so-
called golden years far less than golden. This is unconscionable for
the most prosperous nation in the world. People who have worked all of
their lives and have contributed so much to this nation are being
neglected and left on their own at a time when they need help the most.
Indeed, there is much left to be done to address the issues of hunger
and poverty locally and nationally.
Working for others is an honor and a privilege. Thank you, Mr.
Chairman and Members of this Subcommittee, for allowing us to do our
part by your support of the Commodity Supplemental Food Program. We are
deeply appreciative of you, and I know that the seniors who this
program has impacted share my great appreciation for all that you have
done and continue to do on their behalf. We ask for your continued
support of CSFP and for the seniors and others who rely on the program
for their most basic needs. Your commitment to this nation's most
vulnerable seniors and the leadership that you have shown in this
regard will never be forgotten.
On behalf of the nation's Commodity Supplemental Food Program
Participants and volunteers nationwide, thank you for this opportunity
to present testimony for the record.

The Chairman. Mr. Kubik, thank you so much for your
testimony.
Mr. Tonubbee, please go ahead and proceed with your 5
minutes of testimony when you are ready.

STATEMENT OF JERRY TONUBBEE, DIRECTOR--FOOD
DISTRIBUTION PROGRAM, CHOCTAW NATION OF
OKLAHOMA, DURANT, OK

Mr. Tonubbee. Halito; sv hohchifot Jerry Tonubbee. Oklahoma
Chahta Okla ya Illimpa Ahopela I nushkoboka sia. Himak nittak a
vla li kvt sv na yukpa. Hello, my name is Jerry Tonubbee. I am
the food distribution Director for the Choctaw Nation of
Oklahoma.
The Food Distribution Program serves 93,000 Native
Americans each month, about 6,000 in our Choctaw Nation area.
They are among our neediest families. I know this program well,
from my own personal experience on the commodity programs as a
kid. I have come to have a deep respect for this program
because it provides vital help to people in need. I am
passionate about serving my fellow Tribal citizens who need
these services today.
My last name, Tonubbee, is a Choctaw warrior name. This,
combined with my other family name of Pistubbee, instill in me
a strong heritage of fighting for Choctaw people who need the
help the most.
On behalf of my chief, the Honorable Gary Batton, thank you
for the opportunity to testify today on the achievements of the
Choctaw Nation Food Distribution Program, our challenges, and
recommendations on improvement.
The Choctaw Nation serves all eligible Tribal members
throughout our treaty territory. That is over 11,000 miles in
southeastern Oklahoma. The Choctaw Nation was designated the
first Promise Zone in January of 2014. All the 10\1/2\ counties
located within the Choctaw Nation fell into the USDA's
extremely high poverty designation. A large portion of this
area is also classified as a food desert by the USDA. Our
statistics on poverty, unemployment, educational attainment,
health, and nutrition are among the worst in America. FDPIR is
one program that helps to combat those awful statistics. FDPIR
is intended to be a supplemental program, but for far too many
of our Tribal members, it is their primary source of healthy
food. Our FDPIR items have low sodium and low fat content. Our
participants receive fresh fruit and vegetables, milk, beans,
lean meats, and other items that can be prepared in full
nutritional meals.
Using Choctaw Tribal funds, the Nation has built five
facilities for food distribution to give our citizens a well-
rounded shopping and learning experience in a grocery store
setting. Before we built these stores, our people were handed
food from the back of a truck. We believe our citizens deserve
a more dignified way of obtaining food, and that is why we have
invested millions of dollars of Tribal funds to help mold this
into this program.
In conclusion, we offer three recommendations that would
make food distribution more streamlined, as well as give Tribes
critical access to other Federal feeding programs. First,
remove the urban place limitations. Some towns within the
Choctaw Nation are slightly larger than 10,000 residents, and
we have Choctaws that live outside our treaty lands in Tulsa
and Oklahoma City. We believe all of our Choctaw citizens
should have access to nutritional foods in the FDPIR. Removing
urban place limitation has the unanimous support of the
National Congress of American Indians.
Second, fix carryover and funding certainty. FDPIR funding
can be uncertain and the amounts can change from year to year.
This forces us to guess as to what the amount of our Tribal
match will be each year. A carryover provision allowing us to
carry forward a percentage of our annual FDPIR budget would
mean better management. This would also help ease the
uncertainty of late Federal budget approvals.
Third, allow Tribes to run The Emergency Food Assistance
Program. Providing nutritious foods to our Tribal citizens is
of utmost importance to the Choctaw Nation. The TEFAP program
would be a good fit, but it does not allow for Tribal
administration. Instead, the Choctaw Nation has to apply to the
State of Oklahoma. This would subordinate the Choctaw Tribal
Government to the state government, and creates inefficient and
an impractical relationship. The Choctaw Nation has continually
demonstrated our programmatic capacity and our commitment to a
Tribe-Federal partnership. We should be on par with the states
for TEFAP.
Finally, as you prepare for the next farm bill, your
Subcommittee has a unique opportunity to further improve how
Indian Country's nutritional needs are met. The Choctaw Nation
stands with you and is ready to embrace that opportunity.
Yakoke!
[The prepared statement of Mr. Tonubbee follows:]

Prepared Statement of Jerry Tonubbee, Director--Food Distribution
Program, Choctaw Nation of Oklahoma, Durant, OK
Mr. Chairman. Members of the Subcommittee. Halito; sv hohchifot
Jerry Tonubbee. Oklahoma Chahta Okla ya Illimpa Ahopela I nushkoboka
sia. Himak nittak a vla li kvt sv na yukpa.
Hello. My name is Jerry Tonubbee. I am the Food Distribution
Director for the Choctaw Nation of Oklahoma. It is my pleasure to be
here today.
I oversee Choctaw Nation's implementation of the USDA's Indian
Reservation Food Distribution Program. Nationwide, this program serves
approximately 93,000 Native Americans each month. In Choctaw Nation
alone, we serve close to 6,000 Native Americans monthly, including our
own Tribal citizens and other Indians who reside in our area. This
program serves our neediest families, providing close to $300,000 worth
of food each month.
I am honored to serve my Choctaw Nation in this way. I am very
familiar with the struggles many of our low-income families go through
while trying to put food on the table. My family went through difficult
times while I was growing up, and the USDA Food commodity program, as
it was called at the time, was very important for my family and me as
we all worked to put food on the table. If not for this program, my
family would have had to rely on relatives for food, or maybe even go
hungry. From my own personal experience, I have come to have a deep
respect for programs like this that provide real, practical and vital
help to people in need. This program is very personal to me, and I am
passionate about serving my fellow Tribal citizens who now need these
services. My last name, Tonubbee, is a Choctaw warrior name. This,
combined with my other family name of Pistubbee, both instill in me a
strong heritage of fighting for Choctaw people. It's my honor to carry
on that family legacy and standing up for our people who need help the
most.
On behalf of my Chief, the Honorable Gary Batton, thank you for the
opportunity to testify today on the achievements of the Choctaw Nation
Food Distribution Program, our challenges, and recommendations on how
to ensure improvements in the implementation of this program to feed
Tribal members around the country through the next farm bill.
FDPIR and the Choctaw Nation
Choctaw Nation is proud to be a partner with the USDA's Food and
Nutrition Service to administer the Food Distribution Program on Indian
Reservations (FDPIR).
In administering FDPIR, the Choctaw Nation serves all eligible
Tribal members throughout our treaty territory--over 11,000\2\ miles in
southeastern Oklahoma. This is one of the largest, most rural, and
highest need Tribal areas in the country. Because of this, the Choctaw
Nation was designated as the first Tribal Promise Zone in January 2014.
At the time of our application, all of the 10.5 counties located within
the Choctaw Nation fell into the USDA's extremely high poverty
designation. A large portion of this area is also classified as a food
desert by the USDA. No matter how we are measured, our statistics on
poverty, unemployment, educational attainment, health, and nutrition
are among the worst in America. However, through the leadership and
record success of Choctaw Nation, we are using the Promise Zone
designation to improve our situation by establishing strong
partnerships with Federal, state, and local governments, community
leaders, and nonprofits. FDPIR is one program that helps to combat our
awful statistics and is crucial to our continued success as a Promise
Zone.
FDPIR is intended to be a supplemental program, but for far too
many of our Tribal members, it is their primary source of food. When
compared to other Federal feeding programs, FDPIR is a healthier choice
for our people. Food supplies our citizens receive monthly adhere to
strict nutritional guidelines. The food has low sodium and low fat
content, and little to no sugar. Things like cakes, pies, and sodas are
not available through FDPIR. Our participants receive healthy
ingredients each month like fresh fruit and vegetables, milk, beans,
lean meats, and other items that can be prepared into full, nutritional
meals.
Choctaw Nation has five locations around the Choctaw Nation for
food distribution. The Choctaw Nation has used Tribal dollars to build
these facilities, in order to provide our citizens a well-rounded
shopping and learning experience as they get their family's food
supplies for the month. Our five stores are top-notch facilities and
provide a real grocery store experience for our citizens. There are
also kitchen facilities and cooking classes offered on a regular basis
to help teach our citizens how to prepare nutritional meals. Before the
Choctaw Nation built these stores, food was shipped to designated
locations around Choctaw Nation and program participants were handed
their food from the back of a truck. We believe our citizens deserve a
more dignified way of obtaining food, and that's why we have invested
millions of Tribal dollars to help mold this program into a well-
rounded experience for our citizens.
Food and Nutrition Recommendations for the Next Farm Bill
The Choctaw Nation works diligently to administer FDPIR and serve
thousands of Tribal citizens each month. However, there are challenges
we and other Tribes face in administering this program. We offer for
your consideration the following recommendations that would make food
distribution more streamlined and efficient in serving our Tribal
citizens. We also offer a recommendation on how Tribal nations should
be given access to administer other Federal feeding programs to meet
nutritional needs in Indian Country.
1. Urban Place Limitation
The USDA bars us from providing FDPIR to residents of any `urban
place', which USDA defines as any city or town with a population over
10,000. By and large, Choctaw Nation is very rural. However, we have
some bustling communities that exceed the 10,000 population threshold.
We have to apply for a waiver from USDA to serve our Tribal members in
each of these communities. We see this as an unnecessary burden that
delays service to some of our neediest citizens. This limitation also
excludes our Tribal citizens from receiving services who live outside
our treaty territory. Choctaws live in every single state in the U.S.,
and we also have a large population of Choctaws who live in Oklahoma,
but outside our treaty territory. So the large number of our Tribal
citizens who live in and around Tulsa or Oklahoma City and need food
assistance cannot access FDPIR. They may be eligible to access other
Federal programs, but programs like SNAP don't have the same
nutritional focus as FDPIR. Removing the urban place limitation from
FDPIR would enable Choctaw Nation to better serve those of our citizens
who reside in slightly larger communities, as well as Tribal members
who live in and around Tulsa or Oklahoma City for whom the Choctaw
Nation provides other Tribal services.
The Choctaw Nation has received broad support for this request from
other Tribal nations around the country. In 2016, Choctaw Nation passed
a resolution with the National Congress of American Indians (NCAI), and
it passed unanimously. NCAI is the largest and oldest group of its kind
representing Indian Country and its interests. (See Addendum) The urban
place limitation is a barrier to serving our citizens, even in
relatively small communities. Thank you for considering our request
that you eliminate this barrier through the next farm bill.
2. Carry-Over and Funding Certainty
FDPIR funding can be uncertain and the amounts can change from year
to year. This requires us to seek Choctaw Nation Tribal Council
approval for a Tribal dollar match often before we know what the
Federal funding amount will be. We ask you to consider a carry-over
provision for FDPIR funding in the next farm bill that would allow us
to carry forward a certain percentage of our annual FDPIR amount so we
can always be good stewards of the funds we are given. This would
better enable us to serve our Tribal citizens in a continuous and
consistent manner that effectively manages both Tribal and Federal
funds. Additionally it would be helpful if we could get annual Federal
FDPIR budgets approved in a little more timely fashion. We are often
halfway through the fiscal year before we know the final approved
budget. A carry-over process would help ease that uncertainty, and
forward funding a year ahead of expenditures would greatly assist us in
administering FDPIR.
3. The Emergency Food Assistance Program and Tribes
Providing nutritious food to our Tribal citizens is of utmost
importance to the Choctaw Nation of Oklahoma. We are looking beyond
FDPIR to see how else we can serve our people, and The Emergency Food
Assistance Program (TEFAP) would be a good fit for the Choctaw Nation.
However, TEFAP does not currently allow for Tribal administration of
the program. Under current rules, the Choctaw Nation would have to
apply to the State of Oklahoma in order to become an eligible recipient
agency. This would subordinate the Choctaw Nation to the state, which
would create an unacceptable, impractical and complicated relationship.
The Choctaw Nation has continually demonstrated our programmatic
capacity and our commitment to a Tribe-Federal partnership through our
administration of FDPIR. We ask this Subcommittee to consider amending
and expanding TEFAP to allow for Tribal administration, on par with
states. The previous farm bill called for USDA-FNS to examine which
Federal feeding programs, other than FDPIR, would be a good fit for
Tribal administration. However, when this study was done, it focused on
programs like SNAP to the exclusion of TEFAP and other programs. We
know TEFAP is a much better fit for Tribal communities due to its
nutritional guidelines. We recommend that the Congress authorize Tribal
administration of TEFAP in the next farm bill.
As you prepare the next farm bill, your Subcommittee has the unique
opportunity to further support and improve how Indian Country's
nutritional needs are met. The Choctaw Nation is honored by this
opportunity to testify before you, and we appreciate your time. We look
forward to engaging with you as you develop the next farm bill.

Yakoke!
Addendum

Groundbreaking ceremony on the new Choctaw Nation Food
Distribution Center in Broken Bow.

Tribal citizen shopping at a Choctaw Nation Food Distribution
Center.

Demonstration and teaching kitchen at a Choctaw Nation Food
Distribution Center.
The National Congress of American Indians Resolution No. SPO-16-022
Remove the ``Urban Place'' Limitation in USDA's Food Distribution
Program on Indian Reservations
Whereas, we, the members of the National Congress of American
Indians of the United States, invoking the divine blessing of the
Creator upon our efforts and purposes, in order to preserve for
ourselves and our descendants the inherent sovereign rights of our
Indian nations, rights secured under Indian treaties and agreements
with the United States, and all other rights and benefits to which we
are entitled under the laws and Constitution of the United States, to
enlighten the public toward a better understanding of the Indian
people, to preserve Indian cultural values, and otherwise promote the
health, safety and welfare of the Indian people, do hereby establish
and submit the following resolution; and
Whereas, the National Congress of American Indians (NCAI) was
established in 1944 and is the oldest and largest national organization
of American Indian and Alaska Native Tribal governments; and
Whereas, The U.S. Department of Agriculture (USDA) Food
Distribution Program on Indian Reservations (FDPIR) program classifies
an ``Urban Place'' as a town or a city with a population of 10,000 or
more people; and
Whereas, Tribal citizens who reside in urban areas can only be
served in this program through a waiver process; and
Whereas, Tribal citizens living in slightly larger communities and
the metropolitan areas are excluded from receiving nutritious food
through the FDPIR program due to the ``urban place'' definition; and
Whereas, Tribal communities are growing and expanding due to
increased economic development to include more Tribal citizens from
many Tribal nations; and that there are thousands of Tribal citizens
who live in urban areas who are excluded from receiving nutritious and
culturally relevant food supplies from the FDPIR program; [and]
Whereas, the FDPIR, which is administered by over 270 Tribes, is a
vital program which provides feeding program services and food packages
for the most food-insecure Tribal citizens and should be allowed to
reach all Tribal citizens in need.
Now Therefore Be It Resolved, that NCAI asks the U.S. Department of
Agriculture to remove the ``Urban Place'' definition and limitation to
a population of 10,000 people for the Food Distribution Program on
Indian Reservations, allowing Tribal nations and the USDA to work
collaboratively to serve even more Tribal citizens who need nutritious
food, regardless of where they live.
Be It Further Resolved, that this resolution shall be the policy of
NCAI until it is withdrawn or modified by subsequent resolution.
Certification
The foregoing resolution was adopted by the General Assembly at the
2016 Midyear Session of the National Congress of American Indians, held
at the Spokane Convention Center, June 27 to June 30, 2016, with a
quorum present.

Brian Cladoosby, President.

Attest:

Aaron Payment, Recording Secretary.

The Chairman. Thank you, Mr. Tonubbee, for your testimony.
Ms. Kriviski, please go ahead and proceed with your 5
minutes of testimony whenever you are ready. Thank you.

STATEMENT OF DIANE KRIVISKI, DEPUTY ADMINISTRATOR, SUPPLEMENTAL
NUTRITION AND SAFETY PROGRAMS, FOOD AND NUTRITION SERVICE, U.S.
DEPARTMENT OF
AGRICULTURE, ALEXANDRIA, VA

Ms. Kriviski. Thank you. Thank you, Chairman Thompson and
Ranking Member McGovern for this opportunity to appear before
you today. I am pleased to share information regarding the
commodity distribution programs, which are part of the nation's
safety net of nutrition assistance programs administered by the
Food and Nutrition Service. As a Deputy Administrator for the
Supplemental Nutrition and Safety Programs, I am the career
senior executive overseeing the commodity distribution
programs. I have served at FNS for over 30 years at all levels
in the organization.
We commonly call the commodity distribution program the
USDA Foods programs to emphasize the fact that these programs
provide 100 percent domestically produced high quality and
nutritious foods. USDA Foods are distributed to a variety of
organizations and nutrition assistance programs. Today, I will
focus my remarks on the smaller but critical portion of USDA
Foods programs that are distributed to low-income households
through three farm bill authorized programs: The Emergency Food
Assistance Program, or TEFAP, the Food Distribution Program on
Indian Reservations, known as FDPIR, and the Commodity
Supplemental Food Program, known as CSFP. Additionally, USDA
Foods are distributed through FNS' National School Lunch
Program and Child and Adult Care Food Program, which make up
the bulk of our purchases of USDA Foods.
In Fiscal Year 2016, over 200 USDA Food items, valued at
over $2 billion, were purchased from food producers in almost
every state, and distributed to program operators across the
country. These purchases not only support our agriculture
producers and farm economy, they ensure the most vulnerable
people have access to nutritious foods through our programs.
USDA Foods are 100 percent American grown, meeting the highest
safety and nutrition standards, and including high quality
fruits, vegetables, dairy products, whole grains, lean meats,
poultry, and fish that contribute to a healthy diet.
TEFAP helps supplement the diets of low-income people by
providing them with food at no cost. Through TEFAP, USDA offers
a variety of food items to state distributing agencies in sizes
appropriate for household distribution. States then order food
items from the list of available USDA Foods, and provide it to
local agencies they have selected, usually food banks, which in
turn distribute the foods to local organizations such as soup
kitchens and food pantries that directly serve the public.
States may also provide USDA Foods to local organizations which
distribute foods directly to low-income households.
The Food Distribution Program on Indian Reservations, or
FDPIR, provides a monthly package of USDA Foods to low-income
households living on Indian reservations and to low-income
American Indian households residing in approved service areas
near reservations or in Oklahoma. It serves as an alternative
to the Supplemental Nutrition Assistance Program, or SNAP, for
households residing in areas where food stores may not be
readily accessible.
The last program I would like to mention is the Commodity
Supplemental Food Program, or CSFP. The 2014 Farm Bill amended
the eligibility requirements for CSFP, phasing out Women,
Infants, and Children, and transitioning it to a program
focused on providing nutrition assistance to the elderly. The
program works to improve the health of low-income persons age
60 and over by providing a monthly food package comprised of
specific nutritious USDA Foods, which supplement their diet.
Each of these programs are operated as a Federal-state
partnership. The Federal Government provides the resources,
USDA Foods, and administrative funding to state agencies or
Indian Tribal organizations. They are then responsible for
submitting orders for USDA Foods and establishing a
distribution system to local program operators. To procure the
food ordered by our program operators, FNS works closely with
USDA's Agricultural Marketing Service, or AMS, who serve as our
procurement office. AMS follows Federal procurement
requirements to purchase and provide USDA Foods in the
quantities and the varieties needed to meet the demands of our
programs. AMS also identifies and approves food manufacturers,
issues and accepts bids, and ultimately awards contracts for
the purchase and delivery of USDA Foods ordered by the states.
While the Food and Nutrition Service provides
administrative funding as appropriated by Congress to states
and Indian Tribal organizations for the operation of these
programs, I want to recognize that many state and local
organizations, as well as Indian Tribal organizations, also
provide financial and in-kind support to help maximize the
administrative resources available from the Federal Government.
I am proud of the dual mission of the Food and Nutrition
Service and USDA Foods program, supporting domestic agriculture
and supplementing the nutrition needs of low-income people.
These programs play an important role in stimulating the
agricultural economy and ensuring the most vulnerable
populations have access to high quality, safe, and nutritious
foods. I look forward to your questions on the operational
aspects of these programs. As you know, I am unable to answer
questions on forward looking policy at this time.
[The prepared statement of Ms. Kriviski follows:]

Prepared Statement of Diane Kriviski, Deputy Administrator,
Supplemental Nutrition and Safety Programs, Food and Nutrition Service,
U.S.
Department of Agriculture, Alexandria, VA
Thank you, Chairman Thompson and Ranking Member McGovern for this
opportunity to appear before you today. I am pleased to share
information regarding USDA's Food, Nutrition, and Consumer Services'
(FNCS) commodity distribution programs, which are part of the safety
net of nutrition assistance programs administered by the Food and
Nutrition Service (FNS). As the FNS Deputy Administrator for the
Supplemental Nutrition and Safety Programs, I am the career Senior
Executive leading the commodity distribution programs. I have served
FNS for over 30 years at all levels of the organization.
Let me begin by expressing my appreciation to you, Chairman
Thompson and Ranking Member McGovern, along with other Members of this
Subcommittee, for your ongoing support for Federal nutrition programs.
I appreciate you taking the time today to highlight these programs that
support American agriculture and meet the supplemental nutrition needs
of low-income people.
Our programs, which operate as partnerships with state, Tribal, and
local service providers across the country, work to prevent hunger and
improve nutrition, while also supporting American farmers. We commonly
call the commodity distribution programs the ``USDA Foods Programs'' to
emphasize the fact that these programs provide 100 percent
domestically-produced, high quality, and nutritious foods purchased by
USDA. USDA Foods are distributed through a variety of organizations and
nutrition assistance programs. USDA helps families stretch their food
budgets and puts healthy foods within reach by distributing USDA Foods
to schools, food banks, disaster feeding organizations, Indian Tribal
Organizations, charitable institutions and other feeding organizations.
In Fiscal Year (FY) 2016, over $2 billion in USDA Foods were purchased
from food producers in almost every state and distributed to program
operators across the country. These purchases for our programs not only
support our agricultural producers and farm economy; they ensure that
the most vulnerable Americans have access to nutritious food. USDA
Foods are 100 percent American Grown, meeting the highest safety and
nutrition standards. They include high quality fruits, vegetables,
dairy products, whole grains, lean meats, poultry, and fish that can
contribute to a healthy diet.
Today, I will focus my statement on a critical portion of USDA
Foods that are distributed through three farm bill authorized programs:
The Emergency Food Assistance Program or TEFAP; the Food Distribution
Program on Indian Reservations, known as FDPIR; and the Commodity
Supplemental Food Program, known as CSFP. USDA Foods are also purchased
and provided for use in the FNS' child nutrition programs, such as the
National School Lunch Program and the Child and Adult Care Food
Program.
TEFAP
The Emergency Food Assistance Program, or TEFAP, helps supplement
the diets of low-income people by providing them with food assistance
at no cost. Through TEFAP, USDA offers a variety of food to state
distributing agencies. States order the food from FNS and provide it to
local agencies selected by the state agencies, usually food banks,
which in turn distribute the food to local organizations, such as soup
kitchens and food pantries that directly serve the public. States may
also provide the food to other types of local organizations, such as
community agencies, which distribute the foods directly to low-income
households. Recipients of TEFAP commodity assistance must meet income-
based program eligibility criteria set by the state.
USDA offers states a variety of healthy, domestically grown foods
for TEFAP including fresh fruits and vegetables, fruit canned in extra-
light syrup, dried fruits, low sodium and no salt added canned
vegetables, dried and low sodium canned beans, canned and frozen meats,
cereal, rice, pasta, peanut butter, oats, shelf stable milk, and eggs.
State and local agencies count on the stability of the TEFAP food
offerings. They fill a gap in the variable array of donated foods,
supplementing both the quantity and quality of private food donations,
which vary greatly throughout the year. TEFAP foods are important to
these operations, though USDA Foods only make up approximately 20
percent of foods provided to food banks and other local organizations.
USDA Foods distributed through TEFAP are purchased by USDA using
funds appropriated specifically for TEFAP food benefits. In addition,
FNS also directs foods from USDA's marketing programs to TEFAP; these
are known as bonus foods. USDA purchases these domestically grown bonus
foods with funds authorized by Section 32 of the Agriculture Act of
1935. Each purchase is analyzed by USDA and approved by the Secretary
to ensure they support American agriculture. These products are then
provided to FNS and directed to the TEFAP program, helping to provide
larger food inventories for distribution. In FY 2016 USDA Foods donated
through TEFAP include chicken, catfish, salmon, eggs, shelf stable
milk, cheese, pinto and great northern beans, walnuts, dates,
blueberries, cherries, cranberries, grapes, grapefruit, oranges, and
potatoes.
In total, FNS provided USDA Foods valued at $623.5 million for
distribution through TEFAP in FY 2016. Of that, USDA was appropriated
$318 million by Congress and purchased approximately $305.5 million in
bonus foods.
During the same period, FY 2016, $54.4 million was appropriated for
TEFAP administrative funds, a slight increase from previous year
funding levels. TEFAP administrative funds are provided to states to
support the storage and distribution of USDA Foods which in turn are
provided to local providers, supplementing their operating budget. It
is worth noting that many local TEFAP agencies are faith-based
organizations and most depend significantly on volunteers to operate
their local programs.
The allocation of both TEFAP food and administrative grants to
states is based on a statutory formula that considers the states'
unemployment levels and the number of persons with income below the
poverty level. Each state is responsible for selecting organizations to
participate in the program, allocating foods and administrative funds
among such organizations, and establishing eligibility criteria for
recipients.
I know TEFAP meets a critical and unique need in the nation's food
safety net. In 2013, FNS published a white paper that described the
impact of TEFAP and found that it fills nutrition assistance gaps for
those extremely vulnerable households and individuals who do not
typically participate in other USDA nutrition assistance programs.
Research found that more than \1/3\ of TEFAP participants who used soup
kitchens and about \1/5\ who used food pantries to obtain emergency
food assistance did not report participating in other FNS nutrition
assistance programs. Additionally, a report published in 2003 by USDA's
Economic Research Service found that households where TEFAP was their
only source of food assistance were more likely to face homelessness,
have very low food security, and suffer greater hardships relative to
other households.
FDPIR
The Food Distribution Program on Indian Reservations, or FDPIR,
provides a monthly package of USDA Foods to low-income households
living on Indian reservations, and to low-income Indian households
residing in approved service areas near reservations or in Oklahoma.
FDPIR serves a very food-insecure population, primarily living on
Tribal lands; many households participate in FDPIR as an alternative to
SNAP because they do not have easy access to SNAP offices or authorized
food stores. A report published in December 2014 by USDA's Economic
Research Service, Measuring Access to Healthful, Affordable Food in
American Indian and Alaska Native Tribal Areas, found that American
Indian and Alaska Native (AIAN) populations have about twice the rate
of nutrition-related health conditions, including cardiovascular
disease, diabetes, and obesity, as non-Hispanic White Americans. The
authors also found likely sources of healthful, affordable food to be
limited in many Tribal areas, a factor that may influence diet and food
choices. A USDA study of the characteristics of FDPIR participants
completed by the Urban Institute in 2016 found that the percent of
FDPIR households with low food security was more than four times U.S.
households as a whole (34 percent compared to 8 percent). The percent
of FDPIR households with very low food security was also much higher,
22 percent compared to six percent.
FDPIR is administered locally by either Indian Tribal organizations
(ITOs) or an agency of a state government. Currently, approximately 276
of the 567 federally recognized American Indian and Alaska Native
Tribes and villages receive benefits under FDPIR through 102 ITOs and
three state agencies. The ITOs and state agencies that administer FDPIR
have to work under unique and often difficult circumstances to provide
food and nutrition education to FDPIR participants. Program directors
and managers tailor warehouse hours, distribution options, and product
selection to the circumstances and preferences of participants. Due to
the remote nature of much of the Tribal lands in the United States,
program sites often use large trucks to drive food out to central
distribution sites and/or provide home delivery for their participants.
This allows FDPIR to reach more households in need and effectively
deliver FDPIR services to eligible participants that otherwise face
transportation challenges. In smaller or less remote locations, some
FDPIR programs set up their distribution sites like grocery stores,
allowing participants the opportunity to select a variety of nutritious
food.
Each month, households participating in FDPIR receive a food
package to help them maintain a nutritionally balanced diet. The FDPIR
food package allows participants to select from more than 100
domestically grown, nutritious foods in a variety of categories
including meat, poultry, fish, dairy, grains, fruits, and vegetables.
FDPIR participants also select from about 40 different types of fresh
produce through an agreement between USDA and the Department of Defense
(DOD), which maximizes efficiencies as DOD produce vendors are already
delivering to defense installations in rural or remote areas. In many
FDPIR locations, a variety of quality and affordable fresh produce
would not otherwise be readily accessible.
The food package also consists of a selection of traditional foods
including bison, blue cornmeal, wild sockeye salmon, and traditionally-
harvested wild rice. The 2008 Farm Bill first introduced the FDPIR
Traditional and Locally-Grown Food Fund. This provision, subject to
appropriations, authorized $5 million for use in purchasing traditional
foods for FDPIR for FY 2015 and FY 2016. Using the funds appropriated,
along with additional FDPIR food funds, USDA purchased over $17 million
in healthy, traditional foods for FDPIR participants, much of it from
Native American-owned businesses. For example, the Leech Lake Band of
Ojibwe and White Earth Nation received awards to provide traditionally
harvested wild rice to FDPIR participants. Both ITOs currently
administer FDPIR on their reservations. Tribal partners were
instrumental in developing first-of-their-kind product specifications
that facilitated the purchase of traditional foods for FDPIR as well as
sharing information on the USDA Vendor approval process for new
Tribally-owned businesses to provide traditional foods to FDPIR.
Traditional foods are important to maintaining the appeal of this
nutritious food package as well as supporting Native American
economies. USDA and FNS leadership meet regularly with elected Tribal
leaders as well as FDPIR program directors to review the individual
food items in the FDPIR food package.
In FY 2016 FDPIR received a total of $145.2 million to support the
program's projected participation levels and food costs and support the
acquisition of traditional foods for participants. Since FY 2013, FDPIR
has seen an increase of 23 percent in program participation (from
75,600 individuals in 2013 to 93,038 in FY 2016). Participation
increases may be attributed, at least in part, to relatively recent
policy changes in both FDPIR and SNAP. In FY 2013, USDA published a
final rule which expanded the medical deduction for FDPIR and permitted
a new income deduction for shelter or utility expenses. Both changes
more closely aligned FDPIR to SNAP eligibility requirements. In FY
2014, a temporary increase in SNAP benefits received from the American
Recovery and Reinvestment Act of 2009 expired which may have also
caused some SNAP participants to switch to FDPIR. High program
participation continues into FY 2017 with the program serving
approximately 93,250 individuals in an average month as of November
2016.
USDA provides FDPIR state agencies with administrative funding to
support program administrative costs such as eligibility determination,
food warehousing and transportation, and nutrition education activities
such as individual nutrition counseling, group cooking demonstrations
and distribution of recipes for preparing USDA Foods. FNS also annually
awards approximately $1 million in Food Distribution Program Nutrition
Education (FDPNE) grants in order to enhance the nutrition knowledge of
FDPIR participants. Since FY 2008, ITOs that received funding have
conducted programs designed to increase fruit and vegetable consumption
and physical activity.
CSFP
The next program I would like to talk about serves primarily the
elderly. The Commodity Supplemental Food Program, or CSFP, works to
improve the health of low-income persons ages 60 and over by providing
a nutritious monthly food package that supplements their diets. The
2014 Farm Bill amended the eligibility requirements for CSFP, phasing
out women, infants, and children and transitioning it to a program
focused on providing service to the elderly. The elderly population
faces unique health, social, and nutrition challenges, which can
include decreased mobility, limited shopping and cooking ability, and
health challenges related to food insecurity. In a 2008 USDA report,
the Urban Institute found that CSFP can be a significant source of
nutritional assistance for low-income seniors and provide a substantial
portion of the food they need each month.
Seniors represent a particularly vulnerable demographic to food
insecurity, and the number of food-insecure seniors has increased in
recent years. While some seniors may be eligible for SNAP, many are not
participating or are receiving very minimal SNAP benefits. In FY 2015,
approximately 4.8 million seniors (age 60 and older) participated in
SNAP, which represents about 42 percent of seniors eligible to
participate in the program.
Through CSFP, USDA distributes both food and administrative funds
to participating states and ITOs. CSFP food packages are supplemental
and the foods provided are good sources of the nutrients typically
lacking in the diets of the elderly population. Food packages include a
variety of foods, such as nonfat dry and shelf-stable fluid milk,
juice, farina, oats, ready-to-eat cereal, rice, pasta, peanut butter,
dry beans, canned meat, poultry, or fish, and canned fruits and
vegetables. State agencies that administer CSFP are typically
departments of health, social services, education, or agriculture.
State agencies store CSFP food and distribute it to public and
nonprofit private local agencies. Local agencies determine the
eligibility of applicants, distribute and may store the foods, and
provide nutrition education. Local agencies also provide referrals to
other programs, such as SNAP, Medicaid, and Medicare.
With the funding provided by Congress over the last 3 years, FNS
has added nine additional states to CSFP. CSFP now operates in 48
states, the District of Columbia, and on two Indian reservations. Two
states, Alabama and Wyoming, do not participate in CSFP and have not
submitted a request to do so. If these states choose to participate,
additional funds would be required to support such a request without
reducing available funding and caseload to other states. CSFP
Regulations require FNS to prioritize the caseload needs of currently
participating states over requests from new states to begin operating
the program. Based on the level of funding currently available in FY
2017, CSFP provides for a participation level of 697,865 nationally.
Conclusion
The impact of these programs is vast. They serve some of the most
vulnerable people in our country and directly support American farmers
across the country. Without access to these critical programs, many
recipients would face higher levels of food insecurity and farmers
would have fewer outlets for their products.
The economic impact of these programs is also large. In FY 2016,
USDA purchased USDA Foods from 43 individual states contributing $2.2
billion to these states' economies and 2.5 billion pounds of food to
families in need across the United States.
While my testimony has focused on the important Federal-state
relationships of these programs, I want to recognize and highlight the
critical role of volunteers at the local level that make these programs
operate effectively. Local organizations, including faith-based
organizations, play a key role as local-level providers for many of the
programs. Many state and local organizations, as well as ITOs, also
provide financial and in-kind support to help maximize the resources
available.
In closing, I am proud of the dual mission of the Food and
Nutrition Service and the USDA Foods programs--supporting domestic
agriculture and meeting the supplemental nutrition needs of low-income
people. These programs play an important role in keeping local
agriculture strong, stimulating the agricultural economy and ensuring
the most vulnerable populations have access to high-quality, safe and
nutritious food.
Thank you for the opportunity to join you today and I look forward
to your questions.

The Chairman. Ms. Kriviski, thank you so much for your
testimony. Thank you to all the panel that is here for sharing
your expertise.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in the order of arrival. I appreciate the
Members' understanding. I am going to recognize myself
initially here for 5 minutes of questions.
I want to start with Ms. Kriviski. This Committee has had
numerous hearings about SNAP, and today, we have had a chance
to talk about several commodity distribution programs. I want
to understand if there is any overlap in the programs that we
have discussed here, and why these three programs are needed in
addition to SNAP?
Ms. Kriviski. Thank you for your question.
As you know, our programs at the Food and Nutrition
Service, 15 nutrition assistance programs, really work to
complement each program. Where there is a direct overlap really
is in FDPIR and SNAP. You do need to choose as a participant
what program that you want to go into. They may choose to
participate in FDPIR. They may go out of FDPIR and choose to
receive SNAP benefits. You are only allowed to be in one of
those programs at a time.
The other two programs, CSFP and TEFAP, serve a unique
population and serve to fill the gaps that a person receiving
SNAP may have. I know you have heard stories of recipients of
SNAP running out of food before the end of the month. That is
exactly when you would see them going to a food bank or a food
pantry and picking up a bag of food stuffs that would help them
get through the month until that next SNAP benefit arrives. We
also know that seniors participate in SNAP at much lower
levels. Right now, we are happy to report we think we have
about a 40 percent coverage rate of seniors in SNAP; however,
there is a minimum benefit for seniors that is fairly small,
$16. You would see those same seniors being able to supplement
their SNAP purchases by going through and enrolling in CSFP and
receiving a box, as we mentioned, valued at close to $50 of,
again, nutritious, healthy food produced by U.S. farmers that
they can take home and help them get through the month.
While we know that there is some thought abroad that these
are duplicative programs, we would assert that they are there
supporting each other and weaving the nutritional safety net
that everybody needs to get through the month.
The Chairman. Thank you very much.
Ms. Calvert, both your testimony and the white paper on the
TEFAP program mentioned that nearly \1/2\ of households
participating in TEFAP and report that they are not
participating in SNAP, and while some of those may be
ineligible, can you speak to why households in need may rely on
TEFAP and not pursue SNAP? And do you think that households are
more likely to access TEFAP on a one time or episodic basis, or
are they obtaining TEFAP benefits to meet an ongoing need?
Ms. Calvert. Sure. I am happy to address that.
First, when we did our last Hunger in America survey, we
asked clients how many were in a household receiving SNAP
benefits? Fifty-five percent of them were, and if we look at
the reported income levels of people we are serving, we would
estimate that potentially up to an additional ten to 15 percent
above that are eligible but not participating. There are many
reasons for that. They may be unaware. They might have family
assets that make them ineligible, even though their reported
income seems like SNAP should be an option for them. Most of
our food banks operate either SNAP outreach, or many of them
now are doing SNAP application assistance, so it is our goal
when people come to us for help to figure out how we can
provide services to them, including figuring out what Federal
programs they may be eligible for. But as Ms. Kriviski said in
her answer to your earlier question, many people are turning to
us for food distributions that include TEFAP foods when their
SNAP benefits are running out. They are just not lasting long
enough, and without enough income coming into the family, they
need charitable food assistance to fill that gap.
We saw a big change after 2007, 2008 with a lot of families
coming to us for longer episodes of need rather than, we
certainly still do see families that come to us because of a
short-term economic situation, but 54 percent of the clients
that we serve have visited a food pantry for at least 6 months
or more when we look at our frequency of use data, and
certainly, we don't see that trend abating.
The Chairman. Thank you. Mr. Kubik, Actually, at this point
my time has expired. I will try to follow back around. I have a
question that maybe we can talk one-on-one about transportation
barriers. I belong to Howard Area Lions Club, I am very proud
of it. We operate the food bank in my area, and as a Lion, we
do a lot of delivery for folks who have transportation issues.
But I will circle back with you individually on that.
My time has expired. I am pleased to recognize the Ranking
Member, Mr. McGovern, for 5 minutes of questioning.
Mr. McGovern. Well thank you, Mr. Chairman.
Ms. Calvert, as I mentioned in my opening statement, I am
concerned about this group called ABAWDs, or able-bodied adults
without dependents, and I am reading from an agriculture report
that the Chairman of this Committee spoke to their farm bill
summit, and he basically called it the current law that allows
able-bodied adults without dependents to collect SNAP benefits
for 90 days out of a 3 year period, and he is quoted as saying,
``If they are able to work, why would they have 90 days?''
And as I mentioned in my opening, this group is very
difficult to define, but extremely vulnerable to food
insecurity, and under SNAP rules, are held to a very strict
time limit on the benefits. I suspect that your network serves
a lot of ABAWDs, and there is a surprisingly small amount of
information on this group. Many of them have barriers to
employment like illiteracy or undiagnosed mental illness, or
drug dependence, or homelessness, as I mentioned earlier, we
know that there are a number of them that are returning
veterans who are struggling to reintegrate into society.
So given the nationwide work that your network does for
this group, what kind of information do you have on ABAWDs? Who
are they, why are they so difficult to reach, and just as a
follow up, as I understand it, there are limitations in some
places as to how many times per month people can access food
packages from food banks. Can you speak to that as well? And if
ABAWDs are kicked out of SNAP and there is a limit to the food
they can access from food banks, where do these vulnerable
adults turn to?
Ms. Calvert. Thank you for your question.
I would agree that serving able bodied adults without
dependents and assessing what their challenges and barriers to
employment is a very, very difficult task.
First, it is important to realize that, as you stated
earlier, most childless adults on SNAP who can work do so, but
there are multiple challenges, including homelessness, physical
and mental health limitations, language barriers, lack of
educational attainment, as well as unstable employment
histories or criminal records that can really complicate the
path to employment for many able-bodied adults without
dependents. Some of the best data that we have on that is
coming from our Food Bank State Association in Ohio, so I would
be happy to connect all of the Subcommittee Members with those
findings, since it might take some time to go into it here.
[The information referred to is located on p. 629.]
Ms. Calvert. It is very important that as the Committee
looks at this population in the next farm bill, that you really
take a look at what data is there on how do we assess what
intervention will help an unemployed adult obtain a job,
because sometimes it is really not that simple, as you know.
Many of our food banks are involved in job training programs.
Those are very costly to do right, so there is a lot of work to
collectively be done here to address this population.
On the subject of pantries, most pantries that our food
banks serve do restrict the number of times people can come to
around two or three times a month for food distributions.
Frankly, it is because there is not enough food to distribute
to everyone coming. There is a real challenge for people when
they lose SNAP benefits, because they are going to have limited
avenues for that food.
Mr. McGovern. I appreciate that.
Mr. Kubik, there have been rumored proposals for the next
farm bill that would change the age of those eligible under the
ABAWD rule from 59 to, for example, 65. Given your experience
with the older population, are there many low-income hungry
Americans between 60 and 65 who can find a job in a 3 month
time period so as to maintain their SNAP benefits, and how
would such a change affect your organization?
Mr. Kubik. Well I can speak for the area I live in. I live
in Detroit. We represent the metropolitan Detroit area. It is
difficult to find work for people under 60 at this point in our
area, so the lack of skilled workers is a real problem in
Michigan that we can't provide workers for the jobs that are
there. I can only imagine that those seniors that are over 60
would have difficulty filling those jobs as well. But even
finding the jobs that unskilled workers qualify for, so that
would be difficult for our seniors to even try to find jobs
like that. Those that can work, do work.
Mr. McGovern. Right.
I will just conclude by saying that this population doesn't
fit into a stereotype or a neat generalization. It is a
complicated population, and we need to be very careful in this
Committee before we start going down a road that may end up
adversely impacting many Americans in a way where they will
literally go hungry, and there aren't many options available to
them when they get cut off of this benefit. I hope we can do a
hearing. I hope we better understand who we are talking about,
before we do something that we are going to regret.
I thank you.
The Chairman. The gentleman yields back. I am pleased to
recognize Mr. Marshall, for 5 minutes.
Mr. Marshall. All right. Thank you, Mr. Chairman.
My first question is for Ms. Calvert. Ms. Calvert, my
family has been very involved in this issue on a personal
basis. My wife volunteered for the food bank for years. We
helped with soup kitchens, Meals on Wheels, taking my kids on
the Meals on Wheels trips. Our senior centers are so, so
important in rural Kansas, often these are the only meals that
they have. We all work together. The grocers work together. It
is a beautiful thing. And what I see is that the big success of
that is local people helping each other, and that is what I
love about the program.
What can we do to accentuate the positive? What can we do
to help empower those local people to do more and do what they
love doing that we are not doing now?
Ms. Calvert. I would agree that volunteerism and the
commitment to giving back is part of what makes this country
great. We see that all the time in our network. In fact, two
million volunteers each year are helping at our food banks, and
it is significant, I will be honest with you. It is a
significant part of the manpower that helps keep a lot of these
smaller agencies in local communities going. We know that there
is no way that we could do what we do without that, that
volunteer army of support.
In terms of supporting volunteerism, I think something that
comes up, and I hesitate to raise it because it is not in the
jurisdiction of this Committee. The volunteer mileage
reimbursement rate is fairly low, and so there have been
proposals in past tax bills to raise that, the allowable
volunteer mileage reimbursement rate to a higher rate, because
a lot of our volunteers are delivering meals. They are helping
provide an extra set of hands to deliver things in local
communities, whether it is mobile pantries or Meals on Wheels,
and the reimbursement rate can be an impediment to volunteers
doing more of that.
Mr. Marshall. Okay. All right.
My next question is for Ms. Kriviski. In my own
communities, it is hard to believe that we have food
insecurities. We have mountains of wheat we can't sell,
mountains of sorghum we can't sell. They are just sitting there
and rotting. In years of plenty like this, is there any type of
storage opportunities so we can use this in the future?
Ms. Kriviski. What I would say is that FNS and AMS work
together to identify both the needs from our participants as
they order the food on our approved food list. We have over 200
items of foods that they can order, and to the degree that
those foods are on that food list, that is an opportunity. But
it is not going to be easy for us to reach down to a food that
we are not currently offering and offer assistance. The other
aspect of USDA's food purchases rests with purchases under
Section 32, which would be looking to do market support
purchases for crops in excess, to the extent that the Secretary
of Agriculture makes those decisions and provides those foods
to AMS, who then turn around and ask FNS if they are suitable
to be distributed for households in TEFAP. That is another
avenue that it could go.
Mr. Marshall. Okay. Probably the two biggest concerns I
have now with food insecurity issues in my state are; first,
preschool age kids that are not getting adequate nutrition for
their brains to develop to their full potential, and weekends,
weekends for our kids and the summers to some extent. What are
we doing to help reach preschool kids and the weekend kids? I
don't know who wants to answer the question first. Ms. Calvert,
go ahead.
Ms. Calvert. Well I will jump in and just talk about the
challenge of surveying kids in the summertime. There is a huge
gap between the number of children that are participating in
the National School Lunch Program for free and reduced price
lunch during the school year, and children that are receiving
food during the summer. And certainly there are a lot of
barriers to that. One of the things that our food banks find,
especially in larger service areas, even in the suburbs, but
also in rural areas, is that there aren't a lot of waivers to
the congregate requirement. This might be an area where some
additional regulatory flexibility would enable many, many more
food banks to actually participate and be reimbursed through
the summer food program, especially in Kansas. This can be a
problem. The Kansas Food Bank serves a significant amount of
really rural counties there. It costs a lot of money to do
that. It is hard to operate a summer meal site if you have 20
kids in one community, 30 in another. It is a little cost
prohibitive.
The Chairman. The gentleman's time has expired. I now
recognize the gentlelady from Ohio, Ms. Fudge, for 5 minutes.
Ms. Fudge. Thank you very much, Mr. Chairman. Let me just
first thank my colleagues, Representatives Davis and Goodlatte,
for joining me on our annual TEFAP appropriations letter where
we requested $329 million for TEFAP, and another $100 million
for storage and distribution. I want to thank my colleagues for
that.
Mr. Chairman, as I look at where we are and try to pull all
this together, if I look at the effects of what TrumpCare is
going to do, which is going to make elderly, poor, and sick
people pay an awful lot more for their healthcare, they are
going to pay a lot more for their prescription drugs.
Healthcare may actually send them into bankruptcy. When I look
at the elimination of the Community Development Block Grant,
which is going to do away with Meals on Wheels, when I look at
the fact that we are going to cut $6 billion from HUD, which is
going to put more veterans on the street, more seniors on the
street, and more children will become homeless, so if they are
homeless, they probably don't have any food either. If I look
at the cuts to after school programs that are being proposed in
this budget, and the cuts to school nutrition, I am trying to
figure out how our Chairman could this morning say that he is
willing, ``Food aid is one of the things I would cut.'' Please
tell me how you think all of those other cuts that are proposed
are going to affect food in this country. Anybody? Let's just
start with Ms. Calvert and go down the line.
Ms. Calvert. Sounds great.
It is a little hard to comment on something when we just
have high level details without the specific line items, but
there are many valuable programs funded through Community
Development Block Grants, Meals on Wheels being one of them,
that we would see having a domino impact on communities that we
operate in if those funds were cut.
There has been a long standing tradition to fund
international food aid through the McGovern-Dole, right.
Ms. Fudge. What I am really trying to get to is all of
those other programs are either eliminated or cut. Certainly it
is going to put more strain on the food programs.
Ms. Calvert. Absolutely. When we look at the number of
people that have been able to obtain health coverage and we
look at our data on the tradeoffs people say they are making,
they are already making tradeoffs between food and utilities,
food and medicine. It is not a far jump to realize that a lot
of the changes that Congress is considering right now could
potentially increase food insecurity and will add to the
burdens that many of our organizations feel.
Ms. Fudge. Thank you. I would like to just try to get
everybody a little time to answer. Please, Mr. Kubik?
Mr. Kubik. When I hear about cuts like this and I think
about the seniors that I deal with and we deal with across the
country who are making do already on limited resources, they
are not always able to access some programs that they could
possibly use because of transportation issues, isolation, not
being able to get out. We know the strain that we are under
when folks come and they need more food than we can provide for
them. We can refer them to other networks, but it is difficult.
Any problems in that chain, anything where something
disappears and is not there that is there now, just would
compound the problem for seniors. The choices, as Carrie said,
``about choosing between medicine and food, that is a reality
for so many people.'' If we are going to remove some part of
that system, that support system, it is going to be devastating
to seniors, making them go to work when they have health issues
is going to be difficult. It would be catastrophic to a lot of
seniors.
Ms. Fudge. Thank you. Yes, sir.
Mr. Tonubbee. Yes, I agree. These cuts would affect things
like the summer food programs or the after school feeding
programs that our Tribe is just starting to get involved in
some of these things and setting up places where we can feed
our children during the summer or after school, sending
backpacks home with kids. Cuts to these programs are going to
affect those, and not only that, but training programs that are
trying to get people back to work, if we make cuts where that
would affect those, then it is going to increase our load as
far as the number of participants we are going to be trying to
serve, because people are not able to find jobs if they are not
able to get trained.
Ms. Fudge. Thank you very much. I am not going to put you
on the spot, Ms. Kriviski, but if you would like to respond, go
right ahead.
Ms. Kriviski. I would just say the Federal nutrition safety
net depends on all the strands being there. Once those strands
are gone, there are gaps. And when those gaps need to be
filled, they turn to our programs, and I would expect an impact
on both TEFAP and the mandatory side with the mandatory
formula, it would actually ratchet up the need for additional
funding. For FDPIR, the same aspect would occur, and on a
discretionary side for CSFP, which is entirely discretionary,
it would make it very difficult for that program to grow under
constraining discretionary spending.
Ms. Fudge. Thank you very much. I yield back, Mr. Chairman.
The Chairman. The gentlelady's time has expired. I now
recognize the gentleman from Arkansas, Mr. Crawford, for 5
minutes of questions.
Mr. Crawford. Thank you, Mr. Chairman.
Mr. Kubik, in your testimony you mentioned both home
delivery and pick up of CSFP food packages. Can you talk about
the distribution process and give us a little more detail on
that?
Mr. Kubik. Yes, thank you for the question. Yes, a lot of
our seniors can't get to our sites. We have four fixed sites,
but we cover four counties so it is hard to expect folks to
drive to our sites. A lot of them don't have reliable
transportation and public transportation in our areas is
limited. We work with groups, and not only our volunteer groups
and ourselves, to get our food to our seniors who are
homebound, or take it to their apartment building. We are
fortunate that we have a lot of support in the community from
some of the businesses there, because our organization doesn't
have the resources by itself to reach all these homebound
seniors. We are able to reach them through the volunteer groups
and through our own staff. And once that senior is signed up,
we can also assign a proxy. That senior can choose a proxy to
pick up the food for them during the certification period. If
that senior has health issues, doesn't have good
transportation, they can have a proxy pick up the food. But it
is important that we get that senior initially the first time,
so we get a lot of calls from folks who may be blocks away from
our sites. You get approximately 30 pounds of food. If you
don't have a car, like I said, our public transportation is
lacking in our area. It is difficult for seniors to get out.
There are safety concerns as well because so many people prey
on seniors, take advantage of them. We have a network in place
working with the other groups in the area, not only, again,
nonprofit groups, but businesses who step forward, some of the
schools will help out also with getting the food to the
homebound seniors and those in apartment buildings. We are very
fortunate we have a network in place that can get to those
seniors.
Mr. Crawford. Are there any particular policy changes you
would advocate for us to consider?
Mr. Kubik. I can just speak from, again, my program on this
one, but the process is pretty fair with that proxy allowance
for the seniors. If that wasn't in place, that would be
difficult to allow those seniors to get to us because they just
couldn't physically come to our site. As long as that proxy is
there and we can send the trained volunteers or staffer to that
senior's home, we can sign the person up and get the food to
them.
Mr. Crawford. Excellent.
Ms. Kriviski, in your testimony you mentioned the various
types of commodity foods available in each of the programs. How
does USDA evaluate the nutritional value of the foods provided
through CSFP, TEFAP, and FDPIR? What I am asking, are there
ways the Department is working to improve nutritional quality?
Ms. Kriviski. We have undertaken a 10 year review of all
the offerings of USDA Foods, and we are very pleased to report
that of our 200+ USDA Foods, what we offer today to all of the
programs that use USDA Foods are lower in salt, sugar, and fat.
We have completely changed the nutritional profile of our
offerings. As some of our witnesses testified today, we have a
number of nutritionists on staff at FNS that continue to
provide technical guidance and advise as needed. We also
produce a number of nutrition education products that are
available to the public at no cost. This is a continuous
process. We will continue as we look at additional foods to add
or subtract to look at the nutritional profile to make sure
that it fits within the nutritional standards for the Dietary
Guidelines for Americans and other nutritional advice.
Mr. Crawford. Okay, thank you.
Anybody who wants to comment on this: in many cases, food
preparation is just as important as the type of foods selected
or distributed, so I am interested to hear from the panel about
current efforts underway, educational efforts that have shown
to have been effective. Ms. Calvert, it looks like you want to
weigh in on that, and can you give us your views on practical,
easy to understand, nutrition education recommendations and how
they benefit your constituents?
Ms. Calvert. Sure. We have really focused on trying to
involve the entire family in either the food distribution or
nutrition education process. We know that when families are
able to--actually, there are a bunch of models here in D.C.
that all of our food banks operate this, especially in your
state as well. They have been really active in implementing
Share Our Strength's, Cooking Matters, a nutrition education
module that I think has made a real difference. But by
involving the entire family having a demonstration of here is
how to cook the meal, everyone tastes it, here is the recipe
card, here is the food distribution from the food bank to take
this home so that you can cook this meal yourself, it is a lot
easier to educate people on the fruits and vegetable that we
are distributing. We are distributing over 1 billion pounds of
fresh fruits and vegetables every year. I know how much effort
it has taken my children to be willing to even look at
spaghetti squash covered in meatballs and spaghetti sauce, so
certainly our food banks are really, really aware of the need
to focus on this.
Mr. Crawford. Thank you. My time has expired. I yield back.
The Chairman. The gentleman yields back. I am pleased to
recognize the gentleman from Florida, Mr. Soto, now for 5
minutes.
Mr. Soto. Thank you, Mr. Chairman. As we all know, since
1996 there has been a work requirement in the SNAP program,
able-bodied adults without dependents have to work. The only
exception is with age or disability or other specific reasons
that are proved. All we are talking about in the potential
reform is about whether able-bodied adults without dependents
can qualify for a limited exception of 3 months in a 3 year
period. And so my question for Ms. Calvert and Mr. Kubik is do
you know what the percentage of SNAP recipients are that are
able-bodied adults without dependents, and based upon that, do
we know what the savings would be in benefits and the
additional costs if we were to take this segment and limited 3
month exception out of the program?
Mr. Kubik. Thank you for the question. That question is
kind of difficult for me to answer in that a lot of our
seniors, the qualifications are different for CSFP and SNAP.
Without knowing every senior's financial state, I couldn't tell
you whether they all qualify. I don't know what impact this
would have particularly on CSFP. But as I mentioned earlier, it
just seems it would be very difficult for seniors to be in the
workforce, and I said those that can work are working that need
a job, but jobs are hard to find and, realistically, it would
be difficult for our program's participants.
Ms. Calvert. I would just add that one of the most
important things to look at when you are focusing on that is,
what are the barriers, how recent have the able-bodied adults
without dependents that are on SNAP been employed? About 75
percent have either been working in the year before or after
they have received SNAP, so one of the things when we look at
this population, we realize that most of them are living in
extreme poverty, averaging, in fact, less, and are not eligible
for many other government supports. I think that is the thing
that I would like to focus on there. There is a real need to
examine what meaningful employment and training means, and what
the barriers are to obtaining employment for this population.
Mr. Soto. Thank you.
Ms. Kriviski, since you are the numbers person from USDA,
what is the percentage of SNAP recipients that are able-bodied
adults without dependents?
Ms. Kriviski. While I am the senior executive in charge of
programs we are talking about today, I am not overseeing SNAP,
but I can certainly go back and get that number for you.
Mr. Soto. And so we don't know today what the savings would
be and the benefits or the additional costs to the program if
we exempted out this limited 3 month every 3 years exception?
Ms. Kriviski. Thank you.
Mr. Soto. I would just say, Mr. Chairman, these are numbers
that we would have to have in order to make an informed
decision on whether we can eliminate this limited exception to
the work requirement for the 3 month every 3 years period so
that we can make this decision with all the information.
And I yield back the remainder of my time.
The Chairman. The gentleman yields back. I would also note
that we are really here looking at these three programs, and
quite frankly, I don't think we are drawing any conclusions.
That is the purpose of hearings, to try to flush out details
and good information so that, going forward, we can set good
policy based on good information.
So I am pleased to recognize the gentleman, Mr. Davis, for
5 minutes.
Mr. Davis. Thank you, Mr. Chairman, and thank you to all of
my colleagues who are talking about an issue that has been very
important to me over my 4\1/2\ years as a Member of this
Committee. I am very appreciative of my good friend, Ms. Fudge,
who is one of my co-leaders in trying to ensure that our TEFAP
funding is stable for those who need it the most, those in
districts all throughout this country who use this program, and
we need to continue to make sure the funding is there to get
that food to those who can't afford to get it themselves.
Ms. Calvert, you spoke to the Committee about the need for
additional TEFAP support in a more stable manner in the next
farm bill. Can you maybe just elaborate on that point?
Ms. Calvert. Sure. The 2014 Farm Bill included an
additional $205 million over 10 years for TEFAP. Now most of
that funding was front-loaded, in Fiscal Year 2015 there is an
additional $50 million for TEFAP, then the next year $40
million, then it went down to $15 million. The idea behind that
was to hopefully as the economy improved and more people were
obtaining full-time employment, food banks would be seeing an
alleviation of demand for their services as the TEFAP funding
went down. Unfortunately, we haven't seen that. A lot of people
that have gone back to work, it has been more part-time or
seasonal employment, and since it is not in the baseline, we
are really starting over in terms of advocating for more TEFAP
funding in the next farm bill.
Based on the demand patterns we are seeing at our food
banks, we feel that it would be definitely a much more reliable
source of support for our food banks if the baseline funding
for TEFAP was increased per year, rather than a one-time
infusion that is scaled down. If we are not seeing demand scale
down, then that might not be the best policy approach.
Mr. Davis. Okay. You also note that currently TEFAP
administrative funding is appropriated at about \1/2\ of its
authorized level, and that provided funds account for just 23
percent of the cost of distribution of food banks.
Ms. Calvert. Yes.
Mr. Davis. And my good friends in Springfield, Illinois and
Champaign, Illinois, Pam and Jim do an excellent job of
advocating on behalf of Feeding America. I want to ask on their
behalf if additional funds were appropriated for TEFAP
administration, what improvements or changes could the food
banks in your network make?
Ms. Calvert. Sure. TEFAP storage and distribution, to find
out that 23 percent number, we really look at, food banks
report to us their operating expenses for all sorts of things.
We black out all the other expenses that aren't related to
TEFAP and what is your staff, your refrigerated trucks, your
storage costs, your gas, it costs money to get food to people,
obviously. The fact that it is only covered at 23 percent, that
means the food bank is using privately raised dollars that
could be going into backpack programs, SNAP outreach, job
training, weekend feeding or summer feeding programs, and
instead, they are needing to use those funds for that
shortfall.
So I definitely don't want to put words in Jim's mouth
because he has----
Mr. Davis. Oh, you don't have to.
Ms. Calvert.--an excellent food bank, and I know he is not
afraid to tell you what those additional funds would mean to
him, but those are some of the tradeoffs that a lot of our food
banks have to make. Road Runner Food Bank in New Mexico, they
have their own long haul truck because it costs so much to get
food across the state. I mean, a significant amount of money
that they are having to make up there.
Mr. Davis. Obviously, you have some experience working with
many of the individuals that I serve who serve our communities
with very important programs, so thank you for your willingness
to work with those food banks in the district I serve, and
thank you for your willingness to work on these issues, and to
each of you for being here today. I yield back.
The Chairman. The gentleman yields back. I am pleased to
recognize the gentleman from California, Mr. Panetta, for 5
minutes.
Mr. Panetta. Thank you, Mr. Chairman. I appreciate that.
And thanks to all the witnesses for being here and taking the
time to prepare and actually coming here and testifying. Thank
you very much.
I hail from the central coast of California. As my
colleagues are going to get sick of me saying, we are the salad
bowl of the world. A number of diverse crops, fruits,
vegetables, you name it, we got it. Obviously our food banks
there have pretty easy access to these fruits and vegetables
that are there; first, because of the geography, and second,
because the growers have actually stepped up and donated a
significant amount of their products to these food banks, which
is fantastic.
But I would imagine there are other places throughout our
country that don't have as easy of access to fresh fruits and
vegetables, and so my question to anybody who would be willing
to answer it would be: are there any steps that have been taken
recently in order to make sure that fresh fruits and vegetables
are accessible to seniors or other people who qualify for these
programs?
Mr. Tonubbee. No, the Choctaw Nation and the FDPIR program,
we are provided fresh fruits and vegetables through a DOD
program that is shipped directly to our stores. We order weekly
and allow our clients to come as often as they want to our
stores to shop so they are able to get fresh fruit and
vegetables on a weekly basis. Seniors, whoever, all of them
have the availability of fresh fruits and vegetables.
Mr. Panetta. Good.
Ms. Calvert. We have really found that USDA does a great
job, especially when there are bonus commodity opportunities.
If there is an easy way to distribute that as a fresh fruit and
vegetable to the food banks or the TEFAP agencies in the area,
they definitely will. But, the nutrition profile of many of the
fruits and vegetables that are offered through TEFAP, fresh is
great, but just access to fruits and vegetables is amazing. And
especially if our food banks are able to combine that with
locally sourced fresh fruits and vegetables, I think that
really makes for a powerful combination.
Mr. Panetta. All right.
Mr. Kubik. What we do at our agency is we are fortunate the
local food bank does give us about 1 million pounds of fruits
and vegetables every year. It is not enough to serve all of our
participants, but it is nice to have that for those who are
there when the trucks arrive from the food bank. But we also
encourage our participants to use, if they are participating in
SNAP and CSFP, consider using CSFP for the goods that we can
provide and use SNAP for the fresh produce and the items that
we don't have. We also work with our farmers' market in Detroit
so that during the summer season, they come to our site once a
week and they do accept the SNAP card, the bridge card in
Michigan, which you can use that to get your produce also.
We are trying to come up with ways to bring produce into
the community. We are in a food desert. We are hoping that
working with our partners like our food banks, our farmers'
market, that we can get fresh produce into the hands of
seniors.
Mr. Panetta. Great.
Ms. Kriviski. I just want to mention the DOD program. We
are very proud that we are in partnership with DOD to provide
fresh fruits and vegetables, both to the National School Lunch
Program, as well as FDPIR. We are up to offering over 42 kinds
of fresh fruits and vegetables to our Tribal members. In
addition, we purchase, as Carrie mentioned, large truckloads of
fresh apples and different fresh produce that can go into
TEFAP, and then last, another one of those programs that
supports CSFP is the Senior Farmers' Market Program, and that
is a good connection between CSFP and the Senior Farmers'
Market Program.
Mr. Panetta. Outstanding, great. Thank you all again. I
yield back my time. Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. I am now pleased to
recognize the gentleman from Florida, Mr. Yoho, for 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman. I appreciate you all
being here, and I appreciate the work you do. Being a recipient
of food stamps a long, long, long time ago, I understand the
importance of that and I appreciate the outreach that you guys
do and the education.
Ms. Kriviski, as we have talked about many times in this
hearing about we have had multiple hearings on SNAP, and today
we have had a chance to talk about several commodity
distribution programs. I want to understand if there is any
overlap in the programs we have discussed here, and why these
three programs are needed in addition to SNAP? What are your
thoughts on that?
Ms. Kriviski. First let me start with the three programs.
There is a choice to be made for our participants between
participating in the SNAP program and FDPIR, so it is either
one or the other. It is not both together. The other two
programs, CSFP and TEFAP, can be used in conjunction with the
SNAP program, and in fact, what we know is that the SNAP
benefit, as it goes through the month, we have families and
individuals running out of food and they would access the TEFAP
program to fill that short food gap, maybe for a week or 2. It
may be a one-time hit or it may be that they go to the food
bank almost monthly towards the end of the month when they run
out of food.
Similarly, the senior participation in the SNAP program is
fairly low, and the minimum benefit is around $16. And so we
would see CSFP as supplementing and complementing the SNAP
program, and being able to provide 100 percent domestic foods
to our seniors to be able to take home, shelf stable, would
last a little longer.
Mr. Yoho. Thank you.
Mr. Tonubbee, did I say that right? What programs did you
say gives funding for the fresh fruits and vegetables?
Mr. Tonubbee. Sorry, it is the DOD program, Department of
Defense.
Mr. Yoho. That is what I thought. I wasn't aware of that.
And then again, Ms. Kriviski, it is my understanding that
there are differences in types of products allowed under each
of the three commodity distribution programs that have been the
focus of today's hearing. Can you describe why there are
differences and what commodities are available?
Ms. Kriviski. Certainly. I do want to clarify that the
funding for the DOD program is actually our funding. We pull it
off of the funding that FNS receives, and it is set aside for
our Tribes to order fresh fruits and vegetables through DOD.
The reason that there are: first let me point out that
there are over 40 types of products that are available to all
three programs. In addition, the programs both have a specific
population they are trying to reach, and they have specific
construction. CSFP and FDPIR is a defined food box with
categories of food that need to fit in it. FDPIR actually has
the most offerings from our food, because we are trying to
replace what they might have accessible in a food store. They
have a wider variety to be able to fit into a fuller package.
For CSFP, the package contents have evolved over time and
historically. Both CSFP and FDPIR package have a very high
nutritional profile. Our Healthy Eating Index at USDA suggests
that it is over 70 percent in terms of the nutritional profile.
For a normal American, we are usually around 50 percent.
And then finally, TEFAP is a completely demand driven
system. We offer foods that states can choose to take or not
take, so they really have a shopping list that they can go
through. And a lot of their choices depend on what they know
they are already getting or they anticipate getting in the
public side of donations.
Mr. Yoho. Thank you.
Ms. Calvert, one of the things I have seen in our district
is the big food trucks, the semi tractor trailers will show up
and they will go to an area that there is a lot of homeless
people, and they will give out frozen chickens or frozen goods,
but people don't have ovens or refrigeration to store them in.
When you look at a program like that, we want to be as
efficient as we can. Have you guys got safeguards to prevent
those kinds of things?
Ms. Calvert. Yes. This might be dangerous to make this
statement, but I feel fairly----
Mr. Yoho. We do that all the time.
Ms. Calvert.--confident that our food banks in your
district are not distributing frozen chicken out of a truck to
a population that does not have the facilities to cook them.
Mr. Yoho. I have seen that. I have been there, and it was
like come on, guys.
Ms. Calvert. Right. No, and I don't doubt that there are
some food distribution programs that do that, and they mean
well, but it is very important to know who you are serving.
Certainly, many of our food banks, the food we would distribute
to a homeless population through a mobile pantry would be a lot
different than the food we would distribute like in a school
setting or to a family.
Mr. Yoho. I agree. Okay.
Ms. Calvert. All of our food banks are required to undergo
a third party scored food safety audit with us. They have a
contract with us. There are plenty of regulatory safeguards in
place with the TEFAP program as well, and we audit our food
banks every year to make sure they are in compliance with it.
Mr. Yoho. Thank you.
Ms. Calvert. Yes.
The Chairman. The gentleman's time has expired.
The chair wants to take a point of personal privilege,
given the fact that nutrition matters and farmers feed, we have
been joined at least for a short time by members of the
Pennsylvania FFA leadership, so we welcome them and thank them
for being a part of our future of being able to grow this food
that we are talking about how we get it to Americans in need.
And keeping with the Pennsylvania theme, it is an honor to
welcome my colleague from Pennsylvania and recognize him for 5
minutes of questioning. Mr. Evans.
Mr. Evans. Thank you, Mr. Chairman. I would like to start
off with a question and go to the three organizations, starting
with Feeding America. What is the typical profile of the people
that your networks serve, and how has that profile changed over
the recent years?
Ms. Calvert. Thank you for your question.
In some ways, there is no typical profile, but we do know
some things about our network and who we are serving. There are
46 million people that we are serving, 12 million children,
seven million seniors. Thirty-nine percent of people we are
serving have a child in the household under the age of 18. One
in three households that we serve has a household member that
is a senior over 60 years of age. Many people that we serve are
working. I think that is what I really want to focus on. More
than \1/2\ of the households we serve have had one or more
people in the household employed in the last year. Nearly \3/4\
of people we are serving live at or below the poverty line. I
want you to realize that many of the people we are serving are
working or want to work.
The other challenge that we see is that many people might
be making too much to qualify for Federal help and they may not
qualify for SNAP nutritional assistance, and so they may need
to turn to the food banks. You have some great ones in your
district. Philabundance is one of our members in Philadelphia,
and I know they serve many of the working poor that may not
qualify for SNAP.
Mr. Kubik. Our program serves seniors 60 and over. The
typical senior has the income on our program of about $750 a
month or less, and about \1/2\ of them live alone. Their
challenges are trying to make ends meet on a limited income,
choosing between food, medicine, utilities. One of the biggest
calls we get for help is for utility assistance, which is why
we have a utility provider now who is on our site offering that
assistance. But even in home repairs, there are so many
challenges seniors have, transportation issues. Food is just
one of many, and so we try to inform people either through
advocacy or through our volunteer network. A lot of volunteers
come in and want to package food or do a home delivery, and
they sometimes think that may be the only issue seniors have is
not having enough food. We try to let the senior talk to that
person and say what their needs are beyond food. And so many
seniors, we find out, that food is just one of many issues that
they have.
Mr. Tonubbee. Obviously as a Tribal organization, our
profile is 100 percent Native Americans, or at least there has
to be one household member that has to be a Native American.
There can be a child in the household or a mother that is not
Native, but there has to be at least one Native in the
household. Most of the time their employment is challenged in
our area. It is a high unemployment area for our Tribal
members. We run anywhere from 25 to 75 percent higher
unemployment rate than the state does. It is just low-income
people that are having difficult times, basically are the
profiles of our people.
Mr. Evans. Ms. Calvert, can you shed light on Feeding
America's work on food waste and the importance of Federal
incentives for food and fund donations?
Ms. Calvert. Yes, I would love to talk about that.
I like to say that we have been involved in trying to
reduce food waste since it became a hip issue for people to
focus on, but it is really a matter of how do we use our
resources wisely. With 70 billion pounds of food being wasted
every year, obviously there is a lot at stake to try to get
this nutritious food to people in need, especially when you
look at where a lot of the available food is. There are a lot
of nutritious fruits and vegetables, dairy products that are
being produced that are not being connected with people in
need, so we have been really focused on what are the
improvements that we need to do with programs or Federal
policies to help strengthen that connection.
Oftentimes it might cost a grower actually more money to
donate food than it would to till it under. In Pennsylvania you
have a lot of dairy, so it can cost money to get it pasteurized
and bottled and to a food bank if you have excess fluid milk.
Federal incentives, either tax incentives or making it easier
for additional food to be donated can have a big role to play
there.
Mr. Evans. Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. I am pleased to
recognize the gentleman from Kentucky, Mr. Comer, now for 5
minutes.
Mr. Comer. Thank you, Mr. Chairman. Before I ask a
question, I just want to address something that was mentioned
earlier in the Committee about the President's proposed budget
cuts, specifically Meals on Wheels. That is something that is
very important in my district. I represent a poorer district. I
have parts of Appalachia all the way to the river counties on
the Mississippi River, in a very gerrymandered district that is
6 hours from east to west in the district.
One good thing that happened when that cut was announced
was Meals on Wheels got a record amount of private donations
overnight, and I think that is because people recognize that is
a good program. It is a needed program. But in the future, we
are going to have to tighten our belts in Congress. I mean, the
debt rapidly approaching $20 trillion, that is not sustainable.
It is immoral what Congress in the past has done to our
children and grandchildren.
So having said that, I support the SNAP program, but I am
wondering, Ms. Kriviski, are there duplications of services?
Are there things that we can do to make this more efficient?
And let me add this. I was Kentucky Commissioner of
Agriculture. One of our divisions was commodity distribution.
We had a commodity distribution program, and knowing how that
was administered, knowing who was eligible, who was not
eligible, is there a duplication of services? Are there things
that we can do to be more efficient when we craft the next farm
bill?
Ms. Kriviski. Well, as I have said, I believe that our
programs are designed to complement and support each other, and
not overlap or duplicate each other. The programs that we are
talking about today, FDPIR, cannot be duplicated with SNAP. You
have to choose to either be in one program or the other. It is
a very clear line there.
For CSFP and TEFAP, they really do support the gaps in
somebody's ability to get through the month on a SNAP benefit.
We know that we see an increase in food stamp lines, frankly,
towards the end of the month when they run out of food, and in
CSFP, we know that seniors don't participate at a very high
rate and they are actually more encouraged to take a box of
food that is grown by American farmers. We know some of the
challenges for seniors participating in SNAP, and one of them
is the stigma of receiving a cash benefit. But they feel like
they are supporting American agriculture by participating in
CSFP and getting domestic food.
Mr. Comer. Okay. Thank you, Mr. Chairman. I yield back.
The Chairman. I thank the gentleman. The gentleman yields
back. I am now pleased to recognize Ms. Lujan Grisham, for 5
minutes of questioning.
Ms. Lujan Grisham. Thank you, Mr. Chairman, and thank you
to the panelists.
I ran in New Mexico the then-State Unit on Aging or state
agency, and it became a Department, I was the Cabinet Secretary
of Aging and Long-term Services for 14 years, over several
different gubernatorial Administrations. I remember being in
your position and talking to legislators and realizing as
somebody who knew the aging services, that while we were
receiving funding from a different Federal Government entity
and through the Older Americans Act, and it does home delivered
meals for seniors and it does congregate meals, that I quickly
realized that the seniors who were coming in for a congregate
meal were often getting that one meal a day. And for the home-
delivered meals, they were getting one lunch and no breakfast,
no dinner, and no weekend meals. And I proposed that if we were
really trying to address hunger, then we should be providing
three meals a day. But I don't get funding for three meals a
day, so I asked the state legislature to fund that. And I spent
year after year after year trying to explain how the number of
individuals served was ``X,'' but the amount of money we were
spending on those meals was ``Y,'' was much larger than they
anticipated. Until they actually met these folks, right, who we
were for years and years and years not talking about, that we
were just under this program giving them one meal a day. And so
literally they are starving.
I think about how we want to make sure that we don't have
redundant programs. We don't want there to be any
administrative waste. I actually go nuts about that. And that
we all recognize that we have to make tough choices, but there
is a sense that there are so many easy ways and that it is all
duplicated, and that in fact we are overfeeding or over-
providing. And I live in a state, as you mentioned, Ms.
Calvert, that since I have been in Congress is either the
hungriest state in the nation, or it has the hungriest children
in the nation, or is second or third. All untenable and all
unacceptable. And in fact, today while in Congress, because we
also have the highest unemployment, and some of the most
difficult challenges of any state in the country, the state
dollars that I got appropriated are all gone. We are back to
the same situation that we resolved to the degree that we could
where people get, if they are lucky, one meal a day and the
next person on the waiting list gets a meal when that person
goes to a nursing home, their family moves them away, or they
die, which is terrible.
I am really grateful that we are as a Committee, as a
whole, talking about ways to make sure that food is getting to
who we need it to go to. I also appreciate that we are doing
lots in private donations, but it is not sustainable, and
people want food, and you made some very practical points, Ms.
Calvert, about sometimes you can't even get food, fresh food,
but we are not getting cash and we are not getting distribution
and storage efforts by grocery stores and by farmers, because
they can't do that. And so I am delighted to hear that we have
at least one Member, one of my colleagues, who is interested in
figuring out what we do with $100 million authorized in TEFAP,
but only $50 million appropriated.
I had a bill, H.R. 4967, the Food Bank Assistance Act of
2016 that we are reintroducing again this year that says spend
the $100 million, because now you are addressing hunger,
because you are getting food to the places that you need it to
get. I have a state with many, many Tribal nations, 22. You
have opportunities to deal in these remote and rural areas, and
in addition, I want there to be more food because without
changing the amount appropriated in TEFAP for actual food, we
are not meeting the need.
I am in favor of at least a 57 percent increase. Instead of
$338 million, it ought to be $500 million. And we really need
to be leveraging, and then we can talk about the impacts we are
having at reducing hunger, and helping folks move.
I haven't left anybody any time, which is typical for me
and I don't mean to, but I get a sense that the whole panel
sees the benefit of making sure that we can store and
distribute food, and that the bulk of our money is getting to
food purchases that are getting into the hands and bellies of
the people that we want to make sure don't go hungry. Yes?
Ms. Calvert. I would agree. Thank you for your past
support. Obviously we are big supporter of the Food Bank
Assistance Act of 2016. We think it is a great way to augment
what the other Federal nutrition programs do in fighting
hunger, and I can just say that I am 100 percent confident that
our food banks can safely receive and distribute any additional
allocation that is provided.
Ms. Lujan Grisham. I guess everyone is yes. Thank you, Mr.
Chairman.
The Chairman. The gentlelady's time has expired, and she
did get at least one opportunity to hear from a witness.
Ms. Lujan Grisham. I am getting better.
The Chairman. You are getting better, absolutely, and I
appreciate it.
I am pleased to recognize the gentleman from New York, Mr.
Faso, now for 5 minutes.
Mr. Faso. Thank you, Mr. Chairman. I hadn't thought to ask
this question, but I noted in terms of Ms. Calvert's
organization that you have over 200 food banks in your
organization, and many other local organizations are
affiliates. And one of the more satisfying things I did as a
private attorney a few years ago, obviously before I got
elected to Congress, was to set up a 501(c)(3) for a local food
bank in my area. And it just occurred me, I wonder are most of
your 200 food banks incorporated as 501(c)(3)?
Ms. Calvert. Thank you for your question.
Feeding America is the national network. We are a 501(c)(3)
association. Our member food banks are also 501(c)(3). They
have a contractual relationship with us as part of our network,
but they are also all their own individual 501(c)(3)
organizations.
Mr. Faso. Good. Okay, and Ms. Kriviski, I am particularly
interested in the commodity program that you mentioned in your
testimony in terms of your dealings with the states and the
distribution. It mentions that you have enough money for
approximately just under 700,000 participants annually. How
much was appropriated for the program in the last fiscal year?
Ms. Kriviski. The last fiscal year we were provided a total
of $222 million, and $45 million of that was for administrative
costs and $176 million of that was for food purchases. In the
ongoing CR, there was an anomaly that provided some additional
funding for 2017, so our total funding stream is now up to
about $236 million.
Mr. Faso. And that $45 million that you mentioned for
administration, is that at both the Federal and state level?
Ms. Kriviski. No, that goes directly to our state agencies
who turn around and pass it down to the local area agencies.
Mr. Faso. I see, and are you satisfied that that level of
administrative spending is appropriate?
Ms. Kriviski. I would turn to Mr. Kubik for that answer,
but I would say that it has been stabilized over many, many
years. That is not an amount that has grown over the past 10
years.
Mr. Faso. And are the almost 700,000 participants that you
mentioned in your testimony, what do you think the actual need
would be out there compared to the 700,000 who are receiving
it?
Ms. Kriviski. The issue about CSFP is it is neither
statewide or nationwide, and so while we are serving about
700,000 participants, we know that many of our states, we have
48 states participating right now. Many of our states, if they
felt funding was available, would be putting in additional
requests for additional caseloads. We have been fortunate in
that the funding has allowed us to add, we are at that number
of 700,000 is up from about 588,000, just a couple of years
ago. We are able to meet some demands for new states
participating. Over the last 2 years, over nine states have
come into the program. They are just getting the program
started. We would anticipate those states would need additional
caseload as they grow their infrastructure.
Mr. Faso. Yes, it struck me that the 700,000 was actually
fairly low across the nation. Could you provide the Committee
for the record some information on the state-by-state
participation, and areas where they are fulfilling the need and
other areas where perhaps there are gaps? Because I certainly
would like to know that for New York State, and I know there is
a significant need out there. I would appreciate if you could
provide that to the Committee.
Ms. Kriviski. I would be happy to.
Mr. Faso. Thank you, Mr. Chairman. I yield back.
The Chairman. The gentleman yields back. I am now pleased
to recognize Mr. Lawson, for 5 minutes of questioning.
Mr. Lawson. Thank you very much, and first, I would like to
compliment you all in the area that you work in. It is so very
important to people to sustain life. Three weeks ago, I had the
opportunity to do two things with USDA. One was to visit a
middle school where 100 percent of the students were on free
and reduced lunch, and that was an incredible experience, even
though it was right in my back yard. And then to go to Second
Harvest Food Bank, where I can see the operation that was going
on. In fact, that was the first time I had ever been in a 0
freezer. It didn't take long to get out, and most of the people
there were volunteers. There were volunteers that had careers
that were coming in to work with people there. I know the
importance. What I really want to do is piggyback on the
question--not the question that I wanted to ask, but the
question from the gentlelady from New Mexico, and that is what
is a wish list that you all did not get a chance to respond to
in terms of funding, and what would it do to alleviate hunger
in this country? And I guess we can just go down the line. She
spoke, but she did not get a chance for all of you all to
respond. In this coming budget, what would be the wish list
that you need in terms of providing resources for people?
Ms. Calvert. In the coming budget or the coming farm bill?
Well just very quickly, we have all really talked about the
strength of the Federal commodity programs. There is a lot that
could be done to make those much stronger: 700,000 seniors
served on CSFP, yet we are serving seven million seniors that
are food-insecure. There is an argument for expansion and
greater funding right there. As you saw at the Second Harvest
Food Bank of Central Florida, they do a great job and
distribute a lot of food but there is a lot that additional
TEFAP funding would provide them. There are a lot of
opportunities to strengthen the SNAP program, which is although
not the subject of the hearing today, is a source of
significant support for millions of food-insecure Americans.
Mr. Kubik. A start with my wish list would be an end to
hunger in this country. That would be my first wish. But in
terms of the seniors we represent, I would like to see those
seniors who need CSFP to have access to it. As we have heard,
it is a smaller program in the FNS budget with the 700,000
caseload. We know that there is more of a need within our
country for that. There are two more states we would like to
see come on board. The last two would be Alabama and Wyoming to
join our community. But we would like to see the program
available to those who need the program. And if there are some
regulatory changes, we thought about perhaps Medicare. The
Medicare portion is considered income that comes out of a
Social Security check. We would like to see maybe that being
addressed to remove it as a portion of income, because some
seniors don't quality for CSFP, and their Medicare portions put
them over it. Without the Medicare portion, which isn't really
actual dollars, in their account, they would qualify. And we
know from seniors, the story that I told of Frederick. He was
82 years old when he signed up for CSFP. They only apply for it
when they need it.
Thank you.
Mr. Tonubbee. My first thing on the wish list would be a
carry forward provision on our budgets. Too many times at the
end of the year you have plans on doing something with your
budgeted funds; however, a snafu may occur that you can't spend
that money. And if you don't get it spent by the end of the
fiscal year, it has to go back to the government. If we had a
carry forward provision, I could go forward with the planned
projects that we had for the program without having to return
those funds and then turn around the following year and ask for
them again, and not know if I would get them because we don't
know what the budget is going to be for the following year.
Ms. Kriviski. While I can't share my personal wish list
with you, I do want to point out that the TEFAP mandatory
formula imbedded in the farm bill can actually result in a
decrease of food funding, as well as an increase of food
funding. It actually depends on the state of the economy, and
so the last farm bill recognized the additional need for TEFAP
on top of the mandatory formula, adding additional amounts
appropriated over the next 5 years, which is getting ready to
expire. In the absence of action, there is a possibility that
our current law right now on the funding formula would cause
the amount of funding to go down.
The Chairman. I thank the gentleman. I am now pleased to
recognize the gentlelady from North Carolina, Ms. Adams, for 5
minutes.
Ms. Adams. Thank you, Mr. Chairman, and I want to thank all
of our witnesses for being here today.
The Emergency Food Assistance Program is very important for
food banks and soup kitchens that help feed our most vulnerable
populations in the 12th District of North Carolina that I
represent. Funding for storage and distribution costs are
needed to help food banks store food items until they can be
distributed to partner feeding organizations and families in
need of assistance.
Ms. Calvert, there are several members at this hearing that
would like for storage and distribution funds within The
Emergency Food Assistance Program to be fully funded at their
authorized level of $100 million. How would fully funding
storage and distribution funds enhance Feeding America's
capacity to provide food assistance?
Ms. Calvert. Thank you for your question. We certainly
would support that as well, and having had the pleasure of
working with the food banks that serve your district and
talking with them about many of the unmet needs, I know that
part of that funding they used to partner with the ag industry
so that when there is surplus food, they are able to reimburse
the grower for the costs to get the food to the food bank. That
is a big deal. North Carolina grows a lot of fruits and
vegetables, and it makes no sense that we can't help a lot of
these smaller agencies connect nutritious food with people in
need. They do a lot of mobile pantries and a lot of work in
schools. I know that that is really important to your food bank
members, and many of our other food banks to increase the
programs that we are able to provide in schools to help
children that are food-insecure.
Ms. Adams. Thank you. Ms. Kriviski, one thing this
Committee has examined over the past 2 years is the need for
improved coordination at the state and Federal levels with the
administration of programs. Is there anything that we can do to
assist you in making sure that funding for all the distribution
programs, including the School Meal Programs, are working
together?
Ms. Kriviski. What I would say is that we do have referral
requirements in most of our programs, so when somebody walks in
seeking assistance in CSFP, there is very likely to be
additional information connecting those seniors to other
services around the state. In food banks around the country,
that same aspect exists in that I think our partners do a
really great job of trying to connect people in need with the
other programs. Our School Lunch Program is used to actually
help confer eligibility to some of our other nutrition
assistance programs, so if you participate in the School Lunch
Program, for many of the food banks they operate a backpack
program, and by virtue of being a recipient of a free reduced
price meal, you are going to also receive a backpack to go home
over the weekend.
We do a fairly good job of connecting the dots, but I am
very happy to discuss at a later date other ways that I think
we could be more effective.
Ms. Adams. Thank you. Ms. Calvert, many nutrition advocates
are concerned at the end of waivers to work requirements for
able-bodied adults in the SNAP program will put more pressure
on food banks. As waivers from SNAP work requirements continue
to expire, are you seeing more demand for your services at
partner agencies?
Ms. Calvert. We are, and actually I wanted to highlight a
study that was done in Maine by our food banks there. The state
decided to make some changes and to remove work waivers, and so
they surveyed the people that they were effected, and they
found that 25 percent of those surveyed who lost SNAP benefits,
that it was due to a time limit. Eighty percent of those
individuals reported that they are using the food pantry more
this year than in the past. Many others actually shouldn't have
been kicked off the program. In Maine, 13 percent of those that
lost their SNAP benefits due to the time limit actually had
health and care giving barriers that should have made them
exempt from that. I would just highlight that there is going to
be significant, if changes were made to work waivers for able-
bodied adults without dependents, there is a significant amount
of implementation challenges that would come with that.
Thirteen percent losing benefits when they shouldn't have in
this population that already is not eligible for other
benefits, that is kind of unconscionable that that happened,
and we worry that that is jut the tip of the iceberg if work
waivers are done away with.
[The information referred to is located on p. 651.]
Ms. Adams. Thank you very much. My time has expired.
The Chairman. I thank the gentlelady. I want to take this
time to really thank all the members of the panel for your
travels, for your expertise, for your passion. It is certainly
a passion that I share, and Members of this Subcommittee share,
of making sure that we are providing the right type of
assistance to meet the nutritional needs of individuals.
It is a team effort. There is no doubt about it. It is
about personal resources and family support and community
programs and SNAP and our TEFAP, the commodities program, and
what we do on our Tribal lands, all part of the formula of not,
as I like to say, not leaning left or right, but standing
squarely behind American citizens and their nutritional needs.
I want to thank my colleagues for being here. We had a
great turnout. As you notice, Members come and go. That is just
kind of part of the wear and tear and the responsibilities
here, but we saw the interest. We had almost close to 100
percent participation today by Committee Members. Finally, I
just want to thank the staff. It is your hard work that keeps
us on track and helps us to put together such great hearings.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member. This hearing
of the Subcommittee on Nutrition is adjourned.
[Whereupon, at 11:46 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Supplementary Material Submitted by Carrie T. Calvert, Director, Tax
and Commodity Policy, Feeding America
Insert 1
Mr. McGovern. Well thank you, Mr. Chairman.
Ms. Calvert, as I mentioned in my opening statement, I am
concerned about this group called ABAWDs, or able bodied adults
without dependents, and I am reading from an agriculture report
that the Chairman of this Committee spoke to their farm bill
summit, and he basically called it the current law that allows
able bodied adults without dependents to collect SNAP benefits
for 90 days out of a 3 year period, and he is quoted as saying
if they are able to work, why would they have 90 days?
And as I mentioned in my opening, I mean, this group is very
difficult to define, but extremely vulnerable to food
insecurity, and under SNAP rules, are held to a very strict
time limit on the benefits. I suspect that your network serves
a lot of ABAWDs, and there is a surprisingly small amount of
information on this group. Many of them have barriers to
employment like illiteracy or undiagnosed mental illness or
drug dependence or as I mentioned earlier, we know that there
are a number of them that are returning veterans who are
struggling to reintegrate into society.
Given the nationwide work that your network does for this
group, what kind of information do you have on ABAWDs? Who are
they, why are they so difficult to reach, and just as a follow
up, as I understand it, there are limitations in some places as
to how many times per month people can access food packages
from food banks. Can you speak to that as well? And if ABAWDs
are kicked out of SNAP and there is a limit to the food they
can access from food banks, where do these vulnerable adults
turn to?
Ms. Calvert. Thank you for your question.
I would agree that serving able bodied adults without
dependents and assessing what their challenges and barriers to
employment is a very, very difficult task.
First, it is important to realize that, as you stated
earlier, most childless adults on SNAP who can work do so, but
there are multiple challenges, including homelessness, physical
and mental health limitations, language barriers, lack of
educational attainment, as well as unstable employment
histories or criminal records that can really complicate the
pass to employment for many able bodied adults without
dependents. Some of the best data that we have on that is
coming from our Food Bank State Association in Ohio, so I would
be happy to connect all of the Subcommittee Members with those
findings, since it might take some time to go into it here.
A Comprehensive Assessment of Able-Bodied Working Adults Without
Dependents and Their Participation in the Work Experience
Program in Franklin, Ohio Report: 2015
Table of Contents
Executive Summary
Program Regulations
Assessment Data
Able-bodied
Age, Veteran Status
Dependents, Education
Criminal History
Transportation
Forms of ID, Employment
Ohio Means Jobs, Additional Barriers
Monthly Clinics
Placements
WEP Outcomes
Recommendations
Appendix
Executive Summary
Franklin County is one of the 72 Ohio counties that did not receive
a waiver to exempt able-bodied adults without dependents (ABAWD)
receiving benefits through the Supplemental Nutrition Assistance
Program (SNAP) from participating in the Federal work requirement to
ensure they are able to maintain their food assistance benefits.
Under Contract No. 25-14-9000, in partnership with Franklin County
Department of Job and Family Services (FCDJFS), the Ohio Association of
Foodbanks has implemented the Work Experience Program (WEP) to assist
with the fulfillment of the monthly work requirement for ABAWDs in
Franklin County.
The Work Experience Program began at the Ohio Association of
Foodbanks in December of 2013 and expanded quickly to accommodate the
increasing number of ABAWD referrals. Hundreds of ABAWDs meet with an
Ohio Association of Foodbanks WEP Assessment Specialist each month to
complete a comprehensive assessment at their local FCDJFS Opportunity
Center. Clients are then required to attend one three-part clinic to
receive a background check and are offered a variety of valuable job
related opportunities. After clients complete the assessment and have
attended the clinics, they are placed at a qualified partner
organization to complete their monthly work requirement which allows
them to maintain their SNAP benefit eligibility for the duration of
their participation.
Our interest in the ABAWD population does not end when they exit
our program. We are concerned about the well-being and long term
outcomes of our clients. We conducted a post-WEP client study to
examine the course of clients after they have exited the program. The
findings of this report provide information about post-participation
employment status and the most common causes of failure to comply with
FCDJFS mandated WEP involvement. This study has also helped us
understand from where some of the discrepancies in our program stem,
which has influenced how we conduct business and communicate with our
clients, our host sites, and FCDJFS. As we continue to innovate and
improve the program we seek to offer more necessary resources and work
related opportunities to our clients. One of our many goals in hosting
WEP is to assist ABAWDs with finding sustainable employment to become
economically self-sufficient.
The data we have collected through ABAWD assessments has allowed us
to identify transportation, criminal records, education, and health
problems as key barriers for ABAWDs struggling to find stable long term
employment. Our deeper understanding of these issues has led us to
partner with organizations that can help ABAWDs navigate through many
of their challenges, giving our clients a better chance at improving
their lives and supporting themselves. The data has prompted many
recommendations to FCDJFS including but not limited to: providing
additional funding for programs that support WEP participants and low-
income households, expanding enrollment of nationally certified
educational programs as well as programs for youth aging out of foster
care, and creating an employment pipeline into strategic aspects of the
job market.
Program Regulations
The Work Experience Program (WEP) is a platform that provides
experience and training for employable participants, who are currently
unemployed or underemployed, to enhance their ability to secure
sustainable work.
While this program is largely regulated by the USDA due to Federal
guidelines, the Franklin County Department of Job and Family Services
(FCDJFS) has additional defining requirements which must be met by the
Ohio Association of Foodbanks, ABAWDs, and host-site organizations.
USDA Guidelines for Serving ABAWDs
According to the USDA Food and Nutrition Service, ``the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)
limits the receipt of SNAP benefits to 3 months in a 3 year period for
able-bodied adults without dependents (ABAWDs) who are not working,
participating in, and complying with the requirements of a work program
for 20 hours or more each week, or a workfare program.''\1\ ABAWDS risk
losing their SNAP benefits if they do not diligently comply with the
work requirement.
---------------------------------------------------------------------------
\1\More information can be found at http://www.fns.usda.gov/sites/
default/files/Guide_to_Serving_ABAWDs_Subject_to_Time_Limit.pdf.
---------------------------------------------------------------------------
USDA ABAWD Exclusions
Individuals are not considered ABAWDS and are not subject to the
work requirement provision if they are:

Under 18 years old or 50 years of age (or older).

Responsible for the care of a child or incapacitated
household member or relative.

Medically certified and documented as physically or mentally
unfit for employment, or pregnant.

Already exempt from other general SNAP work requirements.
FCDJFS Work Requirement
FCDJFS mandates that an ABAWD must serve 23 WEP hours a month to
remain compliant with the work requirement. This timeframe is the
result of dividing a household's food assistance allotment by the
higher of the applicable Federal or state minimum wage.
Ohio Association of Foodbanks Responsibilities
The following information outlines the exact responsibilities of
the Ohio Association of Foodbanks as the operator of the Work
Experience Program. This information has been outlined in the grant
under contract with FCDJFS, and the association has diligently adhered
to the standards with strict compliance.
Multi-Strategy Approach to Serving ABAWDs
To remain compliant with the program guidelines referenced in the
WEP contract with the Ohio Association of Foodbanks and FCDJFS, the
association is responsible for the following:

Meeting with ABAWDs to assess their work capabilities and
any other issues they may be experiencing.

Working with ABAWDs to create resumes and register clients
on the Ohio Means Jobs website.

Developing and maintaining viable work sites and activities
to support ABAWDs. However, due to the size of the population,
the association will document all attempts and strategies
employed if limited work sites are available in specific areas.

Placing ABAWDs at community, social service, faith-based,
and government agency partners to be placed in a work
experience opportunity to work for up to 23 hours per month\2\
to maintain their food assistance benefits.
---------------------------------------------------------------------------
\2\Effective January 2015, with the increase in minimum wage for
the state of Ohio, the work requirement to maintain food stamp
eligibility decreased from 24 hours per month to 23 hours per month.

Attempting to employ numerous site development strategies in
order to address the various barriers exhibited by ABAWDs, such
as difficulties with transportation, encounters with the
---------------------------------------------------------------------------
criminal justice system or limited job skills.

The Ohio Association of Foodbanks makes every effort to
place clients no more than an hour bus ride from their
residential address. FCDJFS offers a monthly $62 travel stipend
issued to ABAWDs for the purposes of travel to and from work
sites or other WEP related activities. The Food and Nutrition
Service regulations insist that workfare participants are able
to request a hardship when asked to travel more than 2 hours to
a worksite.
Assessment Data
The Ohio Association of Foodbanks developed the Work Experience
Assessment Portal, an online form used to interview ABAWDs. Through a
series of questions we are able to ascertain the employability of the
individuals we serve in Franklin County. This information is used to
help us place clients in WEP positions that fit their aptitude and
increases their work experience to broaden their employability.
Ohio Association of Foodbanks WEP Assessment Process
When Franklin County Job and Family Services caseworkers make the
determination that a client is an ABAWD and is considered work
required, the client is referred to their local opportunity center to
be assessed by an Ohio Association of Foodbanks WEP Assessment
Specialist. Each specialist completes an in-depth interview with the
clients using a series of questions on the Work Experience Assessment
Portal.

------------------------------------------------------------------------

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Assessment Question Development
An able-bodied adult without dependents is defined by the USDA as a
physically and mentally fit (able-bodied) person between the ages of 18-
49 (adult), who is not responsible for the care of a dependent child
(without dependents). This criterion was the basis for a portion of our
questions as they could potentially exempt any person that may have
been overlooked in the original processing of their status as an ABAWD.
The questions used to screen for physical and mental health are
mirrored from validated questions from the ``Hard to Serve'' scientific
study developed by a cohort of researchers through Freestore Foodbank
in Cincinnati, Ohio.
All other relevant questions collect job skills, and other important
information which identifies the challenges our clients encounter while
they strive to meet the work requirement as they attempt to secure
stable employment.
------------------------------------------------------------------------

Assessment Data Findings
During the Ohio Association of Foodbanks WEP pilot period from
December 10, 2013 through February 23, 2015, WEP Assessment Specialists
were able to complete 4,145 ABAWD assessments. Some of this information
was collected online through self-assessments for clients who were
unable to report to a regionally located Franklin County Job and Family
Services Opportunity Center. The following data reflects who our
clients are, their background, and their job skills. Our findings
include undiagnosed mental and physical disabilities, inadequate access
to transportation, previous encounters with the criminal justice
system, previous work experience and training, differing levels of
education, veteran status, participation in other government programs
(Medicaid, SSI/SSDI, and unemployment compensation), knowledge of and
registration with Ohio Means Jobs, and caregiver or non-custodial
parent status.
Staff Experiences
Going out to the Job and Family Services opportunity centers
to do in person assessments help me put a face to the data. I
find that it is natural to be more empathetic when I know my
clients, and it makes the process of placing them at sites
easier.
A. Potter,
WEP Assessment Specialist.
Unpacking the Data
We find out so much more about our clients through the assessments.
Something as simple as an address does not just tell us where to send
mail, it can also tell us if a client is experiencing homelessness or
if they are currently displaced.
Gender
While collecting demographics on the basis of gender we noticed
that a disproportionate amount of ABAWDs are male.

Able-Bodied
To evaluate the abilities of clients both mentally and physically,
they are asked if they are disabled, or if they have any physical or
mental limitations we should know about. If they indicate they suffer
from any physical or mental health condition they are then asked if the
limitations affect their ability to work.

30.8% of clients reported they have a physical or mental
health limitation.

17.8% of clients reported that they had filed for
Supplemental Security Income (SSI), or Social Security
Disability Insurance (SSDI).\3\
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\3\After September 9, 2014 we began screening self-reported
disabled clients if they were able to work and earn more than $1010 per
month. This question identifies whether the client could potentially
qualify for SSI/ SSDI. The earned income amount is determined by the
Social Security Administration's definition of a substantial gainful
activity, which could disqualify a person from being considered
disabled for the purposes of SSI/SSDI.
---------------------------------------------------------------------------
Client Stories
The stress of being unemployed for a long time, my recent
divorce, the death of my parents, and watching my debt grow out
of control has finally taken a toll on my mind and my body. I
had a nervous breakdown and went to North Central Mental Health
for services because I could no longer deal with all of it on
my own. I was diagnosed with depression and severe anxiety.
Eric W.
WEP client, interviewed during an assessment at the North Opportunity
Center.

Clients who self-report they are disabled with a physical or mental
condition that renders them unable to work may need more outreach and
supportive services to complete an application for SSI or SSDI.
Just over \1/2\ of the clients (54 percent) have applied for
Medicaid, although all qualify for recently expanded necessary health
coverage due to their low-income status. This potentially shows why so
few clients are under a doctor's care (21.3 percent), and only 24.9
percent of clients are on medication. Many clients explicitly report
not taking medication because they are unable to afford the medication
they have been prescribed.

Most common mental health limitations reported:

13.7% other, (multiple mental/physical limitations).

4.2% depression.

3.5% bipolar disorder.

2.9% anxiety.

1.5% learning and mental disabilities.

1.3% Post Traumatic Stress Disorder (PTSD).

5.5% other, including schizophrenia and addiction.

Most common physical health limitations reported:

7.7% problems with standing and heavy lifting.

5.9% back problems and back pain.

5.3% leg problems including severe pain.

2.5% breathing problems such as asthma or COPD.

1.5% high blood pressure.

1.5% diabetes.

8.2% of clients requested special accommodations which included
requests for work assignments that require no heavy lifting, or no
standing/walking for long periods of time.
Staff Experiences
While completing an assessment, a client explained she has a
social anxiety disorder that made it difficult to leave her
home and contributed to her lack of employment. I encouraged
her to sign up for Medicaid so she could get some help. I saw
her on the bus a few months later and she hugged me and said
that having healthcare has allowed her to get the medication
she needs to feel more comfortable in public.

Anjanette P.
WEP Assessment Specialist.
Age
The average age of the ABAWDs assessed in this program is 34 years
old. While ABAWDs must be between the ages of 18-49, over 60 referrals
were made for clients over the age of 50 years old. These clients
should have been screened out of the referral process and exempted from
participating in WEP.
Veteran Status
Only 3% of clients are veterans. We inquire about veteran status to
determine if eligible clients may be able to participate in programs
designed to assist veterans, or if they qualify for veteran specific
services.
Dependents
According to the USDA definition of an ABAWD, it is assumed that
all clients do not have dependents.

24.4% of clients reported having children not in their
custody.

17.7% disclosed that they owe child support.

1.9% of clients who responded also reported they need
childcare.
Client Stories
I've been home from prison for 34 days. I'm a hard worker,
but I don't know what jobs are available besides the work I can
get through a temp service. I have five kids and want to be
able to take care of them. With all of my felonies I don't know
if I will be able to do that.
Dominique R.
WEP client, interviewed during an assessment at the West Opportunity
Center.

Having the status of caregiver to a relative should potentially
exempt an individual from participating in WEP. Caregivers can often
replace the services of a Medicaid or Medicare home-healthcare
provider. Caring for children is not the only form of dependent care
examined.

13% of clients are caregivers for a parent, relative, or
friend.
Education
While the unemployment rate in Ohio is declining, clients in this
population may not meet the educational standards for the jobs becoming
available. Analyzing the statistics we have collected on education, we
find how limited the prospects are for clients to enter the workforce
in a position that will pay a sustainable living wage.

30% of clients have no high school diploma or GED.

Although 68.5% of clients have graduated from high school or have
earned a GED, only 38.1% have attended college. A very small portion of
clients (10.5 percent) who have attended college went on to earn a
degree.

In speaking with clients during assessments we have noticed some
clients appear marginally and functionally illiterate. This prompts a
deeper examination of social promotion policies that may exist in
schools, and inquiry about undiagnosed learning disorders, mental
disabilities, and autism.
Criminal History
As part of the assessment clients are asked if they are willing to
complete an FBI/BCI background check. An overwhelming 98.6% of clients
agree to comply with this request. Clients who declined a background
check do not qualify to participate in WEP with the Ohio Association of
Foodbanks.
Domestic violence can happen in any household regardless of
socioeconomic status, race, age or any other demographically defining
factor. Studies show that domestic violence is three times as likely to
occur when couples are experiencing financial strain.\4\ More than
11.1% of clients assessed reported having domestic violence charges.
---------------------------------------------------------------------------
\4\Michael L. Benson & Greer Litton Fox, Department of Justice, NCJ
193434, Economic Distress, Community Context and Intimate Violence: An
Application and Extension of Social Disorganization Theory, Final
Report (2002).
---------------------------------------------------------------------------
A history of criminal activity or previous incarceration can have a
tremendously negative impact on someone. They miss out on many
opportunities, job related or otherwise. The stigma of a felony
conviction can follow someone for a lifetime, even if their release is
meant to suggest that they have been rehabilitated. Over 35.3% of the
clients in our program have felony convictions; some clients have
multiple felonies, or a combination of felonies and misdemeanors. Close
to 12.1% of clients are on probation or parole which means they may not
qualify for services offered through legal aid, such as record sealing.
Staff Experiences
I noticed a client hanging around after one of the monthly
clinics. I let him know he had completed his hours for the day.
We began talking about how his old criminal background has been
holding him back. He said, ``It's been over 10 years and I am
still judged on my past.'' I placed him at one of our sites
that works with mostly ex-felons. The site supervisor called to
say, ``He is one of my hardest workers and I am really glad to
have him as a volunteer.''

Mechelle D.
Client was placed at Welcome Home Ohio.

This area warrants further analysis to determine the full
repercussions of a criminal record and the future it creates for
individuals.
A recent report from the Kirwan Institute found that one in four
people incarcerated in the State of Ohio were between the ages 18 to
24. The incarcerated population from the 18 to 24 age group in Ohio has
grown nearly 70% in recent years. Prison intake data from Franklin
County indicate that the median age of first arrest for those entering
the state correctional system in 2012 was 19 years old.
Communication
Maintaining a reliable form of communication with clients has
proven to be a massive challenge. While clients offer contact
information, they rarely respond to communications. This could be
happening for a number of reasons. Although 95.3% of clients reported
having phone numbers, this does not mean that they have continuous
access to a phone. We often call clients and find out they have run out
of minutes before the end of the month (this is often the case with
government provided cell phones), their phone has been disconnected, or
their phone number has changed due to using prepaid cellular devices.
We can only assume that if we are unable to contact clients, potential
employers are also unable to reach them.
Mailing addresses appear to be as transient as phone numbers. A lot
of mail is returned to our office on a regular basis. Over 89.2% of
clients reported having mailing addresses, but many of them are in
short-term housing situations. In many cases, the phone number or
address given to us by clients does not belong to them, but is that of
a friend, family member, or homeless shelter.
Even if we attempt to communicate with clients via e-mail, we
cannot guarantee that all clients will have reliable or readily
available community based access to the Internet. Only 37.5% of clients
reported having an e-mail address. The Ohio Association of Foodbanks
would like to increase this number by offering to help clients sign up
for an e-mail address and encouraging clients to visit their local
libraries to check their messages as this can be a viable alternative
to having a phone number.
Types of Communication

Transportation
Clients are supposed to receive a monthly travel stipend from their
FCDJFS caseworker. Many clients call Ohio Association of Foodbanks to
report that they have not received the stipend. This could be due to an
inaccurate mailing address, the inability to contact their caseworker,
or a delay in dispersing of funds. Some clients report that the travel
stipend is not enough to cover travel to and from work sites. Some
clients do not have bank accounts and have to pay a service fee to cash
the check they receive from FCDJFS, leaving an insufficient amount to
purchase a monthly bus pass which the stipend should cover.
More than 56% of clients report they have reliable access to
transportation. This can be a personal vehicle, public transit, or
utilizing friends and family members for transportation. It is
important to note that the use of a friend or family member's vehicle
may not always be reliable. Owning a vehicle may pose its own
challenges for low-income populations, as the car could break down and
the client may not have the means to fix it.
Only 38.8% of clients have a valid driver's license, which
indicates that clients are either using public transportation or are
driving without a license. Some clients may not be able to obtain a
driver's license if they owe child support and have had their driving
privileges suspended, or if they have outstanding tickets or unpaid
fines which they may be unable to resolve with their limited income.
Additionally, only 17.5% of clients report having car insurance,
inferring that some are driving without insurance which can be
attributed to a variety of factors, including affordability. More than
72% of clients report they live near a bus stop, which leaves 28% in a
tough situation if they do not have reliable transportation to their
work site.
Having a DUI/OVI on an individual's driving record can affect their
ability to obtain employment or housing, it can result in higher car
insurance which they may be unable to afford, or loss of driving
privileges.
Staff Experiences
At 15 years old, a client was sentenced to 15 years in
prison. Now, at 30 he has been released and is eager to start
his life over. He was nervous during the assessment, but I was
able to get him to relax as he told his story. Later, he called
our office to thank me for being so sweet during the assessment
and for also believing in him. He was thrilled to tell me that
he learned to drive and is now enrolled at Columbus State
Community College. I'm very proud of him!

Kelly R.
WEP Assessment Specialist.

14.6% of clients report they have been documented as Driving
Under the Influence (DUI) or Operating a Vehicle Impaired
(OVI).
Forms of Identification
To apply for jobs, housing, government benefits, vote, or obtain a
driver's license most agencies usually require two forms of
Identification (ID). More than 71.1% of clients report having a state
ID, 90.2% of clients report having a [S]ocial [S]ecurity card, and
81.4% of clients report having a birth certificate.
Forms of Identification

Employment & Job Seeking Needs
Working 20 or more hours of paid employment per week, every week
can exempt an ABAWD from participating in WEP. Close to 10.6% of
clients are currently working. Many clients were unable to identify how
many hours they work per week because they are employed through a
temporary employment agency (including day labor and labor pool
agencies), which means clients may not have consistent work on a weekly
basis. About 10.3% of clients reported working in-kind for rent or
housing, and 240 clients report they work more than 20 hours per week
in-kind, which can exempt them from the work requirement if the client
has adequate documentation.
Clients were asked if they had ever been dismissed from a job, and
24.4% of clients reported they had been dismissed from a job. When this
question appears on a job application it can be a deterrent for
employers to hire an applicant that has previously been fired from a
position.
A recipient of unemployment compensation benefits is exempt from
fulfilling the work requirement.\5\
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\5\According to Ohio Revised Code 5101:4-3-11 Food assistance: work
registration and exemptions: a person receiving unemployment
compensation benefits. A person who has applied for, but is not yet
receiving, unemployment compensation benefits is also exempt if that
person is complying with the requirements of the unemployment
compensation application process.

78.5% of clients have never been eligible for unemployment
---------------------------------------------------------------------------
compensation benefits.

When asked what the most recent year of employment was, the answers
ranged from 1980-2015. On average, a client's last year of employment
was 2014. Having gaps in a resume can influence an employer's decision
in the hiring process, which can negatively impact a client's chances
of obtaining employment.
Staff Stories
Under the leadership of Franklin County we were given the
opportunity to hire several staff members directly from the
affected ABAWD population. One of our first employees came to
us very timid and quiet, and was obviously frustrated after
months of looking for work. Over the past few months I have
seen her grow into an amazing employee! The diligence, hard
work, and the empathy that our team holds for our clients has
helped this program become a tremendous success. My experience
with them speaks to the great opportunity and latent talent to
be found within the ABAWD population.

Tyler Davis,
WEP Program Manager.

94.4% of clients listed their job skills and training in the
following fields:

Warehouse work (32.6%).

Customer service (20.7%).

Fast food/restaurants (18.9%).

Cooking and food preparation (15%).

Janitorial and cleaning (14.7%).

Computer skill (13.2%).

Construction/building (10.1%).

Office/clerical work (9.6%).

Landscaping/lawn care (9.5%).

Cashier (9.4%).

Retail/sales (8.6%).

Healthcare [nurse, aide, etc.] (7.7%).

Forklift operation (7.6%).

Pick & Pack (7.2%).

Management (6.2%).
Ohio Means Jobs Registration
In an effort to offer more job seeking resources to clients, they
are referred to Ohio Means Jobs (www.ohiomeansjobs.com). When asked if
clients were already registered with Ohio Means Jobs 74.1% reported
they were not registered, and most clients reported they have never
heard of the website. This shows that the outreach for the Ohio Means
Jobs website has been ineffective in reaching this population.
Staff Experiences
We haven't needed assistance in over 20 years. My husband got
sick and lost his job, which brought me to SNAP. The volunteer
position I had led to a job I actually like, and has helped me
catch up on all of our bills. When I tell WEP clients my story
they relate to me, and when they tell me what they are going
through I can certainly relate to them.

P. Lehman.
WEP Assessment Specialist.
Additional Barriers
To ensure a client is able to perform the duties assigned to them,
we inquire about any supportive services they may need to successfully
complete their work assignment. Over 15.8% of clients report needing
supportive services. The most common services requested were language
interpretation (especially for Somalian refugees) and help with
transportation.
Clients experiencing homelessness, health problems, language
barriers and a lack of stable employment to fit their skill set make up
nearly 12.7% of clients who reported other barriers standing in the way
of employment.
Monthly Clinics
Beginning in May of 2014, the end of each month marked the start of
a three part monthly clinic for newly assessed WEP clients. Three days
of consecutive clinics allow first month WEP participants to gain their
required work hours through a series of purposeful activities. There is
a job skills clinic, a benefits clinic, and a background check and
legal aid clinic.
WEP Monthly Clinics
Because the WEP placement process requires a background check, the
monthly clinics were initially developed to offer background checks to
hundreds of clients in a convenient location. They expanded to include
other resources found to be helpful to clients. The clinics also serve
to ensure that assessed clients can complete their hours if they are
waiting to be placed at a WEP host site.
2014 Clinic Attendance Growth over a Nine Month Period

WEP clients signing up for Adult Continuing Education
(A.C.E.) at a monthly clinic.

WEP client visiting vendor booth at monthly job skills
clinic.
Partners & Clinic Content
Each clinic serves a unique purpose. The background check clinic is
usually paired with representatives from the Legal Aid Society of
Columbus. Recognizing that criminal records are a major barrier to many
of our clients, we invite legal aid to the clinics each month to answer
questions and offer services.
Understanding how education can impact a person's ability to access
sustainable income, we found it necessary to include education programs
in the monthly clinics. Job skill clinic days boast a wide network of
adult education opportunities. Clients can learn more about certificate
programs, or enroll in classes that will help them earn a GED. We work
with many workforce development partners such as the Columbus Urban
League (My Brother's Closet) and Dress for Success. These partners
offer job readiness training courses and gives clients business suits
to wear for interviews.
At the monthly benefits clinic, clients are able to access the
services of The Ohio Benefit Bank with certified counselors and
healthcare navigators. Knowing that our clients qualify for SNAP, means
they may qualify for other programs available to low-income individuals
like the Home Energy Assistance Program (HEAP) or Ohio Medicaid.
Monthly Clinic Outcomes
As a result of our monthly clinics over 90% of attendees receive
background checks.\6\ Clients can even request a copy of their
background check from the Ohio Association of Foodbanks if an employer
requires one. About 16% of clients apply for Medicaid at each monthly
clinic, with an Ohio Benefit Bank Counselor, or a Certified Application
Counselor. Over 30% of clients also utilize other services offered
through The Ohio Benefit Bank, such as filling out Home Energy
Assistance Program (HEAP) applications or completing their taxes.
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\6\Clients must present a valid driver's license or state ID to
successfully complete a background check.
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Placements
Our growing network of nonprofits, workforce development partners,
and faith-based organizations make it possible for Franklin County
ABAWDs to obtain their required work hours through volunteer service or
job readiness, while also offering work experience.

Placements are made at these organizations after clients have
completed a background check at the WEP monthly clinics. Ohio
Association of Foodbanks requires clients to have a background check to
ensure that we are not placing clients in situations that may
compromise the integrity of our partners, and to protect their clients
and staff in the event of a known conflict of interest.
WEP Host Sites
At the program's inception there were less than ten host-sites. In
3 short months that number grew to over 50 sites, and has expanded to
more than 126 sites as of February 23, 2015.
The recruitment process for developing new sites involves calling,
mailing, and emailing numerous nonprofit and faith-based organizations
in Franklin County. The Ohio Association of Foodbanks has contacted
over 19,711 potential new sites, but only 0.64% of organizations were
willing to host WEP volunteers. The low number of interested sites may
be due to a lack of incentive for organizations to participate in the
program. By October of 2014 recruitment outreach decreased as most
organizations had previously been contacted.
Sites Contacted 2014-2015

Host-Site Memorandum of Agreement (MOA)
All host sites must sign and agree to the terms and conditions set
out by the Ohio Association of Foodbanks and FCDJFS when hosting WEP
volunteers. This partnership agreement covers all requirements and
expectations of both the site and the Ohio Association of Foodbanks.
Host sites must work with WEP clients to arrange a schedule that
will meet the 23 hour per month work requirement. Clients are to
receive an on-site orientation and supervised training that meets
Occupational Safety and Health Administration (OSHA) standards for
their volunteer assignment.
As part of the MOA, sites also agree to maintain attendance records
for all WEP participants who volunteer with their organization. In
addition they agree to report all hours for which the client was
actively volunteering throughout the month.
Host-Site Stories
``We were able to hire one of our WEP volunteers. She had all
of the qualifications we needed for someone to work in our
kitchen. She has worked out great and we really appreciate her
hard work.''
Marilyn O.
Site Supervisor at Community Kitchen.
Host-Site Volunteer Restrictions (MOA)
To ensure civil rights, and to guarantee that WEP volunteers are
not engaged in unauthorized activities while they are volunteering, the
MOA explicitly states all restricted activities as defined by the Ohio
Association of Foodbanks and FCDJFS.
Sites are informed that WEP participants cannot be used to assist,
provide or participate in partisan and nonpartisan political activities
associated with a candidate, including voter registration. They are
unable to make direct or indirect attempts to influence passage or
defeat of legislation or proposals by initiative petition. Clients are
also restricted from participating in labor [union] or anti-labor
organization or related activities.
Due to the number of faith-based organizations we recruit as host-
sites, the association clearly outlines all religious activities WEP
volunteers cannot complete as part of their duties. These provisions
include providing religious instruction, leading worship services,
proselytization, or any other religious activities.
Other restrictions outlined in the MOA are to ensure that WEP
volunteers are not displacing paid staff or being used to fill existing
vacant positions, or performing work which reduces the number of hours
by regular or part-time employees or reduces the number of positions
that would otherwise be filled by regular employees. Host-sites are
encouraged to consider hiring qualified WEP volunteers for vacant
positions if the individual has displayed good work habits and has met
the site's expectations throughout the assignment.

*To read the MOA in its entirety, reference the Appendix.
Staff Experiences
I was discouraged from trying to find a job. I was convinced
that joining the workforce was no longer for me. Medical bills
made me seek out Medicaid which led me to SNAP. Due to the work
requirement I found full time work and really enjoy my job.
When I speak to upset clients I tell them, ``I have been on the
other side of this phone and in your seat, I will do everything
I can to help you.'' I feel so blessed to be in a position to
help others every day.
M. Darby.
WEP Assessment Specialist.
Placement Barriers
It can be very difficult to place clients at a volunteer site if
their location is not on the bus line or if it is not easily accessible
by public transportation. Some host-sites require a college education
or degree, which many of our clients do not have. Some sites have a
list of restricted felonies which would limit a large portion of our
clients from volunteering with those sites. The same is true for
workforce development programs. Many clients do not meet the minimum
education requirements to enroll in such programs, or struggle with
passing an entrance exam. Additionally, clients are not eligible to be
placed at a host site until their FBI/BCI background check is received.
The Ohio Association of Foodbanks makes every effort to place all
clients, no matter how limiting their personal situations may be. Not
all clients report to their assigned placements each month. Between May
2014 and January 2015, exactly 1,790 clients had been placed at host
sites, with a 58.7% rate of compliance.
Volunteer & Workforce Development Opportunities
Volunteer experience through WEP is intended to give participants
training, education, or experience that would be beneficial in an
ABAWD's search for future employment. A list of possible volunteer
roles could include but is not limited to janitorial duties, painting,
grounds maintenance, warehouse positions, office work, manual labor, or
any position providing valuable experience for future employment.
Workforce development partners offer a variety or resources
including but not limited to job readiness programs, resume and cover
letter writing workshops, interview suiting, certification programs
such as State Tested Nursing Assistant (STNA) certificates, and adult
education courses.
Type of WEP Host Sites

WEP Outcomes
The short term goals of WEP are to actively ensure viable
opportunities for ABAWDs in Franklin County to fulfill the work
requirement to maintain their SNAP benefits and prepare ABAWDs for
reentry into the workforce. The long term goals and objectives for WEP
are focused on decreasing unemployment among Franklin County ABAWDs to
break systemic cycles of poverty and hunger, and ensuring clients can
become economically self-sufficient.
Program Outcomes
The WEP grant under contract with FCDJFS explicitly states that the
Ohio Association of Foodbanks will assess and place clients at
qualified worksites during the program pilot period. Ohio Association
of Foodbanks was expected to assess and place 1,000 ABAWDS. The
association has exceeded this expectation and has assessed over 4,143
clients and has placed over 1,796 clients at sites.
Rate of Compliancy
In order for a client to remain compliant with WEP they must report
to their worksite for 23 hours per month. An estimated 50% of clients
are sanctioned each month due to noncompliance. When clients are
sanctioned they lose their monthly SNAP benefits. Clients can restore
their benefits by talking to their caseworker to get an exemption on
the basis of good cause, or they can reapply for SNAP benefits and
reenroll in WEP.
Noncompliant Clients Exited WEP

Good Cause Exemptions

Clients can be excused from a work assignment if they have a ``good
cause'' exemption, determined by their FCDJFS caseworker. Good cause
may not be granted prior to a failure to complete hours, and is
determined subjectively. Good cause is intended to recognize that
temporary barriers may be present during a specific timeframe. A lack
of work sites or assignments is not good cause.

Regaining Eligibility

An ABAWD who fails to meet the requirement and loses eligibility
may attempt to regain eligibility any time during the 3 year period by
meeting the work requirements for 30 consecutive days, or if they are
no longer considered an ABAWD. An ABAWD who regains eligibility during
the 3 year period and then stops meeting the work requirement may
receive an additional 3 months of eligibility. The additional 3 months
must be used consecutively and will be granted only once during the 3
year period.
Program Expenses
The total grant award for WEP has been applied to two categories,
participant expenses and operational expenses. Participant expenses
include everything from background checks to equipment needed for
clients to perform their duties at their work assignment. Operational
expenses cover staff needs for assessments, placements, sanction
reporting, and other administrative needs.
Benefits Retained
In calculating the amount of SNAP benefits retained in Franklin
County's economy by WEP participants we took the total number of
clients who reported to their placements or attended a monthly clinic
from March 2014 to January 2015, and multiplied by the maximum SNAP
benefit\7\ for an ABAWD. We found that over $ 856,200 in SNAP benefits
have been retained through WEP.
---------------------------------------------------------------------------
\7\From March 2014 to September 2014, the maximum SNAP benefit for
a single person household was $189. Effective October 2014 the maximum
SNAP benefit for a single person household increased to $194. More
information can be found by visiting http://www.fns.usda.gov/snap/cost-
living-adjustment-cola-information.
---------------------------------------------------------------------------
2014 Post-WEP Client Survey Findings
In an effort to learn more about the outcomes of clients after they
exit WEP, we conducted a comprehensive study to examine program
effectiveness, job prospects, income, and food access. The findings of
this study have helped us to better understand our program from a
client perspective, the effects of this program on clients who exited
due to noncompliance and lost their benefits, and the type of jobs an
ABAWD can expect to find in Franklin County.
Over 900 former clients were contacted, but only 247 clients
elected to participate in the full survey.
Quantitative Analysis
When asked why a client exited WEP, the most common responses were:

44.1% Failed to Complete Hours (Sanctioned).

25.1% Found Employment.

23.1% Miscommunication with the Ohio Association of
Foodbanks.

21.1% Found to be Exempt.

17% Miscommunication with Caseworker.

11.3% Transportation Stipend Not Received.

11.3% Difficulty with Transportation (Unrelated to
Transportation Stipend).

8.5% Time Barrier.

8.5% Miscommunication with Host Site.

4.5% No Desire to Continue Participation

A miscommunication with Ohio Association of Foodbanks, a FCDJFS
caseworker, or a host-site highlights the importance of clear
communication from start to finish of the program. Any misstep can
place a client in the position of potentially losing their benefits.
Found to be Exempt
Clients were given the option to offer multiple answers to this
question, on average clients gave 2.05 reasons for exiting WEP. Clients
who indicated that they were found to be exempt gave the following
reasons for exemptions:

38.5% Physical Disability.

25% Employment 20+ Hours per Week.

9.6% Mental Disability.

9.6% In-Kind Work 20+ Hours per Week.

5.8% Responsible for Dependents
Found Employment
One in four WEP participants listed ``Found Employment'' as their
reason for exiting the program, the highest percentage listed aside
from not completing hours. Some clients have had help finding
employment through WEP workforce development partners; others have
found employment on their own.
One in three clients reported having taxable employment from
February to August. The average length of employment reported by the 86
clients who answered positively to this question was 79 days (11.3
weeks). The average hourly wage reported was $10.23. The average number
of hours worked per week was 29.49 hours. This means the average number
of dollars generated per employed individual over the 7 month period
was $3,409.01. It is estimated that clients generated close to $293,175
during this time period.
Of the 86 clients who reported some kind of employment, the
following were the most common occupations reported:

4.9% Warehouse.

4.5% Temp Agency.

4.5% Fast Food/Restaurant.

2.8% Retail/Sales.

1.6% Shipping & Receiving.

1.2% Landscaping.

1.2% Elderly Care.

1.2% Cooking/Food Prep.

1.2% Automotive.

0.8% Office Clerical.

0.8% Hotel/Hospitality.

In just these 11 occupations, there were an estimated 126
jobs obtained by WEP participants over the past 7 months. These
findings point to an estimated one in three success over the
past 7 months.
Churn Rate
When a client is no longer a participant in WEP due to a sanction,
they may need to have a state hearing to overturn their sanction.
Nearly 66% of clients reported taking this step to overturn their
sanction, or reapplied for food assistance in another way after exiting
WEP. It is estimated that there is a 3 month churn window, which is the
average amount of time it takes for WEP participants to reenter SNAP
after exiting the program.

The amount of churn generated by the most common causes of
noncompliance creates increased work for both FCDJFS and the Ohio
Association of Foodbanks, as an average two out of every three
participants, including those who identified some form of employment,
must restart the entire process by reapplying through their case worker
for SNAP benefits.
Food Sources
If a client is not receiving food assistance due to a loss of SNAP
benefits, they look for food elsewhere. When asked, ``How are you
providing food for yourself in the absence of food benefits,'' clients
gave multiple answers to the question:

81% Food Pantry.

80% Family Support.

18.1% Asking (Getting Food from Strangers, Panhandling,
Dumpster Diving, etc.).

18.1% Soup Kitchen/Meal Line.

10.5% Homeless Shelter.

10.5% Church.

Many clients are utilizing the services of local emergency feeding
programs in Franklin County. It is unclear why 42.5% of clients choose
not to answer this question.
Recommendations
The following recommendations are supported by the findings of the
WEP assessment data and the post-program client report. These
recommendations have been presented to FCDJFS and are meant to
encourage other government organizations to consider a further
examination of the implication of programs like WEP.
Program Next Steps
The specific program needs of the Ohio Association of Foodbanks
will enhance the overall client experience while strengthening
relationships with our partners.

Coordinate with other Departments of Job and Family Services
statewide in an effort to replicate the positive results we
have seen in Franklin County, to expand this program to other
metro and rural areas.

Increase the efficiency of our program in order to enhance
client satisfaction and success while working with very limited
resources.

Coordinate with Franklin County to offer more opportunities
for clients to connect with available employment and training.

Improve quality assurance measures and outcomes as well as
communication channels between the Ohio Association of
Foodbanks, clients, host sites, and Franklin County Department
of Job and Family Services.

Improve relationship with new ABAWD specific units at
FCDJFS.

Improve our ability to assist clients with resumes and other
work support initiatives.
Provide Additional Funding to Organizations Supporting WEP
Accor[di]ng to the findings in our post-program client
survey, over 80% of former WEP participants are utilizing the
services of their local emergency food programs. This warrants
more emergency funding to be provided to Mid-Ohio Foodbank to
support the purchase, acquisition and distribution of
additional food for Franklin County food pantries, soup
kitchens, shelters and churches who are feeding the individuals
affected.

Provide additional funding to the Ohio Association of
Foodbanks to support the cost of emergency vouchers for
transportation, travel vouchers and basic needs.

To increase interest in becoming a part of the host-site
network, there needs to be more incentive for organizations to
serve ABAWDs through WEP. By offering operating support to the
nonprofit and faith-based organizations that are providing WEP
services and slots we can motivate more sites to partner with
the Ohio Association of Foodbanks, while current sites may be
able to effec[ti]vely increase their capacity to serve more
ABAWDs.

Provide supplemental support for the continuation, expansion
and analysis of YouthCorps, a program of the Ohio Association
of Foodbanks for Young Adults Aging out of the Foster Care
System. All youth who have successfully completed this program
were either enrolled in school or working, which exempts from
partic[i]pating in WEP as ABAWDs.

Improve the funding and training of a specialized unit
dedicated to the implementation of this work requirement and
the ABAWD population's specific needs.
Increase Oversight To Improve Effectiveness
Ensure that the foundation of the statewide grant
application for the 2015 Pilot Project to Reduce Dependency and
Increase Work Requirements and Work Effort Under the
Supplemental Nutrition Assistance Program (SNAP) is based upon
this project and the data collected in these studies.
Furthermore, assign specific staff and help lead the
application and implementation of this grant

Analyze the expenditures of Workforce Development Programs
funded by FCDJFS compared to outcomes. WEP at the Ohio
Association of Foodbanks has proven a 24% success rate,
compared to a 16% success rate of similar government funded
workforce programs in Franklin County.
Provide More Work Support Opportunities for ABAWDs
Expand enrollment, participation, and successful completion
of nationally certified programs such as the FastPath program
at Columbus State Community College, including ServSafe,
customer service, advanced logistics, and STNA.

Create an employment enterprise or pipeline into strategic
aspects of the job market. This will help harder to employ
individuals find opportunities to gain sustainable employment.

Prioritize Workforce Investment Act funding to provide
education, training, and supportive services to ensure a
seamless delivery of services.

Establish a relationship with the Ohio Department of
Reentry, Rehabilitation, and Corrections in order to address
the specific concerns of the employer community in regards to
the future employment of felons.

Examine opportunities to secure additional USDA/SNAP
Employment and Training funds to enhance service delivery.
Study the Social and Economic Impact of WEP
Monitor and report on the impacts to well-being, health and
safety of clients, WEP host-site staff/volunteers and the
community at-large.

Conduct an Economic Impact Analysis on the loss of food
assistance/SNAP benefit issuance on the Franklin County
economy.

Provide funding for comprehensive case-management,
longitudinal tracking of employment, wages, public assistance
participation, and well-being of the ABAWD population.
Examine and Evaluate the Needs of Special Populations
Provide support and funding for a study on the mental and
physical health status and outcomes of the ABAWD population and
their utilization of Medicaid.

Fund person-centered community-based case management of
ABAWD applying for SSI/SSDI, and supportive services including
Legal Aid Assistance to non-custodial parents and individuals
with criminal charges and felony convictions.

Convene a study group to examine the impact of temporary and
day labor employment services and its effects on this
population.

The Ohio Association of Foodbanks will continue to analyze
assessments and data including current and previous encounters
with the criminal justice system, community impact and these
associated cost.
Appendix
Host Site Memorandum of Agreement
Host-sites must sign and return the Memorandum of Agreement (MOA)
to the Ohio Association of Foodbanks before they are set up to receive
WEP clients. Without agreeing to the terms and conditions set forth in
the MOA they are ineligible to participate as a host-site.
Memorandum of Agreement
This Host Site Memorandum of Agreement, hereinafter referred to as
``the Agreement,'' between the following two parties: (1) the Ohio
Association of Foodbanks; hereafter referred to as ``Sponsor'' and (2),
Host Site, hereafter referred to as ``Host Site,'' sets forth the
parties' understanding concerning the establishment and operation of a
local project under Franklin County Department of Job and Family
Services (FCDJFS) pursuant to Chapter 5107.54 to 5107.69 of the Ohio
Revised Code and rules promulgated by the Ohio Department of Job and
Family Services. The primary purpose of this Agreement is for the
Sponsor to provide the Host Site with Food Assistance Recipients
recognized as Able Bodied Adults without Dependents (ABAWD) for
purposes of the Work Experience Program (WEP). These participants will
have been directly referred to the Sponsor by FCDJFS.

I. General Provisions

1. Duration of This Agreement

This agreement will go into effect the date the Memorandum of
Agreement is issued and will be null and void as of July 1, 2015,
regardless of early termination of any WEP participants for any reason.

2. Status of WEP Participants During Service

WEP participants, in the course of their service, shall not be
considered employees of the Host Site, the Sponsor, the Franklin County
Department of Job and Family Services, or the Ohio Department of Job
and Family Services. Therefore, the WEP participant is not entitled to
any benefits and privileges of any employee. WEP participants are not
covered by unemployment compensation.

II. WEP Participant Assignment Description

The Host Site will provide experience and training for WEP
participants receiving Food Assistance Program benefits (also known as
SNAP benefits) who are not otherwise able to obtain employment, in
order to assist them to move into regular employment. Individual WEP
Participants assigned to the Work Experience Program (WEP) will be
utilized in various occupations, such as but not limited to: clerical,
groundskeeper, painter, custodial, building maintenance, and appliance
repair in an on-the-job training environment. The Host Site shall
adhere to the WEP Participant Assignment Description, which was
submitted during the Host Site application process, including but not
limited to: the description of the work to be performed and the
schedule for completing the work.
If at any time, the Host Site deems it imperative to amend the WEP
Participant Assignment Description, the Sponsor is to be notified
before any changes are made.

III. Records and Reporting

1. The Host Site will:

a. Maintain such records and accounts, and make such reports
and investigations concerning matters involving WEP
Participants and the project as the Sponsor may require. The
Host Site agrees to retain such records as the Sponsor may
require for a period of 1 year after completion or termination
of the project, or longer if required for administrative
proceedings and/or litigation purposes, and to provide access
to such records to the Sponsor for the purpose of litigation,
audit or examination.
b. Work with the Sponsor to schedule a site visit quarterly
at times convenient for both the Sponsor and Host Site.
c. Submit monthly reports of hours served for all WEP
participants at your agency no later than the last business day
of the month at 5:00 p.m. EST
d. Report any knowledge of the employment placement and
retention of any WEP participants to the Sponsor, including the
following information:

a. Date of hire.
b. Hourly wage.
c. Full or part time.
d. Employer.
e. Whether Health Benefits are available.
f. Industry.

IV. Further Responsibilities of the Parties

1. Sponsor Responsibilities. The Sponsor will:

a. Assign WEP participants to the Host Site at its
discretion.
b. Periodically review and assist the Host Site's use of WEP
participants to achieve the objectives and perform the task(s)
specified in the WEP Participant Assignment Description
c. Promptly respond to written requests by the Host Site to
move any WEP participant from the project.
d. Ensure that the WEP participant has undergone a FBI/BCI
Criminal Background Check prior to assignment.
e. Ensure that the WEP participant is provided with all
necessary tools, equipment, transportation, and supplies
required on the worksite for the WEP participant to complete
assigned duties.

2. Host Site Obligations. The Host Site will:

a. Arrange and be responsible for providing on-site
orientation and training for all incoming WEP participants
within a week of being contacted by the WEP participant and the
Sponsor.
b. Operate the project in accordance with applicable program
policies and regulations, and other Federal laws, regulations,
and policies which are, or become, applicable to the program.
c. Provide opportunities for WEP participants to develop
existing skills or learn new skills to enhance their chances
for securing unsubsidized employment and to assign WEP
participants duties that are consistent with their WEP
Participant Assignment Description.
d. Agree to ensure that WEP participants work 24 hours per
month, but no more than 24 hours per month, or the required
number of hours as established by the FCDJFS, and to allow WEP
participants to observe those holidays which are observed by
the WEP Host Site.

i. Limitations regarding hours of participation are
exclusive of:

1. Travel time to and from the worksite.
2. Travel time to and from the child care
provider.
3. Mealtime for which regular employees of
the WEP Host Site are not compensated.

ii. The Sponsor shall not require WEP participants to
report to the worksite if a strike or other labor
dispute develops after the start of the work
assignment.

e. Provide the Sponsor with a list of necessary tools,
equipment, transportation, and supplies required on the
worksite for the WEP participant to complete assigned duties.
f. Provide training or orientation and supervision vital to
the WEP participant's efficient performance of the work
assignment.

i. Provide on-the-job training, if necessary, to
improve the skills of WEP participants for the type of
WEP assignments provided.
ii. Ensure the WEP participants are knowledgeable of
the work standards they are expected to meet.

g. Agree that WEP participants shall not engage in activities
which result in the displacement of other persons. Should an
employee of the WEP Host Site feel he/she has been displaced
due to the activities of a WEP participant, he/she may file a
complaint with the Sponsor. Displacement occurs when a WEP
participant's assignment results in removing or discharging
employees or individuals or otherwise denying such assignment
to persons who:

i. Are already employed as regular full-time or part-
time employees.
ii. Are or have been employed full-time or part-time
as WEP participants in publicly subsidized employment
and training programs.
iii. Are or have been involved in a dispute between a
labor organization and the WEP Host Site.
iv. WEP participants shall not be used to fill
existing vacant positions or to perform work which
reduces the number of hours by regular or part-time
employees or reduces the number of positions that would
otherwise be filled by regular employees.

h. Understand that the Sponsor shall investigate all
complaints that a violation may have occurred. If it is
determined that a violation exists:

i. No WEP participant shall be assigned to the WEP
Host Site until the violation(s) have been corrected
and
ii. And such violation(s) cannot be corrected to the
satisfaction of the FCDJFS, this agreement is null and
void.
iii. Further, the Sponsor will administer a complaint
procedure available for regular employees of the WEP
Host Site who feel displacement has occurred because of
a WEP participant assignment.

i. Agree that if as a party to a collective bargaining
agreement which is in effect at the worksite, the WEP Host Site
will notify the union that WEP participants are being assigned
to the worksite and provide the Sponsor with documentation that
such notification has been given. The FCDJFS will inform the
WEP participant of the existence of a collective bargaining
agreement when one exists at the worksite.

i. The Host Site further agrees that the WEP
assignments and positions will not have been developed
in response to, or are in any way associated with the
existence of a strike, lockout, or bona fide labor
dispute; also they do not violate any existing labor
agreement, or interfere or conflict with the collective
bargaining agreement.

j. Agree to consider for hire qualified WEP participants when
the individual has displayed good work habits and has met the
Host Site's expectations throughout the WEP assignment period.
k. Understands that penalties are provided under law for any
WEP Host Site who knowingly obtains a benefit to which he/she
is not entitled. If such violation occurs, this agreement shall
be null and void. This agreement may be terminated at any time
upon thirty days written notice by either party.

Termination notice should be sent to:

Attention: Work Opportunity Coordinator,
Ohio Association of Foodbanks,
101 East Town Street Ste. 540,
Columbus, OH 43215

l. Agree that in any publicity release or other public
reference including media releases, information pamphlets, etc.
on the services provided under this agreement, it will be
clearly stated that the services are funded by the Ohio
Department of Job and Family Services administered by the
Franklin county Department of Job and Family Services through
its Employment Opportunities Program.
m. Understands that the FCDJFS will pay premiums which are
assessed by coverage of WEP participants for work related
injuries or disabilities under public work relief compensation
administered by the Bureau of Worker's Compensation. Benefits
under public work relief compensations differ from those under
regular worker's compensation. Detailed provisions of coverage
are found in Chapter 4127 of the Ohio Revised Code.
n. Make every reasonable effort to ensure that the health and
safety of WEP participants are protected during the performance
of their assigned duties.
o. Report to the Sponsor, within 24 hours, the unscheduled
departure of WEP participants, and otherwise keep the Sponsor
timely informed of unscheduled changes of status and conditions
of WEP participants, such as arrests, hospitalization, and
absence without leave. The Host Site must also indicate to the
Sponsor the actual departure date(s) of WEP participants(s) who
leave prior to completion of service date(s) when requested.
3. Nondiscrimination

a. General Prohibition

No person with responsibilities in the operation of
the project, whether affiliated with the Sponsor or the
Host Site, shall discriminate against any WEP
participant, or member of the staff of, or beneficiary
of the project, with respect to any aspect of the
project on the basis of race, religion, color, national
origin, sex, sexual orientation, age, disability,
political affiliation, marital or parental status, or
military service.

b. Sexual Harassment

Sexual harassment is a form of discrimination based
on sex, which is prohibited as addressed directly
above. The Host Site must prohibit sexual harassment
and take immediate corrective action and/or
disciplinary action if violations occur. Such sexual
harassment violations include:

(1) Acts of ``quid pro quo'' sexual
harassment where a supervisor demands sexual
favors for service benefits, regardless of
whether the Host Site, its agents or
supervisory employees should have known of the
acts.
(2) Unwelcome sexual advances, requests for
sexual favors and other verbal or physical
conduct of sexual nature which have the purpose
or effect of creating an intimidating, hostile
or offensive service environment.
(3) Acts of sexual harassment toward fellow
WEP participants or non-employees, where the
Sponsor or Host Site, its agent or its
supervisory employees knew or should have known
of the conduct, unless it took immediate and
appropriate corrective action.

4. Prohibitions of Use of WEP Participants By Sponsor and Host Site

The Sponsor and Host Site both agree that no WEP participant
assigned to the Host Site, under this Agreement, shall be used
to assist, provide or participate in:

a. Partisan and nonpartisan political activities
associated with a candidate, including voter
registration.
b. Direct or indirect attempts to influence passage
or defeat of legislation or proposals by initiative
petition.
c. Labor or anti-labor organization or related
activities.
d. Religious instruction, worship services,
proselytization, or any other religious activity as an
official part of their duties.

5. The Sponsor and Host Site further agree not to:

a. Carry out projects resulting in the identification of such
projects with partisan or nonpartisan political activities,
including voter registration activities, or providing voter
transportation to the polls.
b. Assign WEP participants to activities that would result in
the hiring of or result in the displacement of employed
workers, or impair existing contracts for service.
c. Approve the involvement of any WEP participants assigned
to it in planning, initiating, participating in, or otherwise
aiding or assisting in any demonstration whatsoever.

6. Amendments

This Memorandum of Agreement may be amended at any time, in
writing, executed by authorized representatives of the Sponsor
and Host Site.
Franklin County Leadership
This project could not have been possible without the high degree
of cooperation from the Franklin County Department of Job and Family
Services, who have been essential in every step of the process.

Anthony Trotman, Director Franklin County Department of Job
and Family Services.
Amiee Bowee, Deputy Director--Development Support Services.
Dawn Carson, WFD Director.
Jaime Brown, Information Technology.
Jeremy Holland, WFD Administrator.
Lashawn Capito, Social Program Developer.
Lavinna Banner, Work Activity Supervisor.
Lawrance Spann, Director--Northland Community Opportunity
Center.
Maurice Miller, ABAWD Unit Supervisor.
Vivan Turner, Administrative Officer.

A Special Thank You To:

The Franklin County Board of Commissioners

Opportunity Center Leadership

Opportunity Center Opportunity Center Supervisors
Administrators
Christy Aimee Knouff Keyna
Hentschel Stephens
Daniel Alicia Jones LaNae Rhodes
Vaccarella
Darren Alison Latonya
Henderson Franklin Truett
Denise Hughes Althea Letang Leandra Coles
Curtis
Erin Heinzman Angela Wagner Lisa McGowan
Jodi Lanthorn Arnita Mason Margaret
Wright Rolland
Kristin Bernadette Mark Rodgers
Retherford Wilson
Lavina Banner Brandy Mays Mary Milner
Lawrence Spann Christina Melissa Clark
Rumpel
Lynette Chuck Haggins Michael
Bennett Hampton-Simpkins
Melissa France Comfort Kenneh Michelle
Taylor
Sherri Herrell Darnell Doaks Pamela Hall
Denise Hensley Pamela Ware
Dwand Rick Evans
Montgomery
Gbesreport Sandra
Jusu Langston
Heather Mackey Som Opma
Jacqueline Stan
Sorrell Daugherty
Jessica Henry Tony
Richardson
Joyce Danflous Twila Lucas

Volunteer Host Site Partners
Without the support of our wonderful network of nonprofit and
faith-based organizations we could not offer so many meaningful
volunteer opportunities to ABAWDs in Franklin County. We extend our
sincere gratitude to each organization for their continued partnership
and dedication to serving the community.

A&L Afterschool Literacy Isabelle Ridgway Care
and Institute Center
Advanced Recovery Services Jerusalem Tabernacle MBC
Agora Christian Ministries J. Jireh Development Corp
African American JLG Academy
Alzheimer's and Wellness
Association
Authority of the Believers Jewish Family Services
Ministries, Inc.
Big Brothers Big Sisters Kingdom Alive Word Church
Boy Scouts of America, Libraries for Liberia
Exploring Program Foundation
Brice United Methodist Licking Heights Steering
Church Committee
Broad Street Food Pantry Life Church at Easton
Broad Street United Long Lasting Community
Methodist Church Development
Cat Welfare Loving Hands Learning
Center
Community Development for Lutheran Social Services
All People and Freestore Ohio Benefit Bank--South Location
Central Community House Lutheran Social Services
Ohio Benefit Bank--West Location
Central Ohio Youth Magic Johnson Bridgescape
Advocacy Program
Central Ohio Youth for Metro Columbus Christian
Christ Job Corps
Charitable Pharmacy of Mid-Ohio Foodbank
Central Ohio, Inc.
Christ Harvest Church Mock Rd University for
Children
Christian Assembly Church National Parkinson
Foundation
City of Whitehall Near East Side Cooperative
Market
Clintonville Beechwold New Directions Career
Community Resource Center Center
Colony Cats & Dogs NNEMAP Inc
Columbus Humanities, Arts, New Salem Baptist Church
and Technology Academy Day by Day and Community Development
Corporation
Community Kitchen Ohio Empowerment Coalition
COVA One Hope Community Church
of the Nazarene
Covenant Presbyterian Pri-Value Foundation
Church
EL Hardy Center Reaching Higher Heights 4-
Life
Family Missionary Baptist RF Hairston
Church
Franklinton Board of Trade Reeb Hossack
Franklinton Gardens St. Dominic Roman Catholic
Church
Genesis of the Good Seven Baskets CDC
Samaritans
The GLORY Praise and Help Shiloh Christian Center
Center
Godman Guild Short North Stage
Greater Ebenezer Cathedral Somali Bantu Youth
of Praise and Kingdom Kids Daycare Southeast Inc.
Greater Linden Development St. Philip
Corp.
Grove City--Parks and The Center for Family
Recreation Safety and Healing
Habitat for Humanity's The CORE Resource Center
ReStore
HandsOn Central Ohio Thurman Avenue United
Methodist Church
Heart Food Pantry Trinity Assembly of God
Church
Heart of Christ Community Trinity UCC
Church
Heart of Ohio Family Twin Valley Behavioral
Health Centers Healthcare
Holy Family Soup Kitchen Unity of Columbus
Homes on the Hill CDC Upper Arlington Public
Library
House of Refuge for All Welcome Home OHIO
People
HUB Community Development Wesley Church of Hope
Corporation United Methodist Church
Ibnu Taymiyah Masjid and YouthBuild Columbus
Islamic Center Community School
IMPACT Community Action
Agency

Workforce Development Partners
Our workforce development partners make education and career
planning a priority. Their partnership affords ABAWDS easy access to
programs and services, which connects our clients to opportunities that
open doors to future employment.

Center for Vocational IMPACT Community Action
Alternatives (COVA)
Columbus City Schools--ACE Jewish Family Services
Columbus Literary Council Legal Aid Society of
Columbus
Columbus Urban League Metro Columbus Christian
(CUL) Job Corps
Delaware Area Career New Directions Career
Center Center
Dominican Learning Center Oakland Park School of
Technology
Dress for Success Per Scholas
Eastland Fairfield Career Salvation Army
Center
Ethiopian Tewahedo Social Tolles Career and
Services Technical Center
Global to Local Language Vocational Guidance
Solutions Services (VGS)
Godman Guild Westerville Area Resource
Ministry (WARM)
Goodwill WrightChoice, INC

Insert 2
Ms. Adams. Thank you. Ms. Calvert, many nutrition advocates
are concerned at the end of waivers to work requirements for
able bodied adults in the SNAP program will put more pressure
on food banks. As waivers from SNAP work requirements continue
to expire, are you seeing more demand for your services at
partner agencies?
Ms. Calvert. We are, and actually I wanted to highlight a
study that was done in Maine by our food banks there. The state
decided to make some changes and to remove work waivers, and so
they surveyed the people that they were surveying, and they
found that 25 percent of those surveys who lost SNAP benefits,
that it was due to a time limit. Eighty percent of those
individuals reported that they are using the food pantry more
this year than in the past. Many others actually shouldn't have
been kicked off the program. In Maine, 13 percent of those that
lost their SNAP benefits due to the time limit actually had
health and care giving barriers that should have made them
exempt from that. I would just highlight that there is going to
be significant, if changes were made to work waivers for able
bodied adults without dependents, there is a significant amount
of implementation challenges that would come with that.
Thirteen percent losing benefits when they shouldn't have in
this population that already is not eligible for other
benefits, that is kind of unconscionable that that happened,
and we worry that that is jut the tip of the iceberg if work
waivers are done away with.
Hunger Pains
Widespread Food Insecurity Threatens Maine's Future
Executive Summary
February 2017
Roughly 203,000 Mainers struggle with hunger, more than the total
number of people living in Portland, Lewiston, Bangor, South Portland,
Auburn, and Biddeford combined.\1\ Since the Great Recession officially
ended in 2009, much of the nation has experienced recovery and relief,
but Maine is moving against the national trend, and high rates of
poverty and hunger continue to harm our state.
---------------------------------------------------------------------------
\1\Population and Housing Unit Estimates, U.S. Census Bureau.
www.census.gov/programs-surveys/popest/data/data-sets.html.

``If I'm working as hard as I do, I want to have the right to
survive and live instead of going hungry.''
Senior man in Hancock County.

One in six Mainers is food-insecure, while the rate among Maine
children is even higher: nearly one in four children in Maine
experiences food insecurity.\2\
---------------------------------------------------------------------------
\2\Alisha Coleman-Jensen, Matthew P. Rabbitt, Christian A. Gregory
& Anita Singh, Household Food Security in the United States in 2015,
USDA, September 2016, p. 7. https://www.ers.usda.gov/webdocs/
publications/err215/err-215.pdf?v=42636; Map the Meal Gap 2016, Feeding
America, 2016. http://www.feedingamerica.org/hunger-in-america/our-
research/map-the-meal-gap/2014/ME_AllCounties_CDs_MMG_2014.pdf.

Very low-incomes for roughly \1/3\ of the Maine workforce are an
important factor underlying food insecurity; Maine's employment
structure provides a livable wage for only about \2/3\ of its roughly
620,000 workers.\3\
---------------------------------------------------------------------------
\3\MIT Livable Wage Calculator. http://livingwage.mit.edu/states/
23/locations; Maine Center for Economic Policy, ``Restoring the Value
of Work,'' August 2016. http://www.mecep.org/wp-content/uploads/2016/
08/Minimum-wage-brief_final_08-17-16.pdf.

------------------------------------------------------------------------

-------------------------------------------------------------------------
Defining Terms

What we commonly refer to as ``hunger'' is termed ``food
insecurity'' by the United States Department of Agriculture (USDA) and
divided into two categories: low-food security is characterized by a
reduction in the quality and variety of diet, and very-low-food
security by ``disrupted eating patterns and reduced food intake.''
------------------------------------------------------------------------

Nevertheless, over the last 2 years, Maine instituted both a time
limit and an asset test for the Supplemental Nutrition Assistance
Program (SNAP), which reduced the number of households eligible for the
federally funded food assistance benefits.\4\ In November 2016, the
state's Department of Health and Human Services reported 188,425
Mainers were participating in SNAP, a substantial decline from 2013
when 249,119 Mainers were receiving benefits.\5\
---------------------------------------------------------------------------
\4\Childless adults aged 18 to 49 lose benefits after 3 months
unless they can find work, job training, or volunteer opportunities.
Assets of more than $5,000 disqualify adults without children,
including seniors and those with disabilities.
\5\Geographic Distribution of Programs and Benefits for November
2016, Maine Department of Health and Human Services, p. 25. http://
www.maine.gov/dhhs/ofi/reports/2016/GeoDistrib_Nov.pdf; Profile of SNAP
Households, USDA, March 2015. https://www.fns.usda.gov/sites/default/
files/ops/Maine.pdf.
---------------------------------------------------------------------------
Preble Street Maine Hunger Initiative and Good Shepherd Food Bank
sought to look beyond the numbers to gain a clearer understanding of
who is struggling with hunger in Maine and what challenges they face in
their attempts to attain food security. The research team surveyed
2,053 food pantry users across all 16 Maine counties, held focus
groups, and conducted interviews in an effort to gather both
qualitative and quantitative information.
Survey respondents ranged in age from 15 to 95, with an average age
of 52. The average household size was 2.7 people. Eighty-seven (87)
percent of households contain a child, a senior, or a person with a
disability.
What Did the Study Find?
b Emergency Food System Has Become Everyday Means of Survival
Food pantries were conceived as a source of emergency food
assistance. Instead, they have become a regular source of food for many
low-income Americans, including thousands of Mainers. Most survey
respondents (86 percent) report using the food pantry at least once a
month, with 29 percent visiting a pantry every week and 15 percent
visiting a pantry every 2 weeks.

``The pantry helps us out a whole lot. We're getting some
food stamps, but they cut them back, so we never know from
month to month what they're going to do. They don't give you
much, that's for sure.''
Senior man in Aroostook County.

Fifty-nine (59) percent of respondents report that they are using
the food pantry more this year than they did last year.
b SNAP Benefits Offer Limited Assistance
Fifty-seven (57) percent of survey respondents indicated that they
receive monthly SNAP benefits. Of these respondents, 83 percent report
that benefits last 2 weeks or less, and 49 percent reported that
benefits last just 1 week or less.

``When they are establishing the amounts for the food stamps,
they need to check the regular grocery stores, because those
prices are going up, and it may take years to get an increase
in food stamps.''
Middle-aged man in Cumberland County.

The SNAP benefit received each month depends on the size of the
household. The vast majority of survey respondents who received SNAP
benefits reported receiving between $16 and $200 a month.
b SNAP Policy Changes Have Increased Reliance on Food Pantries
One in four respondents (486 people) reported they had lost SNAP
benefits in the past year. Nearly \1/3\ of this group said they were
removed from the program because of the time limit (24 percent) or the
asset test (7 percent). The remaining \2/3\ were dropped from the
program for reasons including increased earnings, marriage, lost
application paperwork, and being unable to schedule a required
interview with a DHHS caseworker.

``The whole point of these benefits, after you have served
your country, is to be able to rely on them. Then I find myself
having to jump through hurdles to achieve them and it doesn't
work.''
U.S. Navy veteran in Knox County.
Of the respondents who lost benefits because of the time limit,

13 percent reported health and caregiving barriers that
likely should have made them exempt from the time limit.

59 percent reported being unable to find work or not having
transportation to get to work.

79 percent report using the food pantry more this year than
they did last year.

Of the respondents who lost SNAP benefits as a result of the asset
test, 63 percent have a household member over 60 years old, and 44
percent have a household member with a disability. Fifty-eight (58)
percent report using the food pantry more this year than last.
b Low-Wage Jobs with Limited or No Benefits Keep Maine Families in
Poverty
When asked about the highest hourly wage at their last job, the
median response was $10 per hour--below the Federal poverty level for a
family of four. A very small portion of respondents reported receiving
employee benefits. For example,

only 15 percent have had access to health insurance through
their current or most recent employer.

13 percent currently have or previously had sick days.

With the collapse of manufacturing in many rural areas, Mainers
struggle to find work. Of those respondents who were looking for work
but having a hard time finding it, fully half faced significant
barriers, such as mental or physical health problems, lack of
transportation to get to work, or lack of needed schooling or training
to qualify for a job.

``The work is all fast food and jobs that don't pay them
enough.''
Senior man in Aroostook County.
b Paying for Food Means Making Trade-offs
When asked whether they have to sacrifice other necessities in
order to be able to afford food, 73 percent of respondents said yes.
The trade-offs that were reported most often were between buying food
and paying utilities and other bills, paying for medication and health
care, and paying for transportation.

``My biggest concern is insurance. Elderly people are
dropping their medicines, to keep money for them to survive . .
. It's either the medication or they don't buy food.''
Senior man in Kennebec County.

Trade-offs are even more acute for those who lost SNAP benefits
because of the recent policy changes, of whom 86 percent report making
difficult choices between getting food on the table and paying for
rent, heat, health care, and transportation.
State Policies Should Help Rather Than Hurt Mainers in Need
When Mainers have access to nutritious food, our communities thrive
and grow. When our neighbors struggle with hunger, the impacts on our
state are dire and wide-reaching.

``People have this image of what a person on assistance looks
like. It's affecting people who are working . . . it's your
neighbor, coworker, lady in line at the grocery store . . .
it's everyone around you, and people just don't talk about
it.''
Middle-aged woman from Lakes Region.

Our results show that while SNAP is a critical safety net, it is
not catching enough people and now fewer than ever. SNAP policy changes
have forced many Mainers to rely more heavily on charitable food
assistance programs to meet their basic food needs. Just like clean
water, public safety, and education, making sure everyone has enough to
eat is an obligation of a just society, not something that should be
done only when individuals and private donors feel generous.
We offer the following set of urgent policy recommendations (see
full report for more details):

b Preserve and protect the Federal Supplemental Nutrition Assistance
Program (SNAP).

b Restore and bolster access to SNAP in Maine by pursuing waivers and
eliminating the asset test.

b Bolster childhood nutrition programs in schools and invest in more
summer meals sites.

b Support Maine workers and families with adequate benefit policies
and job training programs.

b Invest in public transit statewide and increased access to
affordable transportation options.

b Accept Federal funds to expand MaineCare to more low-income people.

b Invest in affordable housing and fund Housing First initiatives to
end homelessness.

In addition to ensuring these policies are in place, Maine should
support the charitable food assistance network to serve as an effective
emergency food system.

Preble Street is a social work organization founded on the
principles of access for everyone and unconditional positive
regard. Since 1975, Preble Street has served some of the most
vulnerable people in Maine, working to turn hunger and
homelessness into opportunity and hope through 14 low-barrier
programs throughout the state. As the hub of services in
northern New England's largest urban area, Preble Street
provides round-the-clock services 365 days a year to not only
meet urgent needs, but to empower people to move beyond the
crises in their lives, and to build and advocate for solutions
to homelessness, hunger, and poverty. Contact: (207) 775-0026;
www.preblestreet.org; www.facebook.com/preblestreet;
www.twitter.
com/PrebleStreet.
As the largest hunger relief organization in Maine, Good
Shepherd Food Bank provides for Mainers facing hunger by
distributing nutritious food to more than 400 partner agencies
across the state, including food pantries, meal sites, schools,
and senior programs. Together with its network, the Food Bank
helps combat the root causes of hunger by engaging in advocacy,
nutrition education, and strategic partnerships. In 2016, the
Food Bank distributed more than 21 million meals to families,
children, and seniors in need throughout Maine. Contact: (207)
782-3554; www.feedingmaine.org; www.facebook.com/feedingmaine;
www.twitter.com/feedingmaine.
The research team for this project consisted of staff people
from Good Shepherd Food Bank and Preble Street Maine Hunger
Initiative, AmeriCorps VISTA members serving at the Maine
Hunger Initiative, graduate students at the University of
Southern Maine overseen by Dr. Michael Hillard, and Jean
Bessette, doctoral student at the University of New Hampshire.
Hunger Pains
Widespread Food Insecurity Threatens Maine's Future
Final Report February 2017
A collaborative project of Good Shepherd Food Bank and Preble
Street
Introduction
During the Great Recession, hunger in the United States
skyrocketed, rising in just a single year from 11.1 percent of
households in 2007 to 14.6 percent in 2008.\1\ Maine saw a similar
increase. In the years since the recession officially ended in 2009,
much of the nation has experienced recovery and relief, but Maine is
moving against the national trend, and high rates of poverty and hunger
continue to harm our state. The rate of hunger, or ``food insecurity,''
in the United States as a whole dropped to 12.7 percent in 2015. In
Maine, it remained elevated at 15.8 percent.\2\
---------------------------------------------------------------------------
\1\Alisha Coleman-Jensen, Matthew P. Rabbitt, Christian A. Gregory
& Anita Singh, Household Food Security in the United States in 2015,
USDA, September 2016, p. 7. https://www.ers.usda.gov/webdocs/
publications/err215/err-215.pdf?v=42636.
\2\Ibid, pp. 7, 21. What we commonly refer to as ``hunger'' is
termed ``food insecurity'' by the United States Department of
Agriculture (USDA) and divided into two categories: low food security
is characterized by a reduction in the quality and variety of diet, and
very low food security by ``disrupted eating patterns and reduced food
intake.'' Detailed definitions can be found at https://
www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-
us/definitions-of-food-security.aspx.
---------------------------------------------------------------------------
According to the United States Department of Agriculture (USDA),
one in six Mainers is food-insecure, meaning they live without reliable
access to a sufficient quantity of affordable, nutritious food.\3\ The
rate of food insecurity among Maine children is even higher: nearly one
in four children in Maine experiences food insecurity.\4\ Maine also
ranks third in the nation for the portion of households experiencing
``very low food security,'' an indication that one or more people were
hungry at times during the year because they could not afford enough
food.
---------------------------------------------------------------------------
\3\Ibid.
\4\Gundersen, C., A. Dewey, A. Crumbaugh, M. Kato & E. Engelhard,
Map the Meal Gap 2016: Food Insecurity and Child Food Insecurity
Estimates at the County Level, Feeding America, 2016. http://
www.feedingamerica.org/hunger-in-america/our-research/map-the-meal-gap/
2014/ME_AllCounties_CDs_MMG_2014.pdf.

The rate of hunger, or ``food insecurity,'' in the United
States as a whole dropped to 12.7 percent in 2015. In Maine, it
---------------------------------------------------------------------------
remained elevated at 15.8 percent.

These statistics mean that every day, roughly 203,000 Maine people
are struggling with hunger, more than the total number of people living
in Maine's six largest municipalities--Portland, Lewiston, Bangor,
South Portland, Auburn, and Biddeford--combined.\5\
---------------------------------------------------------------------------
\5\Population and Housing Unit Estimates, U.S. Census Bureau.
https://www.census.gov/programs-surveys/popest/data/data-sets.html.
---------------------------------------------------------------------------
While hunger rates are high across Maine, the highest rates of food
insecurity are in some of Maine's less-populated northern and rural
counties: Washington (17.2 percent), Aroostook (17.1 percent), and
Piscataquis (16.9 percent). The lowest rates are in the coastal
counties of Sagadahoc (13.4 percent), Knox (13.6 percent), and Lincoln
(13.7 percent).\6\
---------------------------------------------------------------------------
\6\Ibid.
---------------------------------------------------------------------------
Not surprisingly, the three most populous counties have the largest
numbers of Mainers facing food insecurity. A 2016 report conducted by
Feeding America, a national hunger relief charity, identified 40,330
people as food-insecure in Cumberland County, which includes Portland
and South Portland; 27,590 in York County, which includes Biddeford;
and 25,280 in Penobscot County, which includes Bangor, compared to
2,910 people facing food insecurity in sparsely populated Piscataquis
County.\7\
---------------------------------------------------------------------------
\7\Ibid.
---------------------------------------------------------------------------
Alarmed by the persistence of widespread food insecurity in Maine,
Preble Street Maine Hunger Initiative and Good Shepherd Food Bank
sought to look beyond the numbers to gain a clearer understanding of
who is struggling with hunger in Maine and what challenges they face in
their attempts to attain food security. This research focuses on people
who receive food assistance through hunger relief organizations in
Maine and examines their household demographics, use of charitable food
assistance, participation in the Supplemental Nutrition Assistance
Program (SNAP), and employment. The report also examines the effects of
two recent policy changes in Maine's administration of SNAP and the
impact on food security for individuals who have lost benefits because
of the changes.
The research team for this project consisted of staff people from
Good Shepherd Food Bank and Preble Street Maine Hunger Initiative,
AmeriCorps VISTA members serving at the Maine Hunger Initiative,
graduate students at the University of Southern Maine overseen by Dr.
Michael Hillard, and Jean Bessette, doctoral student at the University
of New Hampshire.
Hunger in Maine
Mainers who face food insecurity look to both charitable
organizations and Federal and state assistance programs in order to
access enough food for themselves and their families.
Charitable Food Assistance
Forty-seven million Americans rely on the charitable food
assistance system.\8\ Although hunger relief organizations were
conceived as an emergency service for people who are temporarily in
need, they have instead become an ongoing source of food support.\9\ In
1980, there were just 200 food pantries in the entire country. By 2013,
there were more than 40,000.\10\
---------------------------------------------------------------------------
\8\Nancy S. Weinfield, et al., Hunger in America 2014, Feeding
America, August 2014, p. 44. http://www.feedingamerica.org/hunger-in-
america/our-research/hunger-in-america/.
\9\J. Molnar, P. Duffy, L. Claxton, & C. Bailey (2001). ``Private
food assistance in a small metropolitan area: Urban resources and rural
needs,'' Journal of Sociology and Social Welfare, 28: 187-209.
\10\Peter Pringle (ed.), A Place at the Table (Participant Media,
2013), p. 137.

Although hunger relief organizations were conceived as an
emergency service for people who are temporarily in need, they
---------------------------------------------------------------------------
have instead become an ongoing source of food support.

Maine has seen a similar expansion of the emergency food system,
with the number of pantries increasing an estimated tenfold since the
1980s.\11\ The state's charitable food assistance network consists of
hundreds of food pantries, soup kitchens, shelters, and other
community-based organizations that provide for the needs of people who
lack access to sufficient food. Good Shepherd Food Bank, Maine's only
statewide food bank, partners with the majority of these local
organizations to distribute millions of pounds of food throughout the
state each year. As of December 2016, the Food Bank had 399 partners--
303 food pantries, 50 meal sites, and 46 other organizations, including
homeless shelters, youth programs, and group buying clubs. Hunger
relief organizations are spread throughout the state, although there
are fewer in less densely populated areas.
---------------------------------------------------------------------------
\11\While statewide figures are not available, historical data for
southern Maine show four pantries in 1979, 60 in 2005, and 80 in 2010.
Donna Yellen, Mark Swann, and Elena Schmidt, ``Hunger in Maine,'' Maine
Policy Review 20.1 (2011): 140-150. http://
digitalcommons.library.umaine.edu/mpr/vol20/iss1/21.
---------------------------------------------------------------------------
Local food pantries and meal sites are typically small
organizations with limited resources and cannot meet the food needs of
all Mainers who are struggling with food insecurity. A 2014 report by
Good Shepherd Food Bank and Feeding America found nearly \3/4\ of Good
Shepherd's partners reported employing no paid staff and relying
entirely on volunteers. Nearly half of the volunteers were over 60
years old. Local organizations also reported having to scale back their
programs or turn clients away for various reasons, including lack of
financial resources and not having enough food to meet the need.\12\
---------------------------------------------------------------------------
\12\Hunger in America 2014: Report for Good Shepherd Food Bank,
Feeding America, August 2014. http://www.gsfb.org/wp-content/uploads/
2014/10/FB259_report.pdf.

Nearly \3/4\ of Good Shepherd Food Bank's partners reported
---------------------------------------------------------------------------
employing no paid staff and relying entirely on volunteers.

The 2014 report counted more than 178,000 Mainers who regularly
sought assistance at local food pantries and meal sites. This estimate
does not account for children and families who participate in Good
Shepherd's school-based initiatives such as school food pantries and
programs that fill student backpacks with food for the weekend. The
study found that people were visiting a local hunger relief charity 11
out of 12 months a year, on average, indicating chronic food insecurity
and an ongoing need for food to supplement what they could obtain
through other means.\13\
---------------------------------------------------------------------------
\13\Ibid.
---------------------------------------------------------------------------
Supplemental Nutrition Assistance Program
The Supplemental Nutrition Assistance Program (SNAP, also known as
Food Stamps, or the Food Supplement Program) is an important component
of the nation's social safety net. The program is designed to help
individuals and families stretch their food budgets and buy the
nutritious foods they need to live healthy lives. SNAP provides
financial assistance for food purchases, on average about $1.40 per
person per meal, to eligible persons via an electronic benefits
transfer (EBT) card. These benefits are entirely federally funded.\14\
As of October 2016, 43.5 million people were participating in SNAP
nationally at a cost to the Federal Government of about $75 billion
annually.\15\
---------------------------------------------------------------------------
\14\``Policy Basics: Introduction to the Supplemental Nutrition
Assistance Program (SNAP),'' Center on Budget and Policy Priorities,
March 24, 2016. http://www.cbpp.org/research/policy-basics-
introduction-to-the-supplemental-nutrition-assistance-program-snap.
\15\SNAP Program: Number of Persons Participating, USDA, data as of
January 6, 2017. https://www.fns.usda.gov/sites/default/files/pd/
29SNAPcurrPP.pdf.
---------------------------------------------------------------------------
Nationally, \1/2\ of SNAP recipients participate for just 10 months
or less, until they get back on their feet or find higher-paying
employment. Fifty-eight (58) percent leave the program within 1
year.\16\ Since 1980, households with full-time, year-round workers
have grown as a share of SNAP recipients more than any other group.\17\
This means that more people who are working full time are not paid a
wage high enough to sustain their families.
---------------------------------------------------------------------------
\16\``A Review of Strategies to Bolster SNAP's Role in Improving
Nutrition as well as Food Security,'' Food Research & Action Center,
updated January 2013.
\17\James P. Ziliak, ``Why Are So Many Americans on Food Stamps?
The Role of the Economy, Policy and Demographics,'' in J. Bartfield, C.
Gunderson, T. Smeeding, & J. Ziliak, SNAP Matters: How Food Stamps
Affect Health and Well-Being (Stanford University Press, 2015), p. 27.
---------------------------------------------------------------------------
In Maine, SNAP is administered by the state Department of Health
and Human Services (DHHS), with the Federal Government sharing \1/2\ of
the administrative cost. SNAP enables participants to shop at a local
grocer when and where it is convenient, like any other Maine family.
The program provides a step toward a sense of normalcy and stability
for families struggling to make ends meet.

SNAP is not only our nation's first line of defense against
hunger, but it also stimulates the economy through a multiplier
effect.

In November 2016, DHHS reported 188,425 Mainers were participating
in SNAP, a decline from the previous year and a substantial decline
from 2013 when 249,119 Mainers were participating.\18\ Thirty-six (36)
percent of SNAP households in Maine are families with children, 25
percent have one or more people 60 years and over, and 35 percent have
one or more people with a disability.\19\
---------------------------------------------------------------------------
\18\Geographic Distribution of Programs and Benefits for November
2016, Maine Department of Health and Human Services, p. 25. http://
www.maine.gov/dhhs/ofi/reports/2016/GeoDistrib_Nov.pdf; Profile of SNAP
Households, USDA, March 2015. https://www.fns.usda.gov/sites/default/
files/ops/Maine.pdf.
\19\Characteristics of Supplemental Nutrition Assistance Program
Households: Fiscal Year 2015, USDA, November 2016. https://
www.fns.usda.gov/sites/default/files/ops/Characteristics
2015.pdf.
---------------------------------------------------------------------------
SNAP is not only our nation's first line of defense against hunger,
but it also stimulates the economy through a multiplier effect. During
Fiscal Year 2015, SNAP brought $282,015,650 in Federal funds to grocery
stores and other retailers throughout Maine.\20\ With $5 in SNAP
generating $9 in the local economy, these funds could be expected to
generate more than $500 million in total economic activity.
---------------------------------------------------------------------------
\20\Supplemental Nutrition Assistance Program, State Activity
Report, Fiscal Year 2015. http://www.fns.usda.gov/sites/default/files/
snap/2015-State-Activity-Report.pdf.
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SNAP Policy Changes in Maine
Maine recently enacted a time limit on receipt of SNAP benefits for
childless adults aged 18 to 49. After 3 months of receiving benefits,
members of this group become ineligible for SNAP unless they can find
work, job training, or volunteer opportunities. Since Maine instituted
the time limit in early 2015, more than 9,000 food-insecure individuals
have lost access to SNAP benefits, and the state's economy has lost the
economic benefits Federal SNAP dollars provide.\21\
---------------------------------------------------------------------------
\21\``APNewsBreak: More than 9,000 fewer Mainers receiving food
stamps under new work requirements,'' March 24, 2015. http://
www.usnews.com/news/us/articles/2015/03/24/apnewsbreak-9-000-mainers-
lose-food-stamps-under-new-rules.
---------------------------------------------------------------------------
Since 1996, Congress has recognized the difficulty of finding work
in areas with high unemployment and given states the option to waive
the 3 month limit on SNAP in those areas. Congress has also provided
for discretionary waivers from the time limit for certain vulnerable
populations, including veterans and the homeless. Maine has
consistently sought these waivers in the past as factories, in
particular paper mills, and fisheries downsized and/or shut their
doors. Under these past policies, Maine has offered critical food
assistance to those struggling to find livable wage jobs, so they have
the basic sustenance they need to survive. Beginning in 2015, Maine no
longer requested these waivers even though there are still many Mainers
in need and high unemployment areas in the state that would qualify for
the time-limit waiver.
There is no evidence that dropping people from SNAP leads them to
find jobs, particularly in regions with high unemployment. While some
argue that the 3 month time limit functions as an incentive for SNAP
participants to enter the workforce, according to the Center for Budget
and Policy Priorities, ``Many able-bodied SNAP participants aren't
working because they can't find a job or enough job training, or
because they face challenges that prevent them from getting or keeping
a job, such as health issues or homelessness.''\22\
---------------------------------------------------------------------------
\22\Brynne Keith-Jennings, ``Limiting SNAP Doesn't Boost
Employment,'' Center on Budget and Policy Priorities, August 18, 2015.
http://www.cbpp.org/blog/limiting-snap-doesnt-boost-employment.

There is no evidence that dropping people from SNAP leads
them to find jobs, particularly in regions with high
---------------------------------------------------------------------------
unemployment.

Many who are willing and able to work are in need of job training,
but such programs are not consistently available. A person who needs
job training, but for whom a placement in a job training program is not
available, still loses all SNAP benefits after the 3 month period. A
qualifying disability can exempt a person from the SNAP time limit, but
low-income people often lack access to a regular health care provider
who could certify a disabling condition. For many in this group,
obtaining necessary treatment or getting documentation to qualify for a
waiver from the time limit can be an uphill battle.\23\
---------------------------------------------------------------------------
\23\Ed Bolen, et al., ``More Than 500,000 Adults Will Lose SNAP
Benefits in 2016 as Waivers Expire,'' Center on Budget and Policy
Priorities, March 18, 2016. http://www.cbpp.org/research/food-
assistance/more-than-500000-adults-will-lose-snap-benefits-in-2016-as-
waivers-expire.

Nearly all states have eliminated asset tests for seniors and
those with disabilities, making Maine an extreme outlier as one
of only five states that apply an asset test to these two
---------------------------------------------------------------------------
groups.

In 2016 Maine also instituted an asset test to reduce the number of
adults eligible for SNAP. Previously, Mainers with income at or below
185 percent of the Federal poverty line were eligible for SNAP
regardless of assets. With the recent policy change, many Mainers are
ineligible for SNAP benefits if they have more than $5,000 in assets.
Disqualifying assets for households now include most second cars, any
property other than a primary home (like a lot used for harvesting wood
for heating), and any money in savings.
Families with children are not subject to the asset test, but
seniors and those with disabilities are. Nearly all states have
eliminated asset tests for seniors and those with disabilities, making
Maine an extreme outlier as one of only five states that apply an asset
test to these two groups.\24\ Asset tests can disqualify needy retirees
who rely on income from modest retirement savings.\25\
---------------------------------------------------------------------------
\24\USDA Categorical Eligibility for SNAP, USDA, updated August
2016. https://www.fns.usda.gov/sites/default/files/snap/BBCE.pdf.
\25\``Press Release: Government Programs Penalize Retirement Saving
By Low- and Moderate-Income Households,'' Center on Budget and Policy
Priorities, June 21, 2005.
---------------------------------------------------------------------------
Summer Challenges for Families
Low-income parents face an additional challenge in the summer
months when school-based meals may be unavailable or inaccessible.\26\
During the school year, schools often provide children who are eligible
for free or reduced-price meals with both breakfast and lunch. A family
with two school-age children must provide an estimated 200 additional
meals over summer vacation.
---------------------------------------------------------------------------
\26\Rachel L. Wilkerson, Durwesh Khalfe, and Kathy Krey (2015),
``Associations Between Neighborhoods and Summer Meals Sites: Measuring
Access to Federal Summer Meals Programs,'' Journal of Applied Research
on Children: Informing Policy for Children at Risk, Vol. 6: Iss. 2,
Article 9.
---------------------------------------------------------------------------
While the Summer Food Service Program (SFSP), funded by the USDA,
offers meals for eligible children, many families do not have access to
summer meal sites. In 2015, SFSP reached only 25 percent of eligible
Maine children with summer meals.\27\
---------------------------------------------------------------------------
\27\Hunger Doesn't Take a Vacation: Summer Nutrition Status Report,
Food Research & Action Center, June 2016, p. 6. http://frac.org/wp-
content/uploads/2016_summer_nutrition_report.pdf.
---------------------------------------------------------------------------
During the summer recess, children from low-income families often
lack access to recreational and academic enrichment opportunities as
well as adequate nutrition. Learning loss that occurs during the summer
months, the so-called ``summer slide,'' accounts for about \2/3\ of the
achievement gap in reading between low-income ninth graders and their
higher-income peers.\28\ When summer meals are offered together with
summer learning programs, these initiatives can provide necessary
nutrition and help address the achievement gap.
---------------------------------------------------------------------------
\28\Karl L. Alexander, Doris R. Entwisle, and Linda Steffel Olson,
``Lasting Consequences of the Summer Learning Gap,'' American
Sociological Review, April 2007, Vol. 72: 167-180. http://www.ewa.org/
sites/main/files/file-attachments/summer_learning_gap-2.pdf; National
Summer Learning Association infographic, undated. http://
summerlearning.org/wp-content/uploads/2016/06/
TheAchievementGapInfographic.pdf.
---------------------------------------------------------------------------
Transportation
Access to reliable transportation is important for employment
options as well as food access. Getting to and from work can be a
challenge for low-income workers. The expense and the time involved in
commuting to low-wage jobs can be daunting, and coordinating available
transportation options to accommodate both family and work obligations
is often difficult.

Car ownership can be critical to the ability of low-wage
workers to maintain employment, especially in areas where
public transit is minimal or nonexistent.

A 2006 study of a rural welfare-to-work program identified the lack
of reliable transportation as an impediment to employment among low-
income adults. In the study region, as in most of Maine, public transit
was extremely limited. Approximately \1/3\ of the study sample did not
own a car or have reliable access to one or have access to public
transportation.\29\
---------------------------------------------------------------------------
\29\Alicia Meckstroth, et al., ``Paths to Work in Rural Places: Key
Findings and Lessons from the Impact Evaluation of the Future Steps
Rural Welfare-to-Work Program,'' Mathematica Policy Research, March 22,
2006. https://www.acf.hhs.gov/sites/default/files/opre/
paths_to_work.pdf.
---------------------------------------------------------------------------
Numerous studies have found that car ownership can be critical to
the ability of low-wage workers to maintain employment, especially in
areas where public transit is minimal or nonexistent. For recipients of
public assistance, car ownership is associated with higher rates of
employment and higher earnings.
Research has also shown that car ownership has a greater impact on
low-skilled workers than it does on higher-skilled workers. In
addition, individuals who have access to a car are likely to be
unemployed for shorter periods.\30\
---------------------------------------------------------------------------
\30\``Shifting into Gear,'' National Consumer Law Center, April
2014, p. 2. http://www.workingcarsforworkingfamilies.org/images/files/
shifting-into-gear.pdf.
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Hunger and Maine's Labor Market
The national recession of 2007-2009 caused the loss of tens of
thousands of Maine jobs, especially in rural Maine, and was followed by
a slow jobs recovery. Maine lost about 30,000 jobs during the
recession, and 3 years into the recovery, had regained only 5,900 of
the jobs lost. Employment has now recovered to about \3/4\ of its
prerecession peak. While economic recovery overall has been hampered by
both population and labor force stagnation, there are still large
numbers of discouraged workers (not technically in the labor force but
who would take a job if available) and part-time workers in Maine who
would prefer full-time work but can't find it.\31\
---------------------------------------------------------------------------
\31\Maine employment peaked at 621,000. At the end of the recession
in summer 2009, Maine employment had contracted to 592,100; in August
2012 it had recovered to only 598,000. Maine employment reached 617,800
in July 2016. Maine Department of Labor, Center for Workforce Research
and Information. http://www.maine.gov/labor/cwri/ces.html. On
discouraged and involuntary part-time workers, see ``Policy Basic:
Maine's Unemployment Rate, More than Meets the Eye,'' Maine Center for
Economic Policy, May 2016. http://www.mecep.org/wp-content/uploads/
2016/05/Unemployment-calculation-5-18-2016-Final_final.pdf.

Maine lost about 30,000 jobs during the recession, and 3
years into the recovery, had regained only 5,900 of the jobs
---------------------------------------------------------------------------
lost.

Very-low-incomes for roughly \1/3\ of Maine workers are an
important factor underlying food insecurity; for many, having a job
does not liberate them from persistent hunger. Maine's employment
structure provides a livable wage for only about \2/3\ of its roughly
620,000 workers. Full-time work at $10 an hour provides annual income
of about $20,000, less than even the most conservative estimate of a
livable wage for a single adult.\32\
---------------------------------------------------------------------------
\32\Projections for the impact of the state's new minimum wage law
show some 181,000 Maine workers benefitting from the increase to $12.
Recent estimates of a livable wage in Maine range from approximately
$10.38 per hour for a single adult up to $26.87 per hour for a
household with a single adult and two children, benchmarks that assumes
full-time, year-round work. MIT Livable Wage Calculator, http://
livingwage.mit.edu/states/23/locations; Maine Center for Economic
Policy, ``Restoring the Value of Work,'' August 2016. http://
www.mecep.org/wp-content/uploads/2016/08/Minimum-wage-brief_final_08-
17-16.pdf.
---------------------------------------------------------------------------
Simply put, a huge portion of Maine's labor market does not provide
wages adequate for meeting basic needs for food, housing, utilities, a
vehicle, and health care. Low wages make workers and their families
economically insecure; a car repair or eviction notice can easily rob
them of the stability and means to maintain employment and avoid even
more dire poverty.
Ongoing changes in the structure of the Maine labor market also
exacerbate the inability of the Maine economy to provide access to
employment and sufficient wages to avoid food insecurity. Economists
considering structure look at changes in the mix of employment by
occupation, industry, and the location of jobs. On the employment side,
rural Maine continues to see the loss of manufacturing jobs, most
visibly with serial and permanent shutdowns of the state's historic
paper mills in Millinocket and East Millinocket, Bucksport, Lincoln,
Madison, and elsewhere. From 2007 (4th quarter) to 2016 (2nd quarter),
Maine lost 8,672 manufacturing jobs, a 12.8 percent decline.
Manufacturing employment fell by 40.7 percent in Penobscot County (East
Millinocket was home to now-shuttered Great Northern Paper); by 30.3
percent in Oxford County (home to historic Rumford paper mills); by
17.5 percent in Franklin County (Jay was home to the former
International Paper mill); and a 17.3 percent decrease in Aroostook
County (home to a number of small paper mills and the former Fraser
Paper mill in Madawaska).\33\
---------------------------------------------------------------------------
\33\Maine Department of Labor, Center for Workforce Research and
Information. http://www.maine.gov/labor/cwri/qcew1.html.
---------------------------------------------------------------------------
With the exception of health care, growth in better-paid service
employment is concentrated far away from where rural Mainers losing
factory jobs are located. The ongoing decline of employment options in
rural Maine is so strong that rim counties (Oxford, Franklin, Somerset,
Piscataquis, Aroostook, and Washington) are seeing sizable losses of
population and labor force participants, as many flee to southern Maine
or out of state seeking employment, or move into a premature semi-
retirement.\34\
---------------------------------------------------------------------------
\34\Population in rim counties alone decreased by 8,522 between
2010 and 2015. Personal e-mail communication with Glenn Mills, Chief
Economist, Maine Department of Labor, Center For Workforce Research,
January 3, 2017.
---------------------------------------------------------------------------
Compounding the loss of jobs is the aging of Maine's labor force;
older workers face more challenges in gaining new skills when they lose
jobs and are more likely to have injuries or other disabilities that
make them unattractive to employers. The cost-benefit profile for older
workers seeking retraining is relatively poor, as they have fewer years
to benefit from the higher wage.

With the exception of health care, growth in better-paid
service employment is concentrated far away from where rural
Mainers losing factory jobs are located.

Southern Maine's economy is relatively prosperous, and it is where
better-paying service jobs (health care, law, banking and insurance)
are concentrated. One-third of Cumberland County employment is in low-
wage retail and service occupations, however. Data for 2015 show that
32.8 percent of the Portland/South Portland labor market's 195,055 jobs
were concentrated in low-wage industries, with annual earnings ranging
from $20,611 to $26,366.\35\ While employment growth in southern
Maine's economy has been strong, for many the combination of low wages
and rising rents threatens their ability to feed themselves.
---------------------------------------------------------------------------
\35\These low-wage sectors include retail trade, leisure and
hospitality, along with health care/social services industries
(residential mental health facilities, continuing care assisted living
facilities, social assistance, individual and family services, and
childcare).
---------------------------------------------------------------------------
In sum, the realities of Maine's labor market for up to \1/3\ of
our workforce are that low wages mean vulnerability to hunger. Despite
the state's current low unemployment rate, the decline of Maine's rural
manufacturing employment and the concentration of employment growth in
low-wage service occupations mean that gaining employment does not
ensure an end to food insecurity.
The Research
Methodology
To achieve a holistic understanding of the problem of hunger in
Maine, we employed both quantitative and qualitative methods of data
collection. We administered a four-page paper survey at food pantry
sites across Maine. We then conducted a series of focus groups in
various geographic locations, and several in-depth follow-up interviews
with people who participated in either the survey or the focus groups,
whose comments help to illustrate the quantitative data.
Administering the Survey
Surveys were administered at hunger relief organizations, including
food pantries and meal sites, in all 16 Maine counties. Members of the
research team visited organizations over a 4 month period and handed
out surveys to be completed on-site. Respondents were offered
assistance if needed to fill out the survey. Copies of the survey were
also mailed to hunger relief organizations across the state.
Organization staff administered the survey during food distributions,
collected completed surveys from clients, and mailed them to the
research team. As it was not feasible to develop a random sample of
food pantry users, the research team set general targets for the number
of surveys to be collected from each county in order to reflect the
approximate distribution of food-insecure individuals across the state.
The survey tool is provided in Appendix A.
Focus Groups
Surveys were administered at hunger relief organizations,
including food pantries and meal sites, in all 16 Maine
counties.

We held six focus groups to gather qualitative data about
respondents' experiences with food insecurity in Maine. Two focus
groups were held in Portland at a food pantry with an on-site soup
kitchen; the other four were held at food pantries in Bridgton,
Ellsworth, Waterville, and Presque Isle. Focus group participants were
recruited through contact information they voluntarily provided on the
completed paper surveys and by food pantry directors who sought out
pantry clients willing to participate. Members of the research team
conducted the focus groups using a standard set of facilitation
questions. The conversations were audio recorded, transcribed, and
analyzed. The focus group protocol is provided in Appendix B.
Interviews
University of Southern Maine graduate students supervised by Dr.
Michael Hillard conducted in-depth follow-up interviews with three
people, and Preble Street staff conducted an additional seven in-depth
interviews. Interviewees were identified by Preble Street staff who
were familiar with their circumstances. The students developed a set of
interview questions related to food acquisition, experience with public
assistance programs, work history, transportation issues, and public
perceptions of low-income citizens in Maine. The conversations were
audio recorded and then summarized by the students. The interview
questions are provided in Appendix C.
Study Results
Demographics of Survey Respondents
In total, 2,053 people responded to the survey.\36\ Respondents
came from 244 different towns spread across all 16 Maine counties. The
geographic distribution of survey respondents is shown in Figure 1.
---------------------------------------------------------------------------
\36\Since respondents did not always answer all survey questions,
the totals in this section may not equal 2,053.
---------------------------------------------------------------------------
Figure 1. Surveys Collected by County

Food Pantry Survey, July 2016, (n = 2,027).

One-third of food-insecure Mainers reside in just two counties:
Cumberland County is home to 20.1 percent and Penobscot County to 12.6
percent.\37\ The research team collected surveys in these two counties
at similar rates: 22.2 percent of surveys were collected from
Cumberland County residents, and 12.6 percent of surveys were collected
from Penobscot County residents.
---------------------------------------------------------------------------
\37\Gunderson, et al., Map the Meal Gap 2016.

One-third of food-insecure Mainers reside in just two
counties: Cumberland County is home to 20.1 percent and
---------------------------------------------------------------------------
Penobscot County to 12.6 percent.

Figures 2, 3, and 4 present selected survey respondent and
household characteristics. All demographic data collected are available
in Appendix D.
Respondents ranged in age from 15 to 95, with an average age of 52.
One in five respondents was 65 or older. Two-thirds of respondents were
female, and 93 percent were white (see Figure 2).
Figure 2. What is your age, gender, ethnicity/race?

Food Pantry Survey, July 2016 (Age n = 1,991), (Gender n =
1,903), (Ethnicity/race n = 1,758).

The majority of households had one or two members. Average
household size was 2.7, with a range of one to 14 household members
(see Figure 3).
Figure 3. How many people are living in your household?

Food Pantry Survey, July 2016, (n = 1,969).

Thirty-five (35) percent of respondents indicated that they had a
child under 18 living in their household. Nearly \1/2\ of respondents
(49 percent) reported a person with a disability living in the
household. Thirty-eight (38) percent reported a senior over the age of
60 living in the household. In total, 87 percent of households surveyed
(n = 1,785) contain a child, a senior, or a person with a disability,
and some contain members of more than one of these groups (see Figure
4).
Figure 4. Respondent households with . . .

Food Pantry Survey, July 2016, (n = 2,053).

Focus group participants offered insights into the kinds of issues
that Mainers face. They spoke about a wide array of disabilities and
health problems, from autism, diabetes, depression, and heart attacks
to a rare eye disease and a bone infection linked to surgery after a
broken limb.

``Last year right before Christmas we had to dish out almost
$600 because my husband has a disease in his eye that runs in
the family. So we had to sit down with the kids and say, `We
can't do Christmas because Dad's got to have surgery to correct
this.'''
Mother in Kennebec County.

``Right now I am so exhausted because I have a bipolar son. I
tried to get him help and the police threw him in jail. If you
have a bipolar child and are poor, most everybody ends up in
jail--that is just the way you get any treatment at all.''
Mother in the Lakes Region.
Use of Charitable Food Assistance
Figure 5 shows how frequently survey respondents visit food
pantries. Eighty-six (86) percent of respondents report using a food
pantry at least once a month. More than 40 percent of households use a
food pantry monthly, and an additional 44 percent are using a pantry
every week or every 2 weeks.
Figure 5. How often do you utilize a food pantry now?

Food Pantry Survey, July 2016, (n = 1,844).

Many food pantries only distribute food once a month, so for those
visiting the pantry monthly, that frequency may reflect the pantry's
limited operations. The household may be in need of assistance more
often than once a month. Households reporting more frequent use may be
visiting multiple pantries to meet their needs.
Among households with children, 40 percent use a pantry more than
once a month; among households with a member who has a disability, 46
percent use a pantry more than once a month; \1/2\ of households with a
member 60 years or older use a pantry more than once a month.
Fifty-nine (59) percent of respondents report that they are using
the food pantry more this year than they did last year, including eight
percent who reported that they did not use a pantry at all the previous
year.
Many focus group participants noted their reliance on food
pantries, along with a patchwork of other resources, including meal
sites, SNAP, Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC), Social Security, Meals on Wheels (for homebound
seniors and individuals with disabilities), afterschool and summer
meals for children, and more.

``The pantry helps us out a whole lot. We try to budget the
best we can. We're getting some food stamps, but they cut them
back, so we never know from month to month what they're going
to be. They don't give you much, that's for sure.''
Senior man in Aroostook County.

``I don't know what we would do without the food pantry. It
is something I think about a lot because I do not know where we
would be.''
Middle-aged mother in the Lakes Region.

The limitations of charitable food assistance are evident to those
who rely on it. Focus group and interview respondents spoke about the
difficulty of relying on food pantries and other charities for food on
an ongoing basis. Problems included the amount or variety of food
offered, the hours of distribution, and the fact that in some cases you
can only receive assistance once a month.

``I do rely on the food pantries and soup kitchens a lot of
the time around here, and it has been very hard for me to
eat.''
U.S. Navy veteran in Knox County.

``For nutrition, I used to use canned vegetables and fruits.
With my husband being diabetic, he has to watch what he eats
and it is very difficult--pantries mostly offer pasta and
carbs.''
Middle-aged mother in the Lakes Region.
``Coming here [to the pantry], it helps a lot. We go to the
evening program [meal site], and it does help, but we try not
to go there all the time because it's always the same thing--
sandwiches. After a while, you get tired of sandwiches. You
want a home-cooked meal.''
Mother in Kennebec County.

Food-insecure Mainers, including the veterans we interviewed,
report skipping meals because they can't get the food they need. One
U.S. Navy veteran in Knox County describes eating one soup kitchen meal
per day and meeting the rest of his food needs by stretching the food
from the one pantry box he receives each month. He often only has the
resources to eat one meal per day. A veteran of the U.S. Marines in
Androscoggin County similarly skips breakfast and supper because he
must rely solely on the limited soup kitchens and food pantries in his
area.
Supplemental Nutrition Assistance Program (SNAP)
Fifty-seven (57) percent of survey respondents indicated that they
receive monthly SNAP benefits. Of the respondents who receive SNAP, 83
percent report that their benefits last 2 weeks or less, as seen in
Figure 6.
Figure 6. How long do monthly SNAP benefits last?

Food Pantry Survey, July 2016, (n = 1,216).

The amount of SNAP received each month depends on the number of
people in the household. The vast majority of survey respondents
reported SNAP benefit amounts of between $16 and $200 a month (see
Figure 7).
Figure 7. How much money in food stamps do you receive each month?

Food Pantry Survey, July 2016, (n = 953).

``When they are establishing the amounts for the food stamps
they need to check the regular grocery stores, because those
prices are going up, and it may take years to get an increase
in food stamps.''
Middle-aged man in Portland.
Loss of SNAP Benefits
One in four survey respondents (486 people) indicated that they had
lost SNAP benefits in the past year. Nearly \1/3\ of this group said
they were removed from the program because of recent state policy
changes, specifically the 3 month time limit (24 percent) and the asset
test (7 percent). The remaining \2/3\ who lost SNAP benefits were
dropped from the program for a variety of reasons including increased
earnings, marriage, lost application paperwork, and being unable to
schedule a required interview with a DHHS caseworker.
Time Limit
Maine's time-limit policy applies only to childless adults aged 18
to 49 who do not have a documented disability. Of the 100 respondents
who lost benefits because of this time limit, 13 percent reported
health and caregiving barriers that likely should have made them exempt
from the time limit and eligible to continue receiving SNAP assistance.
A veteran of the U.S. Marines living in Androscoggin County
explained in an interview that he is disabled and receives a disability
pension from the Veterans Administration (VA) due to an injury incurred
during the Gulf War. Even though specific guidance from the USDA makes
it clear that this should exempt him from the time limit, his benefits
were cut when Maine made the policy change. His benefits were only
restored in January 2017 after several years without access to SNAP.
A veteran of the U.S. Army living in Waldo County who has disabling
medical conditions was dropped from SNAP because of the time limit
until he could get connected to VA health care and linked with a
provider. During the months it took him to make this happen, he
struggled to get the food he needed.
Of the 100 respondents who lost benefits because of the time limit,
59 percent reported looking for work and not being able to find it or
not having transportation to get to work.
A U.S. Navy veteran in Knox County who was dropped from SNAP
because he couldn't find work explained in an interview, ``It's been a
6 year struggle to get back on my feet. I have a whole list of skills,
if I brought my resume it would shock you.'' Despite his extensive job
search, he cannot find work and was dropped from SNAP due to the time
limit policy's work requirements. He frequently skips at least one meal
a day, regularly experiences hunger, and cannot make ends meet. As he
explains, ``The whole point of these benefits, after you have served
your country, is to be able to rely on them. Then I find myself having
to jump through hurdles to access them and it doesn't work.''
Seventy-nine (79) percent of those who lost SNAP benefits
because of the time limit report using the food pantry more
this year than they did last year.
Asset Test
Of the 27 respondents who lost SNAP benefits as a result of the
asset test, 63 percent have a household member over 60 years old, and
44 percent have a household member with a disability. (Families with
children are exempt from the asset test.)
Of those who lost SNAP benefits due to the asset test, 58 percent
report using the food pantry more this year than last.
Summer Hunger
Respondents with children under age 18 in the household reported
overwhelmingly that their supplemental food needs increase in the
summer (see Figure 8).
Figure 8. Does your need for food go up in the summer when your kids
are out of school?

Food Pantry Survey, July 2016, (n = 493).
Trade-offs and Challenges
When asked whether they have to sacrifice other necessities in
order to be able to afford food, 73 percent of respondents said yes.
The trade-offs that were reported most often were between paying for
food and paying for utilities and other bills, medication and health
care, and transportation.
The necessity of making trade-offs because of limited income is
amplified for people who have lost access to SNAP. Of those who lost
SNAP benefits because of the time limit, 86 percent report making
difficult choices between getting food on the table and paying for
rent, heat, health care, and transportation. Similarly, of those who
lost benefits because of the asset test, 86 percent said they have to
make trade-offs between buying food and paying for necessities.
Focus group participants echoed these survey findings, reporting
that they have to skip bills, pay for expensive car repairs, and choose
between buying food and buying medications.

``You can have the grocery money to go to the store, but not
have the gas to get there.''
Middle-aged mother in the Lakes Region.

``I feed my children before I feed myself. And I hate this,
but I have to limit the portions that [my children] can have
for a meal.''
Middle-aged mother in the Lakes Region.

``We are on a strictly tight budget. My other half works . .
. I'm here [at the pantry] every 2 weeks. I don't work. I'm
disabled. I have three kids, so it's hard . . . If we have to
skip a bill, we skip a bill, to put food on the table. If that
means that Dad and I don't eat, to make sure our family is
provided [for]--as parents, you have to do what's right for
your kids.''
Mother in Kennebec County.

``My biggest concern is insurance, because insurance is even
hard for the elderly. Elderly people are dropping their
medicines, to keep money for them to survive . . . It's either
the medication or they don't buy food.''
Senior man in Kennebec County.

Transportation was cited as a major obstacle for Mainers trying to
obtain the food they need. In rural areas particularly, commute times
can be long, and cars are often necessary for work, school, health
appointments, and food acquisition. But cars require frequent repair
and maintenance, as well as registration, inspection, and insurance,
and the expenses compound. One respondent indicated that he/she can
only afford gas money by collecting and redeeming returnable bottles
and cans.

``I cannot get my car inspected, and the sticker is expired.
I am just crossing my fingers every time I see a trooper.''
Middle-aged mother in the Lakes Region.

``I had a [car] and things kept going wrong with it. I needed
to repair it because I needed to get to work . . . then my
brake line went, then this, and that, and I had to spend it all
to get it fixed so I could go to work. The day that I had it
fixed I couldn't work, so I was out money that day plus the
cost to fix it.''
Young single mother in the Lakes Region.

Respondents who live in more densely populated areas, including
Portland, Waterville, and Rockland, find that public transportation
routes do not always link residential neighborhoods with supermarkets
and food pantries. Getting food home can be a major difficulty,
especially for people who are elderly or disabled.

``South Portland has some places [to get food], but I can't
get there on the buses, and walking is hard because I have to
carry all of the stuff by myself.''
Single mother in Portland.

``For food it will take me about an hour to just get there,
then walk back in the rain, sleet or snow, with my groceries
the same distance.''
U.S. Navy veteran in Knox County.

``We're fortunate because he's got the truck. But you leave
here [the pantry] with five or six bags and you've got to carry
it home? When I was living a mile or so out of town, I was just
hoping that my little rolling bag didn't give out. It's one
thing to get here, but to haul everything home, it's hard.''
Middle-aged woman in Kennebec County.
Labor Market Participation
When asked to describe their work ethic, 96 percent of survey
respondents responded positively, using words such as good, excellent,
hardworking, dependable, timely, and honest. A senior man from Hancock
County explained, ``If I'm working as hard as I do, I want to have the
right to survive and live instead of going hungry.''
When the survey asked about the highest hourly wage at respondents'
last job, the median response was $10 per hour--below the Federal
poverty level for a family of four.
A very small portion of respondents reported receiving benefits at
their current or last job. Only 15 percent reported having access to
health insurance through their current or most recent employer.
Thirteen (13) percent currently have or previously had sick days, and
15 percent have or had vacation days.
Of those currently working either full time or part time, 78
percent still have to make difficult trade-offs between buying food and
paying for rent, health care, and other expenses.

``Jobs that are here just aren't paying. The standards, the
pay rates are not keeping up with the rest of the country.
Minimum wage has to be livable for the area that you're in.''
Middle-aged woman in Kennebec County.

``Many of the women that I work with . . . they're in that
position . . . if they don't have the means to feed their
family it might keep them in the abusive situation longer. That
fear of not keeping a roof over their heads or being able to
feed their kids is a big thing.''
Middle-aged woman in the Lakes Region.

``I consider my family low- to middle-income, but we struggle
every day.''
Mother in the Lakes Region.

With the collapse of the manufacturing industry in rural areas,
Mainers struggle to find work.

``I'm 67 years old, and if they brought a mill back, I'd go
back to work in a heartbeat.''
Senior man in Kennebec County.

``Back when he started, you had six guys on a paper machine.
Now you might have five guys on the entire floor, but they're
not on the floor . . . now it's all computer screens . . . you
don't need workers anymore.''
Working-age man in Kennebec County.

``The work is all fast food and jobs that don't pay them
enough.''
Senior man in Aroostook County.

Of those who were looking for work but having a hard time finding
it, fully \1/2\ faced significant barriers, such as[:]

schooling, training, or experience in the field in order to
prepare them for a job.

resources to improve their mental and/or physical health.

a driver's license, functioning car, or access to a vehicle
or public transportation in order to get back to work.

Some people need a job that accommodates special family
circumstances, e.g., a ``part-time night job so I can be home with my
kids because I'm a single parent.''
Survey Respondents' Thoughts on Ending Hunger in Maine
Ninety (90) percent of respondents agreed that Maine has a high
rate of hunger. Respondents point to three key factors: the ailing
labor market, lack of access to SNAP benefits, and lack of
transportation options. Maine jobs with livable wages are hard to come
by, and the seasonal and temporary nature of many jobs also contributes
to hunger. One respondent explained, ``Seasonal work is high in this
state, so a lot of people suffer in the winter.''
Many respondents noted that the closing of factories and mills,
which once provided lifetime employment for many Mainers, makes it hard
to get by in rural areas. For those who are lucky enough to have found
work, low wages in Maine keep people hungry. Respondents said that the
pay is insufficient to keep up on expenses while also buying food.
Lack of transportation also contributes to hunger. Respondents said
that lack of transportation not only makes it difficult for them to get
to food pantries and grocery stores, but also poses a major barrier to
getting to work. Respondents explained that transportation is
expensive: bus passes, gasoline, and upkeep for a vehicle all add up.

Respondents want to strengthen community and to form networks
for people to help one another. As one respondent said,
``people have to look after one another.''

When asked about solutions to hunger, respondents called for
livable wage jobs, increased availability of SNAP benefits, and
improved access to transportation. Many anticipate that boosting the
minimum wage will ease rates of hunger. Mainers want increased access
to public assistance programs like SNAP. One respondent asserted that
people should ``get more food stamps until you're stable on your
feet.'' Respondents called for eliminating both the time limit and the
asset test and for expanding access for all struggling Mainers to
participate in SNAP.
Mainers care for each other. One respondent said we need to ``find
a way to dispel the stigma of people who use public assistance,'' while
another says we must ``treat everyone equally,'' and another suggests
we should ``pay more attention to the needy and homeless'' to end
hunger. Respondents want to strengthen community and to form networks
for people to help one another. As one respondent said, ``people have
to look after one another.''
Discussion and Policy Recommendations
In Maine, we are both independent and interdependent people. When
Mainers have access to nutritious food, our communities thrive and
grow. Hunger hurts us all. When one Mainer experiences hunger, there is
a ripple effect: these are our friends, neighbors, grandparents, and
children.
Hunger has reached epidemic proportions in Maine. Our results show
that while SNAP is a critical safety net, it is not catching enough
people. SNAP policy changes have forced many Mainers to rely more
heavily on charitable food programs to meet their basic food needs, but
charity alone can't feed everyone who's hungry. Just like clean water,
public safety, and education, making sure everyone has enough to eat is
an obligation of a just society, not something that should be done only
when individuals and private donors feel generous.
Food pantries and soup kitchens are typically run by small,
grassroots groups struggling to meet the ongoing needs of communities
facing economic hardships. Churches, nonprofits, and other private food
charities have already been stretched too thin and are not the answer
to ending hunger in our nation. Charity is not enough, and Maine
families go without.
The trend toward reducing access to SNAP and forcing Mainers to
rely on charitable resources moves us toward a two-tiered food delivery
system: food pantries and soup kitchens for people living in poverty
and grocery stores for everyone else. Federal nutrition programs like
SNAP are the single fairest and most efficient way to feed low-income
Americans. When people get food from a food pantry, while it's a
laudable community effort, it is not a success. It's a failure of
American policy.

In the 1970s, the United States succeeded in virtually
eliminating hunger.

We must focus on the underlying problems of poverty and inequality.
Ending poverty could be within our reach; we just need to harness the
political will to do it. In the 1970s, the United States succeeded in
virtually eliminating hunger. Livable wage jobs and increased access to
USDA programs like SNAP and child nutrition programs in schools to fill
the gaps made ending hunger possible. Since the 1970s, Maine has been
on a steady decline: loss of manufacturing jobs, growing income
inequality, high rates of hunger and poverty.
Maine is at a crossroads. Will our state continue to rely on an
ever-expanding charitable food assistance system that cannot stem
rising food insecurity? Or will Maine start to turn the tide and, like
other states across the country, commit to ending hunger in our state?
We offer the following set of urgent and immediate policy
recommendations:

b Protect and preserve the Federal Supplemental Nutrition Assistance
Program (SNAP)[:]

Maintain SNAP's effective programmatic structure, which
enables it to[:]

respond to increased need in economic downturns.

meet the needs of increasing numbers of older
Mainers as our population
ages.

provide access to essential nutrition to those in
our communities who can-
not afford an adequate diet.

b Restore and bolster access to SNAP in Maine[:]

Pursue geographic waivers to the time limit in areas that
qualify for a Federal waiver because of high unemployment.

Pursue an exemption from the time limit for veterans.

Follow USDA guidance to ensure that exemptions for those
with work-limiting disabilities and those experiencing
homelessness are correctly and uniformly administered.

Join the vast majority of states in eliminating the asset
test for SNAP.

b Bolster childhood nutrition programs in schools[:]

Require high-need schools to serve breakfast after the
bell.

Invest in more summer meal sites across the state.

Eliminate the reduced-price category for school meals.

Create a statewide online application for school-based
meals.

b Support Maine workers and families[:]

Require basic benefits for all employees including sick
time and paid family leave.

Invest in job training and education programs for workers.

b Invest in transportation[:]

Develop programs that provide access to affordable
transportation for low-income Mainers through taxi fare
assistance, car donation, or subsidized lease or loan
programs.

Improve public transportation options statewide and
provide free or discounted bus passes to low-income people.

b Expand health care coverage[:]

Encourage legislators to accept Federal funds to make
MaineCare (Maine's Medicaid program) available to 75,000
Maine people with low-incomes who need health care and
can't afford it.

b Invest in affordable housing[:]

Build more permanent, affordable housing.

Fund Housing First initiatives to end homelessness in
Maine[:]

Increase access to housing vouchers.

Create a housing voucher option for TANF families.

In addition to implementing these policies, Maine should[:]

b Strengthen the charitable food assistance network to serve as an
effective emergency food system[:]

Invest in Maine's network of hunger relief charities as a
public-private partnership to ensure all Mainers have
access to nutritious food when and where they need it.

Your Background
------------------------------------------------------------------------
1. What town do you live in? 9. If you lost your benefits
____ because of the work requirements.
2. How many people are living check all that apply:
in your household that share {time} I looked for work but
meals? ____ couldn't find it
3. Check if someone in your {time} I was not able to find
household is: a volunteer placement
{time} A child under the age {time} I wanted more education
of 18 or training but couldn't get
{time} Age 60 or older it
{time} Has a disability that {time} I am not able to work
limits their ability to work but lost benefits anyhow
4. What is your age? -------- {time} I don't have
5. What is your gender? ---- transportation to get work/
volunteer
6. Do you currently receive {time} Other ____
Food Supplement (Food Stamps/SNAP) 10. If you lost your benefits
benefits? because of the work
{time} Yes {time} No requirements and participated in
a food supplement
6a. How much money in food employment and training program
stamps do you receive each month? did those services help you?
____ Please describe:
7. Did you or someone in your _________________________________
household lose food stamp benefits _______________
any time in the last year? _________________________________
_______________
{time} Yes {time} No 11. How often do you utilize a
food pantry now?
8. If yes, why did you (or {time} Once a week
they) lose benefits?
{time} I lost my benefits {time} Every 2 weeks
after 3 months because of {time} Once a month or more
the new work rule
{time} I had more than {time} Once every few months
$5,000 in assets
{time} I tried to reapply {time} I don't use a food
for benefits but my pantry
paperwork got lost 12. Did you use the food pantry
more this year
{time} I was not able to do than last year?
my interview in-person or {time} Yes
over the phone
{time} Other ____ {time} No
{time} I didn't use a food
pantry last year

13. If you have asked for help from Maine's Department of Health and
Human Services recently, please tell us about your experience. Are
these statements true or not true?

------------------------------------------------------------------------
True Not True N/A Statement
------------------------------------------------------------------------
DHHS staff helped me get the
information and help I needed.
------------------------------------------------------------------------
I was able to get through on
the phone to DHHS and get the
information I needed in a
reasonable amount of time.
------------------------------------------------------------------------
I was treated respectfully in
my interaction(s) with DHHS
staff.
------------------------------------------------------------------------
I discontinued my application
process/benefits because of my
experience.
------------------------------------------------------------------------
I experienced delays in
getting the help I needed.
------------------------------------------------------------------------
I received inconsistent
information from different DHHS
staff
------------------------------------------------------------------------

Cost of a Healthy Diet
------------------------------------------------------------------------
14. When do you use all of your 16. Do you ever have to make
food stamps? choices between spending money on
{time} On the first day I get food and spending money on other
them needs? (such as medications,
{time} During the first week I heating fuel, rent, car repairs,
get them etc.)
{time} Within the first 2
weeks after I get them
{time} They usually last 3-4 {time} Yes
weeks
15. Does your need for food go {time} No
up in the summer when your kids
are out of school?
{time} Yes 17. If yes, what sacrifices
{time} No have you had to recently make to
put food on the table?
{time} Not applicable _________________________________
______________
_________________________________
______________
------------------------------------------------------------------------
Work History
------------------------------------------------------------------------
18. Are you or anyone in your 24. Did any of your previous
household currently employed? three jobs last more than a year?
{time} Yes, full time {time} Yes
{time} Yes, part time {time} No
{time} No 25. What was your highest
hourly wage at your
19. If you are not working, current or last job?
would you take a job if one were _________________________
available?
{time} Yes 26. Which benefits do/did you
{time} No have at your current/last job:
20. If No, why not? {time} healthcare
________________________
_______________________________ {time} paid sick days
______________
If no, skip to question 28 {time} vacation
21. How would you describe your {time} childcare
work ethic?
_______________________________ {time} none
______________
_______________________________ 27. What services would be most
_______________ useful to help you find a job:
_______________________________ _______________________________
________________ _________________
22. If you had appropriate _______________________________
support or training, what would _________________
your dream job be?
_______________________________ _______________________________
________________ _________________
_______________________________ 28. What is your citizenship
________________ status?
_______________________________ _______________________________
________________ _________________
23. If you aren't working right 29. What is your ethnicity/
now, what do you think you need to race?
re-enter the labor market? {time} White
_______________________________ {time} Black
________________
_______________________________ {time} Hispanic/Latino
________________
_______________________________ {time} Middle Eastern
________________ {time} Asian
{time} Other: ____
30. Do you agree with this statement? Maine has a high rate of
hunger
{time} Yes
{time} No
If yes, why do you think there is so much hunger in Maine?
____________________________________________________________________
________________
____________________________________________________________________
________________
31. What changes are needed to make sure that you and others you
know have enough to eat?
____________________________________________________________________
________________
____________________________________________________________________
________________
____________________________________________________________________
________________
____________________________________________________________________
________________
32. Would you like to receive the results of this survey and
information about what we are doing to end hunger and how you can help?
If yes, please fill out the information below:
Name: ___________________________
Phone: ___________________________
E-mail: ___________________________
------------------------------------------------------------------------
Thank you for your participation!
------------------------------------------------------------------------

Appendix B
Focus Group Questions
Thank you for being here today. We are interested in finding out
the experiences of people in Maine struggling to make ends meet. We'll
be using this information to educate the public and inform policy
change. We appreciate your time and input. We plan to create a report
from this information and hold events moving forward. We would love for
you to be part of that. Please fill out the demographic form, the
consent form, and let us know if you'd like to stay involved. Your
answers today will remain completely confidential.

1. Please tell us your name and a little about yourself.

2. What do you do to get enough food for yourself and your family?

(What is a typical day for you? What is that like?)

3. What are some of the things that make it difficult to make ends
meet and get enough food? Can you explain?

(E.g., wages too low, not enough jobs, disability that limits
your ability to work, or disability in the house that
limits household income, rent too high, number of people in
the household sharing food, cost of childcare, lack of
transportation, other expenses--medical, rent,
transportation, etc.?)

4. What works about SNAP (Food Supp/Food Stamps)? Is there anything
you would change?

(Tell us experiences you or people you know have had with SNAP?
Have you lost SNAP? Do you know people who have lost SNAP?)

5. What would make it easier for you and others you know to have
enough to eat without having to come to a food pantry?

6. When you watch television, read the newspaper, or hear Maine
politicians speak, how do they portray Mainers living in
poverty?

(Do you think this is accurate? How does that make you feel?)

7. What do you think your life will be like in 5 years?

8. Is there anything else you think we should know that we didn't
think to ask?
Appendix C
In-Depth Interview Questions
Food:

Describe what you eat over the course of a week. What are the
ways you get your food?

Benefits:

What benefits are currently available to you? How do these
benefits affect your life? Your ability to get food (SNAP
status, been cut, why)?

Work:

Are you able to work? Can you describe your current work
situation (barriers, part-time, full-time, wages)? What kinds
of jobs did you have in the past?

What are the barriers to working faced by other people you
know?

Transportation:

In your daily life, how do get around? (get food, get to job,
public transportation, walking, biking, cabs, own or borrow
car)

How do you get to your food sources?

Perceptions:

In your view, how do the media and politicians depict Mainers
in poverty? In general, how well do you feel supported by
society?
Appendix D
Survey Respondent Demographics

Table 1. Respondent Characteristics
------------------------------------------------------------------------

------------------------------------------------------------------------
Number of Percent of Mean
respondents respondents
------------------------------------------------------------------------

Age (n = 1,991) 52

------------------------------------------------------------------------

------------------------------------------------------------------------
<18 5 0.25
18-24 88 4.42
24-44 565 28.38
45-64 875 43.95
65-84 434 21.8
85+ 24 1.21
------------------------------------------------------------------------
Gender (n = 1,903)
------------------------------------------------------------------------
Female 1,265 66.47
Male 628 33.00
Other 10 0.53
------------------------------------------------------------------------
Race/ethnicity (n = 1,758)
------------------------------------------------------------------------
White 1,634 92.95
Black 62 3.53
Hispanic 29 1.65
AI/AN 21 1.19
Other 12 .69
------------------------------------------------------------------------

Table 2. Household Characteristics
------------------------------------------------------------------------

------------------------------------------------------------------------
Number of Percent of Mean
respondents respondents
------------------------------------------------------------------------

Number in household 2.7

------------------------------------------------------------------------

------------------------------------------------------------------------
One 545 27.68
Two 563 28.59
Three 326 16.56
Four 247 12.54
Five 159 8.08
Six or more 129 6.55
-----------------------------------------------------
Total........... 1,969
------------------------------------------------------------------------
Households with children under 18
------------------------------------------------------------------------
Yes 725 35.31
No 1,328 64.69
-----------------------------------------------------
Total........... 2,053
------------------------------------------------------------------------
Households with member with disability
------------------------------------------------------------------------
Yes 1,009 49.15
No 1,044 50.85
-----------------------------------------------------
Total........... 2,053
------------------------------------------------------------------------
Households with member over 60 years of age
------------------------------------------------------------------------
Yes 777 37.85
No 1,276 62.15
-----------------------------------------------------
Total........... 2,053
------------------------------------------------------------------------

THE NEXT FARM BILL

(LIVESTOCK PRODUCER PERSPECTIVES)

----------

TUESDAY, MARCH 21, 2017

House of Representatives,
Subcommittee on Livestock and Foreign Agriculture,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:02 p.m., in
Room 1300 of the Longworth House Office Building, Hon. David
Rouzer [Chairman of the Subcommittee] presiding.
Members present: Representatives Rouzer, DesJarlais,
Marshall, Conaway (ex officio), Costa, Bustos, Plaskett, Evans,
and Peterson (ex officio).
Staff present: Caleb Crosswhite, Mykel Wedig, Patricia
Straughn, Stephanie Addison, Mary Knigge, Matthew MacKenzie,
Troy Phillips, and Carly Reedholm.

OPENING STATEMENT OF HON. DAVID ROUZER, A REPRESENTATIVE IN
CONGRESS FROM NORTH CAROLINA

The Chairman. This hearing of the Subcommittee on Livestock
and Foreign Agriculture entitled, The Next Farm Bill: Livestock
Producer Perspectives, will come to order.
I would like to welcome everyone here this afternoon, and
thank all of you for gathering here again as the Committee
continues its work to reauthorize the farm bill prior to its
expiration next fall.
Last month this Subcommittee held a hearing on the
importance of USDA's trade promotion and market development
programs, and the benefits they bring to the agricultural
sector as a whole. Today, we will highlight a variety of issues
facing the livestock industry.
From wildfires across the Plains, to recently confirmed
cases of High-Path Avian Influenza in Tennessee, to an ongoing
battle against cattle fever ticks in south Texas, there is no
shortage of challenges facing America's livestock producers. On
top of that, there are a host of ill-conceived and burdensome
Federal regulations to contend with, including the so called
GIPSA rules that threaten producers' longstanding marketing
arrangements and the National Organic Program standards that go
well beyond the scope of the law by mandating animal welfare
practices. Now, I know that livestock producers are a resilient
bunch, but I am hopeful that the new Administration will
continue efforts to roll back these regulations, just as they
have, for example, with the disastrous Waters of the United
States regulation.
I am eager to hear from those of you here today about how
all of these issues are affecting your operations, which USDA
programs and initiatives have proven most beneficial in
mitigating those effects, and what sort of tweaks or
modifications might be needed to be made to those programs in
the next farm bill. In addition to enhancing and supporting
existing programs, I understand that that there is widespread
interest, and I certainly have an interest in it as well, in a
new provision designed to bolster the United States' ability to
respond to the potential outbreak of devastating animal
diseases; namely foot-and-mouth disease, or FMD, as we call it.
In exploring the linkages between agriculture and national
security last Congress, this Subcommittee developed a better
understanding of the devastation that would result from such an
outbreak, and the need to improve our response capability. I
look forward to hearing more specifics today about your
proposals for establishing and funding such an effort.
Again, thank you all for being here.
[The prepared statement of Mr. Rouzer follows:]

Prepared Statement of Hon. David Rouzer, a Representative in Congress
from North Carolina
Good afternoon, and thank you all for gathering here again this
afternoon as the Committee continues its work to reauthorize the farm
bill prior to its expiration next fall.
Last month this Subcommittee held a hearing on the importance of
USDA's trade promotion and market development programs and the benefits
they bring to the agricultural sector as a whole.
Today we will highlight a variety of issues facing the livestock
industry.
From wildfires across the Plains, to recently confirmed cases of
high path avian influenza in Tennessee, to an ongoing battle against
cattle fever ticks in south Texas, there is no shortage of challenges
facing America's livestock producers.
On top of that, there are a host of ill-conceived and burdensome
Federal regulations to contend with, including the so called ``GIPSA
rules'' that threaten producers' longstanding marketing arrangements
and the National Organic Program standards that go well beyond the
scope of the law by mandating animal welfare practices.
I know that livestock producers are a resilient bunch, but I am
hopeful that the new Administration will continue efforts to roll back
these regulations, just as they did with the disastrous Waters of the
United States rule.
I am eager to hear from the industry leaders here today about how
all of these issues are affecting your operations, which USDA programs
and initiatives have proven most beneficial in mitigating those
effects, and what sort of tweaks might need to be made to those
programs in the next farm bill.
In addition to enhancing and supporting existing programs, I
understand that that there is widespread interest in a new provision
designed to bolster the United States' ability to respond to the
potential outbreak of devastating animal diseases--namely Foot-and-
mouth disease (FMD).
In exploring the linkages between agriculture and national security
last Congress, this Subcommittee developed a better understanding of
the devastation that would result from such an outbreak and the need to
improve our response capability. I look forward to hearing more
specifics today about your proposals for establishing and funding such
an effort.
Again, thank you all for being here. I now yield to the Ranking
Member for his remarks.

The Chairman. I now yield to the Ranking Member for his
remarks.

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

Mr. Costa. Thank you very much, Mr. Chairman. And I want to
welcome our witnesses to this Subcommittee hearing, and Members
of the Subcommittee.
The next farm bill, obviously, is what we are focused on,
and livestock producer perspectives are an interest to the
entirety of this Subcommittee, certainly with the livestock
producers that I represent in California. We understand the
important role you play every day in putting dinner on
America's dinner table.
As we begin the process of formulating the farm bill, this
hearing and other hearings like it play an important role in
giving us the opportunity to hear from you as to what changes,
modifications we ought to be considering in the reauthorization
of the farm bill. At a time when there are many voices that are
calling to increase the production of American products, we
have before us today representatives that are very capable at
increasing that production, not only by raising domestic
products consumed by Americans, but also creating the
opportunity for more jobs and being able to export those
products around the world.
Our livestock producers, all of you represented here, from
beef to poultry, to the other commodities, represent 42 percent
of our domestic and global markets that are increasingly a
significant part of this effort, and people understand the high
quality of the products you produce. Nobody does it better.
Today's hearings, I know the Chairman and I believe, will
cover issues that we have been working on in the past so that
you can continue to maintain that high-level productivity, and
be able to compete in those foreign markets.
We hear about the importance that animal health plays in
stabilization of markets globally, and the effect regulations
can have on the livestock industry. One such regulation in
which there is bipartisan support is the U.S. Department of
Agriculture Grain Inspection, Packers and Stockyards
Administration's, otherwise known as GIPSA, proposed rule. We
are very concerned about the potential interruption of
livestock and poultry industries, and the massive costs that
could be added as a result of that. Last year, the Congress
responded to prevent that rule from taking effect. If it were
to, it would fundamentally, as the Chairman said, negatively
change the way livestock industry and poultry industry has been
able to market in this country for decades, and also the value-
added, and value-added is an important part of everything you
do.
These agreements are important, they help producers get
more return on their animals, and the last thing we want to do
is open up a situation to a flood of baseless litigation.
Clearly, if USDA does not withdraw this rule, Congress must
continue to act legislatively.
As important as marketing is here at home, our producers'
ability to export their goods is very important in California.
We obviously produce more than we can consume in so many of the
commodities we produce, and that is why I feel very strongly we
must not, not retreat from international trade agreements. And
I am very concerned about the Administration's comments as it
relates to NAFTA, its impacts with our trading partners in
Mexico and in Canada, and our ability to work with our partners
in Asia. Last week, the Trans-Pacific Partnership met in South
America without us. I think that was a mistake for us.
Obviously, we have other markets where we need to have fair
and level playing fields as it relates to the Europeans, and so
we must be working with you as a partnership to ensure access
to those markets remains and improves. The vast growth
potential for our livestock products resides overseas, and
trade agreements help open those doors to these markets.
With growing production comes growing demand for labor, and
let me just be plainspoken here, as Sergeant Friday used to
say, ``Just the facts, ma'am.'' Seventy percent of our
agricultural labor force in California is undocumented. That is
the reality. They came to this country for a lot of different
reasons, but primarily to seek a better life for themselves and
their families, and provide the necessary labor to care for all
these various kinds of agricultural productivity that we see in
the various commodities that we produce. However, because the
livestock production is not seasonal, producers are not
eligible to use the H-2A visa system, and that is a problem. We
know we have a broken immigration system in this country, and
we must figure out how to go about fixing it in a bipartisan
manner. I get calls from students, from families, from
farmworkers, from labor contractors, and from farmers and farm
organizations, in which there is a shortage of the necessary
labor to do the work. And clearly, we need to do something
about this in a constructive, positive sort of way, that does
not bring further fear in so many of the farming communities
that I represent.
Mr. Chairman, I look forward to hearing the testimony of
our witnesses. And I thank you for convening this hearing.
The Chairman. I thank the Ranking Member. I noticed that
the Chairman of the full Committee has joined us. And, Mr.
Chairman, I don't know if you have an opening statement you
would like to make?

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

Mr. Conaway. I am just glad to be here and participate in
the hearing, and look forward to what our witnesses have to
say.
The Chairman. The chair would request that other Members
submit their opening statements for the record so the witnesses
may begin their testimony, and to ensure that there is ample
time for questions.
I would like to welcome our witnesses to the table. And,
Mr. Chairman, I understand there is one in particular that you
would like to introduce.
Mr. Conaway. Well, I do. Bob is here, Bob Buchholz from
Eldorado, Texas. Bob is a good, long time friend of mine. I
used to get to represent that community for the first 8 years I
was in Congress, and Bob and I have had more than several
occasions to have conversations. He is here today representing
the American Sheep Industry Association, and while I don't
represent the home, I represent part of the ranch, and I hope
it is the tropical part of the ranch that gets most of the
rain, but the rest of his place is in Will Hurd's district. So,
Bob, thanks for being here today. I appreciate you coming up.
The Chairman. Thank you, Mr. Chairman.
We also have Mr. Craig Uden, President of the National
Cattlemen's Beef Association. Thank you for being here. We have
Mr. Carl Wittenburg, Chairman of the National Turkey
Federation. And then we have my good friend, Mr. David Herring,
Vice President, National Pork Producers Council, from Newton
Grove, North Carolina, right around the corner from where I
reside. And, David, great to have you here again.
Mr. Uden, please begin when you are ready.

STATEMENT OF CRAIG UDEN, PRESIDENT, NATIONAL
CATTLEMEN'S BEEF ASSOCIATION; PARTNER, DARR
FEEDLOT, INC., JOHNSON LAKE, NE

Mr. Uden. Thank you. Chairman Rouzer, Ranking Member Costa,
thank you for allowing me to testify on behalf of the United
States beef industry today.
I am Craig Uden, a fourth generation cattleman from Johnson
Lake, Nebraska, and current President of NCBA. I am a partner
in Darr Feedlot, Inc., a commercial cattle feeding operation,
and my wife, Terri, and I own and operate 3 cow/calf
operations. Today I would like to discuss the 2018 Farm Bill,
and the cattle industry's priorities as you all begin to
assemble this important legislation.
We oppose agricultural policies that pit one industry
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. We continue to oppose attempts to narrow business
options or limit the individual freedom of livestock producers
to market their product. We will oppose the inclusion of a
livestock title as we believe the items with industry-wide
support can be included in the miscellaneous title. The vast
majority of cattle producers also oppose the involvement of the
Federal Government in determining how their cattle are
marketed.
The NCBA is in opposition of the Grain Inspection, Packers
and Stockyards Administration, GIPSA, interim final rule on
competitive injury. The rule has been opposed by cattle
producers since it was first introduced in 2010, and they
continue to oppose it today.
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 they will not be willing to open themselves up to
these frivolous lawsuits that this change in the competitive
injury standard would create. We believe this rule would
eliminate value-based marketing programs, and negatively impact
producers and ultimately consumers.
In that same vein, NCBA also opposes any attempts to
restrict the ownership of livestock. In the past, a handful of
Members of Congress have proposed language placing restrictions
on packer ownership of livestock, commonly referred as the
packer ban. These types of restrictions would limit the
marketing options available to our producers, and would
represent interference in the marketplace by the Federal
Government.
NCBA would also like to reiterate its opposition to
mandatory government-run COOL. Repeal of the previous mandatory
program was necessary since, after 6\1/2\ years of
implementation, it provided no market benefit to beef producers
or consumers.
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. I would also like to mention today
a need for a stronger, more adequate foot-and-mouth disease,
FMD, vaccine bank. Estimates show 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 the livestock producers, auction markets,
slaughterhouses, food processors, as well as consumers. NCBA
would be requesting the support of this Committee for dedicated
funds of $150 million a year for 5 years, to develop a more
robust bank.
Research is another topic that is of great importance to
the beef industry. We support increased funding for research on
production practices, genetics, animal diseases, economics,
nutrition, food safety, and environmental impacts. Trade is
vital to the beef industry, and protecting trade promotion
programs such as Foreign Market Development and Market Access
Programs within the 2018 Farm Bill are extremely important.
As 96 percent of the world's consumers live outside the
U.S., we recognize the growth and profitability of the U.S.
cattle and beef industry is closely tied to our ability to
market our products to those customers.
Finally, I ask that you help us protect the national beef
check-off. This check-off is a producer-led and funded research
and promotion program that has helped our industry with food
safety, nutrition, recipe development, and the successful Beef,
It's What's for Dinner advertising campaign. The success of the
check-off is why the majority of beef producers in this country
still support it.
On behalf of all cattle producers, thank you for allowing
me to come testify today. We look forward to working with each
of you on the development of the 2018 Farm Bill.
[The prepared statement of Mr. Uden follows:]

Prepared Statement of Craig Uden, President, National Cattlemen's Beef
Association; Partner, Darr Feedlot, Inc., Johnson Lake, NE
Chairman Rouzer, Ranking Member Costa, thank you for allowing me to
testify on behalf of the United States Beef industry today. I am Craig
Uden, a fourth-generation cattleman from Elwood, Neb. and I am a
partner in Darr Feedlot Inc., a commercial cattle feeding operation.
My wife Terri and I also own and manage three commercial cow/calf
operations. My daughter Blair and her husband are involved in
agribusiness and they own a registered Red Angus operation in
Minnesota. My son Andrew lives in Lincoln, NE and owns a high tech
agriculture company that runs data analytics, and he still finds time
to run cattle. I have always been active in helping to shape the ever-
challenging and changing beef industry. I believe in giving back to an
industry that has been good to me, and while I have stepped aside from
the day to day management, I still enjoy buying and selling cattle and
building relationships within this industry. People in the cattle
business work towards a common goal to improve and learn so that their
industry is sustainable for future generations.
I am currently serving as NCBA President, and I have been involved
in a number of positions on the local and state level, including past
Chairman and elder of Trinity Lutheran Church in Lexington, Nebraska,
member and past chair of the Dawson County Cattlemen, and a 4-H leader.
Along with serving on the Nebraska Beef Council, I have served on the
Nebraska Cattlemen's Board of Directors as a Committee Chairman and
Vice Chairman, the Nebraska Cattlemen's Research & Education
Foundation, and am involved in the Nebraska Feedlot Council. I am also
a member of Nebraska Ag Builders and sit on the Foundation Board of
Alpha Gamma Rho Fraternity.
Today I would like to discuss the 2018 Farm Bill and the cattle
industry's priorities as you all begin to assemble this important
legislation. Development of this next farm bill is an important process
for livestock producers. Whether directly or indirectly, the programs
that are included in this farm bill have lasting effects, and sometimes
a dramatic impact on livestock producers. We 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.
We also oppose inclusion of a ``livestock title'' in the next farm
bill. Items with industry-wide support can be included in the
``miscellaneous title.'' I ask for the support of Members of this
Committee in opposing a livestock title in the next farm bill.
The vast majority of 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 their consumers and their specific needs and requests. 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 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.
In that same v[e]in, NCBA also opposes any attempts to restrict the
ownership of livestock. There have been times previously that a handful
of Members of Congress have proposed language placing restrictions on
packer ownership of livestock, commonly referred to as the ``packer
ban.'' These types of restrictions would limit the marketing options
available to our producers and would represent interference in the
marketplace by the Federal Government which we adamantly oppose.
Furthermore, attempts to put a ``packer ban'' in place have been tried
in the past and have failed under both Republican and Democrat control
of Congress.
NCBA would also like to reiterate its opposition to country-of-
origin labeling (COOL) and any mandatory COOL programs. Repeal of the
previous mandatory program was necessary since, after 6\1/2\ years of
implementation, it provided no market benefit to beef producers. 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. 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 Nebraska, 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 testified about 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. The economic consequences also include trade disruptions and
decreased tourism.
NCBA will be requesting the support of this Committee 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 the amount of
$150 million a year for five years. In addition, we support more work
around Foreign Animal Disease preparedness that will continue to shed
light on our response plans that recognize the limitations of current
vaccination capabilities in an FMD outbreak.
Research is another topic that is of great importance to the beef
industry. We support increased funding for research on production
practices, genetics, animal diseases, economics, nutrition, food
safety, and environmental impacts. The research components of USDA and
our land-grant universities continue to provide critical knowledge to
our industry allowing us to be the most efficient and effective
producers possible. The impact of environmentally sensitive lands and
species on agricultural operations is a critical component in advancing
animal agriculture. Increased investment in this type of research is
vital to the security and viability of our agricultural industry and
overall food supply.
Trade is vital to the beef industry, and protecting trade promotion
programs such as the Foreign Market Development and the Market Access
Programs within the 2018 Farm Bill, are important to us. Ninety-six
percent of the world's consumers reside outside U.S. borders. We
recognize that the growth and profitability of the U.S. cattle and beef
industry is closely tied to our ability to market our products to those
consumers. We support international trade policies that aggressively
pursue expanded market access for U.S. beef, enforce trade agreements
that are based on internationally recognized standards and guidelines,
and hold our trading partners accountable for their international trade
commitments.
Since I am here testifying on behalf of the cattle industry, I
wanted to briefly mention an item of great concern to our producers
down in Texas, and that is the ongoing problem of Cattle Fever Ticks.
These ticks carry and spread a blood parasite that causes Bovine
Babesiosis commonly known as Texas Cattle Fever or Cattle Fever, a
devastating disease for the industry. Symptoms of Cattle Fever include
anemia, seizures, high fever, aggressiveness and jaundice, resulting in
decreased milk production, poor weight gain, damaged hides and leading
to death in 90% of cattle not previously exposed. They were effectively
eradicated from the United States in 1943, after which a Permanent
Fever Tick Quarantine Zone was established along 500 miles of Texas'
southern border with Mexico, to contain natural fever tick movements to
the United States/Mexico border.
NCBA is working closely with USDA-APHIS Veterinary Services to
adequately respond to current fever tick outbreaks and protect against
further outbreaks in the United States. The hope is to improve current
technologies and develop new ones, and also to encourage all public
lands to be required to comply with the same regulations as private
landowners, for the prevention and treatment of cattle fever tick. NCBA
would encourage continued work between USDA-APHIS, the Texas Animal
Health Commission, and any other interested parties to work in
collaboration to eradicate this pest.
I wanted to also take a moment to mention our support for the
programs established under the permanent disaster provisions of the
2014 Farm Bill. Currently we do not have any suggestions on ways to
improve these programs. However, with the ongoing rangeland fires
occurring in the Midwest and Texas, barring any concerns that may arise
from these tragic events, we will not seek any changes within the 2018
Farm Bill.
Finally, I ask that you help us protect the national beef check-
off. The check-off is a producer-led and funded research and promotion
program which has helped our industry with food safety, nutrition,
recipe development, and the successful ``Beef, It's What's For Dinner''
advertising campaign. The success of the check-off is why the majority
of beef producers in this country still support it. In fact, several
states have passed local referendums to increase their state check-offs
because they know it is a sound investment in our future. The check-
off, however, has come under attack by a small minority who don't want
to pay or support the check-off. We will fight any attempt to attack,
change, or kill the national beef check-off. We have a model that is
working well, and we need to let it continue its positive work for the
beef industry.
Thank you again for the opportunity to provide testimony today on
behalf of NCBA and the beef industry. We look forward to working with
this Committee and a wide range of interested stakeholders to help
craft a bill that helps agriculture move forward in the best possible
way. Working towards conservation program improvements, protecting
research funding, keeping the government out of cattle marketing, and
allowing producers to manage decisions regarding the check-off, are
issues of critical importance. On behalf of all cattle producers, thank
you and we look forward to working with each one of you on the
development of the 2018 Farm Bill.

The Chairman. Thank you, Mr. Uden.
Mr. Wittenburg.

STATEMENT OF CARL WITTENBURG, CHAIRMAN, NATIONAL TURKEY
FEDERATION, ALEXANDRIA, MN

Mr. Wittenburg. Good afternoon, Chairman Rouzer, Ranking
Member Costa, and Members of the Subcommittee.
My name is Carl Wittenburg, and I am the current Chairman
of the National Turkey Federation, as well as President of the
Protein Alliance in Alexandria, Minnesota. My wife, Sharlene,
and I raise 100,000 turkeys annually for Northern Pride on our
family farm in Wyndmere, North Dakota.
I appreciate the opportunity to testify before you today on
the turkey industry's priorities for the upcoming farm bill,
and we look forward to working with this Committee.
After suffering through the worst animal disease outbreak
in U.S. history in 2015, the turkey industry has made
significant strides in recovering from Highly Pathogenic Avian
Influenza. As an industry, we learned many lessons from the
outbreak; however, the road ahead remains long, and as an
industry, we will need continued support from Congress to
assist APHIS to reduce the long-term impacts. High-Path AI is
not going away overnight, it is a global problem, and the time
is now to start an international discussion on limiting trade
impacts when using vaccination as an eradication strategy.
While we fully understand and respect the implications, we
cannot shy away from this timely discussion. Recent High-Path
AI outbreaks in Tennessee and Alabama remind us all this
disease is still a danger and can strike at any time.
As the Committee begins writing the farm bill, NTF is
asking for the addition of a forward-looking, mandatory animal
pest and disease prevention program, and a foot-and-mouth
vaccine bank designed to limit the impacts of foreign diseases
on American livestock and poultry producers.
As partners in the Animal Ag Coalition, we hope to further
the concept that an ounce of prevention is worth a pound of
cure, and focus Federal dollars on targeted efforts that reduce
foreign diseases' ability to gain a foothold here in the United
States.
There are 4 key areas of focus for our proposal. First, the
Animal Pest and Disease Disaster Prevention Program,
administered by APHIS, would build upon the 2014 Farm Bill's
authorization of NAHLN Network. This aims to provide crucial
resources to prepare and prevent a crisis, bringing together
the Federal Government, states, industry, and universities to
provide rapid detection and response capabilities, develop
mitigation technologies including vaccines, identify and
support critical research needs. Second, it would establish a
long-needed foot-and-mouth vaccine bank strategy. Third, it
would provide for the development of a block grant system that
allows states to strategically target areas of concern. Fourth
and final, this program would be structured to take full
advantage of science generated by the National Institute of
Food and Agricultural program in order to protect our
investment in this vital sector of the economy. We will be
asking Congress to support our request for this new program.
International trade is a major engine in the U.S. growth,
therefore, it is critically important to the economic health of
the U.S. agriculture and food industry to continue to support
the North American Free Trade Agreement. As an industry, our
trade relationships with Mexico and Canada are extremely
important.
The turkey industry continues to support the establishment
of an Under Secretary for Trade and Foreign Agricultural
Affairs at USDA, a provision which was contained in the 2014
Farm Bill. Such a position will bring unified, high-level
representation to key trade negotiations with senior officials
and within the Executive Branch.
Finally, over 6 years ago, USDA proposed sweeping rule
changes on farmer contracting. With the expiration of a
Congressional prohibition on implementing those changes, USDA
pressed forward in the final months of the Obama Administration
to reattempt a fundamental change to the rules by which our
members operate. Congress should reaffirm its opposition to
this rulemaking, and USDA should withdraw the rule.
Thank you for the opportunity to testify today on the
turkey industry's key farm bill priorities, and the issues
impacting our business. I will be happy to answer any
questions.
[The prepared statement of Mr. Wittenburg follows:]

Prepared Statement of Carl Wittenburg, Chairman, National Turkey
Federation, Alexandria, MN
Good afternoon, Chairman Rouzer, Ranking Member Costa, and Members
of the Subcommittee. My name is Carl Wittenburg, and I am the current
Chairman of the National Turkey Federation, as well as President of
Protein Alliance in Alexandria, Minnesota. My wife Sharlene and I raise
100,000 turkeys annually for Northern Pride on our family farm in
Wyndmere, North Dakota. Protein Alliance is the exclusive sales
representative for Northern Pride, a 27 farmer-owned cooperative that
processes 3 million turkeys annually in Thief River Falls, MN, located
in Congressman Peterson's district. I appreciate the opportunity to
testify before you today on the turkey industry's priorities for the
upcoming farm bill. The turkey industry raises approximately 238
million turkeys annually, and provides employment to over 63,000 people
nationwide, directly associated with breeding, hatching, raising and
processing turkeys. 2017 turkey production is forecast at 6.4 billion
pounds, up 7.3% from 2016. Those of us in the turkey business continue
to be challenged with a multitude of issues, and we look forward to
working with this Committee to address some of our concerns through the
2018 Farm Bill.
Animal Disease and Disaster Prevention Program
Since 2015, the turkey industry has made significant strides in
recovering from Highly Pathogenic Avian Influenza (HPAI), after
suffering through the worst animal disease outbreak in U.S. history.
The losses from HPAI were personal and weighed heavily upon farmers,
rural communities, and companies from the West coast to the Midwest. As
an industry, we learned many lessons from the outbreak, and the way we
quickly contained a similar case of HPAI in Indiana last year indicates
the industry is applying those lessons to reduce the chances of a
future outbreak. However, the road ahead remains long and as an
industry we will need continued support from Congress to assist USDA/
Animal Plant Health Inspection Service (APHIS) to reduce the long-term
impacts. HPAI is not going away overnight; it is a global problem and
the time is now to start an international discussion on limiting trade
impacts when using vaccination as an eradication strategy for HPAI.
While we fully understand and respect the implications of the U.S.
using this tool without first getting agreement from our trading
partners, we cannot shy away from this timely discussion. In the past
year alone, we have seen large poultry producing countries in Europe,
Asia, Africa, North and South America all have to deal with devastating
bouts of the disease. The global spread of HPAI illustrates that no
country is immune and the U.S. must be a leader to begin this difficult
discussion--there is technology that can ensure that we safeguard our
exports to trade partners. Additionally, we are reminded by the recent
HPAI outbreak in Tennessee that this disease is still very much a
danger and can strike at any time. This is why; NTF is still concerned
with the ill-advised Organic Rule's outdoor access requirements as it
simply mandates more un-necessary risk of contact with other animals
carrying the disease that could have far reaching impacts. We just do
not need to take this risk.
As the Committee embarks on the reauthorization of the farm bill,
NTF is asking for the addition of a forward-looking, mandatory Animal
Pest and Disease Prevention Program and Foot and Mouth Vaccine Bank
designed to limit the impacts of foreign diseases on American livestock
and poultry producers. As partners in the Animal Ag Coalition, which
represents all facets of animal ag production, we hope to build upon
the concept that ``an ounce of prevention is worth a pound of cure''
mantra and focus Federal dollars on targeted efforts that reduces
foreign diseases ability to gain a foothold here in the first place.
Animal agriculture is a major economic driver for our nation and
this program will have a huge impact on protecting the industry from
foreign diseases. According to the Farm Income Atlas administered by
USDA's Economic Research Service, total cash receipts for animals and
animal products was over $212.2 billion in 2014. This represents over
fifty percent of all farm cash receipts. In addition, a recent study
commissioned by the United Soybean Board found that the total economic
impact of the livestock and poultry industry in the United States was
$440.7 billion in 2014. In order to protect our investment in the vital
sector of the economy, we will be asking Congress to support our
request for this new program.
In recent years, disease outbreaks have cost billions in production
losses and response costs. According to APHIS, the 2015 avian influenza
outbreak cost taxpayers $1 billion in response, clean up, and indemnity
costs. That doesn't include lost export markets, temporary shortages,
or price increases for certain poultry products.
There are four key areas of focus of our proposal: First, the
Animal Pest and Disease Disaster Prevention Program, administered by
APHIS, would build upon the 2014 Farm Bill's authorization of the
National Animal Health Laboratory Network (NAHLN) that provide crucial
resources to prepare, prevent, and respond before and during times of
crisis. This support will bring together the Federal Government,
states, industry, universities, as well as other interested groups to
reduce the impact of high-consequence animal diseases, provide rapid
detection and response capabilities, develop disease prevention and
mitigation technologies including vaccines, prevent the entrance and
spread of foreign animal diseases into the United States, and identify
and support critical research needs.
Second, it would establish a long-needed Foot-and-Mouth Vaccine
Bank strategy. Third, it would provide for the development of a block
grant system that allows states and other key players to strategically
target areas of concern. Finally, it is envisioned that this program
would be structured to take full advantage, through support and
collaboration, of the science generated by the National Institute of
Food and Agriculture (NIFA) program. Federal investments using
mandatory funding mechanisms available through the farm bill would play
a critical role in building capacity to meet evolving needs in animal
disease prevention.
Trade
International trade is critically important to the economic
vitality of the U.S. agriculture and food industry, and is a major
engine of U.S. economic growth. I should start by restating our support
for the North American Free Trade Agreement (NAFTA). Mexico accounts
for more than \1/2\ of all turkey exports, and almost 10 percent of all
turkey produced in the United States is shipped to Mexico. Ironically,
the agreement as originally written was not overly favorable to the
industry, but it created a framework by which we were able to negotiate
additional shipments to Mexico prior to the agreement's ultimate
removal of all tariff and quota barriers. As an industry that relies on
healthy and productive trade relationships, we in the turkey business
would be severely impacted if access to this market were in any way
damaged. The turkey industry is the fourth-largest protein supplier in
the United States which plays a critical role in the rural communities
and states that rely on a thriving and growing industry and this
agreement supports those people directly.
NTF recognizes the need to keep American industry competitive, add
jobs, and grow the U.S. economy, but we should do this while keeping in
mind areas where we have excelled. Meat and poultry processing is an
example of this agreement's success. We look forward to working with
Congress and the new Administration in preserving and expanding upon
the gains our sector has achieved within the North American market
while strengthening our competitiveness around the globe.
To that end, the turkey industry continues to support the
establishment of an Under Secretary for Trade and Foreign Agriculture
Affairs at USDA, a provision contained in the 2014 Farm Bill. Such a
position will bring unified high level representation to key trade
negotiations by senior officials within the Executive Branch. It will
also allow the Administration to recruit an Under Secretary who has
extensive experience in international trade negotiation and policy
issues. We believe it is vitally important for U.S. agriculture to
fully capitalize on the long-term, increased global demand of U.S. farm
and food products in an increasingly competitive world marketplace.
USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA)
Finally, over Six years ago, USDA proposed sweeping rules changes
on farmer contracting. With the expiration of a Congressional
prohibition on implementing those changes, USDA, under the Obama
Administration, pressed forward in the final months of office to once
again threaten a fundamental change to the rules by which our members
operate and will create a greater legal and regulatory risk. We
continue to believe that the changes would increase costs, reduce
productivity, and possibly lead to increased live production ownership
by integrated poultry companies, to the detriment of independent
farmers. Congress should reaffirm its opposition to this rulemaking and
USDA should withdraw the rule.
Thank you for the opportunity to testify today on the turkey
industry's key farm bill priorities and the issues impacting our
business. I will be happy to answer any questions.

The Chairman. Thank you, Mr. Wittenburg.
Mr. Buchholz.

STATEMENT OF BOB BUCHHOLZ, REPRESENTATIVE,
EXECUTIVE BOARD FOR REGION V, AMERICAN SHEEP
INDUSTRY ASSOCIATION, ELDORADO, TX

Mr. Buchholz. Chairman Rouzer, Ranking Member Costa, and
Members of the Livestock Subcommittee, thank you for the
opportunity to speak with you today.
I am Bob Buchholz, a third-generation sheep and meat goat
producer from central Texas, a Member of the Board of Directors
of the American Sheep Industry Association, past President of
the Texas Sheep and Goat Raisers' Association. I am here today
representing the nation's 88,000 sheep producers.
My testimony today will focus on ASI's farm bill
priorities. My written testimony will offer a deeper view of
the general state of the sheep industry and challenges outside
the scope of the farm bill.
American sheep producers support rural communities, the tax
base, local businesses, providing both lamb and wool. From the
farm and ranch to the retail level, the sheep industry has a
total annual economic impact of $2.7 billion, and supports
nearly 98,000 sheep industry-related jobs.
First, I would like to talk about the fires in Oklahoma,
Texas, Kansas, and New Mexico, which have burned almost 1\1/2\
million acres, and forced many farmers and ranchers to move or
sell their livestock. I understand the devastation and droughts
and wildfires have caused to the livestock producers. During
the drought in 2011, I was also a victim of wildfires. My ranch
was part of a 252,000 acre fire that burned part of Crockett
and Val Verde Counties. Fences and improvements were burned to
the ground. Without disaster programs that helped me and my
fellow livestock producers, I would not be ranching today. The
Emergency and Conservation Program and Wildfire Mitigation
Program, funded in part by the USDA EQIP Program, helped in
rebuilding miles of burned-out fences for the producers in my
area. I did not lose livestock from this fire, but many
producers in the recent fire did lose some or all of their
animals. The Livestock Indemnity Program will help producers
recover part of the value of those lost livestock. The value of
these programs to the producers devastated by natural disaster
is a financial savior, and will allow many of them to continue
ranching. I personally thank all the people involved in
creating and implementing the FSA and NRCS programs that saved
me and my fellow operators during our trying times.
It is also important that in this farm bill we consider
protection from another sort of farm disaster, and that threat
posed by the introduction of foot-and-mouth disease, either
inadvertently or intentionally. While we must do everything we
can to eliminate the risk of reintroduction of foot-and-mouth,
we must also be prepared in the event of an outbreak. It is
critical that the U.S. producers have immediate access to a
viable vaccine bank. We join with other livestock industries to
support the creation and maintenance of a foot-and-mouth
disease vaccine bank, and continued research to protect the
U.S. livestock industry from a foot-and-mouth outbreak.
We support risk management for sheep producers, and pledge
our assistance and strong support for the Wool Marketing
Assistance Loan Program at an adequate level. The current
program is operating on a loan rate that was established in
2002, but has not kept pace with markets and production
expenses of the 15 years since. In recent years, actual outlays
on this program have been nonexistent, meaning that it has
provided very little risk management. It is time to re-evaluate
the loan rate and guarantees for this program. ASI looks
forward to continuing conversations with the Subcommittee to
ensure these programs provide producers effective risk
management. We support programs that provide benefits beyond
the ranch gate, and the farm bill as well. ASI is a cooperator
with USDA for rural exports, and can speak firsthand to the
value of the Market Access Program, the Foreign Market
Development Program, and Quality Sample Program, and support
their reauthorization in this farm bill. The sheep industry
benefits greatly from funding provided to the National Sheep
Industry Improvement Center through the Sheep Production and
Market Grant Program. Established in the 2008 Farm Bill, the
NSIIC is instrumental in providing funding that aids in the
marketing of both lamb and wool. For example, the NSIIC
provides for the development of the LRP Lamb Insurance Product,
which is the only risk management tool available to the lamb
producers, as neither lamb nor wool are traded in the
commodities futures market.
In summary, the nation's sheep producers are eager for the
upcoming farm bill discussions. Thank you for your past support
of the livestock industry, and for allowing me to visit with
you about our priorities.
[The prepared statement of Mr. Buchholz follows:]

Prepared Statement of Bob Buchholz, Representative, Executive Board for
Region V, American Sheep Industry Association, Eldorado, TX
2018 Farm Bill_State of the Sheep Industry
Introduction
Chairman Rouzer, Ranking Member Costa, and Members of the
Subcommittee, thank you for the opportunity to speak with you today. I
am Bob Buchholz, a third-generation sheep and meat goat rancher from
central Texas, a Member of the Board of Directors of the American Sheep
Industry Association (ASI), and past President of the Texas Sheep and
Goat Raisers' Association. I am here today to represent the nation's
88,000 sheep producers. America's sheep producers continue a strong
tradition of supporting wildlife habitat, natural resources, and open
space across the country--all enabled by careful resource management
while grazing our flocks on private and Federal lands. Our members
support rural communities, the tax base, and local businesses providing
safe domestic lamb and wool. In fact, the economic impact of sheep and
wool production on our nation's economy is immense. From on the farm
and ranch to the retail level, the sheep industry has a total retail
impact of $2.7 billion and supports nearly 98,000 sheep-industry
related jobs.
My operation runs across several counties in central and
southwestern Texas. Our operation was hit hard with the drought
starting in 2011 and a devastating wild fire that forced us to severely
cut back our livestock numbers. We are still working to rebuild our
flocks and recover, six years later. Like others testifying today, a
strong farm program, including disaster assistance, is critically
important to our nation's sheep producers.
Ongoing Challenges and Concerns
Bighorn Sheep in Domestic Sheep Grazing Allotments
Nationally, about \1/2\ of all domestic sheep spend time grazing on
Federal lands, including rangelands managed by the U.S. Forest Service
(USFS). Over the years, the USFS has been systematically removing
domestic sheep ranchers from Federal lands in the name of bighorn sheep
management, despite the fact that there are reasonable, science-based
solutions to accommodate domestic sheep grazing while protecting the
health of bighorn sheep populations. In mid-2016, the USFS announced
that it may close some allotments in the Ashley National Forest and the
Uintah-Wasatch-Cache National Forest in Summit County, Utah due to
bighorn sheep concerns. This is being done without any offer of
alternative allotments. In total, three allotments will be closed and a
fourth allotment will be reduced. The ranchers on these allotments have
letters from the USFS detailing that when they introduced bighorn sheep
to the area, there would not be an impact to the domestic sheep
population. There are many examples of these egregious actions.
Mandatory Price Reporting
In September 2015, the President signed into law the Agriculture
Reauthorization Act of 2015 which included an extension of the
Livestock Mandatory Reporting Act of 1999 (MPR). Unfortunately for
sheep, this reauthorization has not lived up to our expectations when
it was passed. Of particular concern is the implementation of current
confidentiality rules followed by the U.S. Department of Agriculture
(USDA) and its chilling effect on price reporting. Further complicating
the issue, is the effect on insurance products available to the sheep
industry which rely on the USDA price reporting. ASI has reached out
numerous times to USDA and is in ongoing discussions with USDA to
resolve this issue. Although MPR has not been a farm bill issue in the
past, if progress cannot be made administratively on the
confidentiality guidelines, ASI will support including language in the
farm bill to address this issue legislatively.
FDA Minor Use Animal Drug Program
It is also critical that producers have continued access to key
technologies. We strongly support the Food and Drug Administration
(FDA) Minor Use Animal Drug Program and its historic collaboration with
USDA's National Institute of Food and Agriculture (NIFA). The targeted
use of biologics and pharmaceuticals within a veterinary-client-patient
relationship is key to our ability to maintain flock health and provide
a safe wholesome product. We urge the creation of a mechanism for NIFA
funding for minor use animal drug research through the National
Research Support Project No. 7 (NRSP-7); NRSP-7 has an established
record with Land-grant universities and has demonstrated excellent
results for minor use drug research for nearly 40 years.
Wildlife Services Funding
Coyotes, mountain lions, wolves, and bears kill tens of thousands
of lambs and calves each year. Livestock losses attributed to these
predators cost ranchers and producers more than $137 million annually,
according to surveys by the USDA National Agricultural Statistics
Service (NASS). For years, ASI has led the aggressive defense of
livestock protection by bringing together a diverse coalition of
supporters in the areas of aquaculture, aviation, forestry, livestock
production, range/forage management, and state departments of
agriculture to ensure the programs' survival. Earlier this month, ASI
led a coalition of 206 organizations to sign a letter supporting
Wildlife Services funding.\1\
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\1\2017 Wildlife Services Letter: http://www.sheepusa.org/
IssuesPrograms_GovernmentPro
grams_WildlifeServices.
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Every dollar spent on predation management returns $3 in livestock
value saved. This has a tremendous impact on sheep and cattle producers
and the rural economies they support. Predator management also supports
abundant wildlife, hunting, and recreation activities on private and
Federal land. We ask Congress to ensure USDA Wildlife Services is fully
funded and has the resources needed to carry out their livestock
protection efforts.
H2-A Temporary Agricultural Workers
The American sheep industry has a decades long history of a
reliable, consistent, and legal workforce. Sheep ranchers depend on the
H-2A sheepherder program to help care for more than \1/3\ of the ewes
and lambs in the United States. To meet those needs, the industry has
largely participated in temporary visa programs (in various forms)
since the 1950s. As a result, sheep producers employ a legal labor
force with an estimated eight American jobs created/supported by each
foreign worker employed.
Increased regulation with ambiguous policies and enforcement have
made the H-2A sheepherder program very costly for employers. In the
2015 re-write of the sheepherder provisions, our program now
constitutes over half of all pages of regulations governing the entire
H-2A program, even though we are only a small percent of total H-2A
employees in the United States. A workable temporary foreign labor
program is essential for the sheep industry and our nation's ability to
produce a secure food supply.
Emergency Conservation Program (ECP)
The Emergency Conservation Program (ECP), administered by the USDA
Farm Service Agency (FSA), provides emergency funding and technical
assistance to farmers and ranchers to rehabilitate farmland damaged by
natural disasters. As determined by FSA county committees, ECP
participants may receive cost-share assistance of up to 75 percent of
the cost to implement approved emergency conservation practices, such
as rebuilding fences.
The recent fires in Oklahoma, Texas, Kansas, and New Mexico have
burned more than 2,300\2\ miles in the four states, and forced many
farmers and ranchers to move their livestock. The fires have also
devastated critical infrastructure, including fencing, on farms and
ranches in our states. The ECP provides critical financial resources to
affected farmers and ranchers to rebuild fences. ASI strongly supports
the expedited implementation of the Emergency Conservation program in
affected states.
The Livestock Forage and Livestock Indemnity Programs are utilized
in some regions by sheep producers each year and are very important to
these operations in periods of extreme drought or devastating storms.
U.S. Sheep Experiment Station (USSES)
The domestic sheep industry relies heavily on the work of the U.S.
Sheep Experiment Station (USSES) and the Animal Disease Research Unit
(ADRU). Both facilities work collaboratively and are critical
components of the USDA's Agriculture Research Service. As our nation's
only experiment station primarily dedicated to sheep production, the
work carried out by these researchers and faculty are critical to our
ability to remain productive and push back against flawed science on
the range and in the area of animal health. In the past, administrative
action has worked to limit the scope of these facilities. Such action
not only threatens the viability of this resource for producers, but
also threatens the USSES' unparalleled historic sage grouse data. We
support the merger of the USSES and ADRU and encourage growth in their
roles in food-animal science, rangeland systems, and animal health
programs. These stations have a dedicated history of careful use of
taxpayer funds to solve issues and challenges for our producers and
counter flawed science from those wishing to remove livestock and
multiple uses from our nation's public lands.
Scrapie Eradication
Working collaboratively with the USDA APHIS and state partners, the
American Sheep Industry has nearly eliminated scrapie from the United
States. Official identification, surveillance, and traceability of both
sheep and goats are critical to continuing and maintaining these
efforts in order to preserve and enhance current and future export
markets. Continued and increased funding of the National Scrapie
Eradication Program should be a part of the next farm bill.
2018 Farm Bill Priorities
ASI strongly supports the reauthorization of the Agricultural Act
of 2014 (2014 Farm Bill). The first and most important national
security concern is the ability of a country to clothe and feed its
citizens. Given the small investment made in agriculture by the farm
bill when compared to the Federal budget and the safe, affordable, and
abundant food supply enjoyed by the U.S. illustrates the wise
investment farm bills provide. Of particular note and support by ASI
are the following:
National Sheep Industry Improvement Center (NSIIC) and the Sheep
Production and Marketing Grant Program (SPMGP)
The National Sheep Industry Improvement Center (NSIIC) was
originally established in the 2008 Farm Bill. The nine-member board
reviews grant proposals, recommends funding, and submit final
recommendations to AMS for approval. The purposes of these grants are
to--

(1) promote strategic development activities and collaborative
efforts by private and state entities to maximize the
impact of Federal assistance to strengthen and enhance
production and marketing of sheep or goat products in the
United States;

(2) optimize the use of available human capital and resources within
the sheep or goat industries;

(3) provide assistance to meet the needs of the sheep or goat
industry for infrastructure development, business
development, production, resource development, and market
and environmental research;

(4) advance activities that empower and build the capacity of the
United States sheep or goat industry to design unique
responses to the special needs of the sheep or goat
industries on both a regional and national basis; and

(5) adopt flexible and innovative approaches to solving the long-
term needs of the United States sheep or goat industry.

NSIIC is intimately connected to the Sheep Production and Marketing
Grant Program (section 209 of the AMA of 1946). The Sheep Production
and Marketing Grant Program (SPMGP) was authorized in the 2014 Farm
Bill and provided $1.5 M for Fiscal Year 2014 (to remain available
until expended) of CCC funding to AMS for the SPMGP. The SPMG provided
funds on a competitive basis to national organizations whose mission is
to strengthen and enhance the production and marketing of sheep and
sheep products in the United States including the improvement of
infrastructure business, resource development, and the development of
innovative approaches to solve long-term needs. Only national
organizations with similar missions were eligible to apply. The NSIIC
was awarded funding by the SPMG which has allowed it to identify and
fund industry improvements.
NSIIC is considered instrumental in the development of the LRP Lamb
Insurance product and the wool superwash capability in the United
States. Superwash or shrink proofing of American wool which is critical
for washable wool socks was not available in the United States until
2011 when NSIIC funds significantly contributed to the presence of
equipment stateside. LRP lamb insurance is the only risk management
tool for lamb producers as neither lamb nor wool are traded in the
commodity futures market.
ASI strongly supports providing mandatory funding for the SPMGP.
Wool Marketing Assistance Loan and Loan Deficiency Payment Program
The 2014 Farm Bill authorizes nonrecourse marketing assistance
loans (MALs) and loan deficiency payments (LDPs) for wool to eligible
producers who produce and shear wool for the 2014 through 2018 crop
years. The LDP program is available to eligible producers of nongraded
and graded wool.
The national loan rate for graded wool is $1.15/pound. Nongraded
wool is $0.40 per pound. When the 2014 Farm Bill was enacted, CBO
estimated that the cost of the MAL/LDP was $4 million for wool
annually. Recent actual outlays have been nonexistent. With the recent
low levels of producer income, ASI supports a re-examination of the
wool loan rate and supports an adjustment to a more appropriate level.
ASI looks forward to continuing conversations with this Subcommittee to
ensure these programs provide producers the safety net needed.
Foot-and-Mouth Disease (FMD) Vaccine Bank
An outbreak of a foreign animal disease has the ability to cripple
the entire agricultural sector and would have long-lasting
ramifications for the economic viability of the livestock industry. It
is critical that USDA Animal and Plant Health Inspection Service
(APHIS) work collaboratively with state animal health officials to be
able to rapidly respond to any such outbreak. Of particular concern is
the threat posed by the reintroduction of FMD, either inadvertently or
intentionally. While we must do everything we can to eliminate the risk
of reintroduction of FMD, we must also be prepared in the event of an
outbreak. It is critical that U.S. producers have immediate access to a
viable vaccine bank. We join with others in the livestock industry in
supporting the creation and maintenance of an FMD vaccine bank and
continued research. We also urge Congress to provide the authority and
$150 million a year in mandatory funding for USDA APHIS to protect the
U.S. livestock industry from an FMD outbreak.
Trade
Continued strength in the international marketing of lamb and wool
requires a commitment to the promotion and export of U.S. wool to
export markets through strong USDA Foreign Agricultural Service (FAS)
Program funding.
ASI is the cooperator with the FAS for wool and finds success every
year in securing customers with the Market Access Program, the Foreign
Market Development Program, and the Quality Samples Program. In 2001,
ASI relaunched an export program for wool and significant improved the
competition of American wool. We now export 50 percent of American
wool, on average, and have at least doubled the number of U.S. firms
that offer wool to overseas markets
Conclusion
In summary, the nation's sheep producers are eager for the upcoming
farm bill discussions. Thank you for your past support of the livestock
industry and for allowing me to visit with you about our priorities.
Sincerely,

Bob Buchholz,
American Sheep Industry Association.

The Chairman. Thank you very much.
Mr. Herring.

STATEMENT OF DAVID D. HERRING, VICE PRESIDENT AND BOARD MEMBER,
NATIONAL PORK PRODUCERS COUNCIL; VICE PRESIDENT, TDM FARMS/HOG
SLAT, INC., NEWTON GROVE, NC

Mr. Herring. Good afternoon, Chairman Rouzer, Ranking
Member Costa, and Members of the Subcommittee.
I am David Herring, a hog farmer from North Carolina, Vice
President of the National Pork Producers Council, and Vice
President of Hog Slat, Incorporated, which supplies equipment
to pork operations globally.
Like all pork producers, in the next farm bill I would like
to see provisions that help strengthen my industry's
competitiveness, and I would hope it doesn't contain provisions
that would restrict my ability to raise and sell animals or to
compete in the global marketplace.
The U.S. pork industry's top priority for the next farm
bill is establishing a foot-and-mouth disease vaccine bank. If
this country ever had an FMD outbreak, it not only could
devastate my farm and the whole livestock industry, but the
entire U.S. economy.
An Iowa State University study estimated that an outbreak,
which would immediately shut off our meat exports, would cost
the U.S. pork, beef, corn, and soybean sectors $200 billion
over 10 years. We need the capacity to produce enough FMD
vaccine to quickly control, then eradicate the disease, and we
need the funds to make that happen. Specifically, we want the
farm bill to direct the USDA to contract for an offshore
vendor-maintained vaccine bank that would have antigen
concentrate to protect against the 23 most common FMD strains
currently circulating in the world; a vendor-managed inventory
of 10 million doses, which is the estimated need for the first
2 weeks of an outbreak; and an international vaccine
manufacturer with the capacity to produce at least 40 million
doses. This does not exist currently.
An important element of combating FMD or any foreign animal
disease is the ability to monitor and detect disease. That is
why we need mandatory increased funding for the National Animal
Health Laboratory Network.
While an FMD vaccine bank would protect the U.S. pork
industry from a future FMD outbreak, a current issue are
efforts to regulate the buying, selling, and raising of
animals. Chief among those efforts, which was pushed by the
last Administration, is the Farmer Fair Practice Rules,
specifically, an interim final rule that is set to take effect
in about a month. We also have issues with the pending Organic
Livestock and Poultry Practice Rules. The Farmer Fair
Practice's interim final rule would make it easier to sue and
win Packers and Stockyards Act cases which carry triple
damages. Livestock industry experts have said this will lead to
an increase in lawsuits and an increase in legal risks for the
meat industry which, no doubt, will take steps to reduce that
risk. That likely would mean consolidation of the livestock
industry, which would reduce, not increase, competition.
Actually, the market is working today. We see it working
now in our industry. Five new producer-owned packing plants
will be coming online over the next 2 years, and no doubt,
those plants will be looking for hogs, meaning producers like
me should be getting some good prices for our animals.
Another important issue for pork producers is trade. While
farm bills don't address this subject directly, Members of this
Subcommittee no doubt know the importance of trade to all of
U.S. agriculture. Most of the U.S. pork industry's export to
other countries with which the United States has a free trade
agreement. In fact, we export more pork to our 20 FTA partner
countries than to the rest of the world combined. Last year, we
exported almost $6 billion of U.S. pork. That was 26 percent of
our total production, and added more than $50 to the price
producers received for each hog marketed. All of that should be
kept in mind as Congress and the Trump Administration consider
any modernized trade agreement with Mexico and Canada.
U.S. pork producers cannot afford any disruptions in trade
with our number 2 and our number 4 export markets, and that
means any new deal must maintain the zero tariff on pork trade
among the United States, Canada, and Mexico.
The bottom line on this farm bill, Congress should craft
legislation that helps farmers like me remain competitive, and
should avoid provisions that would make it difficult for us to
compete in the global marketplace.
Thank you for this opportunity to testify, Mr. Chairman,
and I will be happy to answer any questions.
[The prepared statement of Mr. Herring follows:]

Prepared Statement of David D. Herring, Vice President and Board
Member, National Pork Producers Council; Vice President, TDM Farms/Hog
Slat, Inc., Newton Grove, NC
Introduction
The National Pork Producers Council (NPPC) is an association of 43
state pork producer organizations that serves as the global voice for
the nation's pork producers. The U.S. pork industry represents a
significant value-added activity in the agricultural economy and the
overall U.S. economy. Nationwide, more than 60,000 pork producers
marketed more than 118 million hogs in 2016, and those animals provided
total cash receipts of nearly $240 billion. Overall, an estimated $23
billion of personal income and $39 billion of gross national product
are supported by the U.S. pork industry.
Iowa State University economists Daniel Otto, Lee Schulz and Mark
Imerman estimate that the U.S. pork industry is directly responsible
for the creation of more than 37,000 full-time equivalent pork
producing jobs and generates about 128,000 jobs in the rest of
agriculture. It is responsible for approximately 102,000 jobs in the
manufacturing sector, mostly in the packing industry, and 65,000 jobs
in professional services such as veterinarians, real estate agents and
bankers. All told, the U.S. pork industry is responsible for nearly
550,000 mostly rural jobs in the United States.
U.S. pork producers today provide 25 billion pounds of safe,
wholesome and nutritious meat protein to consumers worldwide, and
exports add significantly to the bottom line of each U.S. pork
producer. U.S. exports of pork and pork products totaled 2.3 million
metric tons--a record--valued at $5.94 billion in 2016. That
represented almost 26 percent of U.S. production, and those exports
added more than $50 to the value of each hog marketed. Exports
supported approximately 110,000 jobs in the U.S. pork and allied
industries.
Next Farm Bill
Obviously, pork producers have a strong interest in the next farm
bill. NPPC has formed a Farm Bill Policy Task Force to gather input
from producers from around the country. The task force will hold
several meetings to review and evaluate many of the farm bill issues
that will affect the U.S. pork industry. NPPC is committed to working
with Congress to help craft the 2018 Farm Bill.
As it has requested in every farm bill on which it has weighed in,
the U.S. pork industry asks that Congress in the next farm bill
maintain the U.S. pork industry's competitive advantage, strengthen its
competitiveness and defend the industry's competitiveness by supporting
provisions that would be beneficial to agriculture and by opposing
unwarranted and costly provisions and regulations that would negatively
affect America's farmers and ranchers.
There are several issues pork producers would like Congress to
address in the next farm bill that could help U.S. pork producers.
Foot-and-Mouth Disease Vaccine Bank
Foot-and-Mouth Disease (FMD) is one of the most economically
devastating foreign animal diseases affecting animal agriculture. It is
an infectious and sometimes fatal viral disease that affects cloven-
hooved animals, including pigs and cattle. It is easily spread through
a number of ways, including through the air, contact with contaminated
equipment and by predators. An outbreak today of the disease, which
last was detected in the United States in 1929, likely would cripple
the entire livestock sector. In addition to causing harm to production
animal agriculture, the economic consequences undoubtedly would ripple
throughout the entire rural economy, from input suppliers to packers
and from processors to consumers.
FMD is endemic in Africa, Asia, some South American countries and
the Middle East. The FMD virus has seven viral serotypes and more than
60 subtypes, with wide strain variability. Sporadic outbreaks with
different types continue to pop up in countries around the world.
Increased travel and trade between affected countries make the
United States increasingly vulnerable to introduction of the disease.
Now, the country must confront the possibility of terrorists using FMD
as a weapon to inflict significant damage to the U.S. economy and
affect food availability.
In the U.S. Department of Agriculture's Foreign Animal Disease
preparation strategy document on the phases and types of an FMD
outbreak, Dr. James Roth, professor and researcher at Iowa State
University, identified four phases of the disease: (1) confirmation of
an outbreak (typically three days); (2) surveillance and
epidemiological work necessary to provide timely evidence of the extent
of an outbreak to support decision making by government officials; (3)
recovery from the disease; and (4) freedom from the disease (possibly
with vaccination).
He categorized FMD outbreaks as having six types: Small Focal,
Moderate Regional, Large Regional, Widespread or National, Catastrophic
U.S. and Catastrophic North American, which includes Canada and Mexico.
Given the structure of the U.S. livestock industry, the likelihood
of having a Small Focal or Moderate Regional outbreak is remote. The
livestock industry estimates there are approximately 1 million pigs and
400,000 cattle moved daily in the United States, some over long
distances. In addition, there are numerous auctions, fairs and exhibits
that concentrate large numbers of animals in a single location,
providing the opportunity for one infected or exposed animal to spread
the disease to many animals. Thus, it seems unlikely that, if the
United States had an outbreak, it would be on the smaller end of Roth's
scale.
The World Organisation for Animal Health (OIE) sets standards for
managing and determining a country's disease status. Those standards
range from ``stamping out'' (killing all infected and exposed animals)
to being free of FMD, or ``free with vaccination.''
After watching countries such as the United Kingdom, Korea and
Japan, whose livestock populations pale in comparison to the United
States, struggle to manage FMD outbreaks by killing large numbers of
animals, USDA's Animal and Plant Health Inspection Service (APHIS)
changed its policy on managing the disease from ``stamping out'' to
using vaccine to limit the spread.
This policy change was endorsed by the U.S. livestock industry as a
cheaper and more practical alternative given the enormous size of the
U.S. livestock herd and the movement of livestock around the country.
The United States simply cannot ``kill'' its way out of an FMD
outbreak.
The problem, though, is the United States does not have enough FMD
vaccine available nor could a sufficient quantity be obtained in time
to implement an effective control program.
U.S. law prohibits storing live FMD virus on the U.S. mainland, so
foreign production companies are the only source of finished vaccines.
The United States is the only country in the world that maintains its
own vaccine antigen bank, which is maintained at the Plum Island Animal
Disease Center on Plum Island, N.Y., and which has a limited number of
antigens.
Currently, if there were an FMD outbreak in the United States,
antigen would be shipped to a vaccine manufacturer in either Pirbright,
England, or Lyon, France, to be turned into finished vaccine and
shipped back to the United States. After three weeks, the process would
produce only 2.5 million doses of vaccine.
Iowa State's Roth estimates that at least 10 million doses would be
needed during the first 2 weeks of an outbreak. Currently, there is no
surge capacity to produce additional doses of vaccine; all the vaccine
production capacity in the world currently is in use by other
countries.
Additionally, it must be noted that the vaccine antigen bank serves
as the North American Bank and thus includes Canada and Mexico.
Over the past several years, the United States has made significant
progress in FMD preparedness through the development of secure supply
plans for milk, pork and beef, and APHIS continues to work with the
livestock industry to improve its preparedness capability. Fixing the
antigen bank capacity and improving vaccine availability must be a
priority in future preparedness efforts.
Establishing a more robust FMD vaccine bank will require a
significant increase in budget outlays. (The current FMD efforts are
funded at just $1.9 million.) But the cost pales in comparison to the
economic cost of an FMD outbreak in the United States.
Because North America is free of FMD, an outbreak of the disease in
the United States would immediately shut off all exports of U.S.
livestock, meat and dairy products, creating a precipitous drop in
livestock markets. Since U.S. consumers have little knowledge of the
disease, which cannot affect people, there also likely would be serious
disruptions in the domestic market because of decreased demand for
those products. According to one recent study, prevention of FMD is
estimated to be worth $137 million a year to the U.S. pork industry.
Iowa State University economist Dermot Hayes estimates the
cumulative impact of an FMD outbreak on the beef and pork industries
over a 10 year period would be $128.23 billion. The annual jobs impact
of such a reduction in revenue would be 58,066 in direct employment and
153,876 in total employment. Corn and soybean farmers over a decade
would lose $44 billion and nearly $25 billion, respectively, making the
impact on those four industries alone almost $200 billion.
The history of government involvement in disasters like an FMD
outbreak is that, once a problem occurs, unlimited resources are
committed to getting control of the situation. In the case of FMD,
there is a clear opportunity to invest in a robust vaccine bank that
would limit the economic impact on producers, feed suppliers and
consumers and reduce the government's cost for control and eradication
of the disease.
A recent study by Kansas State University estimated the cost to the
U.S. Government of eradicating FMD would be $11 billion if vaccination
is not employed. But costs could be cut significantly if vaccination is
used, and, the study estimated--depending on the strategy--losses to
consumers and producers could be cut by 48 percent.
Congress should work with the Trump Administration to address the
alarming gap in the government's preparedness for an FMD outbreak.
Whether the disease introduction is the result of terrorism, careless
travelers or carried on traded commodities, the calamitous result would
be the same: devastation to the U.S. livestock industry and a
significant hit to the U.S. economy.
NPPC urges Congress to provide the authority and $150 million a
year in mandatory funding for USDA APHIS to protect the U.S. livestock
industry from an FMD outbreak. Specifically, the farm bill should
direct APHIS to:

Contract for an offshore, vendor-maintained vaccine antigen
bank that would have available antigen concentrate to protect
against all 23 of the most common FMD strains currently
circulating in the world.

Contract for a vendor-managed inventory of 10 million
doses--the estimated need for the first two weeks of an
outbreak.

Contract with an international manufacturer(s) for the surge
capacity to produce at least 40 million doses.
Disease Surveillance
An adjunct to a robust FMD vaccine bank is a world-class disease
surveillance system. Being able to detect and identify any disease that
could affect the U.S. food supply is vital to the continued viability
of the U.S. pork industry.
The United States faces an increasing threat from the introduction
of a foreign animal disease (FAD) into the U.S. livestock herd, but
there is evidence that the safety net in place to prevent such an
introduction needs to be improved.
Late last year, the House Agriculture Committee held a hearing on
American agriculture and national security, which highlighted the
vulnerability of the U.S. food supply to the potential for FAD
introduction by terrorists or by accident.
Additionally, in October 2015, the bipartisan Blue Ribbon Study
Panel on Biodefense, co-chaired by former Department of Homeland
Security Secretary Tom Ridge and former Sen. Joe Lieberman, released a
report that highlighted the need for improving the U.S. system for
protecting the U.S. livestock herd and the nation's food supply from
FADs.
Disease surveillance is the foundation of disease prevention and
preparedness. The threat of new and emerging diseases continues to
grow, with scientists continually warning the public and animal health
authorities about the increasing risks. In May 2013, for example, the
first case in the United States of Porcine Endemic Diarrhea virus was
identified on an Ohio hog farm. That disease, which USDA determined
likely came from China, spread quickly throughout the Midwest and
killed between 8 million to 10 million mostly young pigs over an 18
month period.
Other bacterial and viral diseases are lurking around the world,
and that is the reason the U.S. pork industry has devoted significant
resources to endemic and foreign animal diseases, funding more than 120
research projects and spending more than $5 million for studying,
monitoring and addressing swine diseases over the past 10 years.
The outbreak of H1N1 influenza in 2009 demonstrated the
interrelationship of human and animal health when combating new and
emerging diseases. From that experience, the U.S. pork industry learned
that a Comprehensive and Integrated Surveillance System (CISS) is
needed to ensure the capture of data about a broader range of diseases.
The industry has been working with USDA APHIS and the Centers for
Disease Control and Prevention (CDC) to develop a CISS, including
continuation and expansion of ongoing swine influenza surveillance.
Completion of this is critical to maintaining the pork industry's known
disease status, which, in turn, is vital to maintaining and expanding
U.S. pork exports. The CISS is designed to provide an ``early warning
system'' and to allow for development of response plans ahead of an
epidemic.
The U.S. pork industry is collaborating with APHIS to test
implementation of a CISS and to determine how it can be connected to an
animal traceability system. Currently, the most significant shortcoming
is funds to build the infrastructure to accommodate a more robust
system of surveillance.
The ability to expand and strengthen surveillance to include other
diseases will help increase exports. Reducing surveillance, however,
would give other countries justification to restrict U.S. exports
because of inadequate surveillance data.
U.S. pork producers also support USDA's animal traceability system.
An effective traceability system is critical to the national animal
health infrastructure and is required for certification by the OIE. The
ability to quickly trace diseased and exposed animals during a foreign
animal disease outbreak would save millions of animals, lessen the
financial burden on the industry and save the American taxpayer
millions of dollars.
With support from all sectors of the pork industry, approximately
95 percent of U.S. pork producers' premises already are registered
under the USDA livestock identification program. Premises
identification is the key to meeting a goal of tracing an animal back
to its farm of origin within 48 hours, which would allow animal health
officials to more quickly identify, control and eradicate a disease;
prevent the spread of a disease; and make certifications to trading
partners about diseases in the United States.
NPPC requests that Congress include in the farm bill authority for
$30 million a year for the National Animal Health Laboratory Network,
which conducts diagnostics on animal diseases, and $70 million a year
for block grants to the states for disease surveillance and other
support.
Agricultural Research
NPPC supports expanding Federal funding for research, education and
extension programs by improving the quantity and quality of USDA
research through the agency's Agriculture and Food Research Initiative
(AFRI). Basic, competitive agricultural research allows America's
farmers to remain globally competitive in the face of a growing world
population, improves public health and strengthens national security.
AFRI is the USDA's premier competitive research program and makes
peer-reviewed, competitively-awarded research grants. The grants fund
basic and applied research, education and extension to colleges and
universities, agricultural experiment stations and other organizations
conducting research in priority areas that are established partially in
every farm bill.
The 2008 Farm Bill required AFRI to make available 60 percent of
grant funds for basic research and 40 percent for applied research.
Despite being authorized for $700 million in the 2008 Farm Bill and
reauthorized in the 2014 Farm Bill, the program never has received
anywhere near full funding in the appropriations process. In fact,
USDA's overall research funding has decreased by 30 percent since 2009.
While other Federal research and development budgets have grown
over time, agricultural research funding has stagnated. This stagnation
has occurred despite studies consistently reporting high social rates
of return--between 20 percent and 60 percent annually. The United
States is falling behind developing nations in its commitment to
funding agricultural research, which has created rapid increases in the
country's productivity. Amid growing challenges, such as the threat of
new diseases, maintaining the position as the world leader in
agricultural research and technology should be an overarching goal.
NPPC supports increasing the funding for agricultural research to
ensure that the U.S. livestock industry maintains its competitiveness
in the global marketplace.
Production and Marketing Regulations
NPPC works on behalf of America's pork producers to ensure that
laws and rules don't impose unnecessary costs on the U.S. pork
industry, restrict it from meeting consumer demands in an economical
manner or prevent market-based solutions to issues. The structure of
the pork production and packing sectors should be allowed to change
with the demands of the growing global marketplace. This includes
allowing producers and packers to adopt new technologies and pricing
and marketing mechanisms that enable the former to reduce their risks
and the latter to capture economies of scale.
The U.S. pork-packing sector is the envy of the world in terms of
efficiency and food safety, and legislation and regulation should not
take away or hamper that source of international advantage. Allowing
producers and packers the freedom to develop new ways of doing business
will enhance the value of U.S. pork products at home and abroad and
reduce costs and risks.
The U.S. pork industry, which has developed a wide variety of
marketing and pricing methods, including contracts, to meet the
changing needs of a diverse marketplace, strongly opposes any provision
that would eliminate or restrict such mechanisms. Limiting producers'
options could force the livestock markets to revert to an inefficient
system used more than half a century ago in which animals were traded
in small lots and at prices determined in an open-market bid system.
Dictating how U.S. pork producers sell and raise their animals and
how packing companies buy livestock would severely cripple the
competitiveness of the U.S. pork industry. Mandates--whether pushed by
lawmakers or activists--must not stand in the way of the free market.
Of particular and immediate concern to the U.S. pork industry is
the Farmer Fair Practices Rules, specifically an Interim Final Rule,
which was issued in the final weeks of the Obama Administration.
Written by USDA's Grain Inspection, Packers and Stockyards
Administration (GIPSA), the Interim Final Rule broadens the scope of
the Packers and Stockyards Act (PSA) of 1921 related to the use of
``unfair, unjustly discriminatory or deceptive practices'' and ``undue
or unreasonable preferences or advantages.''
USDA in 2010 proposed a number of PSA provisions--collectively
known as the GIPSA Rule--which Congress mandated in the 2008 Farm Bill.
But the agency was blocked by Congress through amendments to annual
agricultural appropriations bills from implementing a provision that
would eliminate the need to prove a competitive injury to win a PSA
lawsuit.
Protecting competition is the heart of the PSA. In fact, eight
Federal appeals courts have held that harm to competition must be
proved for an action to be a violation of the PSA. But the Interim
Final Rule would eliminate the need to prove injury to competition,
which would prompt an explosion in PSA lawsuits by turning nearly every
contract dispute into a Federal case subject to triple damages.
The inevitable costs associated with increased lawsuits and the
legal uncertainty they would create likely would lead to further
vertical integration of the pork industry and drive packers to own more
of their own hogs--reducing competition for producers of all sizes,
stifling innovation and providing no benefits to anyone other than
trial lawyers and activist groups that will use the rule to attack the
livestock industry.
(An Informa Economics study found the GIPSA Rule, including the
Interim Final Rule, now would cost the pork industry more than $420
million annually, with most of the costs related to PSA lawsuits
brought under the ``no competitive injury'' provision.)
The U.S. pork industry recently endured its fair share of
headwinds. It does not need more of them in the form of the Interim
Final Rule of the Farmer Fair Practices Rules.
NPPC urges Congress to work with the Trump Administration to
rescind the Interim Final Rule and to ensure that any USDA rule to
amend the Packers and Stockyards Act not restrict producers' ability to
sell or packers' ability to buy animals and not limit their ability to
use technologies and pricing and marketing mechanisms that work for
their mutual benefit.
Likewise, Federal mandates on production practices, including ones
that would dictate animal housing systems, would add to producers'
costs and weaken the U.S. pork industry's competitiveness vis-a-vis
foreign competitors.
Nearly 3 decades ago, the U.S. pork industry developed and
implemented strict standards for animal care and judicious use
guidelines for use of animal drugs. These standards and guidelines are
part of the industry's Pork Quality Assurance Plus and Transport
Quality Assurance programs, which require producers and handlers to be
trained and certified in caring for and transporting animals.
Pork producers do not support Congress including animal care and
handling provisions in the farm bill--a piece of legislation that has
been aimed for more than 80 years at maintaining the competitiveness of
the U.S. agriculture and livestock sectors.
Trade and USDA Export Programs
Expanding foreign markets for U.S. pork products increases
producers' bottom line and contributes significantly to the U.S.
economy, fostering job growth and increasing the U.S. gross domestic
product.
Pork represents 37 percent of global meat protein intake, more than
beef and poultry, and world pork trade has grown significantly over the
past decade or so. The extent of the increase in global pork trade in
the future will hinge heavily on continued efforts to increase
agricultural trade liberalization.
For the U.S. pork industry, free trade agreements (FTAs) have
increased exports by 1,550 percent in value and nearly 1,300 percent in
volume since 1989--the year the United States began using bilateral and
regional trade agreements to open foreign markets.
The importance of FTAs to U.S. pork producers is underscored by one
fact: The U.S. pork industry now export more pork to the 20 countries
with which the United States has FTAs than to the rest of the world
combined.
Last year, the U.S. pork industry exported nearly $6 billion of
product, which represented 26 percent of total production and supported
more than 50,000 jobs. It is estimated that the price U.S. pork
producers received on each hog marketed was $50.20 higher last year
than it would have been in the absence of exports.
It is important to strengthen the ability of U.S. agriculture to
compete in the global marketplace. But the downside of growing exports
is, of course, the larger economic impact on producers and the U.S.
economy should there be any disruption in trade. Pork producers
understand this dynamic and recognize that it would be devastating for
the U.S. pork sector.
And while interruption in any one market would be troublesome, it
would be catastrophic if there were a disruption in trade with Mexico
and/or Canada, the U.S. pork industry's No. 1 and No. 4 markets by
volume, respectively and No. 2 and No. 4 by value. This should be kept
in mind when considering ``modernization'' of the North American Free
Trade Agreement (NAFTA).
NPPC strongly urges the Trump Administration and Congress to
maintain NAFTA's zero tariff on pork trade among the United States,
Canada and Mexico.
While the best way to increase U.S. pork exports is through FTAs
that eliminate all tariff and non-tariff barriers on pork, programs run
by USDA's Foreign Agricultural Service and authorized under the farm
bill also are important to U.S. agricultural exports.
The Market Access Program (MAP) uses funds from the Commodity
Credit Corporation to help producers, exporters, private companies and
other trade organizations finance promotional activities for
agricultural products of the United States. The Foreign Market
Development Program, also known as the Cooperator Program, helps
create, expand and maintain long-term export markets for U.S.
agricultural products.
NPPC supports funding levels that will sustain those important
programs.
Environment
Protecting the environment is a top priority of the U.S. pork
industry. Pork producers are committed to running productive pork
operations while protecting the environment and meeting or exceeding
environmental standards. Pork producers have fought hard for science-
based, affordable and effective regulatory policies that meet the goals
of today's environmental standards. To meet strict environmental
criteria while maintaining production, they support the Federal
Government providing through conservation programs within the farm bill
cost-share support to help defray some of the costs of compliance.
For many farmers, USDA conservation financial assistance funds
through the Environmental Quality Incentives Program (EQIP), the
Conservation Stewardship Program (CSP) and the Conservation Reserve
Program (CRP) are integral to making investments in environmental
protection practices and technologies possible. Certainly, there will
be advances made by many farmers without Federal funding assistance,
but conservation financial assistance is critical for many, and it will
help build a foundation of practices that can sustain conservation
improvements for the long term.
Under the EQIP program, however, pork producers have not received
enough support to meet all the challenges they face related to
conservation and the environment. Producers who use EQIP would like to
see the scope of projects covered by the program widened.
NPPC wants in the next farm bill funding maintained for EQIP and
the other critical working lands conservation programs, and on CRP, it
supports the current limit on acreage that may be enrolled in the
program.
Conclusion
The U.S. pork industry is the lowest-cost producer and No. 1
exporter of pork in the world, and U.S. pork producers continue to
produce the most abundant, safest, most nutritious pork in the world.
Pork producers have proved very resilient over the past years,
weathering financial crises and diseases as well as the vagaries of a
supposedly free-market economy pushed and pulled in various directions
by government intervention and regulation. All the while, they have
invested in and adopted new technologies that have promoted animal
health, protected the environment and added thousands of jobs and
billions in national income to the American economy.
For America's pork producers to continue as leaders in the
international and domestic economies, for them to take advantage of the
opportunities and meet the challenges presented to them, Congress and
the Administration, through the next farm bill, should pursue policies
and regulations that support the U.S. pork industry rather than hinder
its ability to continue producing safe, lean and nutritious pork and
pork products for the global marketplace.

The Chairman. Thank you, Mr. Herring.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
I now recognize myself for 5 minutes.
Mr. Wittenburg, you mentioned the need for an Animal Pest
and Disease Disaster Prevention Program in the next farm bill.
Can you give a brief overview of how that would be structured
and funded, and I am particularly interested in having a better
understanding of how that state block grant would actually be
utilized?
Mr. Wittenburg. The funds would come through the USDA. And
in particular you are looking for the vaccine, is the question?
The Chairman. Yes. You referred to the Animal Pest and
Disease Disaster Prevention Program and a block grant to the
states, and I am just curious what you are envisioning in terms
of that block grant, how that block grant would be utilized,
the particulars of that.
Mr. Wittenburg. Yes. One idea would be to critically expand
upon the great work done as many of the labs around the
country, such as the NVSL Lab in Ames, Iowa, or the Southeast
Poultry Lab in Athens, Georgia. They are understaffed and
ultimately cannot get all the areas they need as to be
proactive, as they might want to due to their funding
restraints.
When it comes to prevention techniques, interventions and
control vectors, there is still a lot of information about how
the disease spreads, what methods worked in lowering the
severity of an outbreak, all legitimate questions that need
research and the smart minds to help limit economic impacts to
the poultry sector of our economy, which many people depend for
their livelihoods.
The Chairman. Mr. Herring, I want to focus in on this FMD
vaccine bank, which I am very much in support of. The majority
of the Subcommittee, if not all the Subcommittee, is very
interested in this particular topic. You mention the idea of
having a vendor-maintained offshore vaccine bank, enlighten us
as to why we couldn't just increase capacity at Plum Island.
Mr. Herring. Well, Mr. Chairman, currently, as most of us
know, Plum Island is set to be closed down in the next few
years, and the facility that is going to take its place, NBAF,
there are no provisions for a vaccine bank in their plans
currently. We also think it would be more economical to have an
offshore vendor vaccine bank, would be a lot faster turnaround
if we had an outbreak because the vendor that would produce the
vaccine would already have the antigen available. And
currently, the way we understand at, at Plum Island we only
have about 10 of the 23 strains that circulate through the
globe, and we are asking to have all 23 available.
The Chairman. The $150 million per year, how was that
figure settled upon?
Mr. Herring. Well, Professor James Roth at Iowa State
University put the numbers together, and basically it breaks
down to provide at least 10 million doses of each of the 23
strains circulating currently, as well as estimates for the
needs for surge capacity in the case of an outbreak. The main
difference we think between our estimate or Mr. Roth's estimate
is we are saying we need 10 million doses of all 23 strains,
instead of 10 million doses of 10 strains. As well as this
Committee, last year we talked about agroterrorism, some of the
most virulent strains of foot-and-mouth is possessed in some of
these countries that don't like us very much today. But the
overall cost, and the one thing I would like this Committee to
hear today, the overall cost of this program is because this
program does not exist today. When USDA made the decision that
we would not euthanize animals in case of an outbreak, that we
would vaccinate, and we concur with that decision, they did not
put any appropriations or anything in place for vaccinations.
The Chairman. I see my time is just about to expire, so let
me transition over to Mr. Costa, if he has any questions.
Mr. Costa. Thank you very much, Mr. Chairman.
Mr. Uden, you said in your testimony about the importance
of the farm bill, and clearly a Market Access Program that we
initiated about two farm bills ago with the Foreign Market
Development Program, could you describe what the benefits have
been for the beef industry in those two areas?
Mr. Uden. Yes. As we look to our future and the growth of
our industry, we have to have access, and we have to have ways
and means of working with these other countries to get our
product abroad. And what they have done is the industry has
contributed a lot of dollars towards like the U.S. Meat Export
Federation, those MAP dollars, those matching dollars have
bolstered that and actually given us access to a lot of foreign
markets to where we have increased our sales abroad. It is
vitally important that we have those funds to keep opening
markets because that is the future.
And as we look to the future of our business, we have to
have export growth because there are only so many people that
live within our borders. Ninety-six percent of all people live
outside of our borders. And as we grow our industry and
preserve it, and have all these young people that are entering,
we must have access to move our product.
Mr. Costa. Right. Mr. Uden, I work very closely with some
of your colleagues or friends, I believe Mr. Wood and Mr.
Harris out there in our part of the cattle country in
California, and they worked very hard to penetrate markets in
Asia and Japan and South Korea, and they tell me of the
benefits of these efforts, and clearly, you underline that
importance.
Mr. Wittenburg, I want to add you have some very fine
representation behind you there who come to our offices all the
time to advise us of challenges facing the turkey industry.
Outbreaks of various diseases, the avian flu and other things,
have been challenging out in the West. A lot of these
contaminations occur not so much even necessarily within your
flocks, as I understand it, but as a result of migratory
patterns of wildlife. Are there ways in which we can provide
additional support for you in the farm bill?
Mr. Wittenburg. Thank you for that question. First, it is
important that Congress signal support for this concept as it
could have a huge economic impact in limiting trade
restrictions in the future. It does not hurt to begin an in-
depth conversation about how the world will operate should the
need to use vaccines arise for High-Path AI. The fact that the
rest of the world has High-Path AI should be a big factor in
bringing them to the table to see if there is a more logical
policy that we can be agreed upon.
Mr. Costa. I appreciate that. And I want to all get some
head-nodding among you here, because I talked about trade in my
opening comments and all of you referenced it. Did all of your
associations support the TPP agreement that we had been working
on? I see head nods.
Mr. Uden. We did.
Mr. Costa. Yes. As I said, it was unfortunate that they met
last week and we weren't there. Do any of you have concerns
that I have, I know the California agricultural industry does,
on the potential retaliatory effects by either Mexico or
Canada? We saw that with the COOL issue last year with Canada
and Mexico, and I am wondering whether or not--what people
don't understand is, a trade agreement, to be effective, has to
be fair both sides. If it is I win and you lose, then you are
not going to be a part of the deal. Right? And we saw this
occur back in 2010 in Mexico with a host of retaliatory tariffs
that were put in place on table grapes and cheese and other
products. Any of you want to share those concerns or fears? Mr.
Uden?
Mr. Uden. Yes, I would address that. Going back to country-
of-origin labeling, if that was to be circulated again, we
would still have that retaliatory trade with those 2 countries.
Canada and Mexico represent 31 percent of our exports.
Mr. Costa. It is big.
Mr. Uden. It is huge.
Mr. Costa. Nebraska provides 42 percent of Mexico's----
Mr. Uden. Right. As you commented on TPP it would have
added $378 million automatically to Nebraska's trade in
general.
Mr. Costa. Yes. All right, well, we are going to need your
continued efforts and support. Thank you, Mr. Chairman.
The Chairman. Mr. DesJarlais.
Mr. DesJarlais. Thank you, Mr. Chairman. I appreciate the
witnesses for being here today.
Mr. Uden, you mentioned in your testimony the possible
reinstatement of mandatory country-of-origin labeling.
Considering its failure last time around, and its negative
impact on cattlemen, is there a real possibility of
implementing this program again, perhaps with new criteria, and
how would we ensure this program does not incur more regulatory
costs and burdens on producers?
Mr. Uden. Do not bring it back. We, as producers, are
better equipped to market our product, and we have shown time
and time again that adding value through a mandatory program
that has a generic label absolutely does no benefit to the
producer. Voluntary labels that have certain attributes for
certain qualities of the product, going back to value-based
marketing, has a lot more reach.
Also the other thing when you look at the COOL legislation,
it only addresses the retail counter. I know a lot of people
think it has some issues when we address imports, but it has no
bearing, usually because those would go into the food service
sector. It is an outdated law, and I would really like to
continue to focus on things that will benefit the industry
versus hashing old tried ideas that do nothing for the producer
other than add costs and confuse the consumer.
Mr. DesJarlais. I thank you for your perspective on that.
Mr. Wittenburg, I represent Tennessee's Fourth District,
which encompasses Lincoln County, the location of two outbreaks
of the Highly Pathogenic Avian Influenza this month which
resulted in the depopulation of over 73,000 birds. I am
concerned, we don't know a whole lot about exactly how High-
Path AI is transmitted. What steps can poultry producers take
to protect their flocks more adequately, and are there steps
that we can take to protect flocks from wild carriers and
ensure that a low pathogenic virus doesn't mutate into a highly
pathogenic case?
Mr. Wittenburg. Yes, thank you for the question. High-path
AI is something we are all getting educated to here
domestically in the United States, but we must admit it has
become a global issue, so it is spreading throughout the U.S.,
and it seems to be connected to the flyway system. I think that
is the first and foremost is that the carriers--we live by a
simple motto, and that is: ``If it moves it can carry.'' And so
when you really think about that, there are a lot of moving
parts to animal production. Biosecurity is a simple word. It is
like quality. What does it mean? And at the end of the day, we
have really got to get a hold on the immunity system of the
birds and build on that, and minimize the impact of these High-
Path AI outbreaks.
Mr. DesJarlais. Okay. We have about a minute and a half
left. I am also concerned with how the Organic Livestock and
Poultry Practices rule could affect organic markets. The
outdoor access requirement for egg producers would create a
barrier to entry for our producers, and potentially eliminate
current suppliers from the marketplace who can't afford to
build outdoor facilities. Do you think that organic production
standards are beginning to favor animal welfare to an extent
that harms our producers' ability to compete in the
marketplace?
Mr. Wittenburg. Yes. Again, it is, commonsense. Having
access to outdoors, you are exposing those animals to the wild,
and if there is a common denominator that the migratory birds
are a potential carrier of a High-Path AI, then you should be
careful on what the rules state for organic production and
birds having access to the outdoors.
Mr. DesJarlais. Thank you. And, Mr. Chairman, I yield back
the balance of my time.
The Chairman. The distinguished Ranking Member of the full
Committee is here with us, and so I recognize Mr. Peterson.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Well, thank you, Mr. Chairman.
Mr. Wittenburg, sorry I wasn't here earlier, I have been
running around in meetings. Your testimony, you referenced the
need to start a conversation with our trade partners regarding
the use of vaccines and to minimize the impacts of High-Path
AI. When we were ground zero of the problem in Minnesota. I had
many, many of my friends and producers who were impacted by
this. And you acknowledge that the trade impacts associated
with the decision to look at vaccines has made it almost
impossible. Since this is a global disease, and I am convinced
it is being spread by ducks and geese and that was our
experience in Minnesota, what do you think we can do to move
the discussion forward. My guys would like to see a vaccine,
what do you think we can do to help make that happen?
Mr. Wittenburg. Well, I think the time is now. We had the
initial onset in 2015 here domestically. We continue to watch
the globe endure High-Path AI. Globally, we are at a perfect
time to sit down and have a discussion in what vaccine
ramification might look like for keeping poultry in a healthy
and marketable status. I believe the time is now. To continue
to indemnify and euthanize poultry globally is not a good long-
term approach. I would suggest it probably starts with APHIS
and that division, and we bring the world together and use the
WTO as a potential standard, but it is time to just have the
discussion and bring them to the table.
Mr. Peterson. Are there other countries that are willing to
look at this?
Mr. Wittenburg. I believe so. There was a time back in 2015
when Dr. Clifford went to China and it appeared China was
real----
Mr. Peterson. Yes, I remember that.
I thought he had had positive meetings over there. But we
have people within the poultry business in the United States
that are not in favor of this, right?
Mr. Wittenburg. Correct. And it is the trade ramifications
that go with it is that is the issue.
Mr. Peterson. Yes. Well, there are people that are
concerned about that, but it just seems to me, I think is what
you said that this is not going to be just confined to
Minnesota, for example, this is going to be something that is
going to be impacted all over the world. If anybody has had to
deal with this up-close and personal, I don't know how you
could be against vaccinating. It is just something that makes
sense.
Mr. Wittenburg. Correct. It is commonsense.
Mr. Peterson. I am going to a trade meeting now at 3
o'clock with Wilbur Ross and the new acting trade rep, talking
to us about what they are going to be doing with trade
agreements, going forward, if they know. Have you had any
discussions with any of these folks that are coming in as to
what their position is or what their idea would be?
Mr. Wittenburg. Yes. Yes, Congressman Peterson, I haven't
personally. We did meet with the FAS director this morning and
he had some comments, our staff would probably have better
insight to that, but me personally, no.
Mr. Peterson. Well, I hope we can figure out a way to make
progress on this issue. And if I get a chance at the meeting,
here in another 15 minutes, I will try to bring it up.
Mr. Wittenburg. Yes. Please do.
Mr. Peterson. Yes.
Mr. Wittenburg. Thank you.
Mr. Peterson. I yield back.
The Chairman. Mr. Marshall.
Mr. Marshall. Thank you, Mr. Chairman.
My first question is for Mr. Herring. Mr. Herring, Kansas
alone has 12 million hogs, 8 million cattle, on a given day. Do
you feel that APHIS would have sufficient quantities of vaccine
to deal with a situation, and kind of talk me through that
timeline of going from the 10 million to the 40 million
vaccinations that we would build up to perhaps.
Mr. Herring. Well, in short, there is no current bank that
is totally adequate, the current bank is inadequate to respond
to an FMD outbreak, other than a very small focal outbreak. In
today's industry, we have anywhere from a million pigs a day
with wheels under them, and for cattle, almost \1/2\ that many
cattle with wheels under them, and it is likely by the time we
detected that we have an outbreak, it would be a major
outbreak.
So given that scenario, we need a vaccine bank with a
minimum of 10 million doses from the get-go, from the start,
and then we need the surge capacity that it would depend on the
outbreak, but we think as many animals that are on the road
within a couple of weeks, that we would be looking at 30 to 40
million doses.
If we back up and look at, in 2014 on what happened with
PEDv, I would give that analogy to the old map on Bonanza, the
way it just burned.
Mr. Marshall. Yes.
Mr. Herring. I mean we couldn't have spread it faster if we
would have tried.
Mr. Marshall. Okay. My next question is for Mr. Buchholz.
Mr. Buchholz, like your state, my state has been devastated by
the wildfires, 650,000 acres, what does 650,000 acres looks
like, it is about an area of 50 by 10 miles, it is bigger than
the size of Rhode Island. Over 5,000 head of cattle died. We
are very grateful for the many, many people that have
contributed hay and fence supplies. But there are some
challenges, going forward, for these people, which I am sure
you have experienced. One is the limit is $125,000 per person.
That doesn't take many cattle or many miles of fence to add up
plus that. And the other concerns as I have been out there on
the ground dealing with the situation, is some of the fencing
issues. The NRCS has a 15 page fencing document, and one of the
concerns is 2\7/8\" inch pipe versus 3" pipe. I am not sure in
Texas, but in Kansas we have been building fences for 5
generations or 6 generations, and these men and women know how
to build fence.
Did you run into any problems with some of your past
experience with wildfires and trying to help people get back on
their feet?
Mr. Buchholz. The payment limit is certainly an issue,
especially when you reach that level of devastation. I haven't
done the math, but it doesn't take much livestock now to hit
that cap. And when you add fencing and other things, it quickly
adds up.
I am not sure on the NRCS recommendations on fencing and
such as that. In our area, it depends on if you build pipe
fencing or wood fencing, but the recommendations on spacing, on
H-braces and such as that is fairly accepted throughout the
agricultural community of anyone that builds fence. I don't
know that that would be that big of an issue.
The personnel in our counties were very timely. NRCS and
FSA, it did not take them long to assess the total devastation
and get on that. And there were--interesting enough, there were
some special funds that were available. We were lucky enough
there were several fires in Texas at that time; ours of
252,000, another one of 400,000, still does not reach the size
and scope of what we have experienced recently.
I am sorry that I can't answer that more. And I was
impressed with our personnel in our local offices, and how they
responded and how quick we were able to start getting boots-on-
the-ground and getting things recovered. But again, the payment
limitation is a big, big deal, especially the level of those
fires. There are fairly large western operations and it doesn't
take long to hit that cap. I don't know if there is some way
that the Committee or a group of individuals could look at that
and because in my incident, it is a very life-changing
experience. One day we were good, the next day literally we
were just trying to prop up the fence to hold the livestock to
get them shipped out of there. We had trailer truck after
trailer truck of hay coming before the embers even stopped
falling. You are good one day and the next day you are burned
out. You don't even have fences to hold them.
So I am sorry I can't address that to a greater level.
Mr. Marshall. I yield back.
The Chairman. Mrs. Bustos.
Mrs. Bustos. Thank you, Mr. Chairman.
This question will be addressed to the entire panel, but I
know it was specifically Mr. Uden and Mr. Herring who had
pointed out the need for more dollars for research, in your
opening comments, and I could not agree more with you.
My question to each of you, and maybe we will start from my
left to the right, in this proposed budget that was just
released within the last several days by President Trump, it
called for drastic cuts to the U.S. Department of Agriculture
to the tune of 21 percent. That concerns me a great deal. That
equates to almost $5 billion in cuts. This will, no doubt, have
an impact on what we can and cannot research, going forward.
And what I would like you to address, I mean you are the folks
on the ground, we are Members of Congress, and you are in a
position where you can drill down a little bit. But, I was
wondering if you would share those concerns about cuts to that
level, and how specifically if those cuts were to go through,
how you would see that impacting research and the end result of
that. Mr. Uden, do you want to start?
Mr. Uden. Okay. I will start. Research is vitally important
to move these industries forward. Every day we have more and
more to deal with, more and more challenges, and without viable
research, we can look at beef safety research and all the
issues that we deal with as far as E. coli, Salmonella, and
some of these, we constantly need better techniques to find
some of our challenges, we have to find more robust research to
deal with those challenges as an industry. And a lot of what we
have done with those dollars in the past has furthered the
industry along, whether it be technology or different methods
of production, from all facets of the beef industry. It is
vitally important that we--we have shrank those dollars over
the last several years. We don't need to shrink those any more,
because research is what we deal with to face our challenges
and improve our product. Consequently, we continue to advance
the industry. And the research that we have conducted
throughout is why we are the global leader in livestock
production, in my opinion.
Mrs. Bustos. Thank you.
Mr. Wittenburg. I concur that the research is extremely
important to our animal livestock and poultry industry. And
what I would suggest is, like anything, is balance your budget.
You might have to shift dollars from one department to the
other, but in the end it is critical with the two various
things we are talking about here today in foot-and-mouth
disease and High-Path AI. I would suggest we try to find the
dollars.
Mr. Buchholz. In the sheep industry in the last number of
years there has not been a whole lot of money spent on research
to begin with. We have one station in Idaho that is totally
devoted to research, and we would hate to see that closed. Our
research throughout the livestock industry is probably, to me,
one of the most important places that the nation can spend
money. Anybody would hate to give up programs that they are
used to, but I would hate to see us as a nation cut research on
livestock.
Mr. Herring. Well, I am sitting in kind of an awkward
situation today because usually when the pork industry comes to
this meeting, we are not asking for anything, but just get out
of our way and let us do our business. But we have a global
challenge. By 2050 they were saying the world population is
going to be almost--the food needs are going--we will have to
double the food production in this country. Research plays a
vital part for doubling the food production in the world,
research plays a vital part of that. The pork industry has done
some amazing things in the last 25 years. We have reduced our
carbon footprint, we have reduced water consumption raising a
pound of pork by 40 percent. All that has come through
research. The ARS Division of USDA is just about the only
entity able to do long-term, large-scale production research,
and without Federal support it just won't happen.
So we have to keep getting better at what we do, and
research is a part of that. Thank you.
Mrs. Bustos. Thank you, gentlemen.
And I yield back the non balance of my time.
The Chairman. Mr. Evans.
Mr. Evans. Thank you, Mr. Chairman.
There has been a lot of discussion about trade agreements,
and you hear a lot of conversation and particularly about
NAFTA. However, some say that agriculture was the big winner in
that agreement. Can you discuss how renegotiating NAFTA would
have an impact on your industry?
Mr. Buchholz. I am sorry----
Mr. Evans. The question is how would renegotiating NAFTA
have an impact on your industry? Go down the line, each one of
you. Give us some perspective of that.
Mr. Buchholz. In particular----
Mr. Evans. Yes.
Mr. Buchholz. Well, thank you. In the past, we have had an
unusual relationship with Mexico and our sheep imports/exports,
exports. Mexico is an interesting individual to deal with in
the sheep industry, as they can open permits and close permits,
it doesn't matter whether we have NAFTA or not. One day we are
able to export all our cull ewes into Mexico at a good price to
the producers, and the next day they are somewhat fickle, and
they close that market.
NAFTA, as far as the wool industry and such as that, right
now, a question that I would just have to glean a little more
information and get back to the Committee on some of that. My
expertise does not lie how NAFTA would affect the whole
industry. I am well aware how Mexico can be very fickle with
some of our older ewes going into there. I appreciate the
question, and I will try to get that better answered.
Mr. Evans. Okay.
Mr. Herring. Mexico is a tremendous trade partner with the
pork industry. Actually, it is our number two market. We are
very nervous over the rhetoric coming out of Washington over
NAFTA. I actually spent last week in Mexico City on a trade
mission. I would tell you that I had several people ask me what
did I learn, and I would tell you that our trading partners
down there are cautiously optimistic. They are not against
modernizing NAFTA, but the product that we send to Mexico is
very important to them.
Now, on the flipside of it, my company does a lot of work
in Mexico. We build farms. Their domestic production in Mexico
is growing. It is going to grow, their sow numbers are going to
grow over 30 percent over the next 4 years. They have a growing
pork industry, and they are importing about 30 percent of the
pork that they are consuming. It has been a very, very good
deal not only for their country, but also for the United
States.
Mr. Uden. The beef industry would agree with a lot of these
comments. Again, we are shipping 31 percent of our product as
far as our exports. Exports represent about 12 percent of beef
throughout the world, so this is a great concern with us when
we go to having this rhetoric out there.
The one thing I might point out, every country is
different, and one real benefit with Mexico is the types of
products that they take that we normally wouldn't consume in
the U.S. so they are very vital to the bottom line of our
producers. It is a huge impact on the U.S. beef supply if we
lost almost \1/3\ of our export markets or jeopardized them.
Mr. Wittenburg. I would concur with all three of the
colleagues here at the table. The turkey industry exports 8
percent of its total product outside the United States, and of
that 8 percent in total volume, 65 percent of it goes to
Mexico. Mexico is a very important trading partner. I would
concur that we don't screw up NAFTA.
Mr. Evans. I yield back the balance of my time. Thank you,
Mr. Chairman.
The Chairman. Thank you all very much. I really, really
appreciate the benefit of your testimony here today. I will
invite the Ranking Member, if he wants, or I guess you are on
your way.
Mr. Costa. No, no, I concur.
The Chairman. If the Ranking Member would like to make a
closing comment or so, he is welcome to, but if he needs to
move on his way, that is good too.
Mr. Costa. I just want to say thank you. Thank you. Thank
you all.
The Chairman. Yes, thank you all very, very much. This has
been very, very helpful. We have a tremendous amount of work
ahead of us, and this is very instructive and going to go a
long way, I believe, to helping us make the right decisions as
we move forward.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Subcommittee on Livestock and Foreign
Agriculture is adjourned.
[Whereupon, at 3:10 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by Barb P. Glenn, Ph.D., Chief Executive Officer,
National Association of State Departments of Agriculture
Statement of Interest
Chairman Rouzer, Ranking Member Costa, and distinguished Members of
the Subcommittee on Livestock and Foreign Agriculture, the National
Association of State Departments of Agriculture (NASDA) applauds the
Committee's work to reauthorize the farm bill prior to its expiration
in 2018, and NASDA appreciates the Subcommittee holding a hearing on
``The Next Farm Bill: Livestock Producer Perspective'' on March 21st.
NASDA stands ready to assist Congress in developing a robust and
comprehensive farm bill prior to the expiration of the Agricultural Act
of 2014 to ensure our farmers, ranchers, and rural communities have the
tools and infrastructure necessary to continue to produce the world's
food, fiber, and fuel.
About NASDA
NASDA represents the Commissioners, Secretaries, and Directors of
the state departments of agriculture in all fifty states and four
territories. As elected and appointed officials, our members serve as
strong advocates for American agriculture and are partners with a
number of Federal agencies in regulating, marketing, and providing
services to the agricultural community. As the chief agriculture
officials in their states, NASDA members are keenly aware of the
changing dynamics, increasing challenges, and new opportunities in
agricultural production across the country and have a deep appreciation
for the important contribution agriculture makes to our nation's
security and economy.
NASDA Farm Bill Perspective & Animal Diseases
Agricultural producers, the rural economy, and communities of every
size rely upon a forward looking and fully funded farm bill. NASDA
calls for enhanced investment in American agriculture that provides
producers the tools they need to succeed. The farm bill is also vital
to providing consumers access to the safest, highest quality and
affordable food supply, which is essential for our nation's economy and
security.
One of NASDA's 2018 Farm Bill priorities is to implement a
proactive, multi-faceted animal disease program, which is needed to
safeguard animal agriculture, promote sustainable economic development
and prevent catastrophic events that could threaten our nation's food
supply. An outbreak of a foreign animal disease has the ability to
cripple the entire agricultural sector and have long-lasting
ramifications for the economic viability of U.S. livestock production.
It is essential that the U.S. Department of Agriculture's Animal and
Plant Health Inspection Service (APHIS) working cooperatively with
state animal health officials have a robust response capability in the
form of a rapidly deployable animal vaccine bank, sufficient laboratory
capacity for disease surveillance and rapid response capability at the
state level.
NASDA calls on Congress, in the 2018 Farm Bill, to establish a
multi-tiered program to deliver the sufficient development and timely
deployment of all measures necessary to prevent, identify and mitigate
the potentially catastrophic impacts an animal disease outbreak would
have on our country's food security, export markets, and overall
economic stability.
Modeled after the highly successful plant pest and disease
management and disaster prevention programs, a new Animal Pest and
Disease Disaster Prevention Program, administered by APHIS, would
provide a proactive and concerted preventative ``boots-on-the-ground''
effort focusing on early detection and rapid response to protect the
nation's animal agriculture industry. It is envisioned that this
program would be structured to take full advantage, through support and
collaboration, of the science generated by the National Institute of
Food and Agriculture (NIFA) program established under section 1433 of
the National Agricultural Research, Extension and Teaching Policy Act
of 1977, the Continuing Animal Health and Disease Research Program.
Building upon the 2014 Farm Bill's authorization of the National
Animal Health Laboratory Network (NAHLN), the Animal Disease and
Disaster Prevention Program will help support NAHLN and bring together
the Federal Government with states, industry, universities, and other
interested groups to reduce the impact of high-consequence animal
diseases, provide rapid detection and response capabilities to respond
to animal diseases, develop disease prevention and mitigation
technologies including vaccines, prevent the entrance and spread of
foreign animal diseases into the United States, and identify and
support critical research needs.
Additional investments are requested to establish and maintain a
rapidly deployable vaccine bank for high consequence animal diseases.
The ability to rapidly vaccinate against diseases, such as Foot & Mouth
Disease (FMD), is central to the U.S. disease control strategy should
an outbreak occur. Currently, the U.S. does not have access to enough
FMD vaccine, and the current vaccine bank arrangement has several
problems in addition to insufficient funding. U.S. livestock groups
have requested that APHIS contract for an offshore FMD vaccine bank and
capacity for domestic stockpiling of other animal disease vaccines.
Such an arrangement would, at minimum, provide vaccine antigen
concentrate for all FMD strains currently circulating in the world.
Additionally, it would ensure resources are in place for production
capacity (including surge capacity) that would produce in the shortest
amount of time sufficient vaccine to meet needs in the early stages of
an outbreak.
Conclusion
NASDA requests the Committee carefully consider the immediate needs
and challenges with addressing animal diseases. NASDA stands ready to
work with the Committee to expand on the authorization for the National
Animal Health Laboratory Network (modeled after the aforementioned
invasive species programs) to help bring together the Federal
Government with states, industry, universities, and other agricultural
stakeholders to reduce the impact of high-consequence animal diseases,
provide rapid detection and response capabilities, develop disease
prevention and mitigation technologies, support a vaccine bank
infrastructure, prevent the entrance and spread of foreign animal
diseases into the U.S., and identify and support critical research
needs.
Thank you for your consideration of this testimony, and please
contact Dudley Hoskins ([Redacted]) if you have any questions.
attachment
We Need A Farm Bill.
Good Food. More Jobs. Conservation. Thriving communities.

These are all things we can get behind.

As the chief agriculture officials in their states, members of the
National Association of State Departments of Agriculture (NASDA) are
keenly aware of the changing dynamics, increasing challenges, and new
opportunities in agricultural production across the country and have a
deep appreciation for the important contribution agriculture makes to
our nation's security and economy.

The farm bill impacts everyone.

Agricultural producers, the rural economy, and communities of every
size rely upon a forward looking, and fully funded farm bill. NASDA
calls for enhanced investment in American agriculture that provides
producers the tools they need to succeed. The farm bill is also vital
to providing consumers access to the safest, highest quality and
affordable food supply, which is essential for our nation's economy and
security.
Priorities
Conservation.

Trade Promotion.

Specialty Crops.

Invasive Species.

Animal Diseases.

Research.

Food Safety.
Our Priorities for the Next Farm Bill
Trade Promotion
The Market Access Program (MAP) promotes American-grown and
produced food and ag products that are in competition with heavily
subsidized foreign products. For every $1 invested in export market
development programs, $24 is returned in export revenue. This means
significant positive effects for farmers & ranchers like increased
income and more American jobs in the farm and food sector. Funding for
the Market Access Program (MAP) should be increased from $200M to $400M
to better promote America's food and ag products in demand across the
globe.
Conservation
Conservation programs provide financial and technical assistance
needed to conserve our nation's natural resources and meet increasing
regulatory demands. The next farm bill must make substantial
investments in voluntary locally-driven, flexible, and efficient
conservation programs. Additional investments are needed to continue
targeted conservation, address water quality challenges and face
regulatory pressures.
Specialty Crop Block Grants
The Specialty Crop Block Grant (SCBG) Program provides important
tools to enhance specialty crop production, while also advancing foods
with critical health benefits to the American people. To the extent
additional funding is available, funding for the SCBG Program should be
increased and Congress should ensure a flexible, locally responsive,
and state-led program.
Invasive Species
Invasive plants and pests are an often catastrophic threat to
farmers and ranchers. To address this increasing threat, bold action is
required. Building on the successes of the invasive species programs
created by the 2014 Farm Bill, Congress should bring additional tools
to bear on this serious economic threat. Funding for the highly
successful ``Plant Pest and Disease Management & Disaster Prevention''
and the ``National Clean Plant Network'' should be increased to in
order to provide additional tools for domestic invasive species issues.
Enhanced funding and coordination of invasive species under the
direction of the USDA Office of Pest Management Policy and involving
other departments and agencies of the Federal and state governments
should be considered to strengthen programs and maximize the value of
the Federal funding.
Animal Diseases
A proactive, multi-faceted animal disease program is needed to
safeguard animal agriculture, promote sustainable economic development
and prevent catastrophic events that could threaten our nation's food
supply. Expanding on the authorization for the National Animal Health
Laboratory Network, and modeled after the aforementioned invasive
species programs, this program will bring together the Federal
Government with states, industry, universities, and other agricultural
stakeholders to reduce the impact of high-consequence animal diseases,
provide rapid detection and response capabilities, develop disease
prevention and mitigation technologies, support a vaccine bank
infrastructure, prevent the entrance and spread of foreign animal
diseases into the U.S., and identify & support critical research needs.
Research, Education, and Economics
Robust funding for agricultural research and extension programs,
and infrastructure, particularly within our nation's many outstanding
agricultural colleges and universities, is vital to ensuring producers
remain competitive domestically and globally. The farm bill must also
ensure adequate funding for research focusing on the safety and
security of the food system and improving and protecting our natural
resources.
Food Safety
The Food Safety Modernization Act (FSMA) is a landmark bill which
has overhauled American food safety regulation from response-driven to
preventive and farm-focused. Congress should address the variety of
implementation challenges with the final FSMA rules. The next farm bill
should provide resources to assist producers in complying with FSMA,
especially via low-cost loans for infrastructure upgrades.
Contact Us: Nathan Bowen D nathan@nasda.org D (202) 296-9680
D 4350 N. Fairfax Drive, Suite 910, Arlington, VA 22203
www.nasda.org @NASDANews @NASDADC
______

Submitted Statement by Roger Johnson, President, National Farmers Union
On behalf of the family farmer, rancher, and rural members of
National Farmers Union (NFU), thank you for holding this hearing
examining the livestock and poultry sector as we head into deliberation
and consideration of the next farm bill.
NFU is a grassroots general farm organization with nearly 200,000
family farmer, rancher, and fishermen members nationwide. Since 1902,
NFU has supported family agriculture and rural communities through
advocacy, education, and cooperative development. Delegates to NFU's
annual convention, through a vigorously debated and democratic process
establish NFU's policies. NFU policy states support of ``Clarification
of the Packers and Stockyards Act to allow individual producers to seek
recourse for abuse of market power without having to prove competitive
injury to the entire marketplace.''\1\ The interim final rule on the
scope of 202(a) and (b) directly addresses NFU's concerns.
Additionally, NFU policy supports, ``Modifications to regulations under
the Packers and Stockyards Act that govern integrator fair-trade
practices and strengthen the enforcement mechanisms therein.''\2\
---------------------------------------------------------------------------
\1\National Farmers Union, Policy of the National Farmers Union,
(March 2016), henceforth ``NFU Policy''.
\2\NFU Policy.
---------------------------------------------------------------------------
The Packers and Stockyards Act of 1921 was passed in response to
the 1919 Report of the Federal Trade Commission on the Meat-Packing
Industry, that stated, ``The power of the Big Five in the United States
has been and is being unfairly and illegally used to manipulate
livestock markets; restrict interstate and international supplies of
foods; control the prices of dressed meats and other foods; defraud
both the producers of food and consumers; crush effective competition;
secure special privileges from railroads, stockyard companies, and
municipalities; and profiteer.'' In 1916, the ``Big Five's'' percentage
of interstate slaughter was 82.2 percent for cattle and 61.2 percent
for hogs. The passage of the Packers and Stockyards Act in 1921
followed the Sherman Antitrust Act of 1890, the Federal Trade
Commission Act of 1914, and the Clayton Act of 1914. The basic premise
of the core antitrust laws was to protect competition for the benefit
of consumers.
The P&S Act was passed in order ``to regulate the sale of livestock
by farmers to the more economically powerful livestock buyers.''\3\
Congress passed the Act with recognition that the previous antitrust
[A]cts did not adequately protect farmers and consumers from the
monopolistic practices of the meatpacking industry. The Act set out to
regulate meatpackers engaging in unfair or deceptive practices that
harm individual farmers.\4\ While the P&S Act has some typical
antitrust components (Sections 202(c) through (f)), the law is broader
than just antitrust in that it also establishes statutory trusts for
the benefit of all unpaid cash sellers and delivery of full amount due,
for example. These are not antitrust components of the P&S Act and were
designed for the benefit of individual farmers and ranchers.
---------------------------------------------------------------------------
\3\See Van Wyk v. Bergland, 570 F.2d 701, 704 (8th Cir. 1978).
\4\Stumo, Michael J., and Douglas J. O'Brien. ``Antitrust
Unfairness vs. Equitable Unfairness in Farmer/Meat Packer
Relationships.'' Antitrust Unfairness vs. Equitable Unfairness (2003):
n. pag. The National Agricultural Law Center.
---------------------------------------------------------------------------
One hundred years after passage of the P&S Act, the concentration
ratio among the top four meatpacking companies is 85 percent for beef,
74 percent for pork, and 54 percent for poultry.\5\ Farmers and
ranchers are subject to both monopolistic practices in the agricultural
inputs sector and monopsonistic practices in the agricultural
production sector. Due to a lack of competition across the agricultural
sector, farmers are subject to both the bargaining power of sellers of
agricultural inputs and the bargaining power of buyers of the products
farmers grow.
---------------------------------------------------------------------------
\5\Scope of Sections 202(a) and (b) of the Packers and Stockyards
Act, 81 Fed. Reg. 92565, (December 20, 2016).
---------------------------------------------------------------------------
The development of contract farming as the model in the poultry and
hog sector has institutionalized the ``monopsony/monopoly relations
between farm and agribusiness and the ability of the latter to capture
value by the producer through price manipulation.''\6\ The two parties
that negotiate the contract are not equal. This asymmetrical power
results in undue influence over contract farmers.
---------------------------------------------------------------------------
\6\Jyotishi, Amalendu. ``Monopsonistic Exploitation in Contract
Farming: Articulating a Strategy for Grower Cooperation.'' Journal of
International Development.
---------------------------------------------------------------------------
Contract poultry growers are often required to invest hundreds of
thousands of dollars for poultry houses and equipment that have a
single purpose--raising birds. Farmers often invest with loans
amortized over decades. Because of the lack of competition in the
meatpacking sector, farmers may only have access to one to two
processors in their immediate area. The poultry houses and equipment
are sunk costs, which puts farmers at a tremendous disadvantage when
negotiating contracts. As one farmer stated at the U.S. Department of
Justice and USDA Public Workshops Exploring Competition in Agriculture:
Poultry Workshop, ``And when you have that kind of debt load over you,
of course you're going to choose to sign the contract. You feel that
there's no other option when you owe $\1/2\ million or $1 million.''\7\
---------------------------------------------------------------------------
\7\USDOJ & USDA Public Workshops Exploring Competition in
Agriculture (2010), Normal, Alabama. Print.
---------------------------------------------------------------------------
For years, USDA has attempted to address the anti-competitive
behaviors of the meatpacking industry by promulgating rules that would
help clarify the P&S Act and its scope. Blocked by Congressional riders
fueled by outrage from the meatpacking companies, USDA has, thus far,
been unable to promulgate rules. The status quo system of indentured
servitude by contract growers who are subject to increasingly offensive
demands by integrators is simply unacceptable. NFU strongly supports
the interim final rule on Scope of Sections 202(a) and (b) of the
Packers and Stockyards Act and the proposed rules on Unfair Practices
and Undue Preferences in Violation of the Packers and Stockyards Act
and Poultry Grower Ranking Systems.
Thank you for the opportunity to submit a statement for the record
on the state of the livestock sector. The Farmer Fair Practices Rules
are long overdue. Family farmers and ranchers operating in an extremely
consolidated marketplace should have the full protection of the Packers
and Stockyards Act of 1921. Over the last few decades, judicial
decisions have weakened the original Act, providing farmers and
ranchers with less protection in a more challenging marketplace. These
rules will go a long way to make sure that farmers and ranchers can
continue to operate with basic protections under the law.
Sincerely,

Roger Johnson,
President.
______

Submitted Statement by Livestock Marketing Association
Subcommittee Chairman Rouzer and Members of the House Committee on
Agriculture Subcommittee on Livestock and Foreign Agriculture:

These comments are provided on behalf of the Livestock Marketing
Association (LMA), which is the leading national trade organization for
more than 800 livestock marketing businesses located throughout the
United States. LMA represents more than 75 percent of the regularly
selling local livestock auction markets in the U.S. Livestock auction
markets serve two important purposes: (1) they sell livestock for
producers in a competitive bidding environment and (2) they stimulate
the economies in local communities.
A primary concern of livestock markets is the amount of devastating
risk sellers of livestock and markets are exposed to when a buyer fails
to pay.
In 2010, Eastern Livestock, the largest livestock dealer in the
U.S., defaulted on payment and was forced into bankruptcy owing
approximately $112 million to creditors, including hundreds of
livestock producers, other dealers, and markets. The Eastern Livestock
default is not a one-time, isolated occurrence in the industry. Since
2010, there have been several instances of dealer defaults. In the fall
of 2015, a major dealer failed to pay two livestock markets (owing
$980,000 to a market in Kansas and $2.9 million to a market in
Nebraska), as well as several producers who sold to the dealer
directly.
Producers who sell through a livestock auction market are protected
by both the market's surety bond and by the market's custodial account
(trust account). Producers who sell directly to packers are protected
by both the packer's surety bond and by the Packer Statutory Trust
under 7 U.S.C. 196. Producers who sell directly to dealers are provided
little protection. Under the current law, dealers do not have a
custodial account or a trust.
Markets are placed in a highly vulnerable position when it comes to
payment. Pursuant to 7 U.S.C. 228b, markets are required to pay sellers
of livestock by no later than the close of the next business day after
the sale, even if the markets are not paid by the buyer of those
livestock. When livestock markets are not paid, they are usually left
with no feasible way to collect. If the dealer has resold the livestock
to a good faith purchaser, that second purchaser has clear title to the
livestock, even if the dealer has not paid for them. In addition, a
dealer's bank usually will have a blanket security interest on all of
the dealer's livestock inventory, which, under current law, will give
the bank a perfected security interest in the livestock even though the
dealer never paid for them and the bank never loaned the dealer any
money for those specific livestock. A producer selling directly to a
dealer is in a similar poor position when the dealer fails to pay.
When a dealer mails a check, as the law allows, it may be several
days before the seller (whether livestock market or producer) even gets
the check or discovers that a check is not coming. In many parts of the
country, mail has slowed down significantly, further stretching this
critical time period. In some cases, a buyer may buy multiple times
before a payment problem is discovered.
Although the P&S law attempts to provide financial protection for
sellers of livestock by requiring dealers to maintain surety bonds,
bond claims rarely make up for any significant loss. P&S dealer bond
claims return, on average, about 15 for every dollar claimed (1999-
2013 data). This does not include Eastern Livestock claims where payout
was 4.37 on the dollar.
Additional protection is needed for producers and markets who sell
to dealers. Financial protection already exists for those dealing with
packers (Packer Statutory Trust), markets (custodial account), and in
other agriculture sectors (statutory trust under the Perishable
Agricultural Commodities Act).
Simply raising bond amounts is not an acceptable alternative
because it would push legitimate buyers, particularly young and
beginning market participants, out of the marketplace due to the
significant assets needed to obtain this type of bond.
Instead, a possible solution to this problem with the least amount
of disruption to the industry would be amending the Packers and
Stockyards Act to establish a dealer statutory trust. A dealer trust
would provide livestock producers and markets financial protection in
the event of a dealer default by giving unpaid sellers of livestock
(producers or markets) first priority to receive livestock and accounts
receivable.
A dealer statutory trust could be modeled after the existing Packer
Statutory Trust that Congress added in 1976 to address packer defaults.
The trust requires packers to hold all livestock purchased from cash
sellers, and all inventories of, or receivables or proceeds from meat,
meat food products or livestock products derived from such livestock,
in a trust fund for the benefit of unpaid sellers.
By adding a Dealer Statutory Trust to the P&S Act, business would
continue as usual until a dealer defaults on payment for livestock. In
the event of a default, the priority would help ensure the producers
and markets that have sold to the defaulting dealer are paid first.
After all, it is their livestock that was sold for compensation. A
Dealer Statutory Trust would not change how the dealer conducts
business or any other requirement of the P&S Act. For example:

A dealer trust would not require dealers to maintain a
separate bank account.

A dealer trust would not affect any of the dealer's other
assets.

A dealer trust would not require a government account be set
up for payment of claims.

A dealer trust would not change a dealer's bonding
requirements.

We appreciate this opportunity to provide written testimony and
thank the Committee for its ongoing interest in helping the livestock
industry succeed. The need for protection against livestock payment
defaults is more important than ever with slowing mail service
delivering checks, increased value of livestock at times, and
volatility within the market. We look forward to working together to
face the challenge of dealer payment default within the livestock
industry.

THE NEXT FARM BILL

(DAIRY POLICY)

----------

WEDNESDAY, MARCH 22, 2017

House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Committee met, pursuant to call, at 10:00 a.m., in Room
1300 of the Longworth House Office Building, Hon. K. Michael
Conaway [Chairman of the Committee] presiding.
Members present: Representatives Conaway, Thompson,
Goodlatte, Lucas, Gibbs, Crawford, Hartzler, LaMalfa, Davis,
Allen, Bost, Rouzer, Abraham, Kelly, Comer, Marshall, Bacon,
Faso, Dunn, Arrington, Peterson, David Scott of Georgia, Costa,
Fudge, Vela, Kuster, Nolan, Plaskett, Adams, Evans, Lawson,
O'Halleran, Panetta, and Blunt Rochester.
Staff present: Bart Fischer, Callie McAdams, Emily Wong,
Matthew S. Schertz, Mykel Wedig, Stephanie Addison, Anne
Simmons, Lisa Shelton, Liz Friedlander, Mary Knigge, Matthew
MacKenzie, Troy Phillips, John Konya, Nicole Scott, and Carly
Reedholm.

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

The Chairman. Good morning. This hearing of the Committee
on Agriculture entitled, The Next Farm Bill: Dairy Policy, will
come to order. Please join me in a quick prayer.
Dear Heavenly Father, thank you, Lord, for the privilege of
living in this country, and all the blessings that that bestows
upon us. Be with us this morning during our deliberations.
Please grant us the wisdom and discernment that we need to be
able to make hard decisions in the area we work with. We are
asking you this in Jesus' name, Amen.
Good morning. Welcome to today's hearing. You may have
noticed something a little different about the room. There is a
different portrait in the back, at the behest of our Ranking
Member. While we are gathered here today to talk about dairy
policy, I would be remiss if we did not take a moment to
reflect on the fact that we lost a great friend of American
agriculture last week. Congressman Kika de la Garza served
every year of his distinguished 37 year career in Congress on
this Committee, and he spent 14 years, from 1981 to 1994, as
the Chairman. As I noted in our release last week, Chairman de
la Garza was a true public servant in every sense of the word.
From serving our country in the military, to representing his
constituents back home in Texas, and here in the nation's
capital, to advocating for farmers and ranchers across the
country, he had a significant and lasting impact. I have long
admired his commitment to bringing various groups together, all
in an effort to build broader support for American agriculture,
and, frankly, his approach is one that we strive to emulate
today.
Today, we take a small tip to honor the man, and remember
his contributions to this great country, and the industry that
we all love. And before I turn it over to Ranking Member
Peterson, I would note that Mr. Goodlatte and Mr. Lucas, will
be offering comments as well, and I would ask that any other
Member wishing to offer tribute to Chairman de la Garza to
please submit their comments for the record.
And, with that, I turn to the Ranking Member, Mr. Peterson,
for any remarks about Kika that he has.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Well, thank you, Mr. Chairman, when I came to
this Committee in 1991, Kika had already been Chairman for 10
years, and he was the second longest serving Chairman of the
Agriculture Committee in history. He was elected in 1981. When
Tom Foley, who had been Chairman, moved up to Majority Leader,
and then eventually Speaker, Kika ran against Ed Jones. This is
all ancient history. You may not even know these guys, and was
elected Chairman.
The thing I appreciated about Kika was that he was a
bottom-up guy. And the Subcommittee Chairman, back in the days
under Kika, had the power of the Committee Chairman, and they
ran the show. And he let them do their thing, and it worked
pretty well. The people on the Subcommittee had a lot to say
about what happened, and they wrote some good farm bills during
a time that was very challenging. The 1980s, if you remember,
was not a good time to be Chairman of the Agriculture
Committee, or to be Secretary of Agriculture, or to be a
farmer.
Kika had a lot of things that he did, and I am going to let
Frank Lucas talk about the submarine story when he gets to his
turn, and I won't go into that now, but the other thing is Chip
Connelly was the economist for many, many years, and they had
this chart. And this was before Kent Conrad made charts famous
over in the Senate. Kika had this chart that Chip had made up
that showed how much the ag budget was in relation to the rest
of the budget. He would print that line on there, and you
couldn't even see it. He would show that chart all over the
place, all over the Hill, when he traveled to other countries
he would show it to people. That was one of the things I
remember a lot about Kika. Yes, I would say it was a good
chart.
And he, as I said, went through some tough times, and he
fought off people that were out to get production agriculture,
including your good friend, Mr. Dick Armey from Texas, and
others. But the bottom line, he was a consummate gentleman. He
treated everybody with respect, and he ran the Committee in a
very judicious way. And, bottom line, what Kika cared about was
the producers. He listened to everybody, that is who he really
cared about. You could see that in the work that he did.
He started the Hispanic Caucus. He did all kinds of great
things while he was here in the House, and he was a pioneer
before his time, and he will be much missed by myself, I think
by anybody that knew him, and he will be greatly missed by
American agriculture, and the people of south Texas. Thank you
for giving us a chance to talk about him a little bit today.
The Chairman. Well, that portrait in the back is Kika, and
he was from south Texas. Mr. Goodlatte, you are recognized for
comments.

OPENING STATEMENT OF HON. BOB GOODLATTE, A REPRESENTATIVE IN
CONGRESS FROM VIRGINIA

Mr. Goodlatte. Well, thank you, Mr. Chairman. I want to
thank you and the Ranking Member for being inspired to remember
former Chairman de la Garza. His final 2 years as Chairman of
this Committee were my first 2 years in the Congress. And I
remember early on in my experience here, in the dead of winter,
taking us all up to Newport, Rhode Island, an unusual place for
an agriculture retreat in the middle of the winter, for an ag
retreat that was beneficial. It got us all together, and we
discussed a number of issues.
And the Ranking Member is correct when he says that he gave
his Subcommittee Chairmen some latitude. Sometimes they
exceeded the authority that he gave them. In one case, in that
first 2 years, when he was the Chairman, and we were in the
Minority, a hearing was held on a bill that I had, my very
first bill in the Congress, and not many people showed up for
the hearing that was held on the bill. And the Chairman had to
leave, and I was the only other Subcommittee Chairman, it was
Harold Volcker, had to leave, so he asked me to take the Chair.
The word got back to Chairman de la Garza that this was taking
place, and he soon appeared to take over.
His portrait, that you noted, hung in that spot the entire
4 years that I had the honor to serve as Chairman of the
Committee, and I always loved what former Chairman, and now
Senator, Pat Roberts had to say about that painting.
Congressman de la Garza was not as tall as that painting might
appear. That is right, Pat Roberts referred to that as the
shortest fence post in Texas. But Congressman de la Garza was a
great champion for American agriculture, and I enjoyed serving
with him, and I am glad we are remembering him here today.
Thank you, and I yield back.
The Chairman. Mr. Lucas, you are recognized.

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

Mr. Lucas. Thank you, Mr. Chairman, and I too appreciate
you and the Ranking Member for taking time to honor our
colleague. There are three of us left on the Committee who
served with him. Mr. de la Garza was strictly old school. He
ran the Committee with authority. He conducted himself in a
very dignified fashion. And in those days, prior to 1995, we
still operated under the proxy system. Remember that,
gentlemen? And when I was elected in a special election on May
of 1994, Ranking Member Roberts took me in to see the Chairman.
He said, ``Now, it is a very important, and you will be
respectful, and you will be understanding, and you will agree
to whatever he says.'' Thank you, Pat.
So we go in, and Mr. de la Garza quizzes me a little bit
about the district, and was I indeed taking my predecessor's
place. And he looks me in the eye and says, ``Have you signed
my proxy form yet?'' And I looked at Pat, and Pat went,
``Absolutely, Mr. Chairman. The proxies went to the party
Member on each side that was in leadership.'' But the thing
that de la Garza may well be remembered the most for, and you
can always tell a Member, or a staffer, or a person who has
been in this crowd for any period of time, that Mr. de la Garza
had something that we all referred to as the submarine story.
Kika had been in the Navy years earlier, and Kika liked to
tell the story that, when he became Chairman of the Agriculture
Committee, he had an opportunity to go and tour a nuclear
submarine out at sea. And that, as an old, I believe, ensign,
he was quizzing the captain of the boat about all the things
that it would do, and all the incredible stuff. And the captain
kept saying, ``Congressman, that is classified. Congressman,
that is classified. We can't discuss all of these various
things.''
And finally Kika, in his story, and I am paraphrasing
rather loosely, Kika looked him in the eye and said, ``So, let
me see now, you have an atomic submarine, so you have unlimited
power. You can make your water, and you can make your air, and
you can stay underwater for years and years at a time.'' And
the captain smiled. And he said, ``Well, it would seem to me,
therefore, captain, the one thing that limits this massive
weapon's ability to defend the United States of America, the
only thing that you can't make on board, is your food supply.
Obviously, captain, the limiting factor on the ability of this
powerful nuclear submarine to defend the country, and the
world's freedom, is its ability to feed itself, the food
supply. Therefore, what is the most important element in the
defense of freedom, and the United States, in the world? It is
the food supply.'' And if you were in Mr. de la Garza's
presence, you would cheer. That was an automatic given. But he
was right. And the Agriculture Committee does defend the
freedom of the entire world.
With that, Mr. Chairman, I thank you for the opportunity to
reminisce about the Chairman, they don't make them quite like
that anymore.
The Chairman. I understand. I appreciate that. Other
Members are requested, if they want to make comments in
reference to Mr. de la Garza for the official record, to put it
in.
Today's hearing continues our marathon series of hearings
examining all aspects of the next farm bill. As I noted
earlier, dairy policy is the focus of today's hearing. Dairy is
a unique industry. It is present in all 50 states. Harvest
comes 7 days a week, 365 days a year, milk is highly
perishable, and it is processed into a range of products. These
factors, combined with the fact that dairy markets are
increasingly globally integrated, make crafting an effective
dairy policy particularly challenging.
While the entire agriculture industry has been experiencing
low prices, leading to a 50 percent drop in net farm income
over the past 4 years, the dairy industry is in an unenviable
position. After hitting $24 per hundredweight in 2014, the
price of milk fell to $16 per hundredweight in 2016. While we
often say that the farm safety net is designed for times like
these, the Margin Protection Program in the 2014 Farm Bill has
provided virtually no assistance. Under-performance by the MPP
has resulted in very few producers purchasing buy-up coverage
levels in 2017, leaving producers even more exposed to market
volatility. While the industry is to be commended for making
the fundamental shift away from farm support to margin
protection, that will only be sustainable if MPP actually
provides sufficient risk management, going forward.
In addition to an inadequate safety net, the dairy industry
is facing other headwinds here and abroad. While many of our
customers are now oversea, with Mexico being the most
significant outlet for U.S. dairy exports, the industry has
been consistently hampered by barriers to entry into the
Canadian markets, including the latest example designed to keep
U.S. ultra-filtered milk out of Canadian processing facilities,
and that is just scratching the surface.
While our nation works to tackle nearly $20 trillion in
debt, we must remind folks that America's farmers and ranchers
have repeatedly answered the call for deficit reduction. In
fact, latest estimates put 2014 Farm Bill savings at just over
$100 billion, four times the savings estimated at passage. Now,
while we don't yet know the resources that we will have
available to craft the next farm bill, we do know that
America's farmers and ranchers feel like they have given at the
office, as they say. As we work through the tough decisions of
how to allocate available resources, it is important that we
have a very clear picture of what is and is not working.
To that end, I look forward to hearing from our witnesses
today about their vision for the next farm bill, and discussing
other issues of importance to the dairy industry.
[The prepared statement of Mr. Conaway follows:]

Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
Good morning and welcome to today's hearing. This hearing continues
our marathon series of hearings examining all aspects of the next farm
bill.
The focus of today's hearing is on dairy policy. Dairy is a unique
industry. It is present in all 50 states. Harvest occurs 7 days a week
and 365 days a year. Milk is highly perishable. And, it's processed
into a range of products. These factors--combined with the fact that
dairy markets are increasingly globally integrated--make crafting an
effective dairy policy particularly challenging.
While the entire agricultural industry has been experiencing low
prices--leading to a 50% drop in net farm income over the past 4
years--the dairy industry has been in an unenviable position. After
hitting $24 per hundredweight in 2014, milk prices fell to around $16
per hundredweight in 2016.
While we often say that the farm safety net is designed for times
like these, the Margin Protection Program in the 2014 Farm Bill has
provided virtually no assistance. Under-performance of MPP has resulted
in very few producers purchasing buy-up coverage levels in 2017,
leaving producers even more exposed to market volatility. While the
industry is to be commended for making the fundamental shift away from
price support to margin protection, that will only be sustainable if
MPP actually provides sufficient risk management, going forward.
In addition to an inadequate safety net, the dairy industry is
facing other headwinds here and abroad. While many of our customers are
now overseas--with Mexico being the most significant outlet for U.S.
dairy exports--the industry has been consistently hampered by barriers
to entry in the Canadian market, including the latest example designed
to keep U.S. ultra-filtered milk out of Canadian processing facilities.
And that's just scratching the surface.
While our nation works to tackle nearly $20 trillion in debt, we
must remind folks that America's farmers and ranchers have repeatedly
answered the call for deficit reduction. In fact, latest estimates put
2014 Farm Bill savings at just over $100 billion--four times the
savings estimated at passage. While we don't yet know the resources
that we will have available to craft the next farm bill, we do know
that America's farmers and ranchers feel like they have given at the
office. As we work through the tough decisions of how to allocate
available resources, it is important that we have a very clear picture
of what is and isn't working.
To that end, I look forward to hearing from our witnesses today
about their vision for the next farm bill and discussing other issues
of importance to the dairy industry.
With that, I turn to Mr. Peterson for any comments he would like to
make.

The Chairman. With that, I turn to Mr. Peterson for any
comments he would like to make.
Mr. Peterson. Thank you, Mr. Chairman, and thanks for
holding this hearing. The Margin Protection Program, we spent a
lot of time on in the last farm bill, working with the National
Milk Producers and others to come up with a new system. The
MILC Program had been around for a while, and it paid out some
payments to producers, but it wasn't really a safety net. And
then we were clobbered in 2009, we got payments, but it did not
go anywhere near what we needed to do to alleviate the problem.
And we had a lot of producers go out of business, and it was a
terrible situation.
Because of that, we went to work, and came up with a new
idea, and that was the Margin Protection Program, that we would
have an insurance program that would float off of feed cost.
The USDA has been calculating feed cost for years, and so it
would be a margin above that feed cost that we would allow
people to buy protection against that margin. And so we put it
together with long meetings with National Milk, and Jerry Kozak
hardly had any hair left by the time it was done, but they
finally came to a resolution, and that was introduced, and
became part of the bill. We did have a fight over this
stabilization fund, and myself and the Speaker got into it over
that, and it was quite a fight that went on there for a year.
And, at the end, the Speaker won, surprise, surprise.
And we were concerned at the time that we had set the sweet
spot at $6.50 above feed cost, so that the most affordable rate
was that amount. When you went above that, you could buy up to
$8. That is pretty expensive. We were concerned that this might
be too good, and that we would take too much risk out of the
system, and there would be over-production, and so we wanted
the stabilization fund. Well, that disappeared. And it turned
out we shouldn't have had a fight over that, because it wasn't
even remotely necessary, because it was not needed at all.
In fact, what happened is CBO, who still is having a very
difficult time, in my opinion, scoring dairy, they came in with
a score that I didn't agree with, and they forced us to take a
reduction in the feed cost. And, because of that, there was
only one bi-monthly since the bill has been in effect, there
was only 1 month that actually paid out, because of this new
feed cost calculation. If we would have had the original feed
cost, we might have four or five times it might have paid out,
depending on what your level of coverage was.
What happened is hardly anybody has signed up for this,
because they signed up the first year, they got burned, and
didn't get anything out of it. As you look at the future price,
and look at what you have to pay, and look at what the
situation is with this feed cost, they are not buying it.
Basically, we have people sitting out there with no protection
when things collapse, and they will collapse at some point.
One of the things that you will hear from the industry
today is that they want to go back to the original feed cost
calculation which was in there at the start, which would have
solved a lot of this problem. We also have to look at what we
charge the small guys for buy-up so that they have better
protection. And the problem is that this is going to cost
money. We have had the CBO score this, these are not the
overall package, but the feed cost change, the original score
they gave us is over $2 billion, which I don't know where we
are going to find that. If we would have had it in the original
bill, we would have it in the baseline. They wouldn't have
forced us to take it out.
The point is I don't see how they can come with a score of
$2.2 billion, when I have sheets here that show that that is
not going to be even remotely close to what it is going to be.
This year there are not going to be any payments at all. They
are already showing $17+ milk, so I don't know how the heck
they are doing this. We are going to have to do some work with
them to try to get this back into reality. But the bottom line
is it is the right idea. The Margin Protection Program is the
right idea. We just have to get it tweaked so that it works,
especially for the small guys. I am not sure the big guys want
it and need it that much. As long as they have catastrophic,
that is the main thing that they want.
We need to tweak this thing, and hopefully we can come up
with a way to get this done, and we can get CBO within the
range of reality, and be successful soon. Thank you.
The Chairman. I thank the gentleman. The chair requests
other Members to submit their opening statements for the record
so the witnesses may begin their testimony, and to ensure there
is ample time for questions.
[The prepared statement of Ms. Lujan Grisham follows:]

Prepared Statement of Hon. Michelle Lujan Grisham, a Representative in
Congress from New Mexico
Thank you, Mr. Chairman, for holding this hearing. Dairy is a
particularly important industry for my state, New Mexico, which is the
ninth largest dairy producer in the country. We are home to roughly 150
dairies, our average herd size of 2,357 milk cows is largest in the
country, and we are second in United States in milk production per cow.
Therefore, it should come as no surprise that New Mexico is ranked
fifth in the nation for cheese production. In fact, Clovis, New Mexico,
is home to the largest cheddar cheese plant in the world!
The economic impact of dairy on New Mexico cannot be understated.
Dairy farms and processing plants are responsible for $26 billion of
the state's economy, provide 25,000 jobs, and in 2012 dairy was the
state's top agricultural export worth $195 million. Maintaining the
strength of the dairy industry is especially important to the rural and
frontier areas of my state, which are still struggling with the highest
unemployment rate in the nation at 6.8%.
Unfortunately, it is no secret that dairy farmers both in my state
and across the country are facing significant financial challenges.
Since 2014, milk prices have fallen 40% causing dairy farmers to see
their incomes cut in half. A reduction in export values of U.S. dairy
from $9.5 billion in 2014 to $7.1 billion last year hit particularly
hard. This was compounded by the strengthening of the U.S. dollar and
an uptick in global milk supply. Furthermore, the Margin Protection
Program (MPP) did not work as well as expected to protect dairy farmers
from low milk prices.
That is why holding this hearing to address issues facing this
critical job-supporting industry is so important. As we begin to write
the next farm bill, we need to ensure that dairy farmers have the
resources and support they need to thrive. Whether they are large or
small, these farms make up the backbone of the rural economy. I look
forward to working with my colleagues to fix the MPP and address the
difficulties facing American dairy farmers in accessing international
markets like Canada. I am confident that we will make it through these
difficult times and ensure that the dairy industry is strong for
generations to come.

The Chairman. I would like to welcome to our witness table
today Jim Mulhern, President and CEO, National Milk Producers
Federation here in Arlington, Virginia, and Dr. Michael Dykes,
President and CEO, International Dairy Foods Association,
Washington, D.C.
Mr. Mulhern, you are recognized for 5 minutes when you are
ready.

STATEMENT OF JAMES MULHERN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, NATIONAL MILK PRODUCERS
FEDERATION, ARLINGTON, VA

Mr. Mulhern. Let me start by commending both your opening
comments. Frankly, the statements you have laid out well
capture the point of view expressed in my written statement. I
have submitted a written statement for the record that goes
into a number of issues. I will confine my comments this
morning to our views on the Margin Protection Program.
If I could take just a second to mention that it is
poignant for me to be here this morning as you honor Chairman
de la Garza. My first farm bill goes back to 1985. Working on
dairy policy back then, it was a very troubling time, and the
comments from the Chairman, Mr. Peterson, Mr. Goodlatte, Mr.
Lucas honoring the Chairman are quite apt. He was a great
leader, he leaves a great legacy for American agriculture, and
we are all better with our farm policy because of the
leadership that he provided.
In terms of where we are at with the situation facing dairy
producers today, we continue to be on the challenging roller
coaster ride that we have faced for the last more than 15
years. And we are once again in a downward slump in our
industry. While 2014, as you said, Mr. Chairman, was a very
good year for dairy, the 2 years since then have been very
challenging for many, many dairy farmers across the country.
And in just the past 2 weeks, the outlook for milk prices and
margins has deteriorated again at an unusually rapid pace.
Looking to future policy needs, I want to commend the
comments, Mr. Chairman, you and Mr. Peterson, in your letter
earlier this month to the Budget Committee, where you laid it
out clearly that the challenge before the Committee, and before
the Congress, is first establishing what policies are required
to effectively address the conditions in farm and ranch
country, and then establish what resources will be required to
achieve them. Mr. Peterson, your comments on the CBO situation
is apt. That is the situation we face. The reality is we have a
dairy program today that is an ineffective safety net. And I
will talk a little bit about that in my comments, but the
bottom line is we have a program today that is a program in
name, but not in effect, and we need to address that in this
upcoming farm bill.
It is because the opposite approach to what you have
outlined in your letter was what we ended up pursuing in the
2014 Farm Bill that we find ourselves today with a program that
is not working. It has really been one that, as I said, doesn't
provide an effective safety net for our dairy industry. Over
the course of the last 18 months we have been examining
potential improvements in the program, and I am pleased to
present to the Committee today our recommendations for changes
in MPP that will make it the effective safety net that we have
been looking for.
The first area we must address to make MPP effective is to
address the feed cost calculation in that margin formula. And,
Mr. Peterson, you spoke to that in your comments. The current
formula is failing because of changes that were made during the
deliberations in the 2014 Farm Bill, and the issue is that we
developed the original formula to capture accurate feed costs
on dairy farms, working with dairy science experts on the types
of feed, the volumes of feed, needed to produce a hundredweight
of milk. And in the course of the discussions in the farm bill,
due to deficit reduction reasons, that formula that we had
proposed, and, Mr. Peterson, that you had in your original
legislation, that formula was changed. You got the calculation
right the first time, Mr. Peterson. The major change we have to
do is go back to that. If we do that, we will have an effective
program.
The second aspect of MPP in need of revision are the
payment rates. And I am specifically talking about the rates
for supplemental coverage. While the feed cost reforms that are
outlined in my testimony are essential to reflecting true
producer costs, in order to have an effective program, farmers
must be able to afford the coverage. And adjusting those
premium rates, especially the rates at the lower levels of milk
production, will help ensure that MPP provides the safety net
coverage that we need for our industry.
A third area of improvement that we are recommending
relates to some technical changes designed to make the program
more responsive to producers. The first one would be to change
from this 2 month tranche that we have currently for
calculation of the margin. Right now it is a January/February,
March/April, May/June, June/July 2 months averaging, which
doesn't really reflect what is happening on a monthly basis on
dairy operations. We need to go back to an annual monthly
calculation of that. And the other change in this area would be
to move the sign-up date for the program back toward the end of
the calendar year preceding the year for which you are signing
up. In the law it is set up a little bit earlier. We have asked
USDA the past 3 years to move that date back. They have done
so, and that has been helpful in getting producers making more
informed decisions for the program.
Finally, we urge the Committee to make changes on the
Livestock Gross Margin Program. More risk management is better
for farmers than less, and my testimony goes into some detail
on changes in LGM. In the interest of time, I will not go into
that in my oral statement, but I am happy to discuss it in
questions.
In sum, Mr. Chairman, if we make these changes, four broad
areas in the MPP Program, we think those changes will have the
desired effect, and make MPP the effective dairy program for
the future that was envisioned in 2014. We are not quite there,
but it is not a lot to do to make it work for us in the future.
Thank you.
[The prepared statement of Mr. Mulhern follows:]

Prepared Statement of James Mulhern, President and Chief Executive
Officer, National Milk Producers Federation, Arlington, VA
Introduction
Chairman Conaway, Ranking Member Peterson, Members of the
Committee, my name is Jim Mulhern and I serve as President and Chief
Executive Officer of the National Milk Producers Federation (NMPF), the
voice of America's dairy cooperatives and their farmer-members for over
100 years. I appreciate the opportunity to testify before you today as
the Committee begins work on the 2018 Farm Bill.
Economic Situation
Mr. Chairman, as you have noted in recent weeks, we are beginning
work on this farm bill in the midst of a very challenging farm economy.
This certainly includes America's dairy community. The past decade has
generally been a roller coaster for our producers. World dairy markets
collapsed in the worldwide recession of 2008-2009, taking U.S. farm
milk prices with them. At the time, the milk price-feed cost margin for
dairy farmers fell to a truly catastrophic level of $2.25 per
hundredweight of milk. Three years later, in 2012, widespread drought
sent feed prices skyrocketing to historic highs, once again dropping
dairy margins to catastrophic levels.
Many dairy farmers were unable to survive this period, and many of
those that did are still struggling to recover fully. While 2014 was a
record year for milk prices, it generated no significant gains in milk
production, as would typically follow periods of high prices. In fact,
production at the national level grew by an average of just 0.8 percent
annually between June 2015, when milk prices had just returned back
down to average levels, and May 2016. This was almost a full percentage
point below the 1.7 percent average production growth from 2010 through
2016. Dairy farmers have explained to us that even the record prices of
2014 did not fully restore their financial condition from the battering
it suffered in 2009 and 2012. In particular, they still needed to make
replacement purchases of vehicles and equipment that were delayed since
2009 and were therefore not able to invest in growing their operations
and recover financially at the same time.
Then global markets collapsed once again in 2015 and 2016,
negatively impacting U.S. milk prices and gross dairy farm income in
the process. The global collapse was due to a combination of China
discontinuing the massive dairy purchases that caused the 2014 world
price spike, together with the extremely large volumes of dairy
products which the European Union (EU) added to world markets in the
aftermath of that price spike. In the year following the removal of its
milk production quotas in April 2015, the EU expanded milk production
by 14 billion pounds, equal to nearly seven percent of total U.S. milk
production that year. Almost all of this additional milk production
came into world markets as demand was contracting, on top of the large
volumes of EU dairy exports that were earlier displaced from Russia
following the import embargo it imposed in August 2014.
All told, the value of the fresh milk produced by America's dairy
farmers in 2016 was down fully 32 percent from its 2014 high, and 19
percent less than what it averaged over the previous 5 years. In all,
these difficult economic conditions facing our industry over the last
decade have resulted in the loss of more than 20,250 family dairy farms
across the United States, or nearly \1/3\ of our total farms since
2006.
While the U.S. Department of Agriculture (USDA) projects small
gains in milk prices for this year relative to last year, recently
those small gains are being challenged by large and growing levels of
dairy product inventories. USDA recently projected that milk production
for all of 2017 will increase at an annual rate of 2.4 percent. By
contrast, during 2015 and 2016, total commercial use of milk in
domestic and export markets grew at an annual rate of only 1.8 percent.
This expansion in production has the potential to outpace demand, which
will weigh heavily on milk prices yet again. In just the past few
weeks, the outlook for milk prices and margins has deteriorated at an
unusually rapid pace. Domestic cheese prices, which play a critical
role in establishing milk prices received by U.S. dairy farmers, have
dropped in the daily cash market in recent weeks and are currently
lower than they have been during all but three percent of the time
since the beginning of 2010. World prices for skim milk powder have
also shown significant weakness. These prices directly determine U.S.
prices for nonfat dry milk, which also play a critical role in
establishing farm milk prices. Nonfat dry milk prices in the domestic
cash market are now lower than they have been during all but four
percent of the time since the beginning of the year 2000. This
deterioration has been reflected in the dairy futures market as well.
Under the changes that NMPF is proposing to make the MPP a more
effective safety net program, as I detail below, the program would now
be projected to make payments to participating producers in the coming
months. It is amidst this challenging economic climate that work is
beginning on the upcoming farm bill.
Dairy Policy Overview
As we begin this process, Mr. Chairman, Ranking Member Mr.
Peterson, I want to voice my strong support of your well-articulated
position that getting the policy right must be the focus of the farm
bill deliberations process, not starting with arbitrary, and often
inaccurate, budget projections and trying to shoe-horn policy into
those numbers. As you pointed out in your March 1, 2017 Budget Views &
Estimates letter to the House Budget Committee, it is critical that
this Committee take the approach of ``first establishing what policies
are required to effectively address the conditions in farm and ranch
country and then by establishing what resources will be required to
achieve them.''
In fact, it is precisely because the opposite of this approach
drove the deliberations on dairy in the 2014 Farm Bill that I am here
today to tell you what we all know--the Dairy Margin Protection Program
is not working. While MPP was, and is, the right approach for the
future of Federal dairy policy, the program today, in its current form,
does not provide meaningful safety net support to the nation's dairy
farmers. And it cannot become the effective safety net policy it was
envisioned to be without action by this Congress to move it closer to
the program it was originally proposed to be by this Committee's
Ranking Member, Rep. Peterson, in 2011. The current program is not
working because of changes that were made to Mr. Peterson's original
proposal in response to cost projections of that proposal by the
Congressional Budget Office--projections that have since proven to be
incorrect.
As the Chairman and Ranking Member further noted in your letter to
the House Budget Committee, the shortcomings in the dairy program (as
well as cotton and others) ``must be addressed if the Committee is to
craft a farm bill that can be successfully enacted into law and
effectively respond to current conditions. America's farmers and
ranchers can hardly be expected to rally around a farm bill that will
fail them in hard times, nor can this Committee in good conscience
advance such legislation.''
Members of the Committee, the nation's dairy farmers wholeheartedly
agree with you. We appreciate this clear and unequivocal message, and
we look forward to working with you to craft policy changes that will
provide the effective dairy safety net that was originally envisioned
in the previous farm bill debate.
Our organization has been working continuously since the MPP was
first established in 2014 to monitor its implementation and seek
changes to improve its operations. During 2015 and 2016 we urged the
U.S. Department of Agriculture to address a number of program
provisions that needed attention--from providing dairy farmers more
time to make decisions on annual sign-up to flexibility in premium
payment schedules and clarifying the interaction between catastrophic
and supplemental coverage levels. We were pleased that USDA worked
closely with us and took appropriate and necessary administrative steps
to address our concerns.
As helpful and important as the Department's actions were, MPP
still is not providing effective safety net protection to dairy farmers
because of the problems with the program's feed cost calculations and
premium structure--problems that can only be addressed by Congress
through legislation.
We have identified a series of steps that Congress can take that
will address these problems and make the MPP the effective dairy safety
that we--and many on the Committee--were seeking in the current farm
bill. In order to better understand the need for the changes we
propose, it is important to recall the context in which the Margin
Protection Program was originally proposed, and to review its
functioning to date.
Following the worldwide economic collapse of 2008-2009 that led to
the disastrous milk prices that dairy farmers endured in 2009, NMPF
proposed to Congress a new risk management tool that would offer
protection against catastrophic income-over-feed-cost margin declines.
In the 2014 Farm Bill, Congress authorized the Margin Protection
Program for Dairy. MPP is a voluntary program run by the Farm Service
Agency (FSA) designed to provide support when the difference between
farm milk prices and feed costs fall below certain levels. The program
enables dairy farmers to annually decide the level of margin coverage
they want for their operations, ranging from a so-called catastrophic
floor coverage level of $4.00 per hundredweight of milk, up to a
maximum level of $8.00/cwt. The $4.00/cwt. basic catastrophic level is
available for a $100 administrative fee paid annually to USDA. Coverage
above that level is available in $.50/cwt. increments (up to the $8.00/
cwt. maximum), with escalating premiums for each higher level of
coverage.
Approximately 23,000 dairy producers, slightly more than \1/2\ the
nation's dairy farmers, are currently participating in MPP. The
participating producers represent 80 percent of the overall U.S. milk
supply. During the program's first full year of operation in 2015
farmers paid roughly $70 million in premiums and fees to USDA for the
basic and supplemental coverage. But during that same year, USDA paid
out to participating dairy farmers only $730,000 under the program. Due
to the program's meager supplemental coverage performance in 2015, many
producers reduced their coverage for 2016, choosing to only purchase
coverage at the catastrophic ($4.00/cwt.) coverage level, which in turn
further reduced MPP payments to producers from USDA when margins shrunk
last year. As a result, last year farmers paid in $20 million while
USDA paid out only $13 million. In total, MPP has generated a
significant profit to the Federal Government and provided no meaningful
support to dairy farmers since its inception--greatly harming farmer
support and trust in the program as an effective safety net.
The reason that MPP has not performed as an effective safety net
for our nation's dairy farmers, as I noted earlier, is because of the
arbitrary changes in the formula used to calculate dairy farm feed
costs that were deemed necessary to meet the Congressional Budget
Office (CBO) score.
While we strongly believe the MPP is, as NMPF Chairman Randy Mooney
told this Committee last year, the right program for the future, that
will only be the case if Congress improves the program so that it
offers the effective risk management for our dairy producers that it
was originally envisioned to provide. We are not seeking, and do not
want, a program designed to make the good times even better, nor one
that would incentivize production. We simply want, and need, an
effective Federal safety that will protect dairy farmers from margin
losses that could put them out of business. We advocate targeted and
specific changes in MPP so that it better reflects the true feed costs
that dairy producers face, and that will enable farmers to purchase the
level of coverage needed for their individual operations. In other
words, we believe that MPP must be improved so that it functions as it
was originally intended during the tough times.
Proposed MPP Changes
Over the course of the last 18 months, NMPF has been working to
examine potential improvements in the program. NMPF Chairman Randy
Mooney appointed an Economic Policy Committee consisting of NMPF
producer members from around the country to discuss a wide range of
possible changes that could be made to improve MPP. The Committee
deliberated in multiple meetings since last fall, and unanimously
developed a series of recommended improvements in MPP that were
presented to our full Board of Directors earlier this month. In turn,
our Board unanimously voted to support the Committee's recommendations.
I am excited to come before you today to discuss our proposal that has
broad consensus support within the dairy cooperative and producer
community nationwide.
Our review encompassed every aspect of the Margin Protection
Program. After examining all the issues that were raised throughout our
discussions, the Board adopted recommendations that encompass four
areas. I'd like to briefly review each of these areas with the
Committee.
The first area that must be addressed in order to make MPP a
functioning risk management safety net relates to the feed cost
calculation in the margin formula. It is this feed cost formula that is
the central reason the program is currently failing. The current
formula reflects harmful changes from the one we initially proposed,
again changes that were made at the behest of an incorrect CBO score.
In developing MPP, NMPF worked closely with dairy economists,
veterinarians, nutritionists, and farmers to develop a model for
calculating the cost of feeding dairy cows. We worked to develop an
approach that would calculate feed costs on a per hundredweight of milk
basis, and reflect the nutritional needs of a lactating cow that
produces the U.S. average quantity of milk per year. The index accounts
for changes in the cost of key feed ingredients like corn, soybean
meal, and alfalfa as well as changes in the cost of feeding an entire
dairy herd, including all lactating cows, dry cows, and replacement
heifers. This careful process took nearly a year and the end result
closely aligned with monthly feed cost data reported by USDA since
2005.
However, during the farm bill deliberations process, Congress
reduced the originally proposed MPP feed ration by ten percent due to
the aforementioned CBO scores. This one change had major, outsized and
significant negative financial implications for the monthly Margin
Protection Program calculations, and for all dairy farmers who
participated in MPP. Specifically, the change had the effect of
arbitrarily raising the reported MPP margins under the formula by
approximately $1 per hundredweight. For one illustrative example, in
May and June of last year, the MPP margin was calculated under the
existing formula to be $5.76 per hundredweight. But under the more
accurate, real-world formula from our original proposal, the true
national average margin was really $4.77 per hundredweight. This nearly
$1.00 difference in the calculation demonstrates why the current
program is ineffective--using the true feed costs calculations would
have provided coverage to a larger group of producers suffering through
a difficult year.
The ten percent reduction to the feed cost calculation has not only
skewed the program arbitrarily, it also severely damaged farmers'
perception of the program. Producers understood that MPP would not pay
out when margins were relatively average, but they did expect the
program would provide support at specific levels when margins were
compressed. Unfortunately, because of the arbitrary change made to the
feed formula in the 2014 Farm Bill process, the expected level of
safety net support didn't happen in 2015 or 2016. As a result, most of
the farms and the milk enrolled in the program today are only covered
at the catastrophic $4 coverage level.
To remedy this problem, NMPF is seeking restoration of the original
feed cost formula that we put forward several years ago. Mr. Peterson,
your proposed legislation from 2011 got this calculation right the
first time and we implore the Committee to restore that original
formula to make MPP more effective and improve program integrity--these
steps will improve producer confidence in the program and, in turn,
encourage greater participation in the program moving forward.
This fix is fundamentally necessary to repair the program. In
addition, there are a few other changes to the particular data series
that USDA has chosen to use for calculating the MPP feed cost formula,
which will better reflect the true costs of feed for the nation's dairy
farmers. Specifically, we support the use of the corn price series
compiled by USDA's Agricultural Marketing Service (AMS), which
calculates the prices paid by farmers to purchase corn, as opposed to
the series compiled by USDA's National Agricultural Statistics Service
(NASS) that is currently used in MPP, which uses the price received by
farmers for corn they sell. AMS reports this price at a large number of
specific locations throughout the United States, and NMPF will work
with that agency to select a representative sample of those pricing
points to develop an accurate U.S. average price for corn purchased by
farmers throughout the country. We also support changing the source of
the MPP soybean meal price from the current single Decatur-Central
Illinois price point to the average of all pricing points also reported
by AMS. The impact of this change would increase average soybean meal
prices in the MPP feed cost calculation by about $9 per ton, and is
more consistent with the national average calculations that are
reflected in the MPP feed and milk price formulas. Finally, we request
that Congress direct USDA to develop a more detailed U.S. average price
for dairy quality alfalfa hay. The current U.S. average price for
alfalfa hay reported by NASS is an average of all grades and qualities
of hay. Our members have consistently indicated to us that the single
NASS price is well below that of the price for minimum quality alfalfa
hay required to productively feed dairy cows. Taken together, these
formula changes will help MPP more realistically reflect the feed costs
borne by dairy farmers.
The second aspect of MPP in need of revision relates to the
producer rates for buy-up supplemental coverage While the feed cost
reforms I have outlined are essential to having a program that reflects
true producer costs, in order to make MPP an effective safety net
program that farmers can afford to participate in, we believes that
Congress must adjust the premium rates, especially the rates at the
lower level of milk production. Today, commercial programs like the
Livestock Gross Management (LGM) run by the Risk Management Agency
(RMA) are more attractive than MPP, a title I program. In order to
provide an effective dairy safety net, it is important to incentivize
participation in MPP. That will require affordable premium rates that
offer adequate levels of needed coverage for producers without
stimulating additional milk production. Higher levels of supplemental
coverage are especially important for small and medium-sized producers,
and can be provided with less risk of increasing production.
We look forward to working with the Committee to determine
appropriate supplemental coverage rates in a manner that balances
producer needs and program costs. Given the disappointment and
frustration that many dairy farmers have felt regarding the program's
initial performance, there will be work to do in reintroducing dairy
farmers to a reformed MPP. Adjusting premium rates in a balanced manner
will be an important part of our effort to maintain a working program
for dairy producers of all sizes and in all regions.
A third area for improvement in the operation of MPP relates to
technical changes designed to make the program more responsive to
producers on a functional level. First, the program can be strengthened
by calculating the MPP margin on a monthly basis, rather than using a
bi-monthly average basis. Using a bi-monthly calculation dilutes the
timeliness and level of safety net support of the program for dairy
farmers, so moving to a monthly calculation would be more accurate for
risk management support purposes. In addition, we urge Congress to
maintain the level of flexibility shown by USDA for coverage sign up
each year so that producers have adequate time and ability to make
informed coverage decisions. Each year since enactment, USDA has moved
the sign-up period to a date late in the year prior to the start of the
next coverage period.
Finally, NMPF urges the Committee to enact policy changes that
permit the Livestock Gross Margin-Dairy (LGM) insurance program, run by
the Risk Management Agency (RMA), to work in a complementary manner
with MPP. Almost every title I commodity has the ability to participate
in both base programs and title XI insurance programs. Prohibiting
dairy from having that ability not only discourages participation in
the program, it further exposes milk, our nation's third largest
commodity by cash receipts, to unwarranted levels of risk.
Specifically, the LGM cap for dairy should be expanded so that more
producers can participate. LGM is a sophisticated tool that works very
well for specific producers during specific times, in particular when
futures prices are high enough to allow farmers to protect a high
margin, well above MPP levels. Unlike MPP's fixed premiums, LGM's
premiums change as futures markets change, and producers have the
ability to make numerous decisions to help customize their risk
management for their farm.
Even though the two programs offer fundamentally different kinds of
protection, the 2014 Farm Bill required producers to make a one-time
choice at the start of the farm bill between MPP and LGM. This put
dairy farmers at a disadvantage within agriculture, as producers of
other commodities are not required to choose between title I farm
programs run by FSA and crop insurance programs run by RMA. Moreover,
an analysis of 2014 Farm Bill outlays under title I demonstrates that
dairy program costs are min[u]scule when compared to other major
commodities.
Average Farm Program Payments per Base Acre
ARC, PLC, MPP

Source: Congressional Budget Office, January 2017.

The above chart demonstrates the importance of not only improving
MPP, but also of ensuring that dairy producers have the ability to use
a variety of different risk management tools to weather challenging
financial times like the ones experienced during the last decade.
Collectively, NMPF has proposed four areas for reform in the
upcoming farm bill that we believe will strengthen MPP for the future
and give producers the flexibility enjoyed by farmers of other major
commodities. We look forward to working with this Committee to enact
these changes in the next farm bill.
Immigration Reform
While the need to improve the MPP economic safety net remains top
of mind, we are heading into this farm bill process against a backdrop
of other very significant challenges confronting the dairy community.
Our current immigration system is failing America's dairy farmers.
The importance of immigrant workers to the United States dairy
industry cannot be overstated. Independent estimates indicate that at
least fifty percent of the U.S. dairy farm workforce is comprised of
foreign-born workers. Simply put, the dairy industry today cannot
operate without immigrant workers.
As our economy has become more services-oriented, our dairy farmers
have found it harder to hire Americans to work on their farms. Even in
times of high unemployment, our producers universally report an
inability to find enough American workers to fill dairy jobs even if
they pay more than other local jobs. Dairies all around this country
consistently seek American workers from their local communities, at
highly competitive wages, but sufficient numbers of local workers are
simply not available or not interested in working on dairy farms.
According to a study NMPF commissioned with Texas A&M University
that was released in August 2015, 51 percent of all dairy farm workers
are immigrants, and the farms that employ them account for 79 percent
of the milk produced in the U.S.
The dairy industry has some unique qualities that set it apart from
other sectors of the agricultural industry. Dairy production is a 7 day
a week, year-round endeavor. Our cows require constant, daily care and
handling. Unlike most other agricultural production, there is no
``season'' in dairy production. Unfortunately, this nation's single
agricultural visa program, the H-2A program, focuses on a seasonal or
temporary need for workers, and generally excludes dairy farms from
participation. Although the Department of Labor has made exceptions to
this seasonal requirement for others in agriculture, such as
sheepherders, the Department refuses to provide a similar accommodation
for dairy.
Therefore, the dairy industry is facing the same shortage of
domestic workers that is faced by the rest of agriculture, but with one
glaring difference: we are unable to utilize the H-2A agricultural
worker visa program to hire legal foreign workers. While we believe the
current H-2A program is deeply flawed, our exclusion from the only
option for hiring foreign workers under a visa program, brings
heightened business and legal risks for our member farms. The fact that
an agency of the U.S. Government consciously treats one sector of
agriculture differently is simply, fundamentally unfair.
As the President enacts his new Executive Orders, new enforcement
mechanisms have come with a great deal of uncertainty and confusion
about the scope of the enforcement actions, and how broad the impact
will be. The uncertainty is creating a significant level of anxiety and
distress in farm country.
Without access to a steady and reliable workforce, our industry
will not be able to survive, let alone thrive, in the future. It is
imperative for Congress to act soon to address the needs of American
agriculture and, in particular, the dairy industry. It is critical that
we maintain our current workforce, and create a sensible, workable
means of filling farm jobs in the future.
We recognize the need for secure borders and enforcement efforts to
remove criminal aliens, but such steps must be accompanied by the
establishment of a system providing dairy and other agricultural
enterprises with access to a stable, legal workforce. If Congress is
going to enact a nationwide E-Verify requirement, then it also needs to
provide agriculture with a workable guest worker program to meet our
future needs and a means to allow those who are currently working in
undocumented status to be eligible for such a guest worker program.
Failure to do so risks severely damaging the economic vitality of the
nation's entire agriculture sector.
We will be working closely with the Judiciary Committee and the
leadership in the House and Senate as well as Members of the House and
Senate Agriculture Committees to address the inability of the dairy
industry to participate in the H-2A temporary agricultural worker
program, and the need to address current workers with improper
documentation.
Trade
The dairy industry also has made great strides on trade since the
turn of the century. Our nation has gone from exporting dairy products
valued at less than $1 billion in 2000 to exporting a record $7.1
billion in 2014, an increase of 625 percent. Although the depressed
world markets I spoke of earlier reduced that number closer to $5
billion last year, we remain the largest exporter of skim milk powder,
whey products, and, depending on the month, the number one exporter of
cheese in the world. This is a tremendous increase not simply on a
value basis, but also in the percentage of U.S. milk production that
finds a home overseas. Fifteen years ago, we exported roughly five
percent of our production, while today we export three times that level
even as overall U.S. milk production has continued to grow. Put simply,
today, the equivalent of 1 day's domestic milk production each week
ultimately ends up overseas.
It is not coincidental that the enormous growth in dairy exports I
mentioned earlier occurred during a period when the U.S. began
negotiating market-opening free trade agreements (FTAs) and the Uruguay
Round Agreement reduced export subsidies and created the first Sanitary
and Phytosanitary Agreement (SPS Agreement). The FTAs implemented since
the early 1990's lowered and in the vast majority of cases ultimately
remove tariffs on our exports and in many cases they gave our products
a preferential advantage over other supplying countries. They also
helped remove technical and regulatory barriers to trade. Over this
period, exports of dairy products to FTA partners grew by 685 percent
as compared to 338 percent to non-FTA countries. But it is important to
note that, while our exports to non-FTA countries contracted by 32
percent, they fell by only 20 percent to our FTA partner countries.
FTAs have created important new market access opportunities for us
and we have worked very hard through our market development efforts to
ensure that we are taking full advantage of them. Two to 3 decades ago
our industry feared trade agreements. Now, we embrace the benefits that
trade agreements can offer as a vehicle for tearing down foreign
barriers to our products and effectively enforcing the terms of U.S.
agreements. Well-negotiated trade agreements are essential to ensuring
that we do not lose out to competitors who are themselves cutting FTA
deals around the world. Poorly negotiated agreements risk forsaking
critical opportunities to level the playing field for U.S. exporters.
It is evident that the United States has fallen behind in expanding
trade agreements compared to our competitors who are negotiating trade
agreements all over the globe. When it comes to trade, those who stand
still lose market share.
We are encouraged by the President's call for greater enforcement
of our existing trade agreements. Unfair import barriers remain in
place and new ones are erected all the time. A good example is the
relatively recent and extremely protectionist effort by the European
Union (EU) to prevent the use of common cheese names around the world--
by misusing Geographical Indications to give their producers a lock on
international markets. If we aren't in the game actively negotiating on
these issues, we are ceding ground to our competitors and those looking
to make it tougher for us to do business in their markets. We thank
this Committee and Congress for strongly rejecting the EU's blatant
protectionist efforts to claw back common food names like parmesan and
feta, which belong to everyone, not just a handful of producers in
Italy and Greece.
Another major enforcement challenge is Canada--a country that has
consistently erected barriers to U.S. dairy products. Canada has been
actively pursuing every available opportunity to constrain dairy
imports that begin to gain ground into its market, thereby repeatedly
nullifying and impairing the value of dairy market access concessions.
There has been case after case of Canada altering its regulations and
policies to erect barriers to dairy trade.
A few examples have been actions by Canada to prevent imports of
milk ingredients, ultra-filtered milk, pizza preparations and even
simple products like mozzarella sticks. In addition to its use of
regulatory and policy tools to impair dairy trade, in the course of its
FTA negotiations with the EU, Canada completely disregarded its own
intellectual property laws in order to bow to EU pressure to impose
restrictions on several generic cheese names. This decision was not
only counter to Canadian IP policies and principles, but also existing
international obligations.
Finally, the most recent Canadian policy shift, which has already
led to a drop in U.S. dairy exports, is another under-handed milk
pricing policy maneuver. The first version of this policy was
implemented in Ontario last spring, but as of last month is reportedly
being implemented nationally. This new program has been developed to
discourage the use of imported dairy ingredients and milk, while
specifically encouraging use by Canadian processors of domestic dairy
inputs. Collectively, these recent milk pricing programs aimed at
displacing imports have already led to tens of millions of dollars in
U.S. dairy export losses, an impact that comes at a particularly bad
time for U.S. dairy farmers given the current depressed dairy market
situation.
Actions of this sort that unjustly attack the investments U.S.
companies have made in servicing export markets cannot be tolerated and
must be met with clear consequences. In the case of ultra-filtered milk
in particular, U.S. companies--supplied by American dairy farmers--have
made significant investments to seize the targeted opportunities in the
Canadian market that were granted by the North American Free Trade
Agreement (NAFTA) and the Uruguay Round.
For Canada to now put in place policies designed to directly
undermine and impair those investments harms employment in rural U.S.
communities, impacts the supplying dairy farms and risks undermining
support for the value of trade agreements. This is a significant blow
to many companies in the United States, but it is not the worst
consequence that this program will impose on our members.
As part of this new policy, Canada will be disposing of significant
quantities of milk protein in the form of skim milk powder into the
world markets, lowering U.S. producer prices even more while at the
same time maintaining its supply management system. The U.S. dairy
industry has jointly urged this Administration, as well as the previous
one, to clearly and publicly reject Canadian actions at both the
provincial and Federal levels as inconsistent with their trade
obligations. NMPF is also asking U.S. Governors of border states that
have been affected by Canadian actions to begin taking immediate action
in response to Canada's new barriers to dairy trade.
We urge Congress to put Canada on notice for its continued
violation of trade agreements and for offloading dairy products into
the world market despite its supply management system. We urge the
Administration to begin evaluating a potential WTO or NAFTA case with
respect to not only the new special Class VII, but also the EU-Canada
FTA agreement on GIs, as both are blatant violations of Canada's
commitments to the U.S. and to its other trading partners.
By contrast, the other NAFTA party, Mexico, has been a steadfast
and reliable partner to the U.S. dairy industry. Where problems have
arisen, both governments have, in general, been willing to work
together to find ways to resolve them. As a result of this partnership,
trade in dairy products to Mexico is now operating fairly smoothly. We
consider Mexico not only to be our best foreign market but also a very
good trading partner. Today we sell over $1.2 billion in a variety of
dairy products to Mexico, making it our number one foreign market.
The U.S. dairy industry has communicated in a united voice, as
recently as last week on a trip we took to speak before Mexican
producers, processors and government officials, where we expressed our
desire to remain a reliable partner and supplier of dairy products,
ensuring that there are no disruptions to our trade relationship.
National Milk cannot stress enough the importance of the Mexican market
to rural economies. Trade with Mexico means good-paying manufacturing
jobs for tens of thousands of Americans. To that end, it is critical
that Congress protects the progress we have made as the Administration
updates existing trade agreements with Mexico.
Finally, I would like to stress that when it comes to trade, our
industry has built markets both close to home and overseas. We need to
protect those markets and increase sales in regions as diverse as Asia,
Latin America, and the Middle East. To make that possible, we need
well-negotiated trade agreements and the necessary tools to implement
them. As such, we urge the Administration to begin negotiations in the
near term with Japan and Vietnam to ensure that we maintain our global
competitiveness in years to come. What was achieved in TPP should be
the starting point for negotiations with those partners, particularly
with Japan in light of the reality that TPP all but excluded new access
for two of the largest dairy commodities into Japan: milk powder and
butterfat.
As the Administration evaluates potential FTA partners, we urge it
to keep in mind which countries would prove to be good candidates for
an investment of U.S. negotiating resources. Not all trading partners
will meet this benchmark and we will look forward to consulting with
Congress and the Administration on helping to select those partners
best positioned to yield net positive dairy and agricultural results in
an FTA.
In addition, we encourage increased funding for two tools under
this Committee's jurisdiction that are designed to help encourage
trade: the Market Access Program and the Foreign Market Development
program. The value of the investment in these programs has eroded over
time and must be significantly bolstered in light of our trading
partners' aggressive investments in similar promotional programs.
However, we strongly urge the Committee to ensure that USDA reviews the
present distribution of new funds, so that those sectors such as dairy
that have expanded exports significantly in the last decade, and are
matching funds with their marketing efforts, are awarded with enough
resources to continue this critical work.
Child Nutrition
Another major issue for our industry is nutrition. This issue
should be of concern to all of us given its impact on dairy farmers
and, more importantly, our nation's children. In recent years, fluid
milk consumption has continued to decline in schools due in part to
restrictions on the types of milk that can be provided. Since these
restrictions were put in place, food waste and reduced consumption of
milk has only worsened.
Let me remind you that milk is the primary source of nine essential
nutrients in children's diets, and studies have shown that if children
are not getting those nutrients at school, they may not be getting them
at all. It is vital that Congress expand fluid milk options for school
meal programs to ensure that our children are getting the nutrients
they need. These changes are consistent with the 2015 Dietary
Guidelines for Americans that determine school food options and have
received bipartisan, bicameral support in Congress.
Environmental Sustainability
Farmers are the original environmentalists. Our dairy farmers care
deeply about the land, air and water that helps sustain their cows and
their farm operations. Our farms are our homes; it's where we raise our
families. In recent years, Federal and state regulators have applied
significant pressure to improve water quality with a focus on reducing
nutrient output in dairy-producing regions across the country. We, as
an industry, have invested significant resources to proactively respond
to this challenge, and we continue to work to embrace the best
environmental practices.
In a demonstration of continued leadership, the dairy industry is
seeking proactive policy solutions that will help turn what can
sometimes be a potential environmental liability, such as manure, into
a valuable asset. To that end, NMPF supports the bipartisan Agriculture
Environmental Stewardship Act which was introduced in both houses of
Congress last year. This legislation creates an Investment Tax Credit
to aid farmers with the up-front capital costs of nutrient recovery and
biogas systems. These systems can play an important role in reducing
the environmental impacts of dairy farming, and the ITC will
incentivize voluntary action to address this rather than add additional
regulatory burdens and higher costs onto the backs of already
financially-strapped farm operations. We look forward to working with
many of you to enact this legislation in this Congress as part of a
broader tax package.
DAIRY PRIDE Act
Another issue of great importance to dairy farmers as well as to
consumers is the accurate and appropriate labeling of foods in
accordance with established Federal standards of identity.
Unfortunately, the U.S. Food and Drug Administration has been negligent
in its enforcement of dairy food standards that clearly stipulate, in
the Code of Federal Regulations, that a product labeled as ``milk''
comes from a cow, and that other similar products, including cheese,
ice cream and yogurt, are likewise made from the milk from animals--not
from beans, seeds, nuts and grains.
Yet our grocery store shelves today are filled with all manner of
copycat ``milk'' products that ignore government standards of
identity--and mislead consumers about the nutritional equivalence, or
lack thereof, to real milk. Milk has numerous vitamins, minerals and
nutrients essential to human health, and it is the number one source of
nine nutrients in children's diets. The 2015 Dietary Guidelines for
Americans found that most Americans are not meeting the recommended
intake for the dairy foods group.
Plant foods processors go to great lengths to take a handful of
seeds or grains, grind them into a powder, add whiteners and
emulsifiers, blend in some vitamins, and then package the resulting
concoction to resemble milk. Perhaps this imitation is meant as a form
of flattery, because calling these products ``milk'' is clearly a
subtle effort to trade on the healthy halo of real milk. Yet these
imitators are engaged in misleading marketing because their products
don't have the same consistent nutritional offerings as real milk,
certainly not across the many types of imitation beverages on the
market. Most will fortify their offerings to an extent, but they still
do not offer the same extensive nutrition package that real milk does.
You would never know this from the marketing claims of dairy imitators,
which can mislead people into thinking these products are comparable
replacements for milk, when in fact most are nutritionally inferior and
thus not suitable substitutes.
NMPF has repeatedly raised concerns with FDA that the agency is
failing to enforce this long-standing, clearly-defined law when non-
dairy products co-opt terms like ``milk'' and ``cheese.'' We are
greatly encouraged now that members of Congress are also becoming aware
of this problem, and have introduced legislation to prompt FDA into
taking action. H.R. 778, the DAIRY PRIDE Act, was introduced in January
by Reps. Peter Welch, Mike Simpson and Sean Duffy. A companion Senate
measure, S. 130, has been introduced by Sen. Tammy Baldwin. This
legislation doesn't create a new law, but rather lays out explicit
conditions by which FDA must explain how and when it will enforce dairy
food standards of identity. I encourage members of this Committee to
support this legislation.
Let me be clear: we do not oppose the sale of imitation dairy
products, but we do oppose their use of dairy terms specified in the
Code of Federal Regulations. Dairy farmers are not seeking to eliminate
competition from these products, they just want the enforcement of
regulations that exist to prevent the marketing of inferior copies of
established food products. Most other countries take this same
approach, which is why you will not find a product labeled as ``almond
milk'' in Canada, the United Kingdom, or the 28 nation European Union,
although almond-based beverages are still sold in those nations.
The promoters of dairy alternatives claim that the DAIRY PRIDE Act,
as well as an overall increase in the enforcement of existing dairy
labeling standards, will interfere with the marketing of other common
foods such as coconut milk, milk of magnesia, and peanut butter. But
these are nothing more than absurd straw man arguments meant to deter
any enforcement of the current regulations.
The difference is that these other products do not market
themselves as replacements for real dairy foods. Peanut butter, and
other nut butters, are not functional replacements for butter made with
real cream. In fact, butter makers first dealt with this issue 80 years
ago, when plant-based spreads began appearing. They were not then
called, nor are they today labeled, ``soy butter'' or ``vegetable
butter.'' They're called margarine, precisely because government
standards dictate that butter comes from milk, not plant sources.
In fact, peanut butter, like real milk, has a Federal standard of
identity, specifying its composition. The imitation milks do not have
standards of identity--that's the major problem.
This line of argument is just another attempt to blur the issue,
which is that a growing number of plant-based products are positioning
themselves as alternatives to milk, even though they are not suitable
substitutes from a nutritional standpoint. It is past time for this
deception to end.
Closing
Mr. Chairman, I want to once again thank you and the Ranking Member
for holding this hearing today. NMPF is grateful for your emphasis and
focus on policy in the upcoming farm bill process, and we look forward
to working closely with you to see that MPP reforms become a reality.

The Chairman. Thank you, Mr. Mulhern. Dr. Dykes, 5 minutes.

STATEMENT OF MICHAEL D. DYKES, D.V.M., PRESIDENT AND CHIEF
EXECUTIVE OFFICER, INTERNATIONAL DAIRY FOODS ASSOCIATION,
WASHINGTON, D.C.

Dr. Dykes. Thank you, Mr. Chairman, Ranking Member
Peterson, and Members of the Committee. I am pleased to be here
today. The recognition for Chairman de la Garza brings back
memories for me as well. I wasn't here in Washington, D.C. in
the 1980s. I was a practicing dairy veterinarian during the
time, and we experienced some gut wrenching financial times
during that era. The late 1980s were tough for everyone, and I
remember those very vividly today. We saw foreclosures, we saw
strife in agriculture that was quite significant. Those are
vivid memories for me of the late 1980s as well.
Thank you all for holding this hearing today. I am honored
to be here. I appreciate the challenges facing this Committee
as you begin to draft a new farm bill, and you are doing that
under very different economic circumstances than you did for
the last farm bill.
I grew up on a dairy farm, having been a practicing dairy
veterinarian, I have always had a special interest in dairy
policy. IDFA is a national trade organization representing a
$125 billion a year manufacturing and marketing industry, with
525 members. We are part of the U.S. food and grocery
manufacturing industry, which employs nearly two million
people. Two million American jobs. Our companies market and
retail milk, dairy products, yogurt, cheese, ice cream, infant
formula, and many other products.
As this Committee begins to consider the next farm bill,
the dairy industry needs better mechanisms for risk management.
And that is on both the farmer side, as you just heard Jim
explain, and on the processor side as well. Farmers are now
looking to improve the Margin Protection Program and the
Livestock Gross Margin insurance program to provide them with
some access to effective risk management tools in this farm
bill. We are looking at those proposals. We are studying those
proposals, and we are supportive of fine tuning the farmer
safety net so that it functions effectively for farmers, and it
is not market distorting.
At the same time, we would ask that the 2018 Farm Bill
provide better risk management tools for processors to manage
price volatility through the extension and expansion of the
current forward contracting program, which includes all dairy
products, except fluid milk, at this time. Forward contracting
has provided an important mechanism for manufacturers to
directly contract with individual farmers, or their
cooperatives, at a fixed price to reduce price volatility. We
believe this program should now be made permanent, and the same
opportunity should be afforded to fluid milk manufacturers so
that they too can help manage price volatility in the
marketplace. We intend to work with National Milk to develop a
consensus proposal, and my hope is that we can work
collaboratively to find a solution. We pledge to keep this
Committee apprised of our progress.
I would also like to briefly mention five additional policy
areas that we are looking to you for support. First, we watch
closely the success of the SNAP pilots authorized in the 2008
and the 2014 Farm Bill to increase fruit and vegetable
purchases. We believe adding voluntary incentives to SNAP
participants to increase their consumption of milk and dairy
foods would be nutritionally sound, and a wise use of taxpayer
dollars. We request that the Food Insecurity Nutrition
Incentive Program be reauthorized and expanded to include milk
and dairy foods in the next farm bill.
Second, milk is not only under-consumed in all U.S.
households, but also in schools. We have seen 6 straight years
of declining school milk consumption, even as overall school
enrollment has increased. We are actively working with National
Milk, and the Subcommittee Chairman Thompson, to lift the
restrictions and expand the options on the types of milk
offered in school cafeterias. We believe these changes to SNAP
and school milk programs are important, given that nine out of
every ten Americans are not consuming the recommended three
servings of dairy a day, according to the 2015 Dietary
Guidelines.
Third, IDFA, and the entire food and beverage industry,
recently asked Secretary Price to extend the compliance
deadline from July 2018 to May of 2021 for FDA's new nutrition
facts and serving size rules. Without the extension from FDA,
our companies may redesign all product labels by next year,
only to learn they must do it all over again to comply with
USDA's GMO labeling requirements, which are on a different
compliance schedule.
Fourth, dairy foods represent the second largest, and
fastest growing, category of organic foods, totaling $6
billion, or 15 percent of all organic sales. We believe
maintaining the National Organic Program as it is currently
managed will ensure that consumers have access to organic dairy
products, and accommodates continued growth over the organic
dairy industry.
Fifth, exports are driving growth and demand for U.S. farm
milk, and we are well positioned to achieve even more growth.
We have industry and regulatory standards to assure consumers
that our products are safe. We have the technology to innovate,
and we have the infrastructure to deliver the products to our
consumers. Mexico is the number one export market for U.S.
dairy, accounting for \1/4\ of our total dairy exports. We need
to ensure that re-negotiation of NAFTA preserves this important
market. Recent Canadian efforts to prevent U.S. exports of
ultra-filtered milk from Wisconsin and New York will cost our
industry approximately $150 million. We need to address this
issue immediately, and obtain increased market access for dairy
in Canada.
Finally, the Asia-Pacific region is the world's largest
market for food and agriculture, and is expected to double by
2050. Reducing and eliminating tariffs and other restrictive
agriculture policies in this region will allow our dairy
industry to compete.
Mr. Chairman, there is a common thread to all the issues
that I raised here today, and that is enhancing the demand for
U.S. dairy products. With the proper tools, and proper
policies, such as expanding the options for the type of milk
offered in school cafeterias, obtaining greater market access
in Canada, and opening new markets in Asia, maintaining our top
export market in Mexico, offering more dairy foods through
SNAP, and providing better mechanisms for risk management for
both farmers and processors, I am confident our industry will
meet and increase the demand for milk and dairy products, and
provide economic prosperity and stability to American dairy
companies, American dairy farmers, and their communities
throughout the country.
Thank you, Mr. Chairman, and the Members of the Committee,
for the opportunity to testify today. I look forward to
answering your questions.
[The prepared statement of Dr. Dykes follows:]

Prepared Statement of Michael D. Dykes, D.V.M., President and Chief
Executive Officer, International Dairy Foods Association, Washington,
D.C.
Chairman Conaway, Ranking Member Peterson, Members of the
Committee,

Thank you for holding this important hearing today and for inviting
me to testify about dairy policy.
My name is Michael Dykes and I am the President and CEO of the
International Dairy Foods Association. As the new leader of this great
organization, I am following two distinguished individuals, Tip and
Connie Tipton, both of whom I have had the pleasure of knowing and
working with for nearly 20 years. I plan to continue building this
great organization by working collaboratively on shared interests with
all stakeholders to realize a bright future for the U.S. dairy
industry.
Let me begin by sharing a brief bit of personal background: I grew
up on a small dairy and tobacco farm in the great Commonwealth of
Kentucky. I milked my first cow at age 5--and kept milking until age 17
when I became the first member of my family to attend college. After
studying animal science and ag economics at the University of Kentucky,
I attended veterinary school at Auburn University. I was an owner in a
six-person veterinary practice for a number of years in Illinois and am
still a licensed veterinarian.
I left the veterinary practice and joined the grain and feed
industry, where I worked with farmers in the United States and all over
the world--especially Europe, South America and China--during my career
at Continental Grain and Monsanto. During those years, I saw firsthand
just how important international trade and competitive global markets
are for U.S. agriculture and our dairy industry. Although the U.S.
dairy sector entered the global marketplace later, the development of
exports over the last 10 years has been a primary contributor to
several periods of prosperity and represents the single most
significant demand-growth opportunity for our members and the dairy
farmers who supply them.
I've worked in the world of agricultural policy and regulation for
the past 2 decades, and during my time in Washington, I've seen and
learned a lot--about politics, about the value of collaboration, about
policy and about the industry that we all so dearly love, American
agriculture. Before I joined IDFA, I thought I had a pretty good
understanding of what this association does--and who it represents. But
in my short tenure I've learned that IDFA is so much more.
I'd like to share briefly what I've learned since joining IDFA so
there is a broader context to my testimony--one that I hope will help
guide your perspective on what our industry has to say about the
upcoming farm bill.
IDFA is a national trade association representing a $125 billion a
year dairy manufacturing and marketing industry with 525 member
companies. We are part of the U.S. food and grocery manufacturing
industries which directly employ over two million Americans.
IDFA members are manufacturers, marketers and retailers of milk and
dairy products, including beverage milk (Class I), yogurt (Class II),
ice cream (Class II), cheese (Class III), and butter and dry products
(Class IV). Our members range from the nation's largest farmer-owned
dairy coops to multinational corporations to family-owned, single-plant
operations. We also have member companies that supply the dairy
industry with everything from ingredients to packaging to equipment.
IDFA members include national and regional grocery retailers that
make their own dairy products; international food service chains; and
innovative processors that produce ultra-filtered, high-protein,
lactose free, fat free and low-sugar milks with extended shelf life. We
represent every kind of ice cream company you can imagine; yogurt
companies; infant formula companies; and cheese makers--all supplying
customers around the globe. Other members are pioneers in providing
innovative dairy ingredients that offer health and nutritional
functions in foods, which are increasingly in demand. And speaking of
increasing demand, we also have members in the rapidly growing organic
dairy sector.
IDFA is governed by board members who represent leaders across the
spectrum of the dairy industry. We are fortunate that this diversity
provides our organization with a very broad view of the overall dairy
industry. We know that to continue our success, we must innovate to
keep up with the market, and to innovate, we must collaborate along
every stage of the supply chain, from farmer to processor to retailer
to consumer.
Consumers Crave New Products
Listening to consumers is a good place to start, and we know they
crave new products. That's why American consumers today have far more
choices in the dairy aisle and on grocery shelves than ever before.
Greek-style yogurt, string cheese, shelf-stable milks and high-protein
beverages and snacks have become consumer favorites in the past few
years. But these products are just the tip of the iceberg.
When you think of traditional dairy, the terms ``wholesome,''
``good for you,'' ``most perfect food,'' ``does a body good,''
``reliable,'' ``affordable'' and ``tasty'' all come to mind. But we're
far more than a gallon of milk today. In fact, milk contains protein,
as well as eight other essential nutrients, lactose, and calcium. These
milk components can be used to make an ever-increasing range of
specialized dairy products and ingredients for infant formula, protein
drinks and many other specialty products.
How did we move from a gallon of milk to powerful protein beverages
and more? Let's take a quick look at the U.S. dairy industry and its
evolution over the years.
Evolution of U.S. Dairy Industry
Before World War II, the dairy industry was dominated by more than
4.5 million small, widely scattered farms and 22,000 processing plants.
With the growing use of refrigeration and cross-country transportation,
the U.S. agricultural sector realized that local production wasn't a
necessity and economies of scale were a good thing. Today the dairy
industry has approximately 47,000 dairy farms and slightly more than
1,500 processing plants that are much larger and serve a broader
market.
Where does all this farm milk go? More than 40% is used to make
cheese and just over 20% is used for beverage milk and cultured
products like yogurt. That is a significant change from 1960, when just
10% went into cheese production and almost half was used for fluid milk
products. As U.S. cheese production has increased, so has production of
dairy ingredients from whey, (which is a protein-packed cheese
byproduct), and other milk components.
Cheese production reached a record high in 2016, as per capita
consumption of cheese kept growing. Americans, on average, are eating
35 pounds of cheese annually, which is twice the amount we ate in 1980.
Per capita consumption of yogurt has increased even more dramatically
during this time period, growing from 2.5 pounds in 1980 to almost 15
pounds in 2015.
Overall, domestic demand for dairy products is growing, but the
growth is not where it should be when you consider that the 2015
Dietary Guidelines for Americans state that ``intakes of dairy foods
are far below recommendations.'' Per capita consumption of fluid milk
products has been on a downward trend for decades as Americans have
shifted to other beverages. USDA estimates that Americans, on average,
drink 37% less milk today than they did in 1970. Forty years ago, per
capita consumption was nearly 1\1/2\ cups per day; now it's closer to
\3/4\ of a cup. Per capita production of frozen dairy products has also
trended downward for more than 20 years.
While our companies will continue to innovate and provide new
products, new packaging and a variety of portions to gain the attention
of American consumers, we're increasingly looking to the global market
for additional growth opportunities. Here's why.
The United States is the single largest cow's milk producer in the
world. U.S. farm milk production has grown from 170 billion pounds in
2003 to 212 billion pounds in 2016, and more than 52% of that
additional farm milk is exported to other countries in the form of
various finished products. Indeed, exports are driving growth in demand
for U.S. farm milk, and the potential for further global demand is
huge.
As the world population grows by another two billion people by 2050
and continues to develop economically, the demand for protein and
improved diets will increase the demand for dairy products. Dairy foods
are uniquely positioned to meet the nutritional needs of a growing
world with more disposable income and an appetite for higher-protein
products. This will mean increased opportunities for global trade in
dairy.
The International Dairy Federation estimates that world demand for
milk and dairy products would double by 2030 if dairy consumption grew
to match the actual nutritional needs of all global diets. That number
would triple by 2050. The Australian Bureau of Agricultural and
Resource Economics (ABARE) estimates that dairy consumption in the
Asia-Pacific region alone--driven by China, India and Japan--should
double by 2050.
Those estimates represent an amazing opportunity for American dairy
processors, American dairy farmers and members of Congress to
collaborate to bring enhanced nutrition to a growing world and new
opportunities and prosperity to our industry. Ensuring that the U.S.
dairy industry is globally competitive to capture this growing demand
is imperative.
We are well positioned to achieve export growth: We have industry
and regulatory standards to assure consumers that our products are
safe, we have the technology to innovate and we have the infrastructure
to deliver to our customers. Most importantly, we are blessed with the
natural resources to expand milk production. On the milk supply side,
we know the United States is incredibly competitive. To cite USDA, milk
production in pounds per cow has increased by more than 20% since 2004.
To emphasize this point, I would like to point out that the average cow
in 1950 produced 5,500 pounds per year, and today it is nearly 23,000
pounds per year. American agriculture has a tremendous capacity to
produce!
As these facts demonstrate, globalization provides important
opportunities for the U.S. dairy industry. At the same time, global
demand has also increased volatility in dairy markets. The question is:
What do we do about it?
First and foremost, the dairy industry needs better mechanisms for
risk management--and that's on both the farmer and processor side. The
2014 Farm Bill overhauled the farmer safety net, replacing the dairy
product purchase program with the Margin Protection Program, a margin
insurance program, in recognition of this new global environment.
Farmers are now looking to improve the Margin Protection Program and
the Livestock Gross Margin insurance program to provide them with
access to effective risk management tools in this farm bill. We are
looking forward to reviewing the details of their proposal but are
supportive of fine-tuning the farmer safety net so that it functions
effectively and is not market distorting.
At the same time, the 2018 Farm Bill should provide better
mechanisms for processors to manage price volatility through the
extension and expansion of the current forward contracting program.
Both domestic and international demand is negatively impacted by price
volatility. Global customers are accustomed to buying dairy products at
fixed prices that cover multiple months of deliveries and are reluctant
to take on the price volatility generally associated with the U.S.
dairy industry. Domestic buyers, whether food formulators for consumer
packaged goods or food service or restaurant menu designers, also
prefer to use ingredients for which prices are less volatile or for
which they can better manage the price risk. If dairy cannot meet that
need, the industry loses that demand. And we risk permanently losing
retail consumers who migrate away from fluid milk and dairy products
during high price cycles.
The minimum regulated milk price provisions of the Federal Milk
Marketing Orders (FMMO) translate the price volatility of the dairy
commodities directly into the regulated milk prices. The establishment
of the forward contracting program for manufacturers of dairy products
other than fluid milk has provided an important mechanism for
manufacturers to directly contract with individual farmers or their
cooperatives at a fixed price, but the finite timeframe allowed in the
program challenges its use as we approach each farm bill. This program
should be made permanent and the same opportunity should be afforded to
fluid milk processors so that they, too, can curb the negative demand
impacts of price volatility.
The current forward contracting program allows farmers and
cooperatives to voluntarily enter into forward price contracts with
handlers for milk that is used to make ice cream, yogurt, cheese,
butter and powder (Class II, III or IV milk). The program allows
handlers regulated under the FMMO and farmers to agree on the terms of
the contract, without having to pay the minimum Federal Order blend
price. However, regulated handlers are still required to make payments
or distributions from the farmer settlement fund into the Federal Order
pool. To ensure that the program is voluntary, the farmer or
cooperative is required to file a disclosure agreement with the FMMO
market administrator.
In addition to proposing that all milk (Class I, II, III, IV), be
eligible to establish forward price contracts, many other aspects of
the current milk pricing regulatory system should be reviewed in the
context of today's consumer trends and global marketplace. The system's
underlying assumption that beverage milk can bear a significantly
higher price burden may no longer be accurate in today's highly
competitive beverage market in which fluid milk sales continue to
decline.
Many of the milk pricing issues that are negatively impacting my
members flow through in the form of decreased demand which negatively
impacts farmers as well. We intend to start a dialog with NMPF and
other farmer stakeholders about these concerns in an attempt to develop
a consensus proposal. Although my hope is that we can work
constructively through that process, I would be remiss not to highlight
to the Committee that these issues are important to address on a timely
basis. We pledge to keep this Committee apprised of our progress to
develop a comprehensive solution to these issues that advances the
interest of the entire dairy industry.
Mr. Chairman and Members of the Committee, I'd also like to briefly
mention some additional policy areas that we are looking to you for
support.
SNAP and USDA Nutrition Programs
I congratulate the Chairman and the members of this Committee for
your thorough, top-to-bottom review of the Supplemental Nutrition
Assistance Program (SNAP). This was an important undertaking from both
a fiscal and nutrition policy perspective. We have watched closely the
success of the SNAP pilots authorized in the 2008 and the 2014 Farm
Bills to increase fruit and vegetable purchases. The 2008 Farm Bill
authorized $20 million for the ``Healthy Incentives Pilot''; and the
2014 Farm Bill authorized $90 million for the ``Food Insecurity
Nutrition Incentive (FINI)'' grant program to test incentives at the
point of sale.
Given that only one out of ten Americans consumes the recommended
three servings of dairy a day, according to the 2015 Dietary
Guidelines, we believe adding voluntary incentives to encourage SNAP
participants to increase their consumption of milk and dairy foods
would be nutritionally sound and a wise use of taxpayer dollars. We'd
like the FINI program to be reauthorized and expanded to include milk
and dairy foods in the next farm bill so SNAP participants would have
even more incentives to purchase milk and dairy products.
Milk is not only under consumed in all U.S. households but also in
schools. We've seen a disturbing decrease in school milk consumption
over the past few years, and we are actively working with NMPF and
Subcommittee Chairman Thompson on solutions that will help move the
needle in the right direction. The same approach holds for other
programs as well, including the Women, Infants and Children (WIC)
program. Currently, USDA regulations limit milk options--and we'd like
to see these regulations changed to expand milk options to encourage
increased consumption, which addresses the 2015 Dietary Guidelines
recommendations that point to significant under consumption of milk and
dairy.
Product Labeling Changes
Product labeling for the entire food and beverage category is
currently undergoing enormous change, and multiple compliance deadlines
are placing a massive regulatory burden on the industry. Approximately
400,000 new products have been introduced since the original Nutrition
Labeling and Education Act rules were established more than 20 years
ago. To change essentially every food package in the United States
requires adequate time, careful planning, significant resources,
testing and analyzing of products, entering of ingredient information
into databases, new label and packaging designs, new printing plates
and queuing up with printing companies. The process requires
coordination among software vendors, ingredient suppliers, graphic
designers, printing companies and others on a magnitude of scale never
before executed.
IDFA and the entire food and beverage industry recently asked
Health and Human Services Secretary Price to extend the compliance
deadline to May 2021 for FDA's new Nutrition Facts and Serving Size
rules. Additional time will help companies avoid wasting billions of
dollars on duplicative relabeling schemes. FDA's own Regulatory Impact
Analysis found that the cost associated with a 2 year compliance
deadline could be as high as $4.6 billion, and the cost of a 4 year
compliance deadline could reach $2.8 billion. Unfortunately, FDA chose
the option that is 39% more expensive, providing only 2 years for all
but the smallest companies. The current compliance deadline is July 26,
2018.
Our request for more time to comply will also allow USDA to
complete its work on the GMO labeling rule, which requires a standard
format for disclosing ingredients produced with biotechnology. Without
the extension from FDA, companies may redesign all product labels by
next year only to learn they must do it again to comply with USDA's
requirements.
Given the lead times required to comply with the Nutrition Facts
label and the opportunity for complying with both FDA and USDA
regulations with one set of label changes, we need immediate action on
this request.
Organic Dairy Products
Dairy foods represent the second-largest and fastest-growing
category of organic foods sales, totaling about $6 billion, or 15% of
all organic sales, according to the Organic Trade Association. The
National Organic Program (NOP) at USDA has provided a consistent and
reliable platform for the organic industry to grow and thrive. We
believe maintaining the NOP program as it is currently managed will
ensure that consumers have access to organic dairy products that meet
their expectations. We also support the current structure and functions
of the NOP and the resources to ensure that the program accommodates
continued growth of the U.S. organic dairy industry.
Trade
IDFA and our member companies look forward to working with the new
Administration and Congress to achieve trade policy goals that will
preserve and grow dairy exports. As I said previously, global trade
represents the single most significant demand growth opportunity for
our members and the dairy farmers who supply them.
Mexico is the number one export market for U.S. dairy, accounting
for \1/4\ of our total dairy exports. The United States has a 73%
market share of Mexico's dairy imports, and we need to ensure that a
renegotiation of the North American Free Trade Agreement preserves this
important market.
I recently traveled to Mexico City with Jim Mulhern and former
Secretary Vilsack to meet with Mexican dairy farmers, processors and
government officials. NAFTA is very successful for both the United
States and Mexican dairy industry; it provides exactly the type of
``win-win'' business opportunities that each country needs. We found
support to preserve the current market relationship from the dairy
farmers, processors and the Government of Mexico.
Unfortunately, we haven't had the same success with our trading
partner to the north. The Canadian Government is violating its trade
commitments with the United States under NAFTA and the World Trade
Organization with respect to dairy. Recent Canadian efforts to create a
new Class of milk effectively prevents U.S. exports of ultra-filtered
milk from Wisconsin and New York and will cost the industry at least
$150 million, while threatening U.S. jobs on farms, in processing
plants and throughout the supply chain. Canada recently expanded this
new pricing initiative, and we need to address this issue immediately
before further damage is done.
Finally, the Asia-Pacific region is the world's largest market for
food and agriculture and is expected to grow rapidly in the years
ahead. Reducing and eliminating tariffs and other restrictive
agricultural policies in this region will allow our dairy industry to
compete, creating an opportunity to supply Asian markets with high-
quality dairy products. With more than 95% of our potential customers
living outside our borders, expanded access to the Asia-Pacific region
is critical if we are to attain our future export potential.
Conclusion
In summary, IDFA represents a broad cross section of the U.S. dairy
industry. Our views are based on what is good for all our members and
our entire dairy industry, from farmer to processor to input provider
to wholesaler to retailer to the consumer. With our policy goals, we
aim to ensure that our industry remains competitive and strongly
positioned for growth, both domestically and internationally, to meet
the demand for our nutrient-rich products in a way that benefits all
our stakeholders and contributes so importantly to the health of
Americans and our nation's economy.
Mr. Chairman, there is a common thread to all the issues I have
outlined: enhancing demand for U.S. dairy products. The opportunities
are clearly out there, and the U.S. dairy industry is poised to take
full advantage.
With the proper policies and tools--such as lifting restrictions on
the types of milk offered in school cafeterias, obtaining greater
market access in Canada and opening new markets in Asia, maintaining
our top export market in Mexico, offering incentives to purchase more
dairy foods through SNAP or providing better mechanisms for risk
management for both farmers and processors--I'm confident our industry
will meet and increase the demand for milk and dairy products and
provide economic prosperity and stability to American dairy companies,
American dairy farmers and their communities throughout the country.
IDFA's board members will be meeting next month to take official
policy positions on a number of the issues I've just outlined, and we
will work collaboratively with NMPF on our many issues of mutual
interest as we approach the upcoming farm bill. We look forward to
working with the Committee on the various programs and policy
recommendations under the purview of the farm bill.
Thank you, Mr. Chairman and Members of the Committee, for the
opportunity to testify at today's hearing. I look forward to answering
your questions.

The Chairman. Well, I thank the gentleman. The chair would
remind Members they will be recognized for questioning in order
of seniority for Members who were here at the start of the
hearing. After that, Members will be recognized in order of
arrival. I appreciate Members' understanding, and I recognize
myself for 5 minutes.
Thank you both for being here, I appreciate it. It is
pretty clear that the MPP Program didn't work as intended, and
we are going to work to try to fix that. I am hard pressed to
understand how the ten percent increase in the feed cost would
trigger a $2 billion score. Maybe the math is fuzzy, but that
would seem to say the overall program would cost $20 billion,
and I don't think that is the case either, so we are continuing
to work with the CBO.
I am concerned that expectations within the dairy industry,
looking at that number, will be hurt if we don't come in near
that, and that is not rational, to be able to add those kind of
resources to the program. Collin and I are committed to finding
the solution, but I don't want your members, and the producers
out there, to feel like we didn't do our job because we
couldn't deliver on that number. I don't think that number is
right, but we are going to work to get this fixed. But I don't
want misplaced expectations among your teams that that is the
fix. And we are going to work on it, and we are committed to
making that happen.
Jim, with that, talk to us a little bit about the
differential between the MPP as it applies to small herds
versus larger producers. In your testimony you said we have had
a significant drop in dairies since 2006. Can you walk us
through how you think MPP could be used to slow that down, or
stop it, or should we slow that down and stop it? Walk me
through the differential between the two; size of farm versus
MPP.
Mr. Mulhern. Sure, Mr. Chairman. One of the beauties of MPP
is the differential rates that were set up, in terms of the
coverage below the first 4 million pounds of production, which
is about 175, 180 cow herd, and production above 4 million
pounds. And all farms get that rate on the first 4 million, and
a higher rate for higher levels of coverage. MPP can be
especially effective in protecting smaller farms because of the
rate differential, and the ability, if it is affordable, to get
higher levels of coverage.
And that really is the key. The rates for $7.50, $8
coverage, which, frankly, some of our small farms probably need
coverage at that level, today it is too expensive, so we need
to address those rates so they can buy up higher levels of
coverage. Mr. Peterson was right in his comments. It is the
same feedback we have gotten from our members, our larger
members. They want to make sure they have the MPP as a
catastrophic safety net. If we go through another 2009
situation, those situations that are completely out of our
control, they want to know that we have a floor under that
price. It was devastating to go through that in 2009, and 2012
was another bad year for our industry.
But the beauty of MPP is it does have the ability to
provide safety net support for all size operations. And by
having the ability to have higher rates of coverage for the
smaller operations, that will actually provide budget
protection, Mr. Chairman. It won't be as high a cost if we do
that.
The Chairman. All right. Is the 4 million pounds an
appropriate cut between the two? Should we raise that, lower
that? Is the industry really okay with economics associated
with herds smaller than that?
Mr. Mulhern. Yes, it is an issue that we have looked at and
had discussion, but our members are satisfied with the current
4 million pound threshold level. There have been discussion,
and there were some back in the last farm bill debate, of
having three levels of coverage. We think we netted out pretty
well on the 4 million pound above and below. That has worked
well. We have not had a lot of concern from our membership
about raising that. And, of course, that goes to the point, Mr.
Chairman, if you adjust that, it does have budget implications,
and we were trying to guard against that.
I want to be clear in our presentation, the dairy industry,
dairy producers of America, do not want a costly program. We
have been back in the days when Kika de la Garza was Chairman
of this Committee, back in 1985, we had not a $2 billion cost
to the program over a 10 year score, we had a $2 billion cost
to the dairy program in 1 year, and that is not helpful. We
have gotten away from that. We want this program to be a safety
net, and not to generate excess production. That was one of the
reasons we had the battle we had in the last farm bill. There
was concern and the whole battle over market stabilization was
our industry's desire not to have too much milk coming out. The
lesson we have seen is this program is not going to do that. It
can be an effective safety net, if it is adjusted.
The Chairman. Yes. Quickly, Michael, what is the scientific
reason why Canada would refuse to take ultra-filtered milk?
Dr. Dykes. I don't think they have given a scientific
reason, sir. They are advantaging their own in-country
processors to use their skim milk products for cheese
production there, rather than taking our ultra-filtered milk
from the U.S.
The Chairman. Okay. With that, I will yield to Mr. Peterson
for 5 minutes.
Mr. Peterson. Thank you, Mr. Chairman. Mr. Mulhern, have
you had discussions with CBO about these scores at all?
Mr. Mulhern. No, I have not had discussions with CBO about
them.
Mr. Peterson. Well, I have, and I have put together a chart
here that has a month by month breakdown of what the margin
was, and I have done it based on what the current law is, and
what it was originally. And there is only one bi-monthly period
since the bill has gone into effect that we have had a payment,
and is part of the reason we don't have participation.
[The information referred to is located on p. 773.]
Mr. Peterson. So this year we are not going to need it,
$17+ they are projecting for milk. I just don't get it, how
they are coming up with this score. One of the things that I
have done is I have asked Langley, over at CBO, to give me a
month by month printout of how he came up with this, and I
would like to see what months he is saying it is going to cost
this much money that we are going to come up to $2 billion.
Whatever you guys can do to help him, I have Scott Brown
working with him, and we are making some progress, but this
thing is way out of line. And, having dealt with CBO in 2008,
when I was Chairman, it is a big problem. And if you don't get
them to move, I don't see how we are going to be able to do
what needs to be done on the feed cost, unless we get them to
bring it into reality.
On the other hand, we have had this scored on the small
producers of the 4 million pounds, and that is in the range, it
will go to $7.50 at current 9, which is what it is for $6.50.
To go to that level, we are talking $150 million over 10 years.
It is not a huge amount of money to get the small producers
better coverage which we need to do if we are going to get
participation. And what I have been concerned about all along
is that we will allow them to sign up month by month, and year
by year we are going to have a situation one year where they
are projected to have some kind of a price, and it turns out
wrong, and we have a collapse, and they don't have any
coverage, because they are not responding to the system. At a
minimum, we have to get that done and go to the monthly
coverages. It is only $21 million over 10 years to go to
monthly coverage, but the feed cost, you guys are right, and
what we had in the bill originally was right. But, we have some
education to do. I don't know if you have any other ideas about
what we can do to get them to the right numbers here.
Mr. Mulhern. Well, I would say, Mr. Peterson, having some
now white hair, remember the days back in the 1985 Farm Bill,
when it was blonde? I have been dealing with CBO budget scores
on dairy for a long, long time, and I have often seen them be
inaccurate. And, frankly, it is a challenge. The score, these
programs, this industry, because of the dynamic nature of it,
it has been challenging. That stochastic model that they use in
this scoring is a bit of a problem. It is a probability model,
so they take all kinds of permutations, my understanding, and
weigh those, and come up with a best guess, if you will. I have
rarely seen them be very accurate in their scoring, and the
experience we have had these last 2 years, where what the MPP
was scored at when it came out of the Congress, scored for
Fiscal Year 2016 and 2017 and what we have experienced, they
were far off. And the fact is, in the first year of operation,
first full year, the Federal Government made money on the MPP.
Mr. Peterson. Right.
Mr. Mulhern. Dairy farmers paid $70 million into the
Federal Treasury for coverage, and the program paid out less
than a million dollars: $730,000 was the payment out. Last
year, because people had that bad experience the first year, a
lot of people dropped down just to the catastrophic coverage,
paid the $100 administrative fee, did not buy supplemental
coverage. The fees collected dropped from $70 million to $20
million. And, as you pointed out in your comments, there was a
2 month period last year where USDA paid only to those
producers who bought the higher level of coverage, which wasn't
very many producers. It is a problem. The scoring is a
challenge. It is one thing that we would like to continue
working with you and the Committee to come up with more
realistic and accurate budget projections.
Mr. Peterson. Thank you, and as we said earlier, we do have
parts of the country that have too much milk right now, as you
know. But, Dr. Dykes, I just want to say, for my constituents
and myself, that we want whole milk in the school.
Dr. Dykes. We would appreciate that.
Mr. Peterson. All right. We are right there with you.
Dr. Dykes. And Jim would as well.
Mr. Peterson. We are right there with you.
The Chairman. The gentleman's time has expired. Mr.
Goodlatte, 5 minutes.
Mr. Goodlatte. Thank you, Mr. Chairman, and I want to
second that motion from the Ranking Member with regard to the
options that should be available in our schools.
Mr. Peterson. Is that unanimous?
Mr. Goodlatte. Mr. Mulhern, I would like to follow up on
the gentleman from Minnesota's questions about the MPP premium
rates. In your testimony you discuss adjustment to those rates,
and your concerns regarding feed factor calculations. If feed
factors were set at the original level that you mention in your
testimony, I am curious about your opinion as to whether the
cost of the program's premiums would be viewed as affordable or
manageable by dairy farmers?
Mr. Mulhern. It is a very good question, Mr. Goodlatte. I
would say that the rates under 4 million pounds clearly need to
be adjusted, because even if we fix the feed calculation, it is
going to be difficult for them to buy coverage on that first 4
million pounds at the current rates. Our experience the first 2
years has been that small operations have a higher cost of
production. They need a little bit higher level of coverage
there. Adjusting those rates would be prudent to encourage more
producer participation in the program to provide the safety net
that it was designed to do.
Above 4 million pounds, we want to look at those rates. We
didn't propose specific rates because it is something we want
to keep looking at. But, again, the feedback we have gotten
from most of the larger producers is they view the importance
of MPP as that catastrophic floor, the $4. Some will buy up
some coverage, but are not looking to have higher levels of
coverage under the program. Yes, rates need to be adjusted,
especially on that first 4 million pounds.
Mr. Goodlatte. Thank you. Dr. Dykes, you mentioned forward
contracting in your testimony for Class II, III, and IV milk.
Can you provide insight as to the logic of excluding fluid milk
from forward pricing, and forward contracting? And why was this
done, and should we change that?
Dr. Dykes. This was done in the last farm bill, was
excluding fluid milk from the ability to forward contract. I
think it should be changed. We should look at that. We want to
work with the National Milk Producers Federation to come up
with a solution to that issue, and we think it should be
afforded to----
Mr. Goodlatte. It is a voluntary program, right? People can
decide whether they want to forward contract or not?
Dr. Dykes. It is a voluntary program. It takes two to make
it work. It takes both the buyer and a seller. And it is not an
effort to reduce the price, it is an effort to stabilize the
price, or bring predictability to the price and reduce the
volatility. That is why we are advocating it be extended to all
four classes of milk, sir.
Mr. Goodlatte. And farmers who forward contracted might
have been helped through some of the fluctuations that we have
been talking about here in recent times.
Dr. Dykes. We believe that has been the case across
agriculture. It helps bring predictability to a price at some
point in time in the future.
Mr. Goodlatte. And you would like to see Class II, III, and
IV. Is that program working, in your opinion?
Dr. Dykes. We think it is, and we also think that if it was
made permanent, therefore, we take some additional uncertainty
out of that, because when you are contracting, as you get near
the end of the farm bill, then you have to have it renewed
again before you know if it is going to be around or not.
Mr. Goodlatte. Thank you. Mr. Mulhern, does the National
Milk Producers Federation agree that forward pricing should be
available for fluid milk, or are you looking at it? What is
your position on that?
Mr. Mulhern. Mr. Goodlatte, we think that forward
contracting has worked well, in terms of Class II, III, and IV.
There are some issues with Class I. There are some challenges
there. However, Michael and I, this is an issue that we have
discussed, and our groups are going to sit down and discuss
this. One of the challenges, just to your initial question, is
Class III and IV are competitively determined prices. They are
determined in the marketplace for prices paid for milk going
into cheese, butter, powder. Class I is calculated as a
differential, added to the higher of Class III or IV price on a
monthly basis.
Mr. Goodlatte. Let me cut you off, because I only have 30
seconds left. I just want to make two points.
Mr. Mulhern. Sorry.
Mr. Goodlatte. First, I know there is concern on the part
of many dairy producers with regard to labor, and I just want
you to know that I have, and continue to work on, as Chairman
of the Judiciary Committee, an agricultural guest worker
program, an H-2A program, that would include taking into
account that dairy producers need workers throughout the year,
and there are ways to help address that.
And, second, going back to our first comment about schools,
I just want to say that one of the issues with the decrease of
milk consumption is the issue of taste, and that we ought to
allow dairy producers and dairy processors to offer products in
schools that meet that demand of young people who still like
the taste of milk.
Mr. Mulhern. We agree.
Mr. Goodlatte. Whole milk.
Mr. Mulhern. Thank you, sir.
The Chairman. The gentleman's time has expired. Mr. Scott,
5 minutes.
Mr. David Scott of Georgia. Thank you very much. It is very
important for us to continue this line of discussion about our
children not getting whole milk, the fatty part of milk, that
clearly is very helpful for them. I have a study here that was
published in the medical journal Circulation, and here is what
it says. It says that children who have a higher intake of
whole milk, or two percent milk, gain less weight. I mean, that
alone right there ought to Amen everything that my Chairman and
Democratic leader said. Here is something else it said, that
the research shows that the dairy fats found in milk, yogurt,
and cheese help protect against Type 2 diabetes.
So here we have this dilemma. One of the biggest issues
facing us right now is obesity of our children, and especially
because of how our society has changed. I often say they no
longer go to the playground, we no longer have physical
education as a requirement in schools, and we are getting fat.
And here we have the golden product of milk, with all these
blessings.
Mr. Mulhern. Yes.
Mr. David Scott of Georgia. What can we do to get this
message out, and to come up with a procedure to do it? I love
milk, and I got other people to enjoy milk, young people,
because, as I would give my younger cousins, and brothers, and
sisters milk, I would just dip into the sugar jar and put a
little sugar in it.
Mr. Mulhern. Yes.
Mr. David Scott of Georgia. They loved it. If we did that,
we would be doing a great blessing for our children. What do
you guys say about that? I mean, you are out there in it. What
can we do to get our young people to drinking more whole milk?
Dr. Dykes. Can I start, Michael?
Mr. Mulhern. Yes.
Dr. Dykes. Thank you, sir. We would agree, and I believe
that the reason so many of us drink milk today is we drank milk
in school.
Mr. David Scott of Georgia. That is right.
Dr. Dykes. And we believe in that setting it is the right
thing to do. Also, if we have milk in school that doesn't taste
good, as has been mentioned in this Committee, we are not
likely to drink it as we become adults.
Mr. David Scott of Georgia. Yes. Like I say, put a little
sugar in it.
Dr. Dykes. We totally agree with you. One of the things
that we are doing on the processor side is we have an education
program that we are running, and we are going to target it, it
is called Kids First.
Mr. David Scott of Georgia. Great.
Dr. Dykes. We are going to explain, and try to educate to
both moms and kids, and school nutrition folks, the value of
milk, and the value of getting milk that tastes good, that the
kids will actually drink, back into the school systems.
Mr. David Scott of Georgia. Are there any rules, both of
you can comment on that, that need to be changed from our
perspective here? We are rule makers. We are legislators. That
is what we do. Is there something we can do?
Mr. Mulhern. Well, the major rule to be addressed is the
regulations with the school meal program, where, under the
Healthy, Hunger-Free Kids School Act, Congress passed
legislation directing the milk served in school to be low fat
or non-fat. When those regulations were put into effect, for
unflavored milk, schools can serve one percent or non-fat. On
flavored milk, which is about 70 percent of the milk consumed
in schools, because of the very point you mentioned,
Congressman, kids like the taste, of chocolate milk, it can
only be non-fat. And that is not a good tasting product for
many people, especially if you drink two percent or whole milk
at home. Two percent is the leading milk consumed in the family
home. You are getting a different milk served at school. No
wonder kids don't quite like it. Turning that around, which the
Child Nutrition Act had the provision in it to raise it to one
percent, we would like to get it to two percent.
This has been a 50 year demonization of dairy fat, going
back to the 1960s, to 1950s and 1960s, actually more than 50
years if I do the math, and it is starting to turn around. The
Circulation article you mentioned is one of many, many research
articles out there demonstrating the importance of dairy fat in
the diet and its impact on things like Type 2 diabetes,
satiety. It is beginning to turn. I am heartened to hear this
mentioned from the Committee, we need to do more, and the Child
Nutrition Act would be one place to start with that.
Mr. David Scott of Georgia. Thank you.
The Chairman. The gentleman's time has expired. Mr. Gibbs,
5 minutes.
Mr. Gibbs. Thank you, Mr. Chairman. I want to talk a little
more about the small versus the large producers. And you talk
about the 175 cow dairies, which included the 4 million pound
production, I have been searching my brain, thinking in my
neighborhood, we don't have any herds that size anymore. They
are all 500, and they are still family farms.
Mr. Mulhern. Yes.
Mr. Gibbs. Okay? And they are still producing their own
feed, okay? Now, I guess one of my questions is, obviously,
when you talk about the larger farms, and I don't count the 500
cow dairies as the larger farms anymore. They are the norm. We
are on the same page there. You talk about the larger farms
only wanting catastrophic coverage, and that goes to what I am
going to try to say here, is the larger farms, the big farms
that are way over 500 cows, is it true that probably most of
them buy their feed, they don't produce their feed? Is that
kind of the norm?
Mr. Mulhern. You are talking about the largest farms, 1,000
and more?
Mr. Gibbs. Yes.
Mr. Mulhern. Yes, you would find that most of the large
farms buy a large percentage of their feed. Grow some, but
probably buy more than----
Mr. Gibbs. Yes. Here is my contention: When you are talking
this margin price difference for the MPP, the larger farms,
since we have seen a drop in commodity prices overall, so their
feed cost has actually come down, because the price of corn and
all that has come down, where the smaller farms, that produce
their own feed, they have those fixed costs in land and
equipment and so they are really losing money on that side of
the operation, but their cost hasn't come down.
Mr. Mulhern. Right.
Mr. Gibbs. I just wanted to get this out; because, when you
are talking about a differential here for a margin, you have
two things going on here. And that is evident why you see the
larger farms only wanting catastrophic coverage, because their
costs, their bottom line, is actually lower, obviously, you
pick up some deficiencies too.
Mr. Mulhern. Right.
Mr. Gibbs. Now, if we were in a different dynamic, where
price of milk was in the basement, but price of corn and beans
didn't drop, a different phenomenon would be happening.
Mr. Mulhern. And that was 2009. That was the situation in
2009.
Mr. Gibbs. Okay. Would you agree, whatever we are trying to
do to figure this out, because it really triggered my mind here
when the Ranking Member was talking about this. That is really
critical when we are developing this program, because you have
two things happening, depending on the size of the farm.
Mr. Mulhern. Right.
Mr. Gibbs. It is important to keep in mind that 500 cow
dairy farm is your norm now, at least in the Midwest.
Mr. Mulhern. Yes.
Mr. Gibbs. Maybe up there, I don't know, Collin, in
Minnesota and Wisconsin maybe you still have the 1,500 cow
dairies. I don't know. But, I mean, all my 1,500 cow dairies,
they either went out of business, or they are actually raising
heifers for the bigger dairies now, and the bigger dairies are
milking their 500+, every one. And I just think in my area my
10 mile radius where I live, and I live in agricultural
country.
Mr. Mulhern. Yes.
Mr. Gibbs. When you guys are developing this, I think that
is important to keep in mind what is really happening there. I
have another question, I just heard, I don't know if I heard it
right, on the school lunch program with milk, and I totally
agree with you that, in the family, at home, it is two percent
milk, okay, and you said that. What are we serving in the
schools?
Mr. Mulhern. In schools, for unflavored milk, schools can
serve one percent or non-fat. For flavored milk, which is the
majority of milk served in schools today, it has to be non-fat
only.
Mr. Gibbs. Is that, like, skim milk? I am kind of----
Mr. Mulhern. I am sorry?
Mr. Gibbs. That would be skim milk?
Mr. Mulhern. Skim milk, yes. Exactly.
Mr. Gibbs. Yes?
Mr. Mulhern. And that is the problem. We had urged USDA to
provide one percent flavored. And, actually, our position in
the rule making process was to have one percent, and put a cap
on the sugar amount, 22 grams of sugar. Put that cap in, but
keep it at one percent, because kids like the taste of milk
when it is----
Mr. Gibbs. Yes.
Well, that is just common sense. If you are drinking two
percent at home--and we used to drink regular milk, 3.5, I
guess, and now it is two percent. I am used to that. I like it.
But I would probably have a problem going down to skim milk, so
the kids for sure, so that is an important point. You can't
serve them something in school and it is like, this doesn't
taste like what I am drinking at home.
Mr. Mulhern. Right.
Mr. Gibbs. Anyway. Well, thanks for being here. Thanks, Mr.
Chairman. I yield back.
The Chairman. The gentleman yields back. Ms. Adams, 5
minutes.
Ms. Adams. Thank you, Mr. Chairman, and thank you to the
witnesses for your testimony. Mr. Mulhern, in the last farm
bill, dairy producers and processors were significantly split
on dairy policy. At the time, there was a proposal to manage
milk supply, and many in the industry had concerns with that as
well. I know that this time around we are not talking about
that kind of approach, but can you discuss what you have done
to build support across the industry for changes to the dairy
program?
Mr. Mulhern. Sure, that is a great question. And the
proposal presented to the Committee today is one that has come
through an 18 month process of engagement on our part with our
members across the country, talking to them about what is not
working with the Margin Protection Program. We looked at every
single issue that we heard from the countryside on issues that
were not working, and we tried to reflect as many of those as
we could into a proposal that balances the needs of the
industry across the country.
So what we are presenting to the Committee does reflect the
input and the views of dairy farmers from across the country,
and our membership, and we think will go a long ways to address
the problems that we are seeing in the program today.
Ms. Adams. Okay. Thank you. As you know, we have to operate
within certain budget constraints as we begin to write the farm
bill. Our districts and states have multiple priorities that
need to be funded in this bill. For example, my district in
North Carolina, the 12th District, is in desperate need of a
strong nutrition title and the SNAP program remaining intact.
What are your thoughts about how to address the budget
challenges as we move forward?
Mr. Mulhern. Well, the budget challenges are real, and I
again want to commend the position of this Committee, and the
Chairman and Ranking Member, in their communication to the
House Budget Committee earlier this month, that the focus for
agriculture, and for the next farm bill, has to be let us get
the policy right, and then address the cost of it. I can say
for dairy, we are not looking to have an expensive program. We
just want an effective safety net for those down times.
In terms of the nutrition programs, those are very
important to all of us in agriculture. There is a strong
consensus view that this package of farm programs and
nutritional programs together is critically important. I will
say, for the dairy industry, for dairy farmers and dairy
processors, we are well aware that folks utilizing the SNAP
program spend a lot of those dollars on dairy products.
Estimates that we have seen for Fiscal Year 2015, the latest
numbers I have seen, were about $8.4 billion of the total SNAP
expenditures went for dairy products. These programs are
important. They have a need, and we want to see a balanced
package, but we think the Committee has it right. Let us get
the program needs set, and then have the budget to address
those.
Ms. Adams. Right. Thank you very much. Mr. Chairman, I am
going to yield the rest of my time back.
The Chairman. The gentlelady yields back. Let's go now to
Roger Marshall, Mr. Marshall.
Mr. Marshall. Thank you, Mr. Chairman. Let me add, with
everyone else's conclusions here, my grandfather would deliver
milk twice a week to my family in great big containers like
this. We would take the cream for the cereal, and my dad would
use it for the coffee. I didn't even know that there was
anything but whole milk until decades later. Is it just that
simple? Why is consumption going down in schools? When I went
to school, we got two cartons of milk at 10:00 a.m., we got two
milks at lunch, come home and had two glasses of milk for
supper. Dr. Dykes, is it just that simple? It is just taste, or
are schools just not offering it, or what else is going on?
Dr. Dykes. We think a lot of it is the options aren't
offered in school. Some of it is taste as well. But we have an
educational effort, and Jim mentioned it as well, dairy
products have been demonized for a long time on the fat side.
There are concerns about the obesity epidemic. However, if we
think about the difference between 1 cup of two percent milk
and 1 cup of one percent milk, we are talking 20 calories. We
just think we have an educational effort, and we also have to
expand the options. Our research says kids will drink the milk
if it tastes good, and we make it available to them. We think
that is the next first step, is to change the rules, and expand
the options.
Mr. Marshall. I am a physician. I am supposed to know
something about nutrition. Is there anything more nutritious
for a drink than milk? You could talk about juices having
different qualities. What is in second place?
Mr. Mulhern. I don't know what is in second, but I will say
your premise is spot on. There is no more nutritious drink you
can have than milk. Milk is the number one source of nine
nutrients in the diets of children, number one source, so kids
who aren't drinking milk are getting a shortfall in terms of
their consumption of calcium potassium, phosphorus, magnesium,
Vitamin A, Vitamin D, and on. It is critically important, and
it is an issue. It is a challenge that we are dealing with. I
don't know what would come in number two, but it is going to
drop off a long ways from milk.
Mr. Marshall. Yes. Kansas has the fastest grown dairy herd
in the country, and I don't understand how we could have food
insecurity issues in Kansas, and I can't imagine what it would
be like in other states, where they don't have the abundance of
grains and milk that we have.
I just finished 2 weeks of town halls, nine town halls, and
I was a little bit surprised, as I went to the southwest
Kansas, that health care was not the number one topic. It was
the labor force.
Mr. Mulhern. Yes.
Mr. Marshall. And it is not unique to the dairy industry.
The feedlots, and slaughterhouses, all those types of things,
packing plants. Sorry, we don't say slaughterhouses anymore,
packing plants, it is a big issue, and we have 20,000 open jobs
in Kansas right now. And even when there has been unemployment,
we still have problems. And I am just wondering is this unique
to Kansas? Jim, you want to go first and just kind of describe
what you are seeing from workforce issues in your industry?
Mr. Mulhern. No, unfortunately, Congressman, it is not
unique to Kansas. It is a critical issue facing dairy farmers,
and, frankly, all of agriculture all across the country. I will
tell you, from my conversations with our members, the single
biggest limiting factor on their ability to grow is an adequate
workforce. They can't find enough workers. And it is not a
question of finding workers in the local community, people who
have grown up there. Our industry does rely upon an immigrant
workforce. Fully 51 percent of the employees on America's dairy
farms are immigrant workers. Those farms are producing almost
80 percent of our total milk supply. Many of the workers we
know are undocumented, so this is a critical issue, getting
immigration reform right. I was heartened to hear the comments
from Mr. Goodlatte. We have been working with him and his staff
for some time on this issue, and are hopeful that we can get a
workable system.
Our members understand the importance of border security,
and enforcement, and support that, but along with that has to
come a system of legal status for workers on our farms so that
they have an ability to have a legal permit to do work, and to
be able to move back and forth, and a system for the future as
well, so we have a pathway to future workers.
Mr. Marshall. And how is dairy different than some of the
other agriculture? I am stating the obvious here.
Mr. Mulhern. Well, it is a huge issue. H-2A, the program
that exists for agricultural workers, is a program focused on
seasonal temporary workers. Our jobs are anything but. Our jobs
are, as the Chairman said in his opening comments, 365. We are
milking these herds two and three times a day. On many farms,
it is an around the clock labor force. It is anything but
seasonal, temporary. H-2A does not work for us. We don't have a
program for dairy workers in this country, and never have had
one.
Mr. Marshall. And I would just add, these are good jobs.
These jobs are paying $40,000, $60,000 a year that are going
unfilled. Thank you, Mr. Chairman, I yield back.
The Chairman. The gentleman yields back. Mr. Costa is
recognized for 5 minutes.
Mr. Costa. Thank you very much, Mr. Chairman, and it is
appropriate that you and the Ranking Member paid tribute to
Kika de la Garza, who was a real force not only in American
agriculture, but spent a lot of time in California, where I got
to know him. And certainly our thoughts, and prayers, and
condolences go to his family.
It is nice to see the two of you at the same table. I
remember times when that was not always the case. Maybe this
bodes well for the farm bill. Both the Ranking Member and I
have worked with all of you in the past, and through a lot of
variations in the last two farm bills, and so maybe this is a
Kum bay ya moment.
I might take issue with my friend from the Midwest about
feed prices and differentials there. While we have the larger
dairies in California, clearly we have to compete with feed
prices all around the country, and California has about a 60
day feed supply out of 12 months. In other words, we are
importing about 10 months of our feed supply, if you want to
average it that way. And so feed comes in from all over the
country, the Midwest and everywhere else, and we have to
compete on those margins, which is one of the criticisms I have
had, and I am glad to hear you agree, the Margin Protection
Program just hasn't worked, in my view, and it is one of the
things we have to look at.
We were talking about prices of fluid milk, and I would
like to kind of drill down a little bit. What changes in milk
pricing regulations would be needed to allow for contracting
for fluid milk?
Dr. Dykes. What I propose is we need to sit down and talk
to both the farmers and the processors, decide to see if we
could work that out. As Jim mentioned earlier, fluid milk
prices--it is a complicated formula, but it basically is a
price predicated on what the higher of Class III or Class IV
milk, with some differentials added to it. In my view, if we
get people that buy and sell milk from each other every day
sitting around the table, we could find a way to make that
happen, to bring some stability and predictability into
pricing, remove some of the volatility.
Mr. Costa. Well, the predictability, the whole dairy
industry has been so volatile over the last 15 years, and the
amount of equity that we have lost out of dairy farms across
American has been significant.
Dr. Dykes. Yes.
Mr. Costa. Mr. Mulhern, do you want to comment on how that
might work?
Mr. Mulhern. Certainly, Congressman. I would agree with
Michael, and we, frankly, support efforts to reduce volatility
on both the producer and processor side, and recognize that
partially in the past, through the agreement on forward
contracting on Class II, III, and IV. There are some issues
around Class I. Forward contracting, because of that settlement
obligation of Class I handlers into the producer payment pool,
the issue becomes would forward contracting reduce pay prices
to producers?
Mr. Costa. Would there need to be changes in the FMMO
pricing system?
Mr. Mulhern. That is something we have to look at.
I don't think it would. It would require monitoring by the
Federal Milk Market Administrator's Office to make sure that
there is information on those forward contracts. But, as you
noted, we do have forward contracting approved, currently in
place in the farm bill, and it does expire at the end of the
current farm bill. At this point we support extending that. We
are going to talk with IDFA about this issue of forward
contracting on Class I.
Mr. Costa. What recommended changes do you think we ought
to be looking at with the new farm bill? I mean both the
Ranking Member and I have worked with you folks for a long
time, and other Members of the Committee on some version of a
supply side management. We know the problems with Canada, as
they have become very predatory. It is not a level playing
field, in my view.
Mr. Mulhern. Right.
Mr. Costa. I only have 54 seconds left. Be quick.
Mr. Mulhern. In terms of supply management, if that is the
tone of the question, Congressman, we are not proposing any
supply management features in our farm bill proposal for the
2018 discussions. Our focus is on improving Margin Protection
Program. Frankly, as Mr. Peterson mentioned, had we the Market
Stabilization Program put in place in the 2014 Farm Bill, we
have come nowhere near even needing that over the last few
years because of where we are, in terms of the markets. Our
focus really is having that producer safety net on MPP.
Mr. Costa. Yes. Dr. Dykes, I want to shift the question,
because you and I spoke about your trip last week to Mexico,
and I am very concerned about the proposed conversation with
the Administration on restructuring NAFTA. Could you tell us
the potential implications to the American dairy industry about
one of our big trading partners?
Dr. Dykes. Mexico is our number one export market, taking
about \1/4\ of our exports, which is a little over $1 billion.
We have developed an excellent partnership with Mexico. It is
free market access. It is seen as a win-win situation in both
Mexico and the U.S. We had quite positive conversations last
week with the Secretary of Agriculture, with the Minister of
Economy, and with the Under Secretary for the Minister of
Foreign Affairs, the former Mexican Ambassador to the U.S. They
want to see this program continue, and we will be working
with--hopefully Secretary Purdue, and Ambassador Lighthizer,
and this Administration to make sure that we preserve that
market access with Mexico during the NAFTA----
Mr. Costa. Well, that is critical. And, Mr. Chairman, my
time has expired, but it is important to note that, depending
on how we approach that, retaliatory issues could take place by
Mexico and Canada if we go down the wrong road on this thing.
And the repercussions to American agriculture, let alone
California agriculture, will be big.
Dr. Dykes. That is why we wanted to make the trip to
Mexico, to visit with our number one customer.
Mr. Costa. Thank you.
The Chairman. The gentleman's time has expired. I now
recognize the gentleman from California, Mr. LaMalfa, for 5
minutes of questioning.
Mr. LaMalfa. Thank you, Mr. Chairman. Welcome, gentlemen.
We love our dairy. I did want to drill down, though, on the
pending legislation, the DAIRY PRIDE Act a little bit with you.
I love the acronyms, the way they get named around here.
Defending Against Imitations and Replacements of Yogurt, Milk,
and Cheese To Promote Regular Intake of Dairy Everyday Act.
That is a heck of an acronym. It is very creative. Again, we
know some of the conditions that dairy has been going through
here, with good prices a couple years ago, and then
international factors on pushing down price, and exports, and
all that. And at the same time, we are seeing pretty much a
record production in that window as well.
I am wondering if the effort to crack down on products that
are in the labeling process that are not directly from a cow,
from dairy, such as soy milk, almond milk. Perhaps as a
consumer protection. I am a little mystified at the direction
the DAIRY PRIDE Act is going, because when we are talking about
the non-dairy alternatives that people are looking at, they are
using the word milk. We are talking about less than ten percent
of the entire market share, or a little under $2 billion in
sales. It really comes down to consumers in the market looking
at what type of a product they are going to be using to fill
that desire, that consumer choice.
To me it seems pretty clear, and easily differentiated by
what you are buying in the dairy case as a milk product from a
cow, or something like almond milk, or one of the other
alternatives too. I will throw it to Dr. Dykes first on this.
Is that where consumers do bother to read labels, do you think
there really is a problem with differentiating between dairy
milk and the other alternatives out there, almond milk, and
other types?
Dr. Dykes. This is a very difficult issue for our
membership. We have members on both sides of this issue. We
have members that are bottling milk, alternative milks, juice,
water, tea, so it is a difficult issue. I go back to FDA
labeling policy, and FDA labeling policy says that foods need
to be labeled to be both truthful and not misleading. So far,
the FDA has not concluded these are misleading, and there have
been court challenges, and the courts have not concluded that
they have been misleading. It has been going on for quite some
time, as you have pointed out. It kind of tends to pit farmer
against farmer, when we think about almond farmers versus a
dairy farmer, or a soybean farmer versus a dairy farmer.
So it is a very difficult issue for our membership. The
beverage case is very competitive, as you note, so we think
this is probably an issue that needs to be resolved in the
marketplace, is our position.
Mr. LaMalfa. Yes. Okay. I understand. Would you look at
that as a consumer protection issue? Do you think that is what
is being pursued here, or is it more of a marketing deal?
Dr. Dykes. Well, it is trying to market to the consumers to
what they want, and what they will drink, offering choice,
innovation, and products. Adding milk proteins to water so we
increase the protein content is a new innovative product for
the beverage case. It has some dairy stuff in it. It is not
totally milk. It is a competitive space. Offering choice is the
bedrock of what we are, and competing in the marketplace.
Mr. LaMalfa. Yes. Certainly. Okay. Again, it seems like you
have people that have different needs too. If there is a
lactose intolerance by some consumers----
Dr. Dykes. Or they may be vegans, and may not want to----
Mr. LaMalfa. Or vegans, yes. I guess just the intervention
with a piece of legislation, taking that word away from the
alternatives of using the word milk just seems like a step
beyond, especially since you talk about the legal issues. It
has been held up in court. It is pretty obvious on a container
it says almond milk, or the other types, I don't know. Your
organization isn't really one way or the other on the DAIRY
PRIDE bill, then?
Dr. Dykes. We have made some comments on it, but, as I
said, this is a very difficult issue for our members, and we,
at this point in time, think this is probably best resolved in
the marketplace, yes. I know the producers have a different
view of that, and Jim has a different view, but it is a tough
issue for our membership.
Mr. LaMalfa. Yes, certainly. Okay. Well, I appreciate the
sincerity on that, and I yield back. Thank you.
The Chairman. The gentleman's time has expired. Mr.
Panetta, 5 minutes.
Mr. Panetta. Thank you, Mr. Chairman. Gentlemen, thank you
for being here. I appreciate your preparation, your expertise,
as well as your testimony. I apologize for being late. In
regards to your testimony, it seems that you want to
incentivize dairy consumption through the FINI Program. With
FINI, though, it seems that that was designed with fruits and
vegetables in mind, and I highlight that based on where I am
from, the Salinas Valley, that has a lot of fruits and
vegetables, known as the salad bowl of the world, and it has
one dairy farm, the Scope Family Farms.
And so my question to you is, by incorporating dairy into
FINI, what would the impact be on purchasing fruits and
vegetables through FINI?
Dr. Dykes. I will take that one. We have not looked at that
aspect of it. Where we are coming from is that, for Americans,
only one out of ten are consuming the recommended three
servings a day of dairy products. That has been our comment
about school cafeterias. That is our comment on SNAP. That is
our comment on all these other programs, is the increased
consumption, because milk is the most nutritious product we
have, nine essential nutrients. We are trying to get nutrient
rich products to consumers.
So our thought is, and what we have observed is, that FINI
has worked well on fruits and vegetables. We think that could
be expanded to include dairy, to make the same offerings
available, and the same incentive programs available, to
increase that number above one.
Mr. Panetta. Understood. Mr. Mulhern, anything on that?
Mr. Mulhern. Mr. Panetta, I would just add, our goal would
be to grow these programs, not to have them in competition.
Mr. Panetta. Fair enough. Thank you.
Mr. Mulhern. Yes.
Mr. Panetta. I appreciate that. The dairy farm that I do
have, the Scope Family Farm, they have taken a hit with the
falling milk prices, when I know of them, but they have also
done, which a lot of people do in agriculture, and that is they
have pivoted. They pivoted to organic, and that has actually
helped them out quite a bit. And actually, I saw them the other
day at a farmers' market, and they were selling not just milk,
but cheeses as well, is what they have pivoted to, and organic
cheeses. And I know that right now organic is about ten percent
of dairy sales. Do you see that growing as well? Do you see
more people pivoting, more dairy farmers pivoting to organic?
Mr. Mulhern. There hasn't been as much growth in dairy
farmers moving toward organic as one might think. Certainly
those who have made the shift are growing their production. It
is a difficult shift because of the 3 year transition rules, it
does present a barrier. And a lot of the members that I talk to
consider it. Some have made the shift, mainly for economic
reasons, because the price of organic milk is so much higher
than conventional milk. A lot of farmers are disinterested in
making that shift because they believe in what they are doing.
They believe in the conventional production they are engaged
in. It is a mixed bag overall.
Mr. Panetta. Fair enough.
Mr. Costa. Would the gentleman yield?
Mr. Panetta. Sure.
Mr. Costa. Part of the problem is not only the issue of the
3 year conversion, but also of being able to obtain a secure
feed supply for your dairy cows.
Mr. Mulhern. Yes.
Mr. Costa. Because, once you convert, you have to get
organic feed, and you have to be able to have that reliable
over 12 months a year. Those cows have to be fed twice a day.
And therein lies the other problem.
Mr. Panetta. Understood. Thank you. The third question I
have, Mr. Mulhern, I completely appreciate very much your
discussion about immigration, and immigration reform, and how
it affects not just the dairy producers, but especially my
growers in the Central Coast, when it comes to picking their
fruits and vegetables, so it is huge. It is a big issue. And I
believe that we can have a two track approach to this. First,
as Mr. Goodlatte said, in regards to helping out the H-2A
program; and second, my focus will also be making sure that
there is enough room there to mechanize. And I was wondering if
you could elaborate, if possible, on the efforts when it comes
to mechanization, any sort of research and development in that
area when it comes to the dairy field?
Mr. Mulhern. Well, my own personal view is that if we don't
resolve this issue pretty soon, you are going to see increased
mechanization in dairy. Robots are moving into dairy production
now, robotic milking, they are expensive. But as you get more
of them into the marketplace the price point comes down. It is
really an issue of cost balance, and farmers are going to make
the rational decision, like any other business person. But if
we don't resolve this pretty soon, we are going to increase,
you are going to see the increased mechanization, increased use
of robotics. It is going to happen anyway, but the failure to
have a stable labor supply is going to likely increase that. At
higher cost, though, in some respects.
Mr. Panetta. Understood. Gentlemen, thank you. I yield back
my time.
The Chairman. The gentleman's time has expired. Mr. Dunn, 5
minutes.
Mr. Dunn. For Mr. Mulhern, I have question. We know that
the actual dairy production margin fails to reflect the actual
farm profitability. It is a misnomer as we use it there,
because it excludes a lot of the overhead costs of producing
milk, the labor capital, veterinary services, depreciation. And
I know that some of these factors are very difficult to nail
down. They are not readily available numbers at a national
level. Can Congress help the dairy farmers by including some of
these production costs in that formula simply so that we would
more accurately reflect to profitability, or lack of
profitability, on the farms?
Mr. Mulhern. Well, it is a good question, Mr. Dunn. I would
say that historically, looking back to the formation of this
Margin Protection Program, what we have focused on was trying
to address those variable costs, which is feed. It is the
largest component for most dairy farmers. In fact, in some
areas of the country, 75 percent of your total costs are with
feed. It really is a focus, in that program, on the variable
costs, because they kind of go up and down. You don't have much
control over what happens on feed costs. Fixed costs tend to be
relatively, using the term, fixed over time.
There is the issue, which you mentioned, of adequate data.
If you are going to try to put some of these things into a
formula, the factors we have in MPP are the ones we use because
there is a price series that USA reports on a monthly basis
nationally for those figures. It is something we could look at,
in terms of looking at other variables, but our focus has been
on feed because it is the largest variable cost of production.
Mr. Dunn. The margin, however, we are ending up with a
number that says, and here is the margin that this farm makes,
and that is in no way, shape, or form reflective of the margin
that the actual farmer has?
Mr. Mulhern. And it is not an indication of profitability,
because to your point, that margin is to cover all the fixed
costs that you have. When the margin is $5 per hundredweight,
that is not much money to cover land, rents, labor, and all the
other capital costs you have in running the dairy operation.
Mr. Dunn. It is not. Yes. That is when a dairy operation
becomes a beef cattle operation.
Mr. Mulhern. Good point.
Mr. Dunn. Thank you very much, Mr. Chairman. I yield back.
The Chairman. The gentleman yields back. Al Lawson, 5
minutes.
Mr. Lawson. Thank you, Mr. Chairman, and I apologize for
being late, and this question might have already been answered,
but my concern is that Canadian dairy has enjoyed a supply
management system that prevents the U.S. from exporting any
meaningful amount of dairy products into Canada. They are using
new tools to restrict imports from the U.S. What is U.S. dairy
industry doing to respond to these actions?
Mr. Mulhern. Mr. Lawson, this is a real issue, and a real
challenge for us. As we look at renegotiation of NAFTA, which
is on the agenda now, to Michael's comments earlier, we think
things are working great, in terms of the U.S. relationship
with Mexico when it comes to dairy, and, frankly, for much of
agriculture. We do have real problems, to your question, with
our relationship with Canada, where access is granted in one
agreement, and then they find a way to work around it. The
ultra-filtered milk issue that Michael mentioned earlier, and
is in my testimony, is one of the problems, where they are
blocking our access to the market. We have been selling $150
million into Canada. They change the system to prevent that
from coming in.
The newest thing they are doing on this Class VII, special
ingredient Class, is going to price their skim milk powder,
because they have a surplus of it as a result of their program,
they have a surplus, they are going to price it at the world
level. Which, frankly, is in contravention to their WTO
obligations, in our view, and this is an issue that we are
going to ask the Administration to focus on in the NAFTA
negotiations. We need enforcement. We need the U.S. to raise
concerns with Canada with respect to dairy. I am very pleased
that Speaker Ryan did raise those concerns when he met with
Prime Minister Trudeau about 6 weeks ago, a month ago, whenever
that was. We do need this to be a focus of any discussions with
Canada to stop the dairy industry there from taking these steps
that have negative impacts not only on us, but this special
ingredient Class VII will hurt dairy exporters all around the
world.
Dr. Dykes. I would add to that as well, I agree with
everything Jim said, and we have also written letters, both my
organization and Jim's organization, to all of the national
associations, State Departments of Agriculture, U.S. Dairy
Export Council. We have written letters to this Administration
expressing our concern with this program. Also, letters have
gone in from the EU, Australia, New Zealand, the U.S., and
Mexico, expressing concerns over what Canada is doing. In
addition, I have also done two TV interviews with Canadian TV
expressing our concern over what is happening in Canada. We are
working jointly to try to address that issue.
Mr. Mulhern. If I could add, we are also reaching out to
governors along the border states to encourage them to engage
in this issue as well.
The Chairman. The gentleman yields back. Mr. Allen, 5
minutes.
Mr. Allen. Yes, sir. Thank you, Mr. Chairman, and thank you
for being here today. As far as the supply and demand issue
that we are faced with, obviously farm income is down some 55
percent over the last 3 years, dairy included, and we have
talked about the pricing, and how that relates--and, of course,
we are involved in a world trade situation. It looks like, from
what I am hearing, that in Mexico that we are doing fine there.
Canada is a problem. Where else in the world are we, down in my
region, we grew a lot of peanuts and pecans, and we are sending
those to China. What are some of the other markets that we are
dealing with that are maybe a problem that we need to address,
as far as the trade situation goes.
Mr. Mulhern. I will take that first. We have a great focus
on developing markets in Asia. While we were reluctant
supporters because of TPP because we didn't think the market
access openings in dairy were as much as we wanted to see, the
agreement had very strong improvements in other areas, which
led us to support it. But Japan is one of those markets where
we would like to see increased access. It is a very good
market, but it could be better for us with more access.
Asia, obviously, because of the growth in middle class,
what we find is a growing middle class, increase for demand for
protein is very good for increased milk consumption. I would
say Asia is probably the number one target for us, but South
America, Middle East, North Africa, are all areas that we are
looking at. But we are not doing so without competition.
Mr. Allen. Yes.
Mr. Mulhern. We are competing with the European Union, and
New Zealand, Australia, when we pursue those markets. That is
why trade agreements are important for us, and it is why,
frankly, it is one of the reasons we need the MPP program,
because the competition we are facing, they have some ability
to influence milk price, within the EU for example, that we
simply don't have. They can sell their exports at a lower
price. We have to compete with that in the world market. It is
a challenge for us.
Mr. Allen. Yes. Go ahead.
Dr. Dykes. I was just going to add, the Asia Pacific
region, as Jim mentioned, the countries that were involved in
TPP, that is a tremendous growth area for us. China, India,
Japan, that market is expected to double between now and 2050.
Mr. Allen. Okay.
Dr. Dykes. We need to get our policies in place so that
U.S. dairy is able to compete in that marketplace.
Mr. Allen. Right, and that is obviously one way that we can
help you, as far as dealing with consumption, because, as I
read here, production is down, like, 32 percent, as far as from
its 2014 high. And, of course, we talked about the Margin
Protection Program, in its current structure paid out very
little, as far as that is concerned.
And, again, on the MPP, producers seem dissatisfied in its
current state, and you are certain that the MPP adjustments you
suggest can make this program into an effective safety net for
our dairy producers?
Mr. Mulhern. Yes, we are confident of that, Mr. Allen. We
have taken feedback from producers across the country, and the
recommendations we are making to the Committee for improvement
in the program will address those problems. The problem with
the program is one of integrity and cost for a producer.
Integrity because the bi-monthly margin reported under the
program today does not accurately reflect the cost that dairy
farmers are facing. And the cost issue is was one of making
those rates a little bit more affordable to encourage higher
levels of supplemental coverage.
We address those issues, and the other more technical
aspects of our proposal, and we think we will have a program
that will meet the needs for the dairy industry, the dairy
community, for the long-term.
Mr. Allen. Okay, good. Thank you. And I am just about out
of time. I yield back.
The Chairman. The gentleman yields back. Ms. Kuster, 5
minutes.
Ms. Kuster. Thank you, Mr. Chairman, and thank you for
holding this hearing. It is an important issue in my district
in New Hampshire, where we lost almost ten percent of our dairy
farms this past year. We saw 19 dairy farms go out of
commercial business in 2016 alone. We had sort of a perfect
storm between the low milk prices, the international market
instability, and then a severe drought that hit my district
last year, causing a record number of dairies to close their
barn doors.
But part of the problem was that the Margin Protection
Program, as we are discussing today, simply was not helpful. We
held an emergency meeting with our New Hampshire dairy farmers,
and learned that it just hadn't worked for virtually any of
them. They had paid in with premiums, but had not received the
benefits. Our dairy industry generates $141 million in economic
activity, which is a lot for our state, and 3,500 jobs, which
is significant. Just to give you the scale, I only have one or
two employers in my district of that size, and so this is the
equivalent of really a major international company coming to
our district. $10 million in labor income, I am sorry, $19
million.
So my fear is that if we don't make significant policy
changes, we are going to risk losing all of the dairy farms.
And I want to direct my first question for Mr. Mulhern. You
have discussed this during this hearing, I apologize I had to
come late, but I am wondering, what do we say to the farmers,
and how do we fix the program to convince them to try it again,
to come into it again next time around? I am concerned that
they will simply walk away from it. First, how can we help; and
second, how can we convince them that it will work the next
time around?
Mr. Mulhern. It is a great question, and it is one we are
focused on. I would say first that the concerns that you
expressed, both from your constituents, and the situation in
New Hampshire is not unlike the same message I hear from dairy
farmers across the country. The program hasn't worked as
intended. The fixes that we are proposing will do that. But it
is going to take time to get people back into the program. It
is the combination of things.
First, we need to get the feed cost adjustment right,
demonstrate that we understand the current formula is not
working, it is not working because of cuts that were made
arbitrarily in the budget cutting process while the Committee
was deliberating on the previous farm bill. We get that right,
but that is another reason to look at those rates. The other
concern I have heard from producers is the cost of coverage is
not affordable. And so adjusting those premium rates to make it
more affordable, to encourage higher levels of buy-up coverage,
would go a long ways to convincing producers that these changes
are real, and that they will be helpful.
Frankly, all it is going to take is 1 year of the program
working for people to realize it is the safety net that we
wanted and needed. And we hope it doesn't come to that, but
once we get people back in, they will see that these changes
will make the program the safety net that we have all wanted.
Ms. Kuster. Thank you. And my focus is on higher feed
costs. We are literally at the end of the road here, in terms
of the U.S., and the transportation and labor costs associated
with bringing the feed to New Hampshire is very high. How can
the MPP better incorporate these increased costs. Do you have a
formula in mind that would take into account those regional
differences? And how would you help New England farmers?
Mr. Mulhern. Yes, that is one of the changes, the
adjustments in the feed formula that we are recommending will
help address. For example, right now the soybean meal formula,
which is a big part of the index, soybean meal is a large cost,
and a major component of a dairy ration. We use one central
basing point, in Decatur, Illinois, reported by the
Agricultural Marketing Service of the USDA. There are, frankly,
a number of basing points around the country that have
reported, so it would be more accurate to take all those basing
points and average those into the index, because it is a
national index. And by doing that, adjusting on the corn price
as well as on to an average, both of those changes will help
reflect the true cost, the actual cost, that producers are
paying.
I will say, in terms of this regional issue, which your
question gets at, we looked at it very, very closely. And in
the analysis that we have done, the reality is that while the
cost of production, and the margin is different in every part
of the country, keep in mind that the MPP is a national index.
It is the average U.S. milk price, the average feed cost, and
we have looked at regional feed cost, regional milk prices, and
what you find is they move in tandem. There is a spread, but
they move in tandem, and so the correlation between the MPP
index and any regional index is almost perfect. It is .98,
which is almost perfect correlation. This index does reflect
the true cost that farmers are facing, and we don't need to
have a regional program because of the accuracy of the formula
that goes into MPP.
Ms. Kuster. That is very helpful. Thank you very much. I
yield back.
The Chairman. The gentlelady's time has expired. John Faso,
5 minutes.
Mr. Faso. Thank you, Mr. Chairman, and I would associate
myself with the questions of Ms. Kuster just now. Being in the
Northeast as well, my dairy farmers in the Hudson Valley, and
Catskills, and central New York, are feeling this very acutely,
and they believe that some type of regional variation might be
useful for them, and I would like to explore that further with
you after this hearing.
Dr. Dykes, you had mentioned the letters that you had sent,
you and Mr. Mulhern jointly, relating to the Canada issue, and
that is one that also has raised concern for dairy farmers in
New York State.
Dr. Dykes. Yes.
Mr. Faso. And I would appreciate if you could make that
available to members of the Committee, and to me those
correspondence.
Dr. Dykes. We will do that, sir.
[The letters referred to are located on p. 777.]
Mr. Faso. What is the precise regulatory change or device
that the Canadians are using to exclude certain U.S. products
from that nation? Can you explain that in more detail?
Mr. Mulhern. There are two changes that are underway. One
has to do with ultra-filtered milk. For the last several years
quite a bit of ultra-filtered milk, which is basically farm
milk that is put through a filtering process to concentrate it
some, it is a higher protein, higher solids product, shipped
into Canada, and used in cheese manufacturing. Canada has
changed the pricing structure to discourage cheese makers in
Canada from purchasing ultra-filtered milk from the U.S. That
is one problem.
Mr. Faso. How do they----
Mr. Mulhern. That is the loss----
Mr. Faso. How precisely do they do that, when you say they
change the pricing mechanism?
Mr. Mulhern. Canada has a very highly regulated milk
pricing system. If you think U.S. milk prices are highly
regulated, you have seen nothing until you have seen Canada's,
and a supply management system. With that supply management,
farmers are limited in the amount of milk they can produce for
the market. It is pretty much a closed market. Under WTO
obligations there has been some opening. Ultra-filtered milk we
have been able to ship in there as a result of WTO agreements.
The change being made is within the pricing structure. They
will sell milk to cheese makers at a lower price, which will
make the milk they have been buying from the U.S., this ultra-
filtered milk, non-competitive, uneconomic.
A similar change, different, but similar in concept, with
this new special ingredient Class VII, which is a provincial
change, now was put in place, I believe in Ontario first, and
maybe adopted across Canada, will price skim milk powder at the
world price, which really is not consistent with Canada's
overall supply management system.
Mr. Faso. On that point, how does a change effectuated by a
province within Canada comply with WTO and NAFTA obligations,
since we have made these agreements with the Nation of Canada,
not with a Province of Canada. And wouldn't those type of
changes done at the regional level within Canada run afoul of
NAFTA and WTO standards?
Mr. Mulhern. We think it does, and we think it is in
contravention to Canada's NAFTA obligations, and that is the
case that we are discussing with the Administration, and hope
that they will push that issue.
Dr. Dykes. And they are also expanding that from the one
province across all the provinces as well. It is going to
become a nationwide issue, if it isn't already.
Mr. Faso. Yes. It would seem quite troublesome if a state
government in the United States were acting similarly, it would
seem to be against international agreements that we have
signed. I would like to explore those issues further with you.
And for the members, the benefit of the Committee, it is
important that we address it. Thank you, Mr. Chairman. I yield
back.
Mr. Mulhern. Right.
The Chairman. The gentleman yields back. I would also like
to get on the record the fact that Canada mis-grades our wheat
going north. They automatically downgrade the quality of our
wheat just arbitrarily and capriciously, and we have raised
that issue with them often. Mr. Davis, 5 minutes.
Mr. Davis. Thank you. I don't have nothing to yell at the
Canadians about. As a matter of fact, some Canadians just
walked in the door. You missed some great debate on trade. Dr.
Dykes, I am glad you have a lid on that water.
Dr. Dykes. Yes, so I don't spill it this time.
Mr. Davis. It was a great first meeting a few years ago.
Dr. Dykes. Yes, it was, sir.
Mr. Davis. I actually have a question for you, sir. Your
group has asked the FDA to extend the new nutrition facts and
serving size deadline from July of next year until July of
2021, which would save the industry billions by synchronizing
those changes with the USDA's GMO labeling scheme. Why has FDA
not agreed to extend that deadline yet?
Dr. Dykes. We are not exactly clear on why they haven't
done that yet. It is a significant issue for the entire food
and beverage industry, when you think about 700,000 products to
be labeled. If we look at where we are currently, one would be
required July 26, 2018, and then the GMO disclosure would
target to be completed July 29, 2018. We would have 3 days, we
turn around, do it all again. We think we need more time. We
are not opposed to doing it. We just need more time.
We have asked for that to be extended to May 2021, thinking
then by the time the GMO disclosure rule is finalized, and
there is an implementation phase of that, we will be able to
sync the two up so that the industry can only label once. I
have members that have estimated that this will cost them
individually, as one company, $35 million. I have another one
that is estimated it at $17 to $18 million. To think about
doing that twice is just totally cost prohibitive.
Mr. Davis. Well, thank you, and let us know how we can--or
let me know how I can advocate on your behalf with the FDA.
That is just too cost prohibitive for many of our companies,
and many of your producers, that will eventually be a cost to
our consumers.
Dr. Dykes. In fairness to Secretary Price, we just sent the
letter to him, so we will ask for a meeting, and ask for a
deeper understanding of where they are, and hopefully they will
see the compelling argument we are making.
Mr. Davis. Well, I will text him, tell him to speed it up
when we are done here, okay?
Dr. Dykes. Thank you.
Mr. Davis. No, I appreciate your comments, they are very
timely. And I actually appreciate the comments on the school
nutrition program. This is an issue that I have talked about in
this Committee for the 4 years that I have been here. We want
to increase the amounts of healthy foods that are served in our
school cafeterias. We want more fruits, and we want more
vegetables. But I also agree that we have to serve products
that not only taste good, where sometimes we have seen
limitations, and the debate has shown here clearly today that,
when we were growing up, the two percent chocolate milk was
much preferred to a non-fat chocolate milk, and I would call it
chocolate water.
Dr. Dykes. Yes.
Mr. Davis. I may like the taste of it; but, and the
cafeteria workers know, when those go in the trash, that is not
a good use of funds for the school district, or for the
program, and it is not achieving the goals that we need. But it
is cost. Cost of the main driver for so many of my school
districts who are under-funded in Central Illinois right now to
where they are spending so much more on their school nutrition
program, and we can have more new innovative products. But
until the Federal Government allows them the flexibility to be
able to serve what is healthy, and what is going to be consumed
by their students, I feel that we have a long way to go.
One question for you, Mr. Mulhern, is yogurt treated the
same way as milk in the school nutrition program?
Mr. Mulhern. Yogurt is not treated the same way as milk.
Mr. Davis. Why not?
Mr. Mulhern. Well, milk is one of the required components
on the list of foods, offer versus serve. It used to be milk
was required at each meal.
Mr. Davis. Yes.
Mr. Mulhern. Offer versus serve, it is offered with each
meal. We have worked to increase yogurt offerings in school.
Expansion of the school breakfast program has been very good
for increasing yogurt consumption. We have tried to work with
the local school food officials to get more smoothie bars into
schools, not just salad bars, but smoothie machines. In fact,
the check-off program has worked to even provide some machines
to schools. It is an area we are working on. There has been
some improvement in yogurt positioned as a protein component,
but more could be done there.
Mr. Davis. Well, thank you. And I just want to commend both
of you. I know during the last farm bill it seemed that your
two organizations may not have had such an amicable
relationship, and it seems to me that you are all working well
together here as we move into the next one. Mr. Chairman, I
yield back. Thank you.
The Chairman. The gentleman yields back. Mr. Thompson, 5
minutes.
Mr. Thompson. Thank you, Mr. Chairman. Thank you, both of
you gentlemen, too, for your organizations and your leadership.
I greatly appreciate it. I want to thank you both for being
here today and testifying before the Committee. Additionally, I
would like to thank you both for working with me, and your
organizations, on my School Milk Nutrition Act, in an effort to
get nutrition and flavor introduced back into the school.
Sounds like I have a bunch of cosponsors in this Committee. The
way they were all talking, the need to take action on that, and
the only thing I could think of is I could drink to that, as
long as it is a good glass of cold milk.
Mr. Mulhern, as you mentioned in your testimony, dairy
farmers are struggling. We have heard a lot of questioning on
that, in terms of Margin Protection Program, that needs some
reform. And I appreciate all the work that you have done to
develop recommendations to make the MPP a more effective risk
management tool for dairy farmers. And while we don't know yet
what the budget situation is going to be, I am very interested
in focusing our efforts on the areas that will best improve the
program.
One idea I frequently hear about is the need to reform the
feed side of the program. We have heard that today commented
on. With that in mind, can you talk a bit more about the feed
formula that you all developed, and additionally, can you walk
us through the proposed changes to corn and soybean price
points?
Mr. Mulhern. Sure. First of all, Congressman, let me
commend you for your leadership on the school nutrition issue.
Your leadership, with the language to change the provisions in
the child nutrition bill on school milk have been very, very
important, and I was remiss in not indicating that in my
earlier comments. We very much appreciate all your work on
that.
In terms of the changes we are recommending in the feed
formula, in some they are designed to reflect the true cost of
feed that dairy farmers experience on the farm. I have talked
about the ten percent cut that was made to the overall formula
as part of the deficit reduction process in the last farm bill.
That needs to be restored. The other changes really are
designed to make sure that we are getting accurate pricing on
the components, there are really three components to the feed
calculator. It is corn price, soybean meal, and alfalfa.
On the soybean meal price, as I had mentioned in earlier
comments, rather than use one basing point, because there are
transportation differentials around the country, so different
costs, we should be averaging the cost of soybean meal at
different points in the country. That will get a more accurate
reflection of the national cost to dairy farmers for soybean
meal.
On corn, a similar change is to move, the current index
uses the prices received by a corn farmer for sale of corn.
That is not always the price paid by a dairy farmer. We want to
move from prices received and mass index to the AMS prices paid
index, which really is going to be more accurate of what dairy
farmers are actually paying for corn, because the prices
received could be shipment of large amount of corn to a grain
elevator, may not reflect what a dairy farmer is having to pay
for feed.
On the alfalfa side, it is a little bit more complicated,
because there are a lot of ranges in quality of alfalfa hay.
Dairy farmers do feed higher quality alfalfa, which costs more
than some of the lower grades. We are trying to capture that,
if we can, so that this index really does truly accurately
reflect the cost to a dairy farmer of feeding a dairy cow.
In sum, we make those changes, and we will have a much more
accurate index, going forward.
Mr. Thompson. Thank you. And when it comes to dairy policy,
obviously there are so many different approaches to make sure
that we maintain dairy security, which is good for Americans,
and nutritious; but, obviously, making sure we are taking care
of our farm families, who are working so hard. And part of that
is in this Committee. Part of it, like the school nutrition
program, where I am a senior Member on the Education and the
Workforce Committee there. But another one, Dr. Dykes, that
falls under that jurisdiction is with the WIC program, and so I
just wanted to touch base. Your testimony says that USDA
regulations limit milk purchasing options under the WIC
program, or Women, Infant, and Children, which is very
important program.
Dr. Dykes. Yes.
Mr. Thompson. When we were first married, my wife and I, we
had our first child, we were WIC eligible. We used those
opportunities to be able to purchase nutritional food for my
wife, and for our newborn son, 30 years ago. What are the
limitations with WIC?
Dr. Dykes. Thank you, sir. The latest changes were
eliminating the two percent milk option out of the WIC program.
And what we are hearing anecdotally is that some of the WIC
directors are saying in public meetings that WIC participants
are now using SNAP dollars to purchase their two percent milks,
because they are accustomed to drinking two percent milk. I
also think there was, in Texas, the change from two percent to
only one percent resulted in a 17 percent drop in milk
consumption. Mr. Conaway may have heard more on that during
some of his extensive hearings on SNAP.
But it comes back, Mr. Thompson, to the overall
conversation we have had here today. Whether it be school lunch
program, whether it be SNAP, whether it be WIC, we need to
think about the nutritional value of milk, and endeavoring to
make sure that we move that number from only one out of ten
Americans consuming the recommended three servings a day, and
we need to work to increase that.
Mr. Thompson. Yes, we certainly need a policy that is
driven by science, specifically food and ag science, and not by
what seems like political correctness.
Dr. Dykes. Yes, sir.
Mr. Thompson. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired. Mr.
Arrington, 5 minutes.
Mr. Arrington. Thank you, Mr. Chairman, and thank you, Mr.
Mulhern, and Dr. Dykes, for being here. We love our dairy
farmers in west Texas, and they are a big part of our economy.
In fact, over the last, I don't know if it is a decade or 2
decades, there has been a tremendous migration of dairy
operations from around the country to west Texas. I don't know,
something about west Texas is the greatest place in the world
to live. Something like that. I am sure the Chairman could give
me a big Amen on that.
We want to make sure, and it is not just our economy. I
grew up in Plainview, and the Bowma family, and other families
that are producers, they contribute a lot to our communities,
and invest a lot in our communities. These God-fearing, freedom
loving Americans, we need to make sure that they have the same
risk management tools as every other farm, and that there is a
responsible and effective safety net. I join my colleagues, and
our fearless leader and Chairman, in making sure that that is
the outcome.
A couple of more controversial issues when I am talking
about agriculture, and dairy farmers, is immigration, and then
the Renewable Fuel Standard, because I also represent a lot of
corn producers. Let us start with immigration. I don't think
there is tension here. I think that our dairy producers support
legal immigration, and they want to stop illegal immigration,
like most Americans.
Mr. Mulhern. Right.
Mr. Arrington. But we know that there is a shortage in
labor force, and so they need this mechanism of work visas.
Help me be very specific on what we can do to fix the problems
of legal immigration to supply labor where Americans won't do
the jobs.
Mr. Mulhern. Mr. Arrington, I will take that question, and
I agree completely with your assessment of the situation with
respect to our members, and the need for a stable, reliable
workforce. The key, in our view, is while policy proceeds along
with a focus on border security and enforcement, that we have
to have a system providing legal status for farmworkers. We
would support providing a program where farmworkers have a
permit that is for an extended period of time, 3 years, 5
years. And we are going to need a system for the future as
well, because it isn't enough to fix the problem for today if
you don't want to be back in the same problem in 10 or 15
years.
So the types of jobs in agriculture that immigrant labor is
filling are very good jobs. They are challenging jobs, and we
have had a hard time getting employees for those jobs on dairy
farms, make no bones about that. We do need the system, and we
need to have a legal status for those workers. It can be, along
with an e-Verify system, as long as we have some legal status
for those workers, that can all be worked out.
We are working with the Judiciary Committee, and that would
be with Mr. Goodlatte as Chairman of that, and he has been a
great leader on the issue. We are hoping that, through this
process, that we can have not only secure borders, and
enforcement of existing immigration laws, but legal status for
workers who are here.
Mr. Arrington. Yes, see, I don't see the two as mutually
exclusive. I am for border security, I am for preventing
illegal immigration, I am for rule of law, and staunchly so,
but there has to be a way to fix a legal process to support our
dairy farmers, and our producers across the board.
Mr. Mulhern. I agree.
Mr. Arrington. What are some reasonable ways that producers
could help prevent illegal immigration? I am just throwing that
out there. I don't want them to be de facto immigration
enforcement officers, but what are some ways they can help in
that process?
Mr. Mulhern. It comes back to having options. You have to
have options to have a legal workforce, and that really is the
problem. I will tell you that farmers today, some know that
they have workers with either undocumented or questionable
papers, and there is concern about what may happen with that
workforce. Those cows need to be milked at least twice a day, 7
days a week, so this is a real and pressing issue for our
members. We hope it can be resolved as quickly as possible.
Mr. Arrington. I won't get to RFS, so I am going to yield
back to the Chairman. Thank you.
The Chairman. The gentleman's time has expired. Mr. Comer,
5 minutes.
Mr. Comer. Thank you, Mr. Chairman, and, Dr. Dykes, it is
an honor to have you here today. I have to say this about Dr.
Dykes, he was born and raised in my Congressional district from
a very good family.
Dr. Dykes. Thank you, sir.
Mr. Comer. In fact, I took a picture of you sitting here
and texted it to your brother, and he told me to drill you hard
when it got to my turn.
Dr. Dykes. Don't listen to those guys.
Mr. Comer. But both those guys are good, hard workers there
in Adair County, and I appreciate them. And I appreciate all
that you do, and will continue to do, to help rural dairy
farmers in Kentucky. I know you are passionate about that, and
I appreciate your work with that.
Dr. Dykes. I am, sir.
Mr. Comer. What is the current status of the dairy export
market? And the reason I ask, we have a big dairy processor
around home that drives milk, and sells it to Kraft, all these
food processors all across the world, but they constantly have
trouble getting in the China market. And I was just curious,
what is the status of the dairy export market right now?
Dr. Dykes. Exports for dairy have been a relatively recent
thing the last 10, 12 years or so. We have gone from exporting
about five percent of our milk production to about 15 percent
of our milk production in a few years. That is roughly about 1
day a week of milking is exported. Mexico is the number one
market, we are the fourth. But if we look at the increase in
milk production in the last few years, about \1/2\ of our
increased milk production has gone to exports. I give you those
kind of numbers for context. Exports are a big part of where we
are with U.S. dairy production today, and it will be a bigger
part of where we go with U.S. dairy production in the future.
Mr. Comer. Yes.
Dr. Dykes. We think our dairy farmers have everything they
need to compete. We have the natural resources, we have the
standards, we have the distribution. We can do those kinds of
things. And we have to work to make sure we have a level
playing field. And that is why these trade agreements become so
important for dairy.
Mr. Comer. Yes.
Dr. Dykes. And that is why fixing Canada, as a part of the
NAFTA re-negotiation, is important. That is why preserving what
we have currently with Mexico, where \1/4\ of production, $1.2
billion of dairy goes to Mexico every year. That is why
preserving Mexico, fixing Canada, gaining market access in Asia
Pacific, around the world, is extremely important.
Mr. Comer. All right. Kentucky is no different than any
other state. Listening to my colleagues ask questions about the
status of the dairy industry, we have lost a lot of dairies.
Dr. Dykes. Yes, we did.
Mr. Comer. And when I talk to dairy farmers, they are
always unhappy with the formula. And I am always thinking in
the back of my mind, would dairy not be better off without a
formula, without price support, without the government
involvement, like beef, and pork, and poultry? I know that is a
tough question to----
Mr. Mulhern. You may get different answers from the two of
us.
Mr. Comer. Right.
Dr. Dykes. That is a tough question, and Jim will want to
talk about that. It is a very tough one. How do we think about
that, and how do we think about the future of dairy.
Mr. Comer. Yes.
Dr. Dykes. When I was a kid growing up in Adair County,
every single neighbor milked cows.
Mr. Comer. That is right.
Dr. Dykes. And the last couple times I went home, the last
neighbor sold their dairy cows.
Mr. Comer. There is one listed in the Farmer's Pride seems
like every month, another dairy going out of business in Adair
County, which is the second biggest dairy county in the state.
Dr. Dykes. Yes. And it just, it hurts when you see that
happen.
Mr. Comer. Yes.
Dr. Dykes. Having been a practicing veterinarian, I watched
them sell herd as well, and it hurts. It also hurts, though,
when you see them just work so hard, I used to tell my clients,
when you are selling cows to pay the feed bill, you and I could
calculate how much longer you are going to be milking here. You
have to think about what your other options are out there for
you. It is a very tough question. That is why I am pleased to
work collaborative with Jim. I have known Jim for 20 years,
worked with the National Milk Producers Federation, to think
about, where are we going to be in the out-years with this
thing called dairy, and what are the things we could do today
that will maybe make it better for some of the younger people
that are coming in, and trying to make a living, and make a
business out of milking cows and processing milk.
Mr. Mulhern. If I could, Mr. Comer, I would point out that
we have made tremendous progress in evolving dairy programs in
this country over the last 10, 15 years, and it has been an
evolution. We don't have the kind of intervention in the
marketplace that we used to have. What dairy farmers today need
is a safety net to deal with those situations we can't control.
We couldn't control Russia invading Crimea, and then the
U.S. and the EU responding to that, and Russia stopping
importing dairy products from the EU, so the EU has to move
those products into the world markets. We couldn't control
China over-buying in 2014, and then pulling out of the world
market in 2015, and having prices collapse. We now are exposed
to these world markets, and they are difficult. It is a
challenging time.
The MPP is a safety net program. We don't want intervention
in the marketplace, but we do need support because, unlike beef
and pork, we are harvesting every single day.
Mr. Comer. Yes.
Mr. Mulhern. Dairy farmers are price takers. We get what
the market provides. And so that kind of situation we face does
mandate the need for some sort of safety net to help deal with
those highs and lows.
Dr. Dykes. That is one of the other reasons another part of
that answer is: what is one of the incremental ways that we do
that? That is one of the reasons we are asking to expand
forward contracting for Class II, III, and IV, make that
permanent, and expand it to include Class I milk, and we will
work with Jim and National Milk on that. But it is to help take
some of the volatility out of that, and to put some
predictability around a price at a future point in time. I
think back to my brothers in Adair County. Our beef cattle are
sold before they ever leave the farm, and they have been sold
for several months before.
Mr. Comer. Yes.
Dr. Dykes. Sometimes we are on the good side of that, and
sometimes we are not, but at least we know where we are going
to be down the road, and we can lock in a profit on those
things.
Mr. Comer. Thank you.
The Chairman. The gentleman's time has expired. I thank our
witnesses for being here today. It has been a very productive
hearing. I too want to add my thanks for the emerging
partnership between some competing folks that in the past have
maybe not seen eye to eye. I hope the rest of production
agriculture can see your example as we walk this hard path.
This Committee is deeply committed to trying to address and fix
the problem that has emerged out of the 2014 Farm Bill with the
Margin Protection Program. How we go about that, we want you at
the table. I know you want to be at the table. You will be.
As I mentioned in my comments earlier, I don't want
expectations to outrun what we can actually get done, but
Collin and I, and the rest of this Committee, as you have heard
from our comments today, are deeply committed to make that
happen, and I appreciate you working together to work on risk
management tools. These aren't revenue sources, these are risk
management tools, whether crop insurance or this one, allow the
farmers to know where their risks are, and to hedge, in effect,
against that. We want this tool to work. It has not worked. I
am deeply troubled by CBO's scoring of what appears to be a
relatively straightforward change to the program that was
originally intended to be there, and we will continue to work
on all this.
Under the Rules of the Committee, today's hearing will
remain open for 10 calendar days to receive additional
material, supplementary written responses from the witnesses to
any question posed by a Member. This hearing of the Committee
on Agriculture is adjourned. Thank you.
[Whereupon, at 12:08 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Chart by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Mr. Peterson. Well, I have, and I have put together a chart
here that has a month by month breakdown of what the margin
was, and I have done it based on what the current law is, and
what it was originally. And there is only one bi-monthly period
since the bill has gone into effect that we have had a payment,
and is part of the reason we don't have participation.

MPP Payments for Margin Coverage Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
MPP-Dairy
Year Month Margin $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 MILC Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
2000 Jan. $7.04 $0.96 $0.46 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Feb. $6.66 $1.34 $0.84 $0.34 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Mar. $6.54 $1.46 $0.96 $0.46 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Apr. $6.56 $1.44 $0.94 $0.44 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 May $6.41 $1.59 $1.09 $0.59 $0.09 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Jun. $7.15 $0.85 $0.35 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Jul. $7.98 $0.02 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Aug. $7.96 $0.04 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Sep. $8.09 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Oct. $7.32 $0.68 $0.18 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Nov. $7.14 $0.86 $0.36 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2000 Dec. $7.46 $0.54 $0.04 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Jan. $7.54 $0.46 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Feb. $7.82 $0.18 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Mar. $8.66 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Apr. $9.27 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 May $10.16 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Jun. $10.90 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Jul. $10.61 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Aug. $10.82 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Sep. $11.45 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Oct. $10.21 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Nov. $8.91 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2001 Dec. $8.04 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.77
2002 Jan. $8.22 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.78
2002 Feb. $7.82 $0.18 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.78
2002 Mar. $7.25 $0.75 $0.25 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.93
2002 Apr. $7.12 $0.88 $0.38 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $1.00
2002 May $6.56 $1.44 $0.94 $0.44 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $1.09
2002 Jun. $5.97 $2.03 $1.53 $1.03 $0.53 $0.03 $0.00 $0.00 $0.00 $0.00 $1.20
2002 Jul. $5.18 $2.82 $2.32 $1.82 $1.32 $0.82 $0.32 $0.00 $0.00 $0.00 $1.38
2002 Aug. $5.04 $2.96 $2.46 $1.96 $1.46 $0.96 $0.46 $0.00 $0.00 $0.00 $1.44
2002 Sep. $5.24 $2.76 $2.26 $1.76 $1.26 $0.76 $0.26 $0.00 $0.00 $0.00 $1.45
2002 Oct. $6.05 $1.95 $1.45 $0.95 $0.45 $0.00 $0.00 $0.00 $0.00 $0.00 $1.59
2002 Nov. $6.01 $1.99 $1.49 $0.99 $0.49 $0.00 $0.00 $0.00 $0.00 $0.00 $1.39
2002 Dec. $6.09 $1.91 $1.41 $0.91 $0.41 $0.00 $0.00 $0.00 $0.00 $0.00 $1.43
2003 Jan. $5.99 $2.01 $1.51 $1.01 $0.51 $0.01 $0.00 $0.00 $0.00 $0.00 $1.41
2003 Feb. $5.40 $2.60 $2.10 $1.60 $1.10 $0.60 $0.10 $0.00 $0.00 $0.00 $1.56
2003 Mar. $5.11 $2.89 $2.39 $1.89 $1.39 $0.89 $0.39 $0.00 $0.00 $0.00 $1.75
2003 Apr. $5.00 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 $0.00 $0.00 $1.82
2003 May $4.77 $3.23 $2.73 $2.23 $1.73 $1.23 $0.73 $0.23 $0.00 $0.00 $1.79
2003 Jun. $4.86 $3.14 $2.64 $2.14 $1.64 $1.14 $0.64 $0.14 $0.00 $0.00 $1.78
2003 Jul. $6.36 $1.64 $1.14 $0.64 $0.14 $0.00 $0.00 $0.00 $0.00 $0.00 $1.76
2003 Aug. $7.56 $0.44 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $1.22
2003 Sep. $8.59 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2003 Oct. $9.04 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2003 Nov. $8.17 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2003 Dec. $7.57 $0.43 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2004 Jan. $6.65 $1.35 $0.85 $0.35 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.83
2004 Feb. $6.76 $1.24 $0.74 $0.24 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.95
2004 Mar. $8.08 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.79
2004 Apr. $10.36 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.02
2004 May $11.50 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2004 Jun. $10.80 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2004 Jul. $9.37 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2004 Aug. $8.87 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2004 Sep. $9.97 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2004 Oct. $10.53 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2004 Nov. $11.15 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2004 Dec. $11.18 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Jan. $10.83 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Feb. $10.09 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Mar. $9.89 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Apr. $9.47 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 May $8.79 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Jun. $8.36 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.03
2005 Jul. $8.53 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Aug. $8.92 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Sep. $9.96 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Oct. $10.29 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Nov. $9.83 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2005 Dec. $9.22 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.04
2006 Jan. $8.84 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.11
2006 Feb. $7.87 $0.13 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.11
2006 Mar. $6.97 $1.03 $0.53 $0.03 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.41
2006 Apr. $6.07 $1.93 $1.43 $0.93 $0.43 $0.00 $0.00 $0.00 $0.00 $0.00 $0.84
2006 May $5.86 $2.14 $1.64 $1.14 $0.64 $0.14 $0.00 $0.00 $0.00 $0.00 $0.92
2006 Jun. $5.96 $2.04 $1.54 $1.04 $0.54 $0.04 $0.00 $0.00 $0.00 $0.00 $1.00
2006 Jul. $5.77 $2.23 $1.73 $1.23 $0.73 $0.23 $0.00 $0.00 $0.00 $0.00 $0.80
2006 Aug. $6.36 $1.64 $1.14 $0.64 $0.14 $0.00 $0.00 $0.00 $0.00 $0.00 $0.92
2006 Sep. $7.05 $0.95 $0.45 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.97
2006 Oct. $6.67 $1.33 $0.83 $0.33 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.43
2006 Nov. $6.27 $1.73 $1.23 $0.73 $0.23 $0.00 $0.00 $0.00 $0.00 $0.00 $0.44
2006 Dec. $6.56 $1.44 $0.94 $0.44 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.43
2007 Jan. $6.59 $1.41 $0.91 $0.41 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.03
2007 Feb. $6.50 $1.50 $1.00 $0.50 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.10
2007 Mar. $7.28 $0.72 $0.22 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 Apr. $8.70 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 May $9.73 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 Jun. $11.67 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 Jul. $13.90 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 Aug. $13.85 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 Sep. $13.70 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 Oct. $13.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 Nov. $12.85 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2007 Dec. $11.82 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Jan. $9.97 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Feb. $8.02 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Mar. $6.69 $1.31 $0.81 $0.31 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Apr. $6.17 $1.83 $1.33 $0.83 $0.33 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 May $6.04 $1.96 $1.46 $0.96 $0.46 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Jun. $5.40 $2.60 $2.10 $1.60 $1.10 $0.60 $0.10 $0.00 $0.00 $0.00 $0.00
2008 Jul. $5.89 $2.11 $1.61 $1.11 $0.61 $0.11 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Aug. $6.42 $1.58 $1.08 $0.58 $0.08 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Sep. $6.30 $1.70 $1.20 $0.70 $0.20 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Oct. $8.34 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Nov. $8.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2008 Dec. $6.71 $1.29 $0.79 $0.29 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2009 Jan. $3.91 $4.09 $3.59 $3.09 $2.59 $2.09 $1.59 $1.09 $0.59 $0.09 $0.00
2009 Feb. $2.55 $5.45 $4.95 $4.45 $3.95 $3.45 $2.95 $2.45 $1.95 $1.45 $1.49
2009 Mar. $2.60 $5.40 $4.90 $4.40 $3.90 $3.40 $2.90 $2.40 $1.90 $1.40 $2.01
2009 Apr. $2.53 $5.47 $4.97 $4.47 $3.97 $3.47 $2.97 $2.47 $1.97 $1.47 $1.58
2009 May $1.42 $6.58 $6.08 $5.58 $5.08 $4.58 $4.08 $3.58 $3.08 $2.58 $1.42
2009 Jun. $1.00 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 $1.78
2009 Jul. $2.37 $5.63 $5.13 $4.63 $4.13 $3.63 $3.13 $2.63 $2.13 $1.63 $1.43
2009 Aug. $3.03 $4.97 $4.47 $3.97 $3.47 $2.97 $2.47 $1.97 $1.47 $0.97 $1.34
2009 Sep. $4.31 $3.69 $3.19 $2.69 $2.19 $1.69 $1.19 $0.69 $0.19 $0.00 $0.84
2009 Oct. $5.47 $2.53 $2.03 $1.53 $1.03 $0.53 $0.03 $0.00 $0.00 $0.00 $0.60
2009 Nov. $6.38 $1.62 $1.12 $0.62 $0.12 $0.00 $0.00 $0.00 $0.00 $0.00 $0.37
2009 Dec. $7.52 $0.48 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Jan. $7.28 $0.72 $0.22 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Feb. $7.32 $0.68 $0.18 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Mar. $6.41 $1.59 $1.09 $0.59 $0.09 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Apr. $6.25 $1.75 $1.25 $0.75 $0.25 $0.00 $0.00 $0.00 $0.00 $0.00 $0.21
2010 May $6.46 $1.54 $1.04 $0.54 $0.04 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Jun. $6.96 $1.04 $0.54 $0.04 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Jul. $7.05 $0.95 $0.45 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Aug. $7.43 $0.57 $0.07 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Sep. $7.60 $0.40 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Oct. $7.57 $0.43 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Nov. $6.69 $1.31 $0.81 $0.31 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2010 Dec. $4.92 $3.08 $2.58 $2.08 $1.58 $1.08 $0.58 $0.08 $0.00 $0.00 $0.00
2011 Jan. $4.31 $3.69 $3.19 $2.69 $2.19 $1.69 $1.19 $0.69 $0.19 $0.00 $0.00
2011 Feb. $5.98 $2.02 $1.52 $1.02 $0.52 $0.02 $0.00 $0.00 $0.00 $0.00 $0.01
2011 Mar. $6.81 $1.19 $0.69 $0.19 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2011 Apr. $5.48 $2.52 $2.02 $1.52 $1.02 $0.52 $0.02 $0.00 $0.00 $0.00 $0.00
2011 May $5.06 $2.94 $2.44 $1.94 $1.44 $0.94 $0.44 $0.00 $0.00 $0.00 $0.00
2011 Jun. $6.74 $1.26 $0.76 $0.26 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2011 Jul. $7.22 $0.78 $0.28 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2011 Aug. $7.57 $0.43 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2011 Sep. $7.21 $0.79 $0.29 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2011 Oct. $6.66 $1.34 $0.84 $0.34 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2011 Nov. $7.61 $0.39 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2011 Dec. $6.86 $1.14 $0.64 $0.14 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2012 Jan. $5.59 $2.41 $1.91 $1.41 $0.91 $0.41 $0.00 $0.00 $0.00 $0.00 $0.00
2012 Feb. $4.02 $3.98 $3.48 $2.98 $2.48 $1.98 $1.48 $0.98 $0.48 $0.00 $0.35
2012 Mar. $3.29 $4.71 $4.21 $3.71 $3.21 $2.71 $2.21 $1.71 $1.21 $0.71 $0.82
2012 Apr. $2.58 $5.42 $4.92 $4.42 $3.92 $3.42 $2.92 $2.42 $1.92 $1.42 $1.25
2012 May $1.71 $6.29 $5.79 $5.29 $4.79 $4.29 $3.79 $3.29 $2.79 $2.29 $1.22
2012 Jun. $0.89 $7.11 $6.61 $6.11 $5.61 $5.11 $4.61 $4.11 $3.61 $3.11 $1.41
2012 Jul. ^$0.17 $8.17 $7.67 $7.17 $6.67 $6.17 $5.67 $5.17 $4.67 $4.17 $1.69
2012 Aug. $0.82 $7.18 $6.68 $6.18 $5.68 $5.18 $4.68 $4.18 $3.68 $3.18 $1.48
2012 Sep. $2.99 $5.01 $4.51 $4.01 $3.51 $3.01 $2.51 $2.01 $1.51 $1.01 $0.60
2012 Oct. $5.38 $2.62 $2.12 $1.62 $1.12 $0.62 $0.12 $0.00 $0.00 $0.00 $0.03
2012 Nov. $6.18 $1.82 $1.32 $0.82 $0.32 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2012 Dec. $4.98 $3.02 $2.52 $2.02 $1.52 $1.02 $0.52 $0.02 $0.00 $0.00 $0.00
2013 Jan. $4.38 $3.62 $3.12 $2.62 $2.12 $1.62 $1.12 $0.62 $0.12 $0.00 $0.12
2013 Feb. $3.79 $4.21 $3.71 $3.21 $2.71 $2.21 $1.71 $1.21 $0.71 $0.21 $0.52
2013 Mar. $3.19 $4.81 $4.31 $3.81 $3.31 $2.81 $2.31 $1.81 $1.31 $0.81 $0.75
2013 Apr. $4.69 $3.31 $2.81 $2.31 $1.81 $1.31 $0.81 $0.31 $0.00 $0.00 $0.68
2013 May $4.12 $3.88 $3.38 $2.88 $2.38 $1.88 $1.38 $0.88 $0.38 $0.00 $0.72
2013 Jun. $3.60 $4.40 $3.90 $3.40 $2.90 $2.40 $1.90 $1.40 $0.90 $0.40 $0.20
2013 Jul. $3.38 $4.62 $4.12 $3.62 $3.12 $2.62 $2.12 $1.62 $1.12 $0.62 $0.03
2013 Aug. $5.36 $2.64 $2.14 $1.64 $1.14 $0.64 $0.14 $0.00 $0.00 $0.00 $0.00
2013 Sep. $7.11 $0.89 $0.39 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2013 Oct. $9.05 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2013 Nov. $9.85 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2013 Dec. $9.97 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Jan. $11.60 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Feb. $12.44 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Mar. $12.52 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Apr. $11.89 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 May $10.63 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Jun. $10.25 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Jul. $11.53 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Aug. $12.26 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Sep. $14.28 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Oct. $15.01 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Nov. $12.15 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2014 Dec. $9.31 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Jan. $7.18 $0.82 $0.32 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Feb. $6.48 $1.52 $1.02 $0.52 $0.02 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Mar. $6.39 $1.61 $1.11 $0.61 $0.11 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Apr. $6.35 $1.65 $1.15 $0.65 $0.15 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 May $6.68 $1.32 $0.82 $0.32 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Jun. $6.91 $1.09 $0.59 $0.09 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Jul. $6.13 $1.87 $1.37 $0.87 $0.37 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Aug. $6.88 $1.12 $0.62 $0.12 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Sep. $7.85 $0.15 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Oct. $8.17 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Nov. $8.84 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2015 Dec. $8.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2016 Jan. $7.09 $0.91 $0.41 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2016 Feb. $6.76 $1.24 $0.74 $0.24 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2016 Mar. $6.34 $1.66 $1.16 $0.66 $0.16 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2016 Apr. $5.66 $2.34 $1.84 $1.34 $0.84 $0.34 $0.00 $0.00 $0.00 $0.00 $0.09
2016 May $4.48 $3.52 $3.02 $2.52 $2.02 $1.52 $1.02 $0.52 $0.02 $0.00 $0.14
2016 Jun. $4.36 $3.64 $3.14 $2.64 $2.14 $1.64 $1.14 $0.64 $0.14 $0.00 $0.43
2016 Jul. $6.72 $1.28 $0.78 $0.28 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.07
2016 Aug. $8.26 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2016 Sep. $8.54 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2016 Oct. $7.79 $0.21 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2016 Nov. $8.82 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2016 Dec. $10.01 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
2017 Jan. $9.90 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

______

Submitted Letter by Hon. James P. McGovern, a Representative in
Congress from Massachusetts; on Behalf of Ben Burkett, Board President;
Lisa Griffith, Acting Executive Director, National Family Farm
Coalition
March 22, 2017

Hon. K. Michael Conaway, Hon. Collin C. Peterson,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.

Dear Chairman Conaway and Ranking Member Peterson:

Thank you for convening a hearing into the vital issues facing
American dairy farmers today. As Chairman Conaway said in his opening
statement to the Agriculture Committee on February 1, 2017: ``Over the
past 3 years, we've seen a 46 percent decrease in net farm income, the
largest 3 year percentage drop since the Great Depression.''
Certainly one of the sectors to have experienced that drop in
income is the dairy sector. Last June, the price paid to dairy farmers
averaged about $15 per 100 pounds (CWT)--a drop in price of more than
40 percent from 2014--but the estimated cost to produce that milk was
$22 per CWT. Is it surprising that the U.S. has lost more than 90
percent of its dairy farms since 1970, from 640,000 to fewer than
50,000 today?
Unfortunately, it appears that legislation passed by various
sessions of Congress has contributed to this situation. In 1981,
Congress froze the dairy support price at $13.10 per CWT, and continued
to lower the milk support price to its last level of $9.90 per CWT. In
1991, Congress consolidated the Federal Milk Marketing Orders and
eliminated some of the important provisions found in various Orders
that provided a necessary safety net to the often perilous volatility
in farmgate milk prices. The 2014 Farm Bill eliminated the MILC (milk
price support) program and established the Milk Margin Insurance
Program, one that has cost taxpayers as well as dairy farmers money
instead of ensuring a fair milk price.
NFFC dairy farmers have long promoted (1) a new pricing formula and
(2) a milk supply management program funded by dairy farmers. The
Federal Milk Marketing Improvement Act, introduced several times in the
Senate by Senators Arlen Specter and Bob Casey since 2007, included
both provisions.
As Congress prepares to develop the 2018 Farm Bill, the National
Family Farm Coalition urges the House Agriculture Committee to correct
some of the inequities facing dairy farmers today by including the
Federal Milk Marketing Improvement Act in the upcoming farm bill. As
Senator Casey outlined in his 18 point summary (below), the inventory
supply management program would be farmer-funded, costing USDA no
additional monies, and prevent foreign milk products from destroying
dairy farmer prices. A dairy farmer's reward for funding the program
would be a fair and stable milk price, the first in many decades. Thank
you for your consideration.
Sincerely,

Ben Burkett, Lisa Griffith,
Board President; Acting Executive Director.

attachment
The Following Is a Summary of: ``The Federal Milk Marketing Improvement
Act Of 2011''--The Casey Bill: S. 1640
(1) All milk produced in the United States will be priced on the
national average cost of producing milk on the dairy farms.
(2) All milk used for fluid purposes will be classified as Class I.
(3) All milk used for manufacturing purposes will be classified as
Class II.
(4) The Class II price will be the national average cost of
production. This price will be uniform in all Federal and state Orders
as well as unregulated areas. The Class I price will be determined by
using the Class II price plus the existing Class I differentials that
are currently in place in each Federal Order. The State of California
and other unregulated areas will be assigned a Class I differential by
the U.S. Secretary of Agriculture.
(5) All Federal and State Milk Marketing Orders will remain intact.
Each Milk Marketing Order will be responsible for determining the
component value of milk.
(6) This Proposal prohibits any cost of operating milk
manufacturing plants (commonly called ``Make Allowance'') to be levied
on dairy farmers.
(7) The U.S. Secretary of Agriculture will adjust the value of milk
four times a year.
(8) This Proposal calls for an inventory supply management program.
The program is aimed at preventing a build-up of domestic milk products
and prevents foreign milk products from destroying dairy farmer prices.
(9) The inventory management program cannot be implemented unless
the exports of dairy products exceed the imports of dairy products.
(10) All dairy farmers will fund the inventory management program.
If and only if the program is necessary, then all dairy farmers will
receive a lower price on up to 5% of their production. This price will
be \1/2\ of the value of manufactured milk. However, the dairy farmers
will receive the correct price on 95% of their milk. Please remember if
the inventory management program is not implemented, then the dairy
farmers will receive the full price. Also, the U.S. Secretary of
Agriculture may decide that only a reduction of one or two percent of
total production may be sufficient.
(11) If this reduction is insufficient to reduce excess production,
the Secretary shall reduce the price for producers who have increased
production over the average production of the three (3) previous years.
This reduction only applies to the volume of increased production.
(12) A new producer may produce milk up to 3 million pounds in the
Milk Marketing Order he is regulated under before he is subject to the
provisions of the inventory management program described in point (11)
This relates only to his first year.
(13) The intent of this Proposal is not to tell dairy farmers how
much milk they can produce. However, over-production will be addressed
in the inventory management program.
(14) An inventory management program is necessary to prevent a
small amount of milk from forcing $20.00 per hundredweight milk down to
$12.00 per cwt.
(15) The beauty of this Proposal is that this program will be
farmer-funded and will not cost the USDA any direct cost. The dairy
farmer's reward for funding the program (if necessary) is for the first
time the dairy farmers will receive fair/stable prices for his/her
efforts.
(16) Rejection of proposed FMMO amendments will not result in the
elimination of the FMMO.
(17) This Proposal allows milk hauling charges to be levied on
dairy farmers. The cost of production figures by the USDA pick up the
hauling charges. Again, the dairy farmers' hauling costs are in the
cost of production figures.
(18) This Proposal mandates that the Secretary of Agriculture must
notify both the Senate and the House Agriculture Committees before he
can implement the supply management provision and/or before he can make
any adjustment to the milk price paid to dairy farmers.
______

Supplementary Material Submitted by Michael D. Dykes, D.V.M., President
and Chief Executive Officer, International Dairy Foods Association
Insert
Mr. Faso. . . .
Dr. Dykes, you had mentioned the letters that you had sent,
you and Mr. Mulhern jointly, relating to the Canada issue, and
that is one that also has raised concern for dairy farmers in
New York State.
Dr. Dykes. Yes.
Mr. Faso. And I would appreciate if you could make that
available to members of the Committee, and to me those
correspondence.
Dr. Dykes. We will do that, sir.

September 12, 2016

Hon. Steven Ciobo, Mrs. Cecilia Malmstrom,
Minister for Trade, Tourism and EU Commissioner for Trade,
Investment, European Commission,
Parliament House, Belgium;
Canberra ACT;
Hon. Ildefonso Guajardo, Hon. Todd McClay,
Mexico Secretary of Economy, Minister of Trade,
Col. Juarez, Del. Cuauhtemoc, Parliament Buildings,
Ciudad de, Wellington.
Mexico. C.P.;
Hon. Michael Froman,
United States Trade Representative,
Washington, D.C.;

Dear Minister Ciobo, Commissioner Malmstrom, Secretary Guajardo,
Minister McClay, and Ambassador Froman:
Canada: Access for Dairy Products
The dairy industries of Australia, the EU, Mexico, New Zealand and
the USA wish to express our deep concern with the Agreement in
Principle (``Agreement'') recently concluded between Canada's dairy
producers and processors.\1\ By adopting this Agreement, Canada is
contravening both its WTO and NAFTA trade obligations and undermining
the intent of the pending TPP and CETA trade agreements. The Agreement
both favors the substitution of Canadian domestic origin dairy
ingredients for dairy ingredients imported from our countries, and
subsidizes the export of Canadian dairy products to unfairly compete
with our products in third country markets. We ask the authorities in
Australia, the EU, Mexico, New Zealand and the USA to initiate a WTO
dispute settlement proceeding to challenge this Agreement, once its
details are announced, given its intended erosion of trading conditions
in place at the time Canada negotiated prior trade commitments.
---------------------------------------------------------------------------
\1\Dairy Farmers of Canada, Dairy Processors of Canada and
provincial processor trade associations , the Canadian Milk Supply
Management Committee including the Canadian Dairy Commission, and
provincial Agriculture Ministries.
---------------------------------------------------------------------------
Background
Canada operates a supply management system, regulated by Canada's
Federal and Provincial governments, that restricts dairy imports via
quotas and a set of prohibitive out-of-quota tariffs. In addition, in
spite of trade agreement obligations, the supply management system has
embarked on import replacement programs since the 1990s, with two
related goals. First, to reduce the yearly structural surpluses of
protein solids which could no longer be exported at subsidized prices
as a result of Canada's obligations under the Uruguay Round Agreement
on Agriculture (URAA) and subsequent Appellate Body rulings. And
second, to limit imports and subsidize exports of further processed
foods at competitive prices by employing the Special Class program to
reduce the price of Canadian domestic dairy ingredients.
Numerous programs have imposed trade limitations over the past few
years. Some examples of that deeply problematic policy approach by
Canada include the following:

Canada's compositional standards for cheese, implemented in
2008, which have intentionally limited imports of ingredients
including casein, powdered Milk Protein Concentrate (MPC), Milk
Protein Isolate (MPI) and Whey Protein Concentrate (WPC) as
inputs into cheese making.

Targeting imported products, such as cheese used on
foodservice pizza and chocolate milk, by allowing access to
lower-priced Canadian milk for use in processing into such
products.

Ostensibly temporary special classes of milk pricing, such
as class [VI] in Ontario which offers Canadian processors non-
fat milk solids, at subsidized prices well below the domestic
cost of production, for ingredient applications like skim milk
powder, MPC and ultra-filtered milk. Broadly speaking the
Agreement adopts this concept and nationalizes it.

In addition to these examples, several other programs and policy
tools have also been instituted in Canada in recent years specifically
in order to undermine market access secured in previous trade
agreements.
The Agreement in Principle (``Agreement'')
The Agreement reached by Canada's dairy producers and processors on
July 7, 2016 will, among other things, establish a new ingredient milk
class to be priced at the lowest of the US, EU and Oceania price for
solids-not-fat (SNF) for 7 years. This below cost pricing will apply to
the manufacture of skim milk powder, liquid skim milk, liquid MPC (any
liquid form of milk protein concentrate or milk protein isolate), whole
milk powder, and similar products approved jointly by the producers and
processors, dry MPC, casein, sodium caseinate, calcium caseinate,
blended dairy powders and infant formula at a maximum of 4% of
butterfat.
This newly introduced provision of below market price milk for the
production of the listed dairy ingredients provides both an incentive
to substitute those ingredients for their imported counterparts and a
subsidy on the production of the end products containing those
ingredients. Both of these elements violate Canada's obligations under
a number of WTO and NAFTA agreement provisions.
Even more concerning is the prospect that new measures to enable
the export of Canada's structural surplus of Skim Milk Powder (SMP) at
below the cost of production reflect an attempt to circumvent the WTO
Nairobi Ministerial Decision on Export Competition undertaking to
terminate all export subsidises by the end of 2020, including Canada's
standstill agreement in the Decision to hold export subsidy quantities
to the levels achieved in the 2003-05 base period.
Canada's International Trade Agreement Obligations
The Agreement will undermine the value of our respective TRQ access
negotiated under WTO, NAFTA, TPP and CETA agreements and otherwise
impede our dairy trade. Further, our initial analysis of Canada's trade
obligations against the measures in place and the Agreement lead us to
conclude that there is ample justification for undertaking a legal
challenge. In this regard we appreciate the efforts of our respective
Governments to address the issue in WTO forums. Accordingly, we would
welcome the opportunity to work with our governments to pursue the most
effective methods possible to dissuade Canada from its course,
including the utilization of dispute settlement under existing trade
agreements. We are determined to seek redress to overturn the use of
these measures.
Conclusion
The dairy industries of Australia, the EU, New Zealand and the USA
believe that the Agreement contravenes Canada's WTO and NAFTA
obligations and similarly undermines the intent of CETA and TPP
commitments. Furthermore, we are very concerned that Canada will
continue to seek out measures to circumvent the Nairobi Export
Competition Ministerial Decision to terminate all exports subsidises by
the end of 2020. Canada's increasingly protectionist policies violate
their international trade obligations, hold out the prospect of trade
diversion with attendant global price-depressing impacts, and are in
conflict with the principles of free markets and fair and transparent
trade.
We therefore request the authorities of Australia, New Zealand,
Mexico, the U.S. and the EU Commission to initiate a WTO dispute
settlement proceeding against Canada, once the Agreement details are
announced, given its intended erosion of trading conditions in place at
the time Canada negotiated prior trade commitments.
With best regards,

Acting President, Secretary General,
Australian Dairy Industry Council European Dairy Association (EDA);
(ADIC);

Secretary General, Secretary General,
European Whey Products Association European Association of Dairy Trade
(EWPA); (Eucolait);

Executive Director, President,
Dairy Companies Association of New U.S. Dairy Export Council (USDEC);
Zealand (DCANZ);

President & CEO, President & CEO,
International Dairy Foods National Milk Producers Federation
Association (IDFA); (NMPF);

General Director
Camara Nacional De Industriales de la Leche (Canilec)
Mexico National Chamber of Industrial Milk.

CC:

Hon. Barnaby Joyce MP, Deputy Prime Minister, Minister for Agriculture
and Water Resources, Australia;
Phil Hogan, EU Commissioner for Agriculture & Rural Development,
European Commission;
Jean-Luc Demarty, Director-General for Trade, European Commission;
Jerzy Bogdan Plewa, Director-General for Agriculture & Rural
Development, European Commission;
Hon. Nathan Guy, Minister of Primary Industries, New Zealand;
Martyn Dunne, Director General, Ministry for Primary Industries, New
Zealand;
Dr. David Walker, Deputy Secretary Trade and Economic, Ministry of
Foreign Affairs & Trade, New Zealand;
Hon. Thomas J. Vilsack, Secretary, U.S. Department of Agriculture;
Hon. Juan Carlos Baker, Deputy Secretary of Trade, Mexico.

January 11, 2017
Canada's Protectionist Policies Will Harm U.S. Economy, Dairy Groups
Tell President-Elect Trump
News Release
Contacts:

Marti Hogan, IDFA: (202) 220-3535
Christopher Galen, NMPF: (703) 243-6111
Mark O'Keefe, USDEC: (703) 528-3049
Amanda Culp, NASDA: (202) 296-9680

(Washington, D.C.) U.S. dairy organizations and the State
Departments of Agriculture across the country today told President-
elect Donald Trump that Canada's existing and soon-to-be-expanded
protectionist policies are intentionally designed to block imports from
the United States. These policies are in direct violation of Canada's
trade commitments under the North American Free Trade Act (NAFTA) and
the World Trade Organization, said IDFA, NMPF, NASDA and USDEC in a
letter urging the president-elect and his key cabinet members to take
immediate action.
The letter to Trump outlined estimates from the U.S. Department of
Agriculture that show each $1 billion of U.S. dairy exports generates
more than 20,000 jobs for Americans and almost $3 billion of economic
output. U.S. dairy suppliers are reporting that they are already losing
business because of these programs, demonstrating that Canada's actions
are resulting in lost revenues and jobs for dairy farmers and
processors across the United States.
``This negative impact is conservatively estimated at $150 million
worth of ultra-filtered milk exports being lost by companies in
Wisconsin and New York, which are highly reliant on their trade with
Canada. In fact, the entire U.S. dairy industry is being hurt, as milk
prices are being driven down nationally by Canada's trade actions,''
the groups said. ``Having an even wider impact on America's dairy
farmers and processors, additional large volumes of skim milk powder
will be forced onto the thinly traded global market resulting in a
further depression of prices that will negatively impact the revenues
of dairy farmers around the world.''
The letter sent to Trump was signed by the International Dairy
Foods Association (IDFA), the National Milk Producers Federation
(NMPF), the U.S. Dairy Export Council (USDEC) and the National
Association of State Departments of Agriculture (NASDA).
Canada is Flouting Trade Obligations
The U.S. dairy industry is already restricted by Canada's
exorbitant tariffs, they said, and only limited market access is
granted under NAFTA. Canada is one of America's top trading partners,
yet the country is clearly flouting its trade obligations by
implementing and enforcing these policies.
``The U.S. dairy industry is highly competitive internationally,
and overseas markets represent a vital source of future growth
opportunities including thousands of new American jobs,'' the groups
said. ``Not long ago, the United States was a net importer of dairy
products, but now our nation benefits from a dairy trade surplus of
over $2 billion. Enforcement of current trade agreements, whether
bilateral or multilateral in nature, is central to strengthening the
U.S. economy.''
Copied on the letter were several Cabinet nominees, including
Robert Lighthizer, the Trump Administration's nominee for U.S. Trade
Representative, along with the leaders and members of the House and
Senate agricultural committees. Read the letter here.*
---------------------------------------------------------------------------
*Editor's note: the letter follows as Attachment, and is available
at http://www.idfa.org/docs/default-source/2017/idfa-nasda-usdec-nmpf-
canada-letter-january-2017-final.pdf.
---------------------------------------------------------------------------
* * * * *
About IDFA
The International Dairy Foods Association (IDFA), Washington, D.C.,
represents the nation's dairy manufacturing and marketing industries
and their suppliers, with a membership of 550 companies within a $125-
billion a year industry. IDFA is composed of three constituent
organizations: the Milk Industry Foundation (MIF), the National Cheese
Institute (NCI) and the International Ice Cream Association (IICA).
IDFA's nearly 200 dairy processing members run nearly 600 plant
operations, and range from large multi-national organizations to
single-plant companies. Together they represent more than 85 percent of
the milk, cultured products, cheese, ice cream and frozen desserts
produced and marketed in the United States. IDFA can be found online at
www.idfa.org.
About USDEC
The U.S. Dairy Export Council (USDEC) is a nonprofit, independent
membership organization that represents the global trade interests of
U.S. dairy producers, proprietary processors and cooperatives,
ingredient suppliers and export traders. Its mission is to enhance U.S.
global competitiveness and assist the U.S. industry to increase its
global dairy ingredient sales and exports of U.S. dairy products. USDEC
accomplishes this through programs in market development that build
global demand for U.S. dairy products, resolve market access barriers
and advance industry trade policy goals. USDEC is supported by staff
across the United States and overseas in Mexico, South America, Asia,
Middle East and Europe.
About NMPF
The National Milk Producers Federation, based in Arlington, VA,
develops and carries out policies that advance the wellbeing of dairy
producers and the cooperatives they own. The members of NMPF's
cooperatives produce the majority of the U.S. milk supply, making NMPF
the voice of dairy producers on Capitol Hill and with government
agencies. Visit www.nmpf.org for more information.
About NASDA
NASDA is a nonpartisan, nonprofit association which represents the
elected and appointed commissioners, secretaries, and directors of the
departments of agriculture in all fifty states and four U.S.
territories. NASDA grows and enhances agriculture by forging
partnerships and creating consensus to achieve sound policy outcomes
between state departments of agriculture, the federal government, and
stakeholders.
attachment
January 11, 2017
Hon. Donald J. Trump,
Office of the Presidential Transition,
Washington, D.C.

Dear President-elect Trump:

Congratulations on your election to serve as the 45th President of
the United States. We look forward to working with you and your
administration on issues important to the U.S. dairy industry.
We are writing today to highlight Canada's latest actions taken in
direct violation of its trade commitments with the United States with
respect to dairy. Provincial policies for ingredient class milk
pricing, adopted last April, are displacing U.S. exports into Canada
and costing the U.S. thousands of jobs on farms, in processing plants
and throughout the supply chain. This negative impact is conservatively
estimated at $150 million worth of ultra-filtered milk exports being
lost by companies in Wisconsin and New York, who are highly reliant on
their trade with Canada. In fact, the entire U.S. dairy industry is
being hurt, as milk prices are being driven down nationally by Canada's
trade actions. Further, these displaced U.S. dairy exports are also
depressing global skim milk prices. Moreover, USDA estimates that each
$1 billion of U.S. dairy exports generates over 20,000 U.S. jobs and
almost $3 billion of economic output, and U.S. dairy suppliers are
reporting that they are already losing business because of these
programs. Thus, Canada's current actions are resulting in lost revenues
and jobs for dairy farmers and processors across the United States.
To add insult to injury the Canadian industry has put forward a
National Ingredients Strategy that in broad terms would take the
provincial programs and nationalize them, putting further pressure on
the economies of the American communities that export ultra-filtered
milk and other dairy products to Canada. Having an even wider impact on
America's dairy farmers and processors, additional large volumes of
skim milk powder will be forced onto the thinly traded global market
resulting in a further depression of prices that will negatively impact
the revenues of dairy farmers around the world.
The U.S. dairy industry is already restricted by Canada's
exorbitant tariffs and the limited market access granted under the
North American Free Trade Agreement (NAFTA). As one of our top trading
partners, Canada's flouting of its trade obligations is unacceptable.
It is clear that these policies were implemented to intentionally block
imports from the United States and are therefore in direct violation of
Canada's trade commitments under NAFTA and the World Trade
Organization.
The U.S. dairy industry is highly competitive internationally, and
overseas markets represent a vital source of future growth
opportunities including thousands of new American jobs. Not long ago,
the United States was a net importer of dairy products, but now our
nation benefits from a dairy trade surplus of over $2 billion.
Enforcement of current trade agreements, whether bilateral or
multilateral in nature, is central to strengthening the U.S. economy.
We welcome the opportunity to work closely with your nominees for
the U.S. Trade Representative Mr. Robert Lighthizer, and for Secretary
of the Department of Commerce Wilbur Ross, as well as White House
Advisor Peter Navarro and other key members of your Cabinet. We
appreciate your consideration of this issue, as resolving it is a
matter of urgency.
Sincerely,

Michael Dykes, James Mulhern, Matt McKnight, Barbara P.
D.V.M. President & CEO, Acting Chief of Glenn, Ph.D.,
President & CEO, Staff,
International National Milk U.S. Dairy Chief Executive
Dairy Foods Producers Export Council Officer,
Association Federation National
Association of
State
Departments of
Agriculture

CC:

Robert Lighthizer, Nominee, U.S. Trade Representative.
Wilbur Ross, Nominee, Department of Commerce.
Peter Navarro, Advisor, White House National Trade Council.
Hon. Orrin Hatch, Chairman, Senate Committee on Finance.
Hon. Ron Wyden, Ranking Minority Member, Senate Committee on Finance
Committee.
Hon. Kevin Brady, Chairman, House Committee on Ways and Means.
Hon. Richard Neal, Ranking Minority Member, House Committee on Ways and
Means.
Hon. Pat Roberts, Chairman, Senate Committee on Agriculture, Nutrition,
and Forestry.
Hon. Debbie Stabenow, Ranking Minority Member, Senate Committee on
Agriculture, Nutrition, and Forestry.
Hon. K. Michael Conaway, Chairman, House Committee on Agriculture.
Hon. Collin C. Peterson, Ranking Minority Member, House Committee on
Agriculture.

January 30, 2017
U.S. Dairy Companies Push Back Against Canada's Protectionist Policies
Group Urges U.S. Governors to Aid in Preserving Export Markets and
`Consider All Tools at Their Disposal'
News Release
Contacts:

Marti Hogan, IDFA: (202) 220-3535
Christopher Galen, NMPF: (703) 243-6111
Mark O'Keefe, USDEC: (703) 528-3049

(Washington, D.C.) The U.S. dairy industry this week continued to
push back against Canada's protectionist policies that are effectively
blocking American dairy imports into the country in violation of
international agreements. A group of 17 dairy companies representing
dairy farmers and processors from coast to coast asked governors in 25
states to urge Canadian policymakers to uphold existing trade
commitments with the United States and halt the imminent implementation
of a national strategy that would unfairly subsidize Canadian dairy
products in its domestic and global markets.
``[U.S.-Canada] trade cannot be a one-way street with Canada
expecting to enjoy the benefits of exporting its products of interest
to our market while denying a sector accounting for hundreds of
thousands of jobs in rural America reliable access to the Canadian
market,'' the group said in its letter to the governors. ``[An existing
provincial] program has already cost U.S. companies tens of millions of
dollars in exports, thereby harming the dairy farmers, dairy plant
employees and rural communities that depend on the benefits those
foreign sales bring.''
Beginning Feb. 1, Canada is poised to expand the product scope of
that provincial program while instituting it nationally. It also
intends to disrupt skim milk powder markets around the world by using
the new program to dump excess milk powder on global markets.
The 17 dairy companies sent the letter to governors in states with
significant numbers of dairy farms and dairy processing companies
because of the damage Canada's policies have had already or are poised
to have on these farms and companies, as well as their employees and
many communities. The letter urges state officials to ``consider all
tools at their disposal to ensure Canada understands the seriousness of
this issue.'' The states are Arizona, California, Colorado, Idaho,
Iowa, Indiana, Kansas, Maryland, Massachusetts, Michigan, Minnesota,
Missouri, Montana, Nebraska, New Mexico, New York, North Dakota, Ohio,
Pennsylvania, South Dakota, Texas, Vermont, Virginia, Washington and
Wisconsin.
Read the letter here.*
---------------------------------------------------------------------------
*Editor's note: the letter follows as Attachment, and is available
at http://www.nmpf.org/files/
Letter%20to%20Governors%20re_Canada%20Dairy%20Trade_013017.pdf.
---------------------------------------------------------------------------
Earlier this month, U.S. dairy organizations and state departments
of agriculture across the country sent a similar letter to President
Donald Trump** that said Canada's protectionist policies are in direct
violation of its trade commitments under the North American Free Trade
Agreement (NAFTA) and the World Trade Organization (WTO). The
organizations urged the president and his key cabinet members to take
immediate action. The letter to Trump was signed by the International
Dairy Foods Association (IDFA), the National Milk Producers Federation
(NMPF), the U.S. Dairy Export Council (USDEC) and the National
Association of State Departments of Agriculture (NASDA).
---------------------------------------------------------------------------
**Editor's note: the letter follows the January 11, 2017 News
Release as Attachment, and is available at http://www.idfa.org/docs/
default-source/2017/idfa-nasda-usdec-nmpf-canada-letter-january-2017-
final.pdf.
---------------------------------------------------------------------------
``In the current trade climate across North America, it is
foolhardy for Canada to continue provoking the United States with a
course of action that so blatantly violates our trade agreements,''
said Jim Mulhern, president and CEO of NMPF. ``We need our nation's
governors to join in our call for Canada to step back from the brink of
what it is about to do and take steps to remind Canada how critical
trade is to its own interests, as well.''
``Despite Canada's efforts to distance itself from the
administration's focus on enforcement and improving how NAFTA
functions, it is Canada--not Mexico--that has time and again chosen to
disregard its dairy trade commitments to the United States and
intentionally dismiss serious concerns from the United States about the
impact its dairy policies are having on trade,'' said Matt McKnight,
acting Chief Operating Officer of USDEC. ``Canada should take a page
out of Mexico's book and hold up its end of the bargain to us on dairy
trade.''
``The U.S. dairy industry is united on this issue because these
policies and incentives severely hinder U.S. exports to Canada and
threaten our ability to remain competitive in markets around the
world,'' said Michael Dykes, D.V.M., president and CEO of IDFA. ``IDFA
will continue to speak out against Canada's protectionist policies on
Capitol Hill, with members of the Trump Administration and among state
governors and legislators, while asking for changes that will force
Canada to honor its trade commitments and allow more access for U.S.
dairy products.''
* * * * *
About NMPF
The National Milk Producers Federation, based in Arlington, VA,
develops and carries out policies that advance the wellbeing of dairy
producers and the cooperatives they own. The members of NMPF's
cooperatives produce the majority of the U.S. milk supply, making NMPF
the voice of dairy producers on Capitol Hill and with government
agencies. Visit www.nmpf.org for more information.
About USDEC
The U.S. Dairy Export Council (USDEC) is a nonprofit, independent
membership organization that represents the global trade interests of
U.S. dairy producers, proprietary processors and cooperatives,
ingredient suppliers and export traders. Its mission is to enhance U.S.
global competitiveness and assist the U.S. industry to increase its
global dairy ingredient sales and exports of U.S. dairy products. USDEC
accomplishes this through programs in market development that build
global demand for U.S. dairy products, resolve market access barriers
and advance industry trade policy goals. USDEC is supported by staff
across the United States and overseas in Mexico, South America, Asia,
Middle East and Europe.
About IDFA
The International Dairy Foods Association (IDFA), Washington, D.C.,
represents the nation's dairy manufacturing and marketing industries
and their suppliers, with a membership of nearly 525 companies within a
$125-billion a year industry. IDFA is composed of three constituent
organizations: the Milk Industry Foundation (MIF), the National Cheese
Institute (NCI) and the International Ice Cream Association (IICA).
IDFA's nearly 200 dairy processing members run nearly 600 plant
operations, and range from large multi-national organizations to
single-plant companies. Together they represent more than 85 percent of
the milk, cultured products, cheese, ice cream and frozen desserts
produced and marketed in the United States. IDFA can be found online at
www.idfa.org.
attachment
January 30, 2017

This letter has also been sent to the governors of Arizona,
California, Colorado, Idaho, Iowa, Indiana, Kansas, Maryland,
Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New
Mexico, New York, North Dakota, Ohio, Pennsylvania, South Dakota,
Texas, Vermont, Virginia, Washington and Wisconsin.

Dear Governor:

We write to you regarding a serious trade concern with a country
that should be our most reliable trading partner: Canada. Our companies
appreciate the actions multiple governors and state departments of
agriculture took last year to express concern over Canada's erection of
barriers to U.S. dairy exports.
Reports now indicate that despite numerous U.S. exhortations to
Canada that it should abide by its dairy trade commitments to us,
Canada plans to proceed with expanding its harmful use of dairy
policies to impede trade by implementing a new national ingredients
strategy pricing program next month. We urge you to prepare to take
direct action at the state level to underscore to Canada that
deliberately and systematically damaging U.S. exports in this way will
not be tolerated.
Every day Canada relies on smooth access for its products to our
market, access that comes through our northern border states which are
being forced to bear the brunt of Canada's flagrant disregard for its
dairy trade obligations to us. However, this trade cannot be a one-way
street with Canada expecting to enjoy the benefits of exporting its
products of interest to our market while denying a sector accounting
for hundreds of thousands of jobs in rural America reliable access to
the Canadian market.
Canada's expected approval of a new national ingredients strategy
pricing program next month will expand an already harmful program
piloted last year in Ontario that was created specifically to
discourage Canadian companies from using imported U.S. ultra-filtered
milk in the production of Canadian dairy products. That Ontario program
has already cost U.S. companies tens of millions of dollars in exports,
thereby harming the dairy farmers, dairy plant employees and rural
communities that depend on the benefits those foreign sales bring.
Beginning February 1, Canada is now poised to expand the product
scope of that program while instituting it nationally and in addition
to disrupt skim milk powder markets around the world by using the new
program to dump excess skim milk powder on global markets.
Over the course of the past year, our industry has urged state
officials to consider all the tools at their disposal to ensure Canada
understands the seriousness of this issue and the value it derives on a
daily basis for the numerous Canadian exports that come across the
borders of northern U.S. states. We now urge you to take action to send
that message directly to Canada. Canada needs to hold up its end of the
bargain, not leave American companies--and the workers and farm
families they support--holding the bag.
Sincerely,

Agri-Mark, Inc., Methuen, MA Northwest Dairy Association/
Associated Milk Producers, Inc., Darigold, Seattle, WA
New Ulm, MN
California Dairies, Inc., Visalia, O-AT-KA Milk Producers Cooperative,
CA Inc., Batavia, NY
Cayuga Milk Ingredients, Auburn, NY
Dairy Farmers of America, Kansas Select Milk Producers, Inc.,
City, MO Artesia, NM
DairyAmerica, Fresno, CA St. Albans Cooperative Creamery,
Grassland Dairy Products, Inc., St. Albans City, VT
Greenwood, WI
Land O'Lakes, Inc., Arden Hills, MN TC Jacoby & Co., St. Louis, MO
Maryland & Virginia Milk Producers United Dairymen of Arizona, Tempe,
Cooperative Association, Reston, AZ
VA Upstate Niagara Cooperative, Inc.,
Buffalo, NY
Michigan Milk Producers
Association, Novi, MI

______

Submitted Letter by Roger Johnson, President, National Farmers Union
March 22, 2017

Hon. K. Michael Conaway, Hon. Collin C. Peterson,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.

Dear Chairman Conaway and Ranking Member Peterson:

Thank you for holding today's hearing entitled, The Next Farm Bill:
Dairy Policy. As you are well aware, the farm economy is continuing to
struggle as a result of low commodity prices, record yields, and a
strong U.S. dollar. Dairy, in particular, has suffered a great deal,
not only as a result of high production and tepid demand, but an
ineffective safety net. As past hearings have highlighted, the Dairy
Margin Protection Program (DMPP) failed to provide meaningful relief
for participants, even as farmers paid millions of dollars in premiums
for the program.
Putting dairy farmer's contribution to the agricultural economy
into perspective is especially important as congress weighs changes to
the safety net. U.S. dairy farms are an important segment of our
nation's economy. As one of the world's largest dairy producing
nations, the industry provides roughly $140 billion in economic output,
$29 billion in household earnings, and more than 900,000 jobs.
Low prices and volatility have dominated dairy economics over the
last three years, forcing many producers to shutter dairy farms across
the country. Milk prices reached $24 per hundredweight in 2014 but
quickly eroded, falling to $16 per hundredweight in 2016. These prices
are well below the cost of production. Meanwhile, cash receipts over
the last three years demonstrate the volatility. In 2009, cash receipts
were $24.3 billion, shooting up to $49.3 billion in 2014, and quickly
falling to $34.2 billion in 2016. Despite the unfavorable economic
conditions faced by dairy producers, U.S. milk production increased for
the seventh consecutive year and the dairy herd continues to expand.
DMPP has provided very little relief to struggling dairy producers.
In 2016, about \2/3\ of milk production, or 140 billion pounds of
production history, enrolled in DMPP did not sign up for buy-up
coverage. It is widely recognized that the program has failed dairy
producers. There must be an acknowledgement, especially during the
budget process, that producers paid millions of dollars into the
program and did not receive assistance during troubling economic
conditions.
As dairy farmers face such headwinds, congress must develop a
comprehensive dairy program to allow dairy producers across the nation
to receive a profitable return on their investment. In order to achieve
this, the next safety net will certainly have to increase spending.
DMPP must have a higher dollar value for catastrophic coverage of at
least $5.00. The feed ration used to calculate payments must more
accurately reflect cost of production.
NFU sees commonality with other industry proposals which call for a
more equitable feed cost formula. Returning to the original feed cost
formula in the Dairy Security Act is an important first step in
improving DMPP. Better price data for corn, soybean meal, and alfalfa
could help improve calculations related to actual feed costs incurred
by dairy farmers. Harmonization of data between the National
Agricultural Statistics Service and the Agricultural Marketing Service
is also important.
Our members voiced support for additional flexibility within DMPP.
Dairy farmers should have the ability to enter and exit the program,
within reason, as this would prevent producers from leaving a
significant amount of milk production uninsured for the entire year.
Coverage calculations and payments should be made on a monthly basis to
better reflect how producers operate. NFU recognizes that there would
have to be a delay between signup and coverage start dates in order to
prevent moral hazards.
Additional premium support, directed to family farms, by the
federal government is very important from an equity standpoint. Our
members, while very supportive of the assistance provided to other
commodities, are frustrated that their sector does not receive similar
support. Higher premium subsidies for a risk management program are
very important to our members. There is a fundamental understanding
that producers have to share in the risk, and our members are prepared
to do that, but there must be additional sign up incentives.
NFU dairy members have also expressed interest in the livestock
gross margin (LGM) program and whole farm revenue protection (WFRP)
policy in conjunction with DMPP. We understand that the same milk
cannot be signed up within different programs. We would ask the
committee to consider allowing producers to use DMPP and LGM in a
complementary fashion. In order for this to work, the current LGM cap
would have to be removed for dairy. The removal of the cap would also
provide dairy producers who are interested in using both DMPP and WFRP
to adequately cover dairy production.
Last, NFU policy recognizes overproduction as one of the many
reasons for low prices. We support exploring an incentives-based
inventory management program. We also support and encourage voluntary
producer assessments for an industry-managed program that will
stabilize and increase producer prices. NFU wants to see a more robust
effort to reign in overproduction, with wider adoption of practices
already being employed by some of our largest dairy cooperatives.
Thank you again for holding this important hearing. NFU stands
ready to assist this committee as it advances changes to the next farm
bill for the benefit of American dairy producers.
Sincerely,

Roger Johnson,
President, National Farmers Union.
______

Submitted Questions
Response from James Mulhern, President and Chief Executive Officer,
National Milk Producers Federation
Question Submitted by Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Question. Mr. Mulhern, you've noted that NASS alfalfa prices don't
reflect what dairy farmers pay for the quality that they purchase, and
that you would like to see a new price reporting mechanism for alfalfa
to be used in the feed cost calculations. Can you suggest what that
might look like? What are the flaws in prices that are currently
reported?
Answer. Thank you for the question, Congressman. The current U.S.
average price for alfalfa hay reported by NASS is an average of all
grades and qualities of hay. Our members have indicated that this price
does not reflect the price for minimum quality alfalfa hay required for
dairy farmers to productively feed their cows. We are urging Congress
to direct USDA to develop a more detailed U.S. average price for dairy
quality hay.
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands*
---------------------------------------------------------------------------
*There was no response from the witness by the time this hearing
was published.
---------------------------------------------------------------------------
Question. Thank you, gentlemen, for taking the time to appear with
us today and present your views on dairy policy as we consider the next
farm bill. And thank you, Chairman Conaway and Ranking Member Peterson,
for holding this important hearing.
As you know well, during consideration of the last farm bill, the
previous dairy stabilization program was replaced with an insurance-
like margin program, the MPP.
The basic premise behind this was to give farmers more tools to
manage risk and provide a safety net without directly interfering in
dairy markets and raising prices for consumers.
There was a prevailing view that the previous dairy stabilization
program penalized those farmers who wanted to expand. Others argued
that the program was voluntary and was not preventative to growth, and
stressed more sensitivity to recent challenges facing the dairy sector.
In your testimony, you say that the MPP does not provide meaningful
safety net support to dairy producers.
What specific changes would you like to see to MPP provisions in
the next Farm Act?
Answer.

THE NEXT FARM BILL

(COMMODITY POLICY--PART 1)

----------

TUESDAY, MARCH 28, 2017

House of Representatives,
Subcommittee on General Farm Commodities and Risk
Management,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Eric A.
``Rick'' Crawford [Chairman of the Subcommittee] presiding.
Members present: Representatives Crawford, Lucas, Gibbs,
Allen, Bost, Bacon, Dunn, Arrington, Conaway (ex officio),
Nolan, Walz, Bustos, Blunt Rochester, David Scott of Georgia,
Maloney, Plaskett, Lawson, O'Halleran, and Peterson (ex
officio).
Staff present: Bart Fischer, Callie McAdams, Haley Graves,
Matthew S. Schertz, Stephanie Addison, Trevor White, Anne
Simmons, Liz Friedlander, Matthew MacKenzie, Troy Phillips,
Mike Stranz, and Nicole Scott.

OPENING STATEMENT OF HON. ERIC A. ``RICK'' CRAWFORD, A
REPRESENTATIVE IN CONGRESS FROM ARKANSAS

The Chairman. This hearing of the Subcommittee on General
Farm Commodities and Risk Management entitled, The Next Farm
Bill: Commodity Policy--Part 1, will come to order.
This is the first hearing of the General Farm Commodities
and Risk Management Subcommittee in preparation for the next
farm bill. Over the course of the next year, we will be
examining policies under our jurisdiction so we can improve
upon the 2014 Farm Bill, and make sure that the needs of not
only American farmers and ranchers are being met, but also that
consumers will continue to benefit from a stable farm policy.
In agriculture it is often said that the cure for high
prices is, high prices. This saying has certainly held true in
the past and we are understanding its true meaning right now.
When we wrote the legislation that would eventually become the
2014 Farm Bill, farmers were experiencing record prices, net
farm income was at all-time highs, and many were led to believe
that commodity prices had reached a new plateau. But the old
adage rang true yet again, and 4 years later, net farm income
has fallen 50 percent, commodity prices are in the tank across
the board, and producers, especially beginning farmers, those
highly leveraged, and those that were unable to capitalize on
high prices, are struggling to get financing so they can
continue to farm for another year. We are on the verge of a
real crisis in rural America.
The current situation in the countryside provides a
textbook example for why we have farm bills in the first place.
The farm bill is not meant to provide help when times are good;
rather, the farm bill helps producers survive the bad times so
they can farm another year, raise their families, and one day
pass their operations on to the next generation.
Today we will examine how the commodity and crop insurance
provisions are faring for barley, corn, sorghum, soybeans, and
wheat producers. We will hear many acronyms thrown around like
ARC, PLC, SCO, and STAX. But let's not lose sight that amongst
the confusion, amongst the technical speak, there are real-life
men and women with dirt under their fingernails who are just
hoping to make it through these tough times. At the end of each
one of these policies are people that are responsible for
providing the safest, most abundant, most affordable food
supply in the world. And that benefits each and every one of
our constituents.
I am glad to see that we have such an outstanding set of
panelists here today. Thank you to each one of you for taking
the time out of your busy schedules, away from your operations
to join us. Your commitment to improving farm policy for all of
your fellow producers does not go unnoticed by the Members of
this Subcommittee.
Whether you are from Jonesboro, Arkansas, like myself, the
Iron Range of Minnesota like the Ranking Member, or even the
Virgin Islands like Ms. Plaskett, every Member of this
Subcommittee has a vested interest in making sure that we get
this policy correct, because we all have people in our
districts that need to eat. And we need to make sure that
America's farmers and ranchers are equipped to feed them.
I look forward to hearing from this panel.
[The prepared statement of Mr. Crawford follows:]

Prepared Statement of Hon. Eric A. ``Rick'' Crawford, a Representative
in Congress from Arkansas
This is the first hearing of the General Farm Commodities and Risk
Management Subcommittee in preparation for the next farm bill. Over the
course of the next year, we will be examining the policies under our
jurisdiction so we can improve upon the 2014 Farm Bill and make sure
that the needs of not only American farmers and ranchers are being met,
but so that consumers will continue to benefit from a stable farm
policy.
In agriculture it is often said that ``the cure for high prices is,
high prices.'' This saying has certainly held true in the past and we
are understanding its true meaning right now. When we wrote the
legislation that would eventually become the 2014 Farm Bill, farmers
were experiencing record prices, net farm income was at all-time highs,
and many were led to believe that commodity prices had reached a new
plateau. But the old adage rang true yet again, and 4 years later, net
farm income has fallen 50 percent, commodity prices are in the tank
across the board, and producers, especially the beginning farmers,
those highly leveraged, and those that were unable to capitalize on
high prices, are struggling to get financing so they can farm another
year. We are on the verge of a real crisis in rural America.
The current situation in the countryside provides a textbook
example for why we have farm bills in the first place. The farm bill is
not meant to provide help when time are good. Rather, the farm bill
helps producers survive the bad times so they can farm another year,
raise their families, and one day pass their homestead on to the next
generation.
Today we will examine how the commodity and crop insurance
provisions are faring for barley, corn, sorghum, soybeans, and wheat
producers. We will hear many acronyms thrown around like ARC, PLC, SCO,
and STAX. But let us not lose sight that amongst the confusion, amongst
the technical speak, there are real life men and women with dirt under
their fingernails who are just hoping to make it through these tough
times. At the end of each one of these policies are people that are
responsible for providing the safest, most abundant, most affordable
food supply in the world. And that benefits each and every one of our
constituents.
I am glad to see that we have such an outstanding set of panelists
here today. Thank you to each one of you for taking the time out of
your busy schedules and away from your operations to join us. Your
commitment to improving farm policy for all of your fellow producers
does not go unnoticed by the Members of this Subcommittee.
Whether you are from Jonesboro, Arkansas like myself, the Iron
Range of Minnesota like the Ranking Member, or even the Virgin Islands
like Ms. Plaskett, every Member of this Subcommittee has a vested
interest in making sure that we get this policy correct, because we all
have people in our districts that need to eat. And we need to make sure
that America's farmers and ranchers are equipped to feed them.
I look forward to hearing from this panel, and I yield to the
Ranking Member, Mr. Nolan for any opening comments he would like to
make.

The Chairman. I now yield to the Ranking Member, Mr. Nolan,
for any opening comments he would like to make.

STATEMENT OF HON. RICHARD NOLAN, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MINNESOTA

Mr. Nolan. Thank you, Chairman Crawford, for holding this
hearing today with respect to the commodity price policy in the
next farm bill. I want to thank the great panel of witnesses we
are about to hear from here. I want to extend a special welcome
to my fellow Minnesotan, Mr. Peter Friederichs. Welcome, Peter.
I am glad to have you here. Peter, as you may or may not know,
is President of the National Barley Growers Association.
In particular, I want to thank all of our witnesses here
for taking the time to testify. We have an old saying around
the Congress here that, like it or not, most things, or many
things in the political world affect your life. I mean the time
of day is a political decision. The air we are breathing, the
fabric in your clothing, the chemicals that went into your
shampoo this morning. We have a saying, if you don't come to
town and make your case, one of two things can happen. One is
they don't know you exist. That is not good. But worse yet,
they know you exist and think you don't care. That is why it is
so important for you to be here so that we not only know you
care, but to offer your suggestions and your advice on how we
can put together the kind of policies that create the kind of
economy we want. In this particular instance, the kind of
economy we want in rural America.
Mr. Chairman, it is clear from the numbers that we have
seen that times in farming country are tough, they are getting
tougher, prices are down, the income is down, the debt is going
up, the cash rents are going up, loans are harder to get. Mr.
Chairman, with the consent of the Committee, I would like to
ask unanimous consent that the entirety of my remarks be put
into the record, and then I will close so that we can get on
with hearing from our witnesses.
[The prepared statement of Mr. Nolan follows:]

Prepared Statement of Hon. Richard M. Nolan, a Representative in
Congress from Minnesota
Thank you, Chairman Crawford, for holding this hearing today with
respect to commodity policy and the next farm bill. And thank you to
the great panel of witnesses we are about to hear from. Welcome to the
Subcommittee.
It's abundantly clear from all the numbers and studies we've seen
that economic times in America's farm country are tough and getting
tougher. Commodity prices and farm income are down, debt is up, cash
rents are high in some places, loans are hard to come by and 2017
promises more of the same.
Moreover, it is profoundly disturbing that due in large part to the
collapse in commodity prices, overall net farm income has fallen by 50
percent since 2013--the largest 4 year percentage drop since the Great
Depression.
And today, because the current farm bill was written during a time
of particularly high commodity prices, our farmers face unique
challenges in dealing with the financial pressures of the current
downturn.
So it's going to be vitally important for this Subcommittee to work
to ensure the new farm bill contains the risk management tools
necessary to help our farmers survive these kinds of devastating
fluctuations in commodity prices.
The fact of the matter is--we need to do everything we can to put a
stop to these boom and bust cycles that threaten our farmers, our rural
communities, our rural businesses and the good paying jobs they support
all across rural America.
So with that said, I'm looking forward to hearing from today's
witnesses and I want to again thank the Chairman for holding this
important hearing.

The Chairman. Without objection. I appreciate the Ranking
Member's comments.
The chair would request that other Members submit their
opening statements for the record so the witnesses may begin
their testimony, and to ensure there is ample time for
questions.
We have five witnesses today. I would like to welcome them
to the table. Mr. Wesley Spurlock, President, National Corn
Growers Association, Stratford, Texas; Mr. Ron Moore,
President, American Soybean Association, Roseville, Illinois;
Mr. David Schemm, President, National Association of Wheat
Growers, Sharon Springs, Kansas; Mr. Peter Friederichs,
President, National Barley Growers Association, Foxhome,
Minnesota; and Mr. Dan Atkisson, Vice Chairman, National
Sorghum Producers, Stockton, Kansas.
Mr. Spurlock, you are recognized for 5 minutes.

STATEMENT OF WESLEY SPURLOCK, PRESIDENT, NATIONAL CORN GROWERS
ASSOCIATION, STRATFORD, TX

Mr. Spurlock. Good morning, Chairman Crawford, Ranking
Member Nolan, and Members of the Subcommittee. My name is
Wesley Spurlock and I am a farmer in the Texas Panhandle, where
our family has farmed and ranched since the late 1800s. We
raise corn, cotton, wheat, sorghum, and cattle. I currently
serve as President of the National Corn Growers Association. I
appreciate the opportunity to share with you the views of our
commodity programs and Federal crop insurance.
The farm economy looks very different today than a decade
ago. From 2006 to 2013, corn prices were in the $4.70 per
bushel range. Most grain farmers were making a profit. Since
2013, they have averaged below $4, and with this marketing
year, at $3.40. At that time, very few corn farmers made a
profit over net income. One study in Illinois found that net
farm income declined to an average of $500 in 2015.
Today, corn farmers face a lot of uncertainty about Federal
policy on renewable fuel and trade, and how they will impact
the market access in their bottom lines. Last year, 4.2 billion
bushels of corn produced more than 15 billion gallons of
ethanol, and returned more than 1 billion bushels of high-
quality feed back to the livestock industry. Keeping the RFS on
schedule provides more certainty, which leads to more demand
for ethanol and corn. We ask you to consider the negative
consequences regarding changes to all parts of the RFS.
Trade is also critical to our bottom lines. NAFTA has been
a huge success for us. Twenty-six percent of U.S. corn exports
go to Canada and Mexico. In Texas, agricultural exports to
Canada and Mexico totaled $3.3 billion in 2016. It is vital
these markets remain open and preserve our duty-free access.
Our county provided nearly $3.5 billion in payments on
corn-based acres in 2014, and more than $4 billion in 2015. In
the same Illinois study, those payments meant making $500 in
income instead of losing $30,000 or more. Although the
financial position of corn farmers has deteriorated, few farms
have had to face liquidating assets or bankruptcy thanks in
part to the support of the ARC-County. ARC was designed as a
market-based program, and provides support only when needed.
And this is the time. By and large, the program is working as
intended. There are a few administrative concerns and changes
to ARC-County we hope you will consider for the next farm bill.
In some situations, the Farm Service Agency switches to crop
insurance data when NASS is unable to publish a county yield,
resulting in underpayments. Equitable payments depend on using
the most accurate, transparent, and consistent data sources.
Also the program parameters were developed during a very
different price environment than what we face today, and that
will need to be reflected in the next farm bill.
As important as commodity programs are to the farm safety
net, Federal crop insurance is ranked by NCGA members as their
most important risk management tool. Eighty-seven percent of
planted acres are covered by some type of crop insurance. Our
2015 risk management survey confirmed that corn farmers are
very price sensitive to insurance. Two areas for improvement
that we have identified are more consistency in quality loss
adjustments for indemnities, and more reasonable preventive
planting provisions.
In summary, commodity programs and crop insurance address
two distinct but related risks. Crop insurance has replaced the
ad hoc disaster assistance and provided same-year risk
protection, while commodity programs protect against multi-year
losses. These two programs have helped many farmers weather the
storm of a weak farm economy and avoid bankruptcy. NCGA
recognizes the daunting task before you in crafting the next
farm bill.
I thank you for your time and your consideration of our
views.
[The prepared statement of Mr. Spurlock follows:]

Prepared Statement of Wesley Spurlock, President, National Corn Growers
Association, Stratford, TX
Chairman Crawford, Ranking Member Nolan, and Members of the House
Agriculture Subcommittee on General Commodities and Risk Management, on
behalf of the National Corn Growers Association (NCGA), I appreciate
the opportunity to share with you our perspectives on the state of the
corn industry and views on the performance of our current commodity
programs and Federal crop insurance. My name is Wesley Spurlock, and I
currently serve as President of the National Corn Growers Association
(NCGA). I am a farmer in the Texas Panhandle. Our family has farmed and
ranched there since the late 1800s. We raise corn, cotton, wheat,
sorghum and cattle on irrigated farms.
The National Corn Growers Association represents more than 40,000
dues-paying corn farmers nationwide. NCGA also represents more than
300,000 corn growers who contribute through check-off programs and 28
affiliated state corn organizations, for the purpose of creating new
opportunities and markets for corn growers.
Before addressing the effectiveness of the 2014 Farm Bill's risk
management programs, I first want to provide you an overview of the
corn industry and how it is performing during this extended period of
low commodity prices. We corn farmers are proud of our ability to
sustainably produce an abundant crop that helps to feed and fuel a
growing world. In 2016, we harvested 86.7 million acres that produced
15.1 billion bushels of corn, a record many thought unattainable just
10 years ago. To go from an average yield of 127.1 bushels/acre in 1996
to an average yield of 174.6 bushels this past year is a remarkable
achievement made possible by advances in seed technologies along with
innovations in production and conservation practices. However, this
success story does not come without some significant challenges. With
the U.S. Department of Agriculture (USDA) estimating 2016 crop year
ending stocks at more than 2.3 billion bushels, it is more important
than ever to build upon on our current markets and develop new uses to
increase demand for our crop.
When I think about risk management, I consider my entire operation
and my total risk portfolio. Farmers know we have to look at the demand
side of the equation. Trade may seem like an external force to some,
but it has a very real impact on my and other farmers' bottom lines.
Agricultural exports account for 20 percent\1\ of U.S. farm incomes,
and for the corn industry that number is closer to 30 percent.\2\ The
health and growth of those trading relationships, particularly during
times when commodity prices are lower (like they are now), can
determine whether I make a profit or a loss. The benefits from trade
ripple out beyond the farmgate to create economic activity and jobs in
our rural communities across the country.
---------------------------------------------------------------------------
\1\USDA.
\2\USGC.
---------------------------------------------------------------------------
Corn farmers face a lot of uncertainty right now about how changes
to our trade policy will impact our market access. U.S. corn counts
Mexico and Japan as its top two export markets. The North American Free
Trade Agreement (NAFTA) has been a huge success for the corn industry--
26 percent of U.S. corn exports go to Canada and Mexico.\3\ In 2016
alone, 13.3 million metric tons of corn were exported to Mexico. In my
home state of Texas, agricultural export trade to Canada and Mexico
totaled more than $3.3 billion in 2016 and supported 18,674 jobs,
according to research conducted by the Center for North American
Studies at Texas A&M University.
---------------------------------------------------------------------------
\3\USGC--Calculated using USDA's economic activity multiplier.
---------------------------------------------------------------------------
As we work with Mexico and Canada to modernize NAFTA, it is vital
we keep these markets open to preserve our duty-free access for corn
and corn products, and build on the mutual success realized from this
partnership. NCGA has also urged the President to engage early with the
Asia-Pacific region to negotiate new or updated free trade agreements
that provide U.S. agriculture with greater access to these growing
markets and reduce non-tariff barriers to trade. We will continue to
prioritize development of new markets through export promotion
activities, which increase and diversify demand for our products and
build valuable trading relationships. USDA's Market Access Program
(MAP) and Foreign Market Development Program (FMD) function as public-
private partnerships and deliver $28 in exports for every $1 invested.
NCGA is seeking an increase in funding for these programs.
In addition to expanding export markets, a robust, growing
livestock industry is extremely important to building new demand for
U.S. corn. One of the key benefits from livestock is market
consistency. While this market ebbs and flows with definitely
pronounced cycles, they are usually over the course of years. Today,
feed for livestock accounts for more than 38 percent of corn usage at
5.6 billion bushels. According to the USDA Economic Research Service,
U.S. corn feed and residual use is expected to rise to nearly 5.8
billion bushels in 2016-17. With projections of U.S. meat exports
forecast to increase in the coming years to meet the rising global
demand for protein, NCGA is hopeful that this growth will result in
higher incomes for corn farmers and our livestock customers.
The other key sector critical to corn farmers' economic security is
a vibrant renewable fuels industry. In the last crop year, nearly \1/3\
of U.S. corn production, or 4.2 billion bushels, was used to produce
more than 15 billion gallons of ethanol. Moreover, ethanol production
returned 1.1 billion bushels of corn to feed livestock and poultry in
the form of distiller dried grains (DDGs).
Even as ethanol production expanded to an all-time high in 2016,
corn farmers still produced a large corn surplus. Contrary to
conventional wisdom, total cropland acres in the United States have
fallen since the Renewable Fuel Standard (RFS) was expanded, and farmer
demand for conservation programs remains high. In short, we produce
more than enough corn to meet our food, feed, industrial and fuel
needs.
After 3 years of delays and uncertainty in issuing the annual
renewable fuel volume levels, corn farmers were pleased to see the EPA
get administration of the RFS back on track last November with final
volume requirements for 2017. Keeping administration of the RFS on
schedule and in line with Congressional intent provides stability and
certainty, which in turn leads to more investment in the industry and
more demand for ethanol and corn, exactly what our producers need right
now.
Although not under the jurisdiction of the Agriculture Committee,
when corn growers hear some in Congress talk about the need to reform
or rewrite the RFS, we ask you to consider the negative consequences of
such action. With farmers facing consecutive years of low commodity
prices and an ethanol industry emerging from several years of
uncertainty caused by EPA actions, we need more stability in the RFS,
not less.
Looking forward, corn farmers want to build on the effective volume
level of 15 billion gallons that EPA set for 2017, in line with
Congressional intent. With stability in the RFS, corn growers can
increase demand for home-grown ethanol that saves consumers money at
the pump, generates 43 percent lower greenhouse gas emissions than
gasoline, and supports thousands of jobs in our rural communities--all
while supporting the bottom line of corn farmers nationwide. I cannot
overemphasize how important ethanol demand is to our industry. It is
crucial to our farmers and beneficial to our nation's energy security.
In fact, the renewable fuel industry directly supports nearly 86,000
jobs and displaced 540 million barrels of foreign oil imports in 2016.
The precipitous decline in price from a national marketing year
average of $6.22 per bushel for the 2011 crop to an estimated $3.40/
bushel for the 2016 crop has resulted in a steep decline in corn
farmers' income as well as a very adverse impact on the rural economy.
When the annual crop value of corn falls from nearly $77 billion in
2011 to just over an estimated $51 billion 5 years later, increasing
financial stress is being experienced from the family farm to the
employees laid off by agriculture equipment manufacturers.
Prior to the downturn in commodity markets, according to USDA corn
prices averaged $4.70 per bushel between 2006 through 2013, a period of
positive net farm incomes for most grain farms in the United States.
Since 2013, corn prices have averaged below $4.00 per bushel. In fact,
the average U.S. market year corn price fell to $3.70 per bushel in
2014, then slid further to $3.61 in 2015. The 2016 crop market year
does not end until September 1, 2017, but the February World
Agriculture Supply and Demand Estimates Report (WASDE) projection
places the price at $3.40. Long-run projections made by USDA now place
the 2017 market year price at $3.50 per bushel. Currently, break-even
levels for corn production are near $4.00 per bushel. As long as corn
prices are below $4.00, we anticipate incomes to be very low or
negative.
As a result of these price declines, revenue from selling a crop,
hereafter referred to as crop revenue, has significantly decreased.
USDA has reported that crop revenue from corn in the United States
averaged $837 per acre in 2011 and $801 per acre in 2012. Gross
revenues have decreased considerably since that time Crop revenue was
$719 per acre in 2013, $602 per acre in 2014, and $611 per acre in
2015. Projections for 2016 place corn revenue at $593 per acre (174.6
national corn yields $3.40 price).
Adding to the financial stress on farm operations is an extended
lag in expenses declining to the same extent that crop revenues have
decreased. According to USDA, costs for corn production reached a high
of $690 per acre in 2014 before falling to $675 per acre in 2015, a
decrease of only $15 per acre. When we compare this small decrease to a
sharp revenue decline of $190 per acre between 2012 and 2015, we can
begin to better understand the difficult transition and drain on equity
that many corn farmers are experiencing.
With crop revenue decreasing, net incomes on grain farms are, of
course, falling. As one example, Illinois Farm Business Farm Management
(FBFM), a record-keeping service with about 25 percent of the acres
farmed in Illinois enrolled in its services, estimates that net farm
income declined to an average of $500 in 2015. The $500 per farm
average in 2015 was the lowest farm income since FBFM began keeping
records. Not surprisingly, cash reserves on farms are eroding due to
successive years of declining income. Although reported incomes for
2016 have yet to be released, they are expected to be slightly higher
than in 2015 due to above-average yields and sizable payments from the
Agriculture Risk Coverage program.
It is important to note that for the period of 2014 through 2016,
incomes would have been lower had payments from the Agricultural Risk
Coverage-county level (ARC-CO) and Price Loss Coverage programs not
been made. As I explain later, ARC-CO payments have been substantial,
partially offsetting the revenue declines experienced in 2014 and 2015.
Overall, NCGA believes the commodity program reforms authorized in
the 2014 Farm Bill program have performed as designed. These more
market-oriented policy changes are delivering assistance to producers
when the need for financial relief is clearly present. During the
enrollment process for the 2014 Farm Bill, 94 percent of the corn base
acres were enrolled in ARC-CO with most of the remaining six percent of
base acres being enrolled in Price Loss Coverage (PLC). As a result of
high enrollment in ARC, corn farmers will evaluate the 2014 Farm Bill
based on the performance of ARC-CO.
ARC-CO has made significant payments to corn farmers in 2014 and
2015, and will likely make large payments in 2016. In 2014, ARC-CO
payments were $3.479 billion on corn base acres, for an average payment
of $39 per base acre. In 2015, ARC-CO made $4.02 billion in payments,
or $45 per base acre. These ARC-CO payments have cushioned the sharp
decrease in revenues occurring in 2014 and 2015. On a national basis,
revenues in 2014 and 2015 were close to $200 per acre below 2011 and
2012 levels.
Obviously, ARC-CO payments have helped to reduce the net income
declines sustained during 2014 and 2015. On Illinois farms, for
example, net income was $500 per farm in 2015. Without commodity title
payments, 2015 incomes would have been more than $30,000 lower,
resulting in an average net income that was negative.
Reflecting low producer enrollment and the relationship between the
market year price and corn's reference price of $3.70 per bushel, the
Price Loss Coverage Program did not make large payments to corn base
acres in either 2014 or 2015. PLC payments averaged $0 per base acre in
2014 and $8.07 per base acre in 2015. For most corn farmers, PLC did
not reduce their exposure to lower incomes in 2014 and 2015.
Overall, ARC-CO has worked as expected. However, there are several
issues regarding the Farm Service Agency's implementation of this
program option and changes in commodity markets we hope this
Subcommittee will consider as it proceeds with crafting a new farm
bill.

In some counties, there has been a need to switch data
sources from National Agricultural Statistical Service (NASS)
to the Risk Management Agency (RMA) when there is an
insufficient number of producer surveys for NASS to publish a
yield. In some cases, source switching leads to concerns of
ARC-CO underpayments due to differences in yields.

In other situations, low or zero payments have occurred in
one county while surrounding counties receive large payments.
While producers should fully expect differences in payments
between counties, concerns regarding equity have been raised,
particularly with farms close to county lines. NCGA appreciates
the efforts of the Farm Service Agency and the NASS to use the
most accurate data available from NASS and RMA as well as their
consideration of adjustments in payments to address disparities
that occurred with the use of yields from a farm's FSA
Administrative County rather than the county where the farm is
actually located.

The 86 percent coverage level and ten percent payment zone
were developed during a different price environment than what
is occurring today. In particular, the high prices during the
2010 to 2012 period are not expected to repeat themselves. ARC-
CO parameters in a lower price environment will be far
different from those moving from a high to a low price
environment.

As critical as commodity programs are to the farm safety net,
Federal crop insurance is consistently ranked by NCGA members as the
most important risk management tool provided by USDA. U.S. corn farmers
use crop insurance extensively. Comparison of Risk Management Agency
(RMA) insured acre data to NASS planted acre data indicate that 87
percent of the acres planted in 2016 were insured with RMA crop
insurance products.
Of the variety of crop insurance products available, corn farmers
predominately choose to insure with Revenue Protection (RP), a revenue
insurance using farm yields in setting guarantees and payments. RP has
an increasing guarantee provision that increases crop insurance
guarantees if the harvest price is above the projected price. In 2016,
RP was purchased on 90 percent of the insured acres.
Moreover, corn farmers typically insure at high coverage levels.
For RP insurance, 14 percent of the acres are insured at the 70 percent
coverage level, 39 percent at the 75 percent coverage level, 28 percent
at the 80% coverage level, and 23 percent at the 85 percent coverage
level. These four highest coverage levels account for 95 percent of the
use. Use is geographically related. In the heart of the Corn Belt
(southern Minnesota, Iowa, northern and central Illinois, northern and
central Indiana, many western Ohio counties), more than 90 percent of
the acres are insured with 80 and 85 percent coverage level polices.
Coverage levels tend to decrease from the heart of the Corn Belt as
yield risk increases and crop insurance premium rises. For example, in
my home state of Texas, average coverage levels are well below those
purchased in Iowa and Illinois. Generally speaking, with higher
premiums, farmers are purchasing an average coverage level of 65
percent on smaller optional units.
The previously cited statistics and NCGA's risk management survey
conducted in late 2015 indicate that farmers have a strong preference
for revenue products using enterprise units that protect against
revenue declines across the farm. Policies that provide protection of
farm yields are far more popular than those at the county level. Our
national survey also confirmed that corn farmers are very price
sensitive to insurance. Increases in crop insurance premiums resulting
from reduced USDA support for discounts are likely to result in
purchases of lower coverage levels, just as in the past decreases in
farmer-paid premiums resulted in higher use.
Overall, corn farmers seem satisfied with overall crop insurance
performance. Concerns, though, have been raised over the following
provisions:

Price discounts are sometimes difficult to account for in
insurance. For example, crop damage due to aflatoxins can
result in difficulties in determining indemnity payments.

Prevented planting payments and related provisions seem to
cause concerns in some areas, particularly in areas where
flooding is common.

Producers in areas that are frequently struck by very low
yields have expressed concerns with the approved yield setting
mechanism. The yield exclusion provision and higher t-yields
implemented in past farm bills may have eliminated some of
these concerns.
The Need for Farm Policy
As we have stated before, the marked increases in the corn
industry's productivity have been achieved in large part by farmers'
investments in new technologies and more modern production practices.
NCGA believes that for the corn farmer who faces a high level of
financial and production risks every year, these investments were made
possible by a farm safety net that offers sound risk management tools
and a cost-share Federal crop insurance program that serves as the
foundation.
The crop insurance and commodity titles provide risk management to
corn farmers. Crop insurance provides within-year risk protection
against low yields or within-year price declines. The importance of
this insurance was illustrated in 2012, when a major drought hit the
Midwest and crop insurance provided payments for yield decreases
occurring in that year. Moreover, crop insurance has replaced ad hoc
disaster assistance programs. In 2012, a disaster assistance program
was not passed, unlike in previous years when adversity occurred and
crop insurance was not as strong or well-used of a program.
Commodity title programs provide protection against revenue or
price decreases across years, a set of risks different from those
addressed by crop insurance. ARC is designed to provide payments when a
current year's revenue falls below a guarantee based on the five
previous yields and prices. The importance of this protection is
illustrated in 2014 and 2015 when ARC made payments were made in the
face of revenue decreases. Without these payments, net incomes and
financial deterioration would have been much worse.
In recent years, the financial posit[i]on of farms has
deteriorated. However, few farms have faced the need to restructure by
liquidating assets or have faced bankruptcy, although the incidence of
farm bankruptcy has increased in recent years. Much of this can be
attributed to crop insurance payments, particularly those occurring in
2012, and recent ARC-CO payments. Without these payments, the financial
posit[i]on of many farms would be more seriously challenged.
The risk management benefits offered by crop insurance and
commodity title programs are particularly important to family farms who
receive the majority of their incomes from farming. In these cases,
off-farm income may be limited, and any changes to the family's
financial position is much more directly impacted by farm level
performance. Without crop insurance and commodity title payments, the
financial wherewithal of these farms would likely face serious erosion.
NCGA recognizes the daunting task now before the House Agriculture
Committee to craft the next farm bill given the multiple and diverse
needs of U.S. agriculture, particularly at a time of continuing budget
constraints and increasing financial challenges confronting U.S.
farmers and ranchers. I thank you for your time this morning and your
consideration of our views regarding the impacts of the 2014 Farm Bill
on corn growers.

The Chairman. Thank you, Mr. Spurlock.
I would like to yield to the gentlelady from Illinois, Mrs.
Bustos, to introduce our next witness.
Mrs. Bustos. Thank you, Mr. Chairman. And good morning to
all our panelists. It is my pleasure to introduce Ron Moore,
who happens to come from my Congressional district, the 17th
District of Illinois, but he is also the President of the
American Soybean Association. A native of Roseville, Illinois,
Ron is also the past Chairman of the Illinois Soybean
Association. With his wife, Debra, and son, Mike, Ron has a
soybean, corn, alfalfa, and feeder cattle operation. In
addition to the Soybean Association, he has been involved with
the Illinois Farm Bureau, the Illinois Beef Association, and
the Illinois Corn Growers Association, among others.
I would also like to add that it is fitting to have an
Illinoisan testify before us at this hearing today. Many of you
know Illinois because our world champion Chicago Cubs, and also
because of our deep dish pizza. Everybody can applaud now, in
addition to Ron. But most of Illinois is rural. And that might
be a surprise to some people, but most of Illinois is rural.
And agriculture is still our number one economic driver.
So I am pleased to welcome Ron because he knows, and I
know, that the number one state in the country for production
of soybeans is Illinois. I am pleased to welcome Ron to our
hearing, and I look forward to hearing your testimony. Thank
you, Ron.
The Chairman. I thank the gentlelady. And would make note
that Cardinal Nation extends well into Illinois, for the
record, but we don't have to talk about that right now.
Mrs. Bustos. That is true.
The Chairman. I know you know that, I am just kidding.
Mr. Moore, you are recognized for 5 minutes.

STATEMENT OF RON MOORE, PRESIDENT, AMERICAN SOYBEAN
ASSOCIATION, ROSEVILLE, IL

Mr. Moore. Well, thank you and good morning. Thank you for
the introduction, Congresswoman. I appreciate that. Mr.
Chairman, thank you, and the Members of the Subcommittee.
As stated, I am Ron Moore, President, and I live in
Roseville, Illinois. And we commend you for holding this
important hearing, and appreciate the opportunity to testify
today.
It has been only 3 years since enactment of the
Agricultural Act of 2014, but conditions in the U.S. farm
economy couldn't be more different. In view of higher market
returns, Congress decided to eliminate the direct payment
program to reduce farm bill spending by $23 billion below the
CBO baseline. Farm programs received most of this cut, and
agriculture was the only sector to contribute to deficit
reduction. Today, farm prices are down by 41 percent, and farm
income is down by 50 percent. Estimates for 2017 show a further
decline of 7.1 percent. Land rents and input costs remain
stubbornly high, and producers are having increasing difficulty
obtaining operating loans.
While a safety net provided by title I programs and crop
insurance has cushioned the impact on some farmers, others have
not fared as well, and the protection these programs provide is
declining as more low prices are factored into revenue
formulas.
ASA's voting delegates approved policy resolutions earlier
this month to ask Congress to write the 2018 Farm Bill based on
a very real need by U.S. producers for a stronger safety net
rather than extending existing programs. We appreciate your
Committee's recent letter to the Budget Committee, which made a
strong case against cuts to the current CBO baseline in the
2018 budget. However, as ASA and 16 other national
organizations stated in a March 15 letter to the Senate Budget
and Appropriations Committee, correcting shortcomings in the
2014 Act, and funding other important programs whose
effectiveness has diminished over time will require additional
resources from outside the farm bill.
We know this will be a difficult task for the Members of
your Committee as well as your Senate counterparts, but farm
groups are united and committed to support your efforts through
discussions with House leadership.
ASA's recommendations for the 2018 Farm Bill begin with the
need to maintain the current crop insurance program as a core
risk management tool for producers of soybeans and other crops.
The various sign-up options provided under crop insurance have
proven their net worth in recent years, even as the cost of the
program is now projected by CBO to decline about $1 billion a
year. Crop insurance isn't broken, and it doesn't need to be
fixed.
Regarding title I, we encourage the Committee to improve
and build upon current programs under the 2014 Act, rather than
develop new ones. We believe offering producers a choice
between price-based PLC and revenue-based ARC programs
appropriately reflects differences between crops and regions,
and that another choice should be offered only on a one-time,
crop-by-crop and farm-by-farm basis.
ASA strongly supports basing ARC and PLC program benefits
on base acres planted to crops in recent years, rather than on
acres planted to crops in their current year. This decoupling
of payments in the current year planting is critical to
encourage farmers to base their planting decisions based on
market signals, rather than on the expectation that a
particular crop will receive a government payment.
ASA supports giving farmers the choice to keep their
existing crop bases, reallocate bases to reflect plantings in
more recent years, or update bases to include production of all
program crops on a farm. We also support updating program
yields to reflect increases since they were last determined.
ASA believes that RMA data should be the default county
yield data used when available, as it is generally considered
more accurate than data based on voluntary surveys.
These and other title I changes, and the need to increase
funding for programs and other titles, will require additional
resources. These resources need to be in addition to the farm
bill baseline, not redistributed from within the farm bill.
Attached to my written statement is a document from eight
national farm organizations identifying issues on which we have
been able to reach consensus. These include agreements on a
number of commodity and conservation programs, crop insurance,
and other provisions. Our organizations will continue to work
together, and will work with other groups to develop common
positions on these and other issues in order to provide unified
input to the Congressional Agriculture Committees as the farm
bill process goes forward.
Finally, ASA strongly supports keeping the agriculture and
nutrition titles together in the farm bill. The only groups
pushing for them to be split into two bills are critics from
outside the ag community whose common goal is to defeat rather
than pass a new farm bill. However the Committee may decide to
proceed, an affirmation that the next farm bill must include
programs to support both producers and consumers of food would
send a strong message to farm bill critics, as well as to the
farm and anti-hunger organizations that support this goal.
Thank you for the opportunity to be here today, Mr.
Chairman, and I would be happy to respond to any questions.
[The prepared statement of Mr. Moore follows:]

Prepared Statement of Ron Moore, President, American Soybean
Association, Roseville, IL
Good morning, Mr. Chairman and Members of the Subcommittee. I am
Ron Moore, a soybean and corn farmer from Roseville, Illinois, and
President of the American Soybean Association. ASA represents U.S.
soybean producers on domestic and international issues. We commend you
for holding this important hearing, and appreciate the opportunity to
testify today.
Mr. Chairman, it's been only 3 years since enactment of the
Agricultural Act of 2014, but conditions in the U.S. farm economy
couldn't be more different. In early 2014, farm prices had been at or
near historic highs for 5 years. Soybeans peaked at over $14 per bushel
in 2013. In view of higher market returns, Congress decided to
eliminate the Direct Payment program and to reduce farm bill spending
by $23 billion below the CBO baseline. Farm programs received most of
this cut, and agriculture was the only sector to contribute to deficit
reduction.
Today, farm prices are down by 41 percent and farm income is down
by 50 percent. Due to continued low prices, estimates for 2017 show a
further decline in income of 7.1 percent. Land rents and input costs
remain stubbornly high, and producers are having increasing difficulty
obtaining operating loans. While the safety net provided by title [I]
programs and crop insurance has cushioned the impact on some farmers,
others have not fared as well. And the protection these programs
provide is declining as more low prices are factored into their revenue
formulas. Many producers are asking that the next farm bill be written
now rather than waiting 18 months or even longer.
In view of these circumstances, ASA's Voting Delegates approved
policy resolutions early this month that ask Congress to write the 2018
Farm Bill based on the very real need by U.S. producers for a stronger
safety net rather than extending existing programs. We appreciate your
Committee's recent letter to the Budget Committee, which made a strong
case against cuts to the current CBO baseline in the FY 2018 budget.
However, as ASA and 16 other national farm organizations stated in a
March 15 letter to the Senate Budget and Appropriations Committees,
correcting shortcomings in the 2014 Act and funding other important
programs whose effectiveness has diminished over time will require
additional resources from outside the farm bill. We know this will be a
difficult task for Members of your Committee as well as for your Senate
counterparts. But farm groups are united and committed to support your
efforts through discussions with the House leadership and with your
colleagues in the House.
ASA's recommendations for the 2018 Farm Bill begin with the need to
maintain the current crop insurance program as the core risk management
tool for producers of soybeans and other crops. The various sign-up
options provided under crop insurance have proven their worth in recent
years, even as the cost of the program is now projected by CBO to
decline by about $1.0 billion per year. Crop insurance isn't broken,
and it doesn't need to be fixed.
Regarding title [I], we encourage the Committee to improve and
build upon current programs under the 2014 Act rather than to develop
new ones. We believe offering producers a choice between a price-based
PLC program and a revenue-based ARC program appropriately reflects
differences between crops and regions, and that another choice should
be offered on a one-time, crop-by-crop, and farm-by-farm basis.
Under a new sign-up, CBO expects many farmers who chose county ARC
for soybeans and other crops will opt for PLC because of the impact
that successive years of lower prices have had on ARC revenue
benchmarks. This may happen, but we believe a choice between programs
should still be offered, just as it was when 94 percent of soybean
producers chose county ARC under the current bill. And a lower
estimated participation level in county ARC relative to PLC may allow
its revenue benchmarks to be enhanced without incurring significant
additional cost. We also support efforts to improve the attractiveness
of the individual coverage option under ARC.
Just as we did during debate on the 2014 Farm Bill, ASA strongly
supports basing ARC and PLC program benefits on base acres planted to
crops in recent years rather than on acres planted to crops in the
current year. This ``decoupling'' of payments from current-year
planting is critical to encouraging farmers to base their planting
decisions on market signals rather than on an expectation that a
particular crop will receive a government payment. Decoupling prevents
production distortions that, under past farm bills, resulted in growing
surpluses and a spiral of ever-lower prices for certain crops.
ASA supports giving farmers a choice to keep their existing crop
acreage bases, reallocate bases to reflect plantings in more recent
years, or update bases to include production of all program crops on a
farm. We also support updating program yields to reflect increases
since they were last determined.
Another improvement needed in title [I] is to change the current
cascade policy for selecting yields under the county ARC program. ASA
believes that RMA data should be the default county yield data used,
when available, as it is generally considered more accurate than data
based on voluntary surveys. In the event a county doesn't have RMA
yield data, the RMA yield for an adjacent county or counties should be
used. In cases where there are no adjacent counties with RMA yields,
the county's NASS yield should then be used. While this approach could
result in changes in the way benefits are currently distributed, using
RMA data as the default county yield would be fairer and more
defensible than the current policy.
ASA is aware that other crops have programs that have not provided
an effective safety net for their producers. Cotton farmers are asking
to replace or supplement the STAX program by making cottonseed an
``other oilseed'' under title [I]. ASA supports this request, provided
funding doesn't come from elsewhere in the farm bill and that the
program is WTO-compliant.
These changes and the need to increase funding for farm bill
programs outside title [I] will require additional resources. These
resources need to be in addition to the farm bill baseline, not
redistributed from other farm bill programs. As I stated earlier, ASA
and other farm organizations are united in supporting this effort, and
are committed to working with your Committee to achieve it.
Finally, ASA strongly supports keeping the agriculture and
nutrition titles together in the 2018 Farm Bill. The only groups
pushing for them to be split into two bills are critics from outside
the agriculture community whose common goal is to defeat rather than to
pass a new farm bill. However the Committee may decide to proceed, an
affirmation that the next farm bill must include programs that support
both producers and consumers of food would send a strong message to
farm bill critics, as well as to farm and anti-hunger organizations
that support this goal.
Thank you, Mr. Chairman. I'll be happy to respond to any questions.
Attachment
Farm Bill Issues on Which We Agree
On March 15, 2017, farm and commodity organizations sent a letter
to the Senate Budget and Appropriations Committees pointing to the
sharp fall in farm prices and income since 2013 and asking Congress to
provide additional funding in order to develop an effective farm income
safety net in the 2018 Farm Bill. A number of these organizations have
met to discuss specific issues that need to be addressed in the next
farm bill and will continue to work to develop consensus proposals to
share with the Agriculture Committees on potential ways to resolve
them. The following organizations are in agreement on the attached
initial list of positions. To be clear, the beginning of this document
covers only those issues where there is a consensus on every issue.
As our discussions continue and as guidance from the Committees is
provided, we hope to expand this list to cover additional issues
expected to be considered during negotiation of the new farm bill.

Overarching Issues:

Increase funding in the 2018 Farm Bill in order to address the
significant reductions in farm prices and income incurred since 2013,
and to meet other critical needs.
Federal crop insurance and commodity programs are our top funding
priorities.

Commodity Programs:

Continue a counter-cyclical program like the Price Loss Coverage
(PLC) program and a revenue program like the Agricultural Risk Coverage
(ARC) program.
Change the ARC and PLC programs to make them more effective and
fairer to all farmers.
If the ARC and PLC programs continue, farmers must be allowed to
re-elect and re-enroll on a crop by crop basis.
Commodity program payments should be based on recent historical
crop production rather than on current year planting.

Crop Insurance Programs:

Oppose reducing premium discounts.

Conservation Programs:

Maintain strong funding for Federal conservation programs which
preserve environmental benefits, while continuing the prioritization of
working lands conservation programs.
Maintain strong funding of the Environmental Quality Incentives
Program (EQIP) and the Conservation Stewardship Program (CSP).
Examine the rental rates of the Conservation Reserve Program (CRP)
and the Conservation Reserve Enhancement Program (CREP) annually at
enrollment to ensure they mirror the rental rates of comparable land in
the immediate area.
Improve State Technical Committees to make them more ag-friendly by
encouraging producers' participation and input.

Other Programs:

Ensure adequate funding for agricultural research and education.
Continue work on simplifying procedures, reducing paperwork
requirements and streamlining interactions between the Farm Service
Agency (FSA), the Natural Resources Conservation Service (NRCS) and the
Risk Management Agency (RMA) via the Acreage Crop Reporting
Streamlining Initiative (ACRSI).
Continue and work to improve the Young and Beginning Farmer
Programs implemented in the 2014 Farm Bill.

American Farm Bureau Federation; National Corn Growers Association;
American Soybean Association; National Farmers Union;
National Association of Wheat National Sunflower Association;
Growers;
National Barley Growers U.S. Canola Association.
Association;

Future Farm Policy Work:

On several other issues, more than a majority of the organizations
are in agreement, but one or two have conflicting policy statements. We
plan to continue to work towards agreement, but rather than another
consensus document, we hope to ``negotiate'' some of those differences
in future meetings and provide additional input to Congress.
Note: The National Cotton Council, Southern Peanut Farmers
Federation and USA Rice have also participated in these discussions but
do not have sufficient policy yet to support these provisions. All
three of those groups, as well as those listed on this statement,
intend to continue to work together to see if we can come to further
agreements on these and other 2018 Farm Bill issues.

The Chairman. Thank you.
I now would like to introduce our next witness, President,
National Association of Wheat Growers, from Sharon Springs,
Kansas, Mr. David Schemm. You are recognized for 5 minutes.

STATEMENT OF DAVID K. SCHEMM, PRESIDENT, NATIONAL ASSOCIATION
OF WHEAT GROWERS, SHARON SPRINGS, KS

Mr. Schemm. Chairman Crawford, Ranking Member Nolan, and
Members of the Subcommittee, thank you for the opportunity to
testify today.
I am David Schemm, the President of the National
Association of Wheat Growers. I raise wheat and other crops on
my farm near Sharon Springs in western Kansas.
A number of factors have caused prices to drop, and are
expected to remain low for the foreseeable future. Through my
testimony, I will highlight some of the key examples of how the
2014 Farm Bill programs have functioned effectively, and some
areas where tweaks would be helpful. You will find more detail
in my written testimony.
Let me start by laying out the economic conditions in wheat
country. The past couple of years have proven to be
particularly challenging for wheat farmers. Prices have dipped
to levels we haven't experienced in a long time. Producers of
Hard Red Winter wheat in my neck of the woods became eligible
for LDPs and marketing loans for several months because prices
dropped below loan rates. Farmers have had to deal with a
rapidly declining market, and these low prices will make each
passing year more difficult to get by, particularly for young
and beginning farmers.
The low prices have also contributed to this year's winter
wheat plantings decreasing to the lowest level since 1909; a
time when farmers were working with a horse and plow. These
conditions have made farm support programs absolutely critical.
As the Agriculture Committee begins to write the next farm
bill, it is important to approach the reauthorization process
from the perspective of what farmers and rural America need.
Moving forward, I will lay out a few issues that have
arisen for your consideration. I have utilized both ARC and PLC
for my wheat crop, and that is why I can speak from personal
experience on both of these programs. One issue we encountered
during implementation was disparities in payment rates in the
ARC-County program between neighboring counties. We have
concern about the data that the Farm Service Agency uses to
make yield determinations. In using NASS statistical data to
establish yields, there is the possibility that different data
sources could be used from year to year. To address this issue,
our producers believe that using RMA data, where available, as
the first data source would provide more assurances of accuracy
and subsequently the integrity of the payment rate established
for ARC-County.
One additional area where our producers have concern is
that the current timing of assistance affects their ability to
get credit. I talked to my banker yesterday. He said that he
cannot incorporate safety net tools into a producer's cash-flow
analysis because of the inconsistency and inaccuracy in these
programs, compounded by the fact that assistance won't go out
for a year and a half later.
Shifting now to price loss coverage. A large percentage of
wheat base acres, 43\1/2\ percent, were enrolled in PLC, and we
expect more participation if prices remain low, and there is an
opportunity to re-elect programs which NAWG would support. We
need to ensure the PLC reference price is set at a level that
provides a sufficient safety net when prices remain low. NAWG
urges Congress to increase the PLC wheat reference price to a
level that is tied to a cost of production.
In addition to title I programs, crop insurance is the most
important risk management tool available to our farmers. NAWG
opposes any efforts that would undermine the current structure
of the program. We oppose any restrictions on eligibility for
program participation based on a producer's adjusted gross
income, any caps on Federal cost-share level, and any
restrictions on a producer's ability to use the harvest price
option. Restrictions would cause farmers to lower their crop
insurance participation, which would cause premiums for all
producers, big and small, to increase. Crop insurance has
functioned incredibly well, and NAWG urges you to maintain the
current structure of this critical program.
Ultimately, wheat farmers and all of agriculture are
suffering some of the toughest economic conditions we have had
to deal with since the 1980s. A strong safety net, risk
management tools, conservation, and other important titles in
the farm bill are needed now more than ever. Farmers who have
the ability have shifted acres to crops that either have better
returns or better risk protection. The shift of acres away from
wheat shows that there needs to be tweaks to the program to
better address the needs of our producers. Many of these tweaks
are part of the consensus document that has been developed
collaboratively with several other commodity organizations.
This document has been included as an attachment to my written
testimony. Moving forward, I urge you to move quickly in this
process to ensure a full reauthorization bill can be completed
prior to September 30 of 2018, so that farmers have certainty
about the structure of the safety net and other farm bill
programs.
With that, I will be happy to answer any questions.
[The prepared statement of Mr. Schemm follows:]

Prepared Statement of David K. Schemm, President, National Association
of Wheat Growers, Sharon Springs, KS
Chairman Crawford, Ranking Member Nolan, and Members of the
Subcommittee, thank you for the opportunity to testify today. I'm David
Schemm, the President of the National Association of Wheat Growers. I
raise wheat, corn, grain sorghum, and sunflowers on my farm near Sharon
Springs in western Kansas. Thank you for holding this hearing as part
of a larger series of hearings each of the Subcommittees are holding to
review programs ahead of the next farm bill reauthorization.
Wheat growers across the country have experienced a multitude of
challenges the past couple of years, with unfair competition from
countries like China that have support systems that distort trade, a
dollar value that is relatively high making our wheat more expensive
than other major wheat producing-countries, and a bigger than expected
crop right here at home last year. Wheat prices have been on the
decline for the past couple of years, and took a significant dive last
year. Prices are at unreasonably low levels right now and are expected
to remain low for the foreseeable future. Programs authorized in the
Agricultural Act of 2014 (the farm bill), and the crop insurance
program in particular, have served has key tools to enable farmers to
continue farming.
As the 2014 Farm Bill programs have been implemented, there have
been some hiccups along the way. We've worked through them and have
sought your help in influencing implementation, and we sincerely
appreciate your help and attention to our concerns along the way.
Despite those hiccups, the programs have been functioning as they were
supposed to: as a safety net for producers. Through my testimony, I
will highlight some key examples of how these programs have functioned
effectively and some areas where tweaks would be helpful.
Let me start by laying out the economic conditions in wheat
country.
Economic Conditions in Wheat Country
The past couple of years have proven to be particularly challenging
for wheat farmers across the country. Farmers of most commodities are
experiencing lower than normal prices. Wheat in particular has dipped
to levels we haven't experienced in a long time. Producers of Hard Red
Winter (HRW) wheat in my neck of the woods became eligible for
marketing assistance loans (MALs) and Loan Deficiency Payments (LDPs)
for several months for the first time in several years because prices
dropped below loan rates. When the last farm bill was written, loan
rates were set at such a low level they were never expected to trigger.
They have, but MALs and LDPs have functioned as helpful cash-flow
tools. Farmers have had to deal with a rapidly declining market, and
months and years of sustained low prices will make each passing year
more difficult to get by, particularly for young and beginning farmers
who weren't able to build up reserves during the high price years. This
is particularly relevant as the average age of a farmer is 58 and
expected to climb over the coming years.
There have been a number of different factors that have contributed
to the low prices, which I will discuss throughout my testimony. One
additional contributing factor has been market competition from other
large wheat-producing countries. Though this falls outside the scope of
title [I], I strongly believe that Congress needs to continue to
aggressively pursue new markets. Along those lines, NAWG supports
reauthorizing doubling funding for the Market Access Program (MAP) and
Foreign Market Development (FMD) program as part of the next farm bill.
As the chart below laying out the market year average price shows,
there have been some big swings over the past few years and more
recently there have been significant drops in prices; the market year
average price is determined by USDA and is used in setting farm program
and crop insurance payments. Additionally, as I'll discuss later in my
testimony, the price that farmers are actually receiving from their
local elevators is often much lower than what the market year average
price would show.
Market Year Average Price

The data in the above chart for 2008 through 2015 shows the Market
Year Average Price from USDA NASS, and from 2016 through 2027 shows the
assumptions made by the Congressional Budget Office (CBO) for future
Market Year Average prices. The low prices have led to farmers needing
to take on more debt in order to continue operating. As such,
producers' debt to asset ratio's have grown rapidly recently. The chart
below lays out the degree to which producers have taken on debt. Over
eight percent of wheat producers are considered by USDA's Economic
Research Service to be ``highly leveraged'' and 16 percent are
considered to be ``extremely leveraged.''
About One in Ten Farms Are Highly Or Extremely Leveraged, But it Varies
By Commodity

Data: USDA-ERS, Nov. 2016 forecast for 2016.

The economic conditions of the past few years have also contributed
to a drop in planted wheat acreage, which is generally predicted to
continue moving forward. Plantings for 2016-2017 winter wheat are at
the lowest level since 1909, a time when farmers were working with a
horse and plow. Spring wheat planting is expected to be down as well,
and we anticipate overall planted acres of wheat will be at
historically low levels this year.
Wheat Planted Acres
(Millions of Acres)

The chart above shows historic and projected future plantings of
wheat. The 2002-2016 timeframe shows the actual planted acres, as
published by USDA's National Agricultural Statistics Service (NASS).
The 2017-2027 data points show the anticipated future plantings of
wheat as published in the January 2017 Congressional Budget Office
(CBO) baseline report. CBO anticipates that there will be a small swing
back up in acreage, but this still exemplifies the challenging
conditions facing growers of wheat when they pull back their production
and shift to other crops.
Writing the Next Farm Bill
The last farm bill was estimated to have reduced spending by $23
billion over 10 years, at the time of passage. Since then, farm bill
programs have cost less. The recent CBO baseline estimates that farm
bill programs cost about $100 billion (over 10 years) below what was
originally estimated. These programs have performed well. But it also
means this Committee will have a smaller baseline for writing the next
farm bill, even though there is a growing need for improving farm
support programs which will require additional baseline. NAWG recently
joined with a broad array of organizations, including those represented
here, in sending a letter to the House and Senate Budget and
Appropriations Committees laying out the economic conditions in farm
country and laying out the case for more resources for writing the next
farm bill than are available under the most recent CBO baseline. We
want the Agriculture Committees to have the resources necessary to
write programs that meet producers' needs.
Agriculture Risk Coverage (ARC) program
One of the higher profile issues we encountered during
implementation was significant disparities in payment rates in the ARC-
County program between neighboring counties in some areas of the
country. ARC-County was, of course, designed in a way where there would
be differences in payment rates as it's a county-based program. Payment
rates will inherently vary across the countryside depending on the
growing conditions in particular counties. However, we have concern
about the data that the Farm Service Agency uses to make yield
determinations.
The FSA has administratively taken the approach of first utilizing
data from the National Agricultural Statistics Service (NASS). This
data is gathered through voluntary producer surveys, and if NASS is
unable to obtain at least 30 responses from producers in a county then
the agency won't publish a yield for that county. If NASS is unable to
publish a yield, FSA will then utilize a cascade of other data sources,
including Risk Management Agency (RMA) data, regional NASS data, or a
determination made by the state FSA director. As this sort of situation
could happen in a particular county inconsistently over time, that
could mean that the data used to establish a county's benchmark yields
and the actual yield for the year in question could come from multiple
sources; this is like comparing apples to oranges. To address this
issue, our producers believe that using RMA data as the first data
source would provide more assurances of the accuracy of the data that's
being used, and subsequently the integrity of the payment rates
established for ARC-County. We recognize that there will still be
disparities in payment rates between counties, but utilizing more
reliable data will help to instill more confidence in our producers
that they are getting fair treatment from the program.
Much of wheat country is in very rural areas with large counties
where weather and growing conditions can vary widely from one part of
the county to another. This dynamic was part of the reason the last
farm bill included ARC-Individual coverage (ARC-IC). As ARC-IC only
applies on up to 65 percent of a participants' base acres, it is less
attractive than participating in ARC-County. An option to improve the
functionality of ARC-County could be to explore smaller-than-county
sized geographic areas, like crop-reporting districts, that could be
utilized for establishing payment rates. This approach could enable
payments to be triggered at a more localized level and to be more
reactive to the actual experience of producers.
Our producers acknowledge the political and budgetary
considerations at play in writing the last farm bill, and the
subsequent need to shift payments under the title [I] programs until
after the subsequent fiscal year after the crop year has concluded.
However, there are multiple negative ramifications at the farm level as
a result of this budget move. The seed and fertilizer bills don't wait
until a year after the crop is harvested before they come due.
Additionally, when I go to the bank to prepare to plant a crop, it's
nearly impossible to predict a year and a half in advance what the
assistance I might be eligible for will look like; as a result I can't
accurately predict my cash-flow. That has a big negative impact on my
ability to get financing. It would be beneficial for you to explore the
possibility of moving up the timeframe for program payments, or to
maybe explore the possibility of making advanced partial payments.
Price Loss Coverage
A larger percentage of wheat base acres were enrolled in Price Loss
Coverage (PLC) as compared to some of the other major commodities, like
corn and soybeans. About 43.5 percent of wheat base acres are enrolled
in PLC. The recent Congressional Budget Office (CBO) baseline, in
projecting the costs of USDA programs over the next 10 years, assumes
that Congress will allow for a producer re-election after the
expiration of the current farm bill and that 80 percent of base acres
will enroll in PLC. This is anticipated as lower prices of the past
couple of years will begin to be incorporated into the ARC benchmark,
ultimately reducing the benchmark revenue.
From NAWG's perspective, this means that it will be important to
adjust the ARC formula to enable it to continue to be functioning as a
safety net when the need is there. It also means we need to ensure the
PLC reference price is set at a level that provides a sufficient safety
net when prices are at perpetually low prices.
NAWG urges Congress to increase the PLC wheat reference price to a
level that is tied to cost of production. To make PLC as effective as
possible, an appropriate measure for a reference price should be what
it costs to produce the crop. We feel this would be a fair way to set
support levels and to provide relatively proportional levels of
support.
Producer Choice
The 2014 Farm Bill rightly included a producer choice between
revenue protection and price protection as part of the process of
replacing the previous direct payments program. NAWG supports
maintaining a producer choice between revenue and price protection as
part of the next farm bill.
In general, the ARC and PLC programs have been working as they were
intended to work and they have been providing a key safety net for
producers across the country. We were pleased at the speed with which
the Farm Service Agency (FSA) was able to implement the new programs
and to make them available to producers beginning with the 2014 crop
year. Moving forward, we believe these programs need to be enhanced for
wheat to address the highly leveraged situation they now find
themselves in, as indicated in the previous chart.
Other Title [I] Issues
Wheat growers are heavily reliant upon our export markets, with \1/
2\ of our crop being shipped out. As such, it's critically important to
our growers that we have a level playing field internationally in which
to sell our wheat, and that includes ensuring we have an international
arbiter of rules. The World Trade Organization (WTO) framework isn't
perfect, but we think it's important that all member countries abide by
WTO rules, including ourselves. We applaud the work the House
Agriculture Committee has done to bring attention to the rules
violations that have been committed by countries like China, whose
policies have been shown to cause U.S. wheat farmers to lose out on
roughly $650 million a year. But we also strongly urge you to write
legislation that provides a safety net that doesn't violate our trade
commitments. We believe the current system of tying payments to a
producers' recent historical production should be continued.
Crop Insurance--What's Working and What's Not Working
The Federal Crop Insurance Program has been and continues to be
farmers' most important risk management tool. The current structure of
the program, which requires a farmer to pay a premium, the cost of
which is shared with the Federal Government, and the producer has to
suffer an indemnifiable loss before they get any sort of payment.
Crop insurance is very popular with producers. For the 2015 crop
year, there 56.8 million acres of wheat grown in the United States
(according to USDA's Economic Research Service (ERS)), of which 49.4
million acres (or 87 percent) were insured (according to USDA's Risk
Management Agency Summary of Business document, as of March 20, 2017).
This high participation rate is indicative of the effectiveness of the
program.
The last couple of years have been particularly difficult for wheat
farmers. Crop insurance has played an important role in helping
producers get through the current low prices. Each year there will
inevitably be producers in some part of the country that experiences
weather conditions outside of their control that could take out their
crop. Crop insurance is critically important to enable a producer to
farm another year after such an experience.
NAWG opposes any efforts that would undermine the current structure
of the program. Specifically, we oppose any restrictions on eligibility
for program participation based on a producer's Adjusted Gross Income,
any caps on the Federal cost-share level, and any restrictions on a
producer's ability to utilize the Harvest Price Option (HPO).
Restrictions on eligibility would cause farmers to lower their crop
insurance participation which would not only cause the producer to take
on more risk, but it would also cause premiums for all producers, big
and small, to increase. If producers lower their coverage or if fewer
producers are participating, that means there are fewer acres over
which to spread risk in the program, ultimately requiring premiums to
increase.
In addition to supporting the current structure of the producer
support component of crop insurance, NAWG also opposes any cuts to the
delivery system. The current public-private partnership for program
delivery to producers has worked very well and has ensured that
producers can get timely assistance when economic or weather disasters
strike. Efforts to reduce the target rate of return or the
Administrative and Operating (A&O) reimbursements would negatively
affect crop insurance companies and their ability to deliver programs,
and would thus have a negative impact on producers. The Federal crop
insurance has also performed incredibly well, with an improper payment
rate of just 2.2 percent, which is about \1/2\ the government-wide
average of 4.39 percent. NAWG urges you to exclude any of these types
of proposals.
Wheat producers have experienced a few issues over the past couple
of years that warrant discussion.
Yield Exclusion
NAWG was very supportive of the inclusion of the Yield Exclusion
provision as part of the last farm bill. When the farm bill was being
written, many producers were suffering periods of prolonged drought.
The Yield Exclusion provision enables producers in a county that had
yields with a 50 percent or greater hit to be able to exclude that
year's yield from their Actual Production History. We were, however,
disappointed that USDA was unable to implement this provision for the
2015 winter wheat crop. Members of the House Agriculture Committee were
true champions of wheat during that time when you raised this problem
with USDA officials. Though the Department was still unwilling to have
the provision apply to that year's crop, the Committee's attention to
this issue undoubtedly drove USDA to quickly move forward with
implementation for spring-seeded crops that year and subsequently the
2016 winter wheat crop.
Non-Convergence in the HRW Futures Market
I'm a Hard Red Winter (HRW) wheat producer in western Kansas. Last
year, our planted acres were down but we still had a crop that exceeded
our previous yield record by over 10 bushels per acre. We had a much
bigger crop than expected. This had a lot of implications for the
markets. Where were we going to not only ship our wheat, but where were
we going to store it in the interim? There were and continue to be
significant logistical issues associated with the huge crop. This was
just exacerbated by big crops in other large-producing countries, like
Russia which was the largest producer last year. We had significant
competition in our export markets from other countries whose wheat was
relatively less expensive than U.S. wheat in part because of the
relatively high value of the U.S. dollar. These economic forces have
been part of the cause of the depressed prices.
At harvest time, as is the case for any crop, there is generally
immediate downward pressure on prices because everyone is delivering to
the market right from the field at the same time. We'll often
experience a growing divergence in the local cash price as compared to
the futures market; the difference is referred to as the basis.
Producers of HRW experienced a much wider basis than what we've
experience in a long time. Personally, my local basis jumped from $0.70
a bushel to $1.55 a bushel in just 10 days. This was a dramatic nose-
dive in my local cash price.
There are several different options that can be explored to address
this non-convergence issue that I don't need to get into here, but this
Committee should be aware of the crop insurance implications of this
problem. For HRW producers with revenue coverage, their contract is
based on the Kansas City futures price. When the local cash price was
$1.55 below the futures price, had I sold the crop and tried to pursue
an indemnity, my contract would've only reflected that I was receiving
the futures price rather than the actual price. In essence, my
``actual'' revenue was significantly inflated compared to my real
experience. There are similar implications for the ARC program, in that
the ARC formula utilizes a market year average price, which wouldn't
account for farmers experiencing a wide basis.
NAWG has been exploring this issue to identify whether there are
components of the crop insurance program that can be adjusted to make
the program more reactive to what the farmer is actually getting paid
for their crop. As we continue with this process, I will keep in touch
with you and the rest of the Committee.
Quality Adjustments
Our wheat markets set strict standards for quality. And wheat tends
to be more susceptible to quality problems than many other commodities.
There are technologies in place to assist producers in producing the
best quality of wheat anywhere in the world, but we are still dependent
upon favorable growing conditions. This year, two of the more high
profile issues our growers experienced were low Falling Numbers and
vomitoxin in the northern Plains.
Many producers have suffered from widespread financial losses due
to weather-induced problems resulting in poor end-use quality as
measured by low Hagberg-Perten Falling Numbers. The Falling Number test
detects starch degradation due to alpha-amylase enzyme activity and
possibly other factors in wheat flour. This ultimately indicates that
the flour has poorer quality for baked goods. Farmers experiencing low
Falling Numbers will likely receive a discount at their elevator, often
significant depending on the degree to which their load was affected.
Additionally, with low Falling Numbers, though the quality has taken a
hit, it isn't a yield issue. In fact, the producers in Washington,
Idaho, and Oregon that experienced this problem had bigger than average
yields. However, the way the statute is written, those quality
discounts are applied to a producer's Actual Production History (APH);
even though low Falling Numbers doesn't directly affect a producer's
yield, RMA still requires that their yield be reduced to reflect that
quality loss. This occurs even if the producer doesn't pursue an
indemnity. From a fairness standpoint, it would be worth looking into
whether such quality discounts could be applied to the price side of
the equation rather than the yield side so that a producer's APH isn't
affected for 10 years until that year's yield is cycled out.
Conservation Compliance
NAWG continues to have serious concerns about linkage of
conservation compliance to crop insurance. NAWG supports a strong crop
insurance program as part of the farm safety net and believes that
growers should be encouraged to purchase crop insurance. Additional
requirements to obtaining crop insurance, such as the conservation
compliance requirements added in the 2014 Farm Bill serve as a
disincentive to purchase crop insurance. NRCS continues to have a
backlog of wetland determinations, with over 2500 awaiting review in
the prairie pothole region at the beginning of January. NAWG supports
voluntary conservation programs included in the farm bill that work
with producers on their land in production to help them adopt
conservation practices to improve natural resources and farm
productivity.
Conclusion
Ultimately, wheat farmers and all of agriculture are suffering some
of the toughest economic conditions we've had to deal with since the
1980s. The political and policy dynamics facing Congress this year are
much different than the process to write the last farm bill. A strong
safety net and risk management system is needed now more than ever. At
the same time, it doesn't matter whether farmers are getting record
prices or if they're bottoming out. The risks that farmers take every
year in putting a crop in the ground requires there to be an effective
risk management system and safety net in place to offset some of that
risk in order to protect against the inevitable weather disaster or
price drop. Crop insurance and the title [I] programs have proven to be
effective and good policy in general.
For many farm bills, Congress has asked commodity groups to work
together to come up with consensus on policy topics in the farm bill.
The attached document is the beginning of that collaborative process.
Farm and commodity organizations sent a letter to the Senate Budget and
Appropriations Committees pointing to the sharp fall in farm prices and
income since 2013 and asking Congress to provide additional funding in
order to develop an effective farm income safety net in the 2018 Farm
Bill. A number of these organizations have met to discuss specific
issues that need to be addressed in the next farm bill and will
continue to work to develop consensus proposals to share with the
Agriculture Committees on potential ways to resolve them. The following
organizations are in agreement on the attached initial list of
positions.* To be clear, the beginning of this document covers only
those issues where there is a consensus on every issue.
---------------------------------------------------------------------------
*Editor's note: the document referred to is entitled Attachment,
and follows the prepared statement of Mr. Moore (located on p. 799).
For purposes of this publication it is not reprinted here.
---------------------------------------------------------------------------
As our discussions continue and as guidance from the Committees is
provided, we hope to expand this list to cover additional issues
expected to be considered during negotiation of the new farm bill.
As you continue your series of hearings, I look forward to working
with you to write the next farm bill. I also urge you to move quickly
with Chairman Conaway in this process to ensure a full reauthorization
bill can be completed prior to the expiration of the current farm bill
on September 30, 2018, so that producers have certainty about the
structure of the safety net moving forward.
With that, I'll be happy to answer any questions.

The Chairman. Thank you.
I would now like to yield to the gentleman from Minnesota,
the Ranking Member of our full Committee, Mr. Peterson, for the
next introduction of our witness.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Well, thank you, Mr. Chairman, and thank you
for holding the hearing.
I would like to welcome one of my constituents, Peter
Friederichs, from just south of me, over in west central
Minnesota in my district. He is an outstanding leader in
agriculture in our area. In addition to barley, he grows wheat,
soybeans, and sunflowers, I guess. And you have a seed
business, right? He is one of the, as I said, leaders of our
area. And as you will hear from his testimony, I went through
many years fighting with the former Staff Director of the
Committee, since 1992 I tried to raise the barley target
prices, and I was unsuccessful year after year after year,
until the staff director retired. And then we were able to get
the target price raised from, it was $2 something to $4.95. One
of the arguments I had with him was that, well, if we raised
it, it was basically more towards the malting barley price
rather than feed barley, we are going to get too much
production. Well, that hasn't happened. All these arguments
that we have about how these target prices are distorting
production and how, if you use base acres versus planted acres
you are going to distort production, I don't think hold up when
you see what happens in the real world.
So as somebody who used to grow barley, maybe the reason
that the production is down, it is so miserable to harvest,
especially if you don't have a cab. You are going with the
wind.
But anyway, welcome, Peter. Glad to have you here.
The Chairman. I thank the gentleman. And, Mr. Friederichs,
you are recognized for 5 minutes.

STATEMENT OF PETER FRIEDERICHS, PRESIDENT, NATIONAL BARLEY
GROWERS ASSOCIATION, FOXHOME, MN

Mr. Friederichs. Thank you, Mr. Chairman and Members of the
Committee, for inviting me here to testify today.
I am Peter Friederichs, President of the National Barley
Growers Association. I farm in west central Minnesota, growing
barley, wheat, soybeans, and sunflowers. Because most barley
growers also plant several other crops on their farms, I will
concur with the statements my colleagues are making today, and
focus for the most part on barley-specific issues.
Barley is a cool-season crop grown primarily along the
Canadian border, from Minnesota to Washington State, and down
into Wyoming and Colorado. This region accounts for 90 percent
of the 3\1/2\ million acres planted annually. About 75 percent
of this production is destined to become malting barley, with
the remainder going into the feed market. Because feed barley
prices can be \1/2\ of malt barley prices, most growers do not
plant barley without securing a malt contract. Good production
and acceptance rates the last 2 crop years have reduced the
demand for malt barley, and acreage is expected to decline this
year because fewer contracts are available from the malt and
beer industry.
The countercyclical nature of the 2014 Farm Bill is working
as intended, especially in barley's case. Seventy-five percent
of barley acres were signed into the PLC program, with the
remainder going into the ARC program. No PLC payments were
triggered, and minimal ARC payments were issued for the 2014
and 2015 crop years because barley prices did not fall as
sharply as other crops during those years; down just 15 percent
from their peak in 2012. However, 2016 barley prices are down
another ten percent and will trigger more payments. And our
2017 contract prices have fallen an additional ten percent.
The steep discount for feed barley means planting for the
malting market is a high risk venture. For that reason, NBGA
and our industry partners worked with the Risk Management
Agency to develop a malt barley endorsement to help mitigate
this risk. Although this option was first available last year,
there are still issues to be worked out regarding full coverage
of these quality risks. NBGA is appreciative of RMA's
willingness to continue working with us on improving this
endorsement. And for the record, the NBGA is a staunch
supporter of the overall crop insurance program.
All farmers are very concerned about the status of
agriculture trade in the current political climate. For
instance, Mexico is our number one market for malting barley
exports, and recent efforts to increase sales to our customers
south of the border have been put on hold indefinitely due to
the current uncertainty surrounding our nation's trade policy
with Mexico. If this export market is lost, agricultural prices
could fall further and result in even higher commodity title
payments than currently expected.
The 2014 Farm Bill has created another challenge that was
unforeseen at the time it was passed. Farmers are finding it
increasingly difficult to secure annual operating loans from
their local banks because of low crop prices, coupled with high
input costs. Each year, we prepare a financial plan for our
banks, showing that we can generate a positive cash-flow with
our expected crop revenue, as well as our expected operating
expenses. This year, many of these plans are only showing a
positive cash-flow if the expected 2014 farm program payments
is included. However, current Federal banking regulations are
not allowing banks to include this payment that is received a
year later because the discovery period of the 2017 average
marketing year price does not begin until after harvest, runs
for a year, and is, thus, considered too far in the future and
speculative to be included. If the farmer has working capital
that can be applied to the deficit the loan can still be
approved, but in worst case scenarios farmers without adequate
working capital may be denied operating loans, and ultimately
forced out of business. If the low crop prices continue as
predicted and our costs don't go down, the situation will only
get worse as more and more farmers deplete their working
capital.
In closing, the NBGA has recently partnered with the
malting and beer industries, both large and small craft
brewers, to ensure that an adequate supply of good quality malt
barley is grown in the U.S. to produce the 190 million barrels
of beer brewed annually. Barley acreage has been in perpetual
decline over the last 2 decades, and it became clear to all
that a concerted effort to keep the crop viable was needed. As
the brewers know very well, without barley you have no beer. No
barley, no beer.
Thank you, Mr. Chairman, for your time and attention, and I
will be happy to answer questions the Committee may have for
me.
[The prepared statement of Mr. Friederichs follows:]

Prepared Statement of Peter Friederichs, President, National Barley
Growers Association, Foxhome, MN
On behalf of the National Barley Growers Association, I want to
thank the Chairman and Ranking Member as well as the Committee for this
opportunity to comment on the commodity and crop insurance programs
from the perspective of U.S. barley growers. I am Peter Friederichs,
President of the National Barley Growers Association. I operate a
fourth generation family farm in west central Minnesota near Foxhome,
growing malt barley, spring wheat, soybeans, and sunflowers; as well as
a registered seed sales and conditioning facility. Because most barley
growers also grow a host of other crops on their farms as well, I will
concur with the statements my colleagues are making here today and
focus for the most part on barley specific issues.
Barley is a cool-season crop grown primarily in the Northern Plains
and Pacific Northwest. This region along the U.S.-Canadian border
accounts for 90 percent of the 3 to 3.5 million acres planted in the
U.S. each year. The U.S. produces about 200 million bushels of barley
annually and roughly 75 percent of this production is destined to
become malting barley with the remainder going into the feed market.
Because feed barley values are routinely less than 50 percent of malt
barley values, most traditional barley growers in recent years do not
plant the crop without securing a malt contract prior to seeding. The
combination of good production and acceptance rates the last 2 crop
years has reduced the demand for malt barley for the coming year.
Acreage is expected to decline in 2017 because of a reduction in
contracts available from the malt and beer industry, coupled with the
depressed price for feed barley. Producers will substitute other crops
in place of barley in their rotation this year; and for me personally,
it will likely mean more wheat, soybeans, or sunflower acreage.
What's working with the current farm bill?
Probably to the dismay of some barley producers who see other crops
receiving larger payments, the counter-cyclical nature of the 2014 Farm
Bill is working as intended in barley's case. 75 percent of barley base
acres were signed into the PLC program, 22 percent into ARC-CO, with
the remaining four percent into ARC-IC. Because barley prices did not
decline as sharply as other crops during the 2014 and 2015 crop years--
just 15 percent from their peak in 2012--no PLC payments were triggered
and minimal ARC-CO payments were issued for the 2 crop years
respectively. However, prices for the 2016 crop year are down another
ten percent and will trigger more payments; and 2017 crop year
contracts have fallen an additional ten percent.
Challenges facing barley:

(1) The aforementioned quality issues and the steep discount for
feed barley means planting barley for the malting market is
a high risk venture. For that reason, the NBGA and its
industry partners worked with the Risk Management Agency to
develop a Malt Barley Endorsement for barley's standard
crop insurance policy to help mitigate this risk. Although
this option was first available for the 2016 crop, there
are still issues to be worked out regarding full coverage
for these quality risks. NBGA is appreciative of RMA's
willingness to continue working with us on improving this
needed endorsement. And for the record, the NBGA is a
staunch supporter of the overall crop insurance program.

(2) While not part of the commodity or crop insurance title, the
NBGA would be remiss if this statement did not reference
our concern about the status of agricultural trade in
general. Mexico is our No. 1 market for malt barley
exports, and our recent efforts to increase sales to our
customers south of the border has been put on hold
indefinitely due to the current uncertainty surrounding our
nation's trade policy with Mexico. If this export market is
lost, agricultural prices could fall further and result in
even higher Commodity Title payments than currently
expected.

(3) Another challenge facing barley farmers--as well as other
producers in all parts of the country--is the increasing
difficulty in securing annual operating loans from local
financial institutions because of the current depressed
commodity prices coupled with still relatively high input
costs. Each year, in order to secure operating loans,
farmers need to prepare a farm plan for their banks showing
their farm will generate a positive cash-flow with the
expected revenue from the crop mix they plan to plant as
well as what they expect to pay for inputs, rent, machinery
and/or land payments, and living expenses. This year, many
of these plans are only showing a positive cash-flow if the
expected farm program support payment for the 2017 crop is
included.

However, current Federal banking regulations are not allowing
banks to include this expected October/November 2018
payment because the year-long discovery period for the 2017
average marketing year price does not begin until after
harvest and is considered too far in the future and
speculative to be included. If the farmer has working
capital that can be applied to the deficit, the loan can
still be approved. However, in worst case scenarios,
farmers without adequate working capital may be denied
operating loans and ultimately forced out of business. If
the current depressed price / high input cost environment
continues as predicted, this situation will only get worse
as more and more farmers deplete their working capital.

In closing, the NBGA in recent years has partnered with the malting
and beer industries--both large and small craft brewers--to ensure that
an adequate supply of good quality malt barley is grown in the U.S. to
produce the 190 million barrels of beer that are brewed annually. This
cooperation came about because barley acreage had been in perpetual
decline for most of the last 2 decades, and it became clear that a
concerted effort to keep the crop viable was needed. As the brewers
know very well--without barley, you have no beer. No Barley--No Beer.
Thank you Mr. Chairman for your time and attention. I will be happy
to answer questions the Committee may have for me.

The Chairman. You are not kidding around, are you?
And our final witness, the Vice Chairman of the National
Sorghum Producers, Stockton, Kansas, Mr. Dan Atkisson, you are
recognized for 5 minutes.

STATEMENT OF DAN ATKISSON, VICE CHAIRMAN, NATIONAL SORGHUM
PRODUCERS, STOCKTON, KS

Mr. Atkisson. Chairman Crawford, Ranking Member Nolan, and
Members of the Subcommittee, thank you for this opportunity to
come before you and present the views of the National Sorghum
Producers regarding title I, crop insurance, and our next farm
bill.
My name is Dan Atkisson, and I farm near Stockton, Kansas.
I am a true family farmer; working alongside my father, my
wife, Amanda, and my 4 year old son, Eli, whom I hope will take
over our farm one day. We grow sorghum, wheat, and forages to
support a herd of commercial and registered Black Angus cattle.
I am honored to serve as the Chairman of the National Sorghum
Producers Legislative Committee, and I hope and expect to be
very engaged throughout the process of crafting this next farm
bill.
Mr. Chairman, I will give an overview of several positive
trends in sorghum within my written testimony, from increasing
productivity to expanding markets within the food sector. These
are exciting, big-picture developments for sorghum, but any
positive developments for the long-term are completely
overshadowed by the current state of our ag economy.
Since the passage of the 2014 Farm Bill, prices for sorghum
have fallen from a benchmark of $5.10 a bushel to just $2.69
per bushel for the 2016 crop; 53 percent of that benchmark.
Today in farming, it is not a question of how to make a profit,
but how to minimize our losses and survive until next year.
Virtually all commodity crops have faced a similar decline
in prices, but unique to sorghum is an emerging pest, the
sugarcane aphid, which is driving up cost of productions,
adding a burden of $430 million in the 2016 growing season
alone.
The National Sorghum Producers believes in the need for a
strong and reliable title I safety net that is balanced and
provides assistance when needed. One very real problem with the
current policy is the timing of payments and its impact on
cash-flow. National Sorghum Producers asks you consider moving
up farm bill assistance timing, or even making marketing
assistance loan rates more relevant to help with cash-flow.
In regard to ARC and PLC, clearly, with the 20/20 vision
that hindsight offers, PLC is a better safety net for sorghum
farmers. PLC was very conservative up-front when prices were
still above $4 per bushel, but the policy is now kicking in to
provide help when it is desperately needed. In contrast, ARC
assistance was a virtual certainty when farmer elections were
being made. With a target revenue generated from $5.10 per
bushel benchmark, the logic was to take a bird in the hand and
put it to use. Unfortunately for farmers, markets have not
rebounded as hoped. Going forward, we are open to the idea that
the ARC model could be improved. We also believe that PLC could
be improved, and generally favor this model, coupled with a
strong crop insurance program. However, NSP pledges to work
with you in a constructive manner, and ensure proper balance is
struck and an adequate safety measure is crafted.
Before moving to crop insurance, I would like to add that
we urge caution in thinking about how these policies affect
plantings of commodities, and urge more thoughtful approaches
to CRP going forward, along with other incentives that can
encourage crop rotations that promote soil health and other
conservation benefits.
Crop insurance is indispensable to sorghum farmers, but
that does not mean it cannot be improved. For sorghum
particularly, participation rates and coverage levels are low
when compared to other row crops. A full 19 percent of sorghum
acres are not insured. This is the highest among major row
crops. There are many reasons for this, but the single biggest
reason is that sorghum insurance is simply too expensive. Over
the last 10 years, the loss ratio for sorghum has been 0.88,
lower than corn and the statutory target. Considering this
window of time includes 3 years of record drought within the
Sorghum Belt, we believe that the rates for sorghum generally
should be lowered. We are also working with private partners
and RMA to explore improving these policies through a 508(h)
process. We believe this will address some county-by-county
inequities between sorghum and competing crops.
Finally, Congressman Ron Kind is again carrying the EWG's
water with a reintroduction of the AFFIRM Act. NSP firmly
believes that Kind's bill, with arbitrary limits, means tests,
and publication of contracts has absolutely no place in the
business transaction of crop insurance.
Mr. Chairman, in closing, I want to thank you again. As a
farmer and member of the National Sorghum Producers, we truly
appreciate the task you have before you. We consider all
aspects of the farm bill to be critical; from research to
conservation, and commodity programs to crop insurance. But
tough times cause us to focus, and title I and crop insurance
should rightly take center stage.
NSP appreciates your attention to these important policies,
and we stand ready to work with you to make these policies work
even better, going forward.
[The prepared statement of Mr. Atkisson follows:]

Prepared Statement of Dan Atkisson, Vice Chairman, National Sorghum
Producers, Stockton, KS
Introduction
Chairman Crawford, Ranking Member Nolan, and Members of the
Subcommittee, thank you for this opportunity to come before you and
present the views of the National Sorghum Producers regarding the next
farm bill as it relates to commodity policy and crop insurance. These
policies are critically important to America's farmers and ranchers, so
we greatly appreciate the Subcommittee's focus here today.
My name is Dan Atkisson, and I farm near Stockton, Kansas. I am a
true family farmer, working alongside my father, my wife, Amanda, and
our 4 year old boy, Eli, who I hope might also take care of our land
and make a living from it one day. We grow sorghum, wheat, and forages
to support herds of commercial and registered Black Angus cattle. I am
very honored to serve as Chairman of the National Sorghum Producers
Legislative Committee. I am also Vice Chairman of the NSP board of
directors and have been very involved since becoming a member of the
second Leadership Sorghum class just a couple years ago. I am a proud
graduate of Kansas State University with a bachelor's degree in
Agricultural Technology Management and a minor in Animal Science. I am
humbled to be here today, and I hope my testimony as a farmer and on
behalf of NSP will be helpful to you.
State of Sorghum and the Sorghum Economy
Although sorghum is considered an ancient grain, it has recently
gained tremendous popularity for its positive health benefits for both
people and pets. However, the fact remains most Americans wouldn't
recognize sorghum if they saw it, and even in the world of agriculture
where it is more common, sorghum has lost ground over the last 30 years
to higher value crops.
Before getting into the specifics of the farm safety net, I want to
begin by telling you a bit about this very important crop, and then I
want discuss the current economic realities facing sorghum farmers.
Sorghum is a highly adaptable crop with many varieties and uses. It
produces a grain for livestock feed but is also chopped for silage or
hay or simply used as a forage which is often referred to as hay-
grazer. As a feedstock for renewable fuels, sorghum is uniquely
positioned as both a source of starch, sugar, and cellulose all in a
single crop. What makes sorghum really special is that it uses up to
\1/3\ less water than corn. It is grown throughout the U.S.--even in
Minnesota and the Dakotas where it makes excellent pheasant habitat--
but its water efficiency, drought tolerance, and soil conditioning
qualities make it particularly valuable as a low input cash crop in the
more arid western Great Plains and hotter regions like South Texas. The
top two sorghum states are in fact Kansas and Texas, followed by
Arkansas, Oklahoma, Colorado, and Nebraska.
Due to its health and environmental benefits, we believe sorghum
has unique advantages and is well suited for growth on more U.S. acres.
As such, our policies reflect the promise sorghum has as a crop.
Sorghum acres, nationally, plummeted through the late 1980s and 1990s,
and have only begun to recover in the last few years. We want to see
that positive trend continue.
The first table in my testimony contains average planted acres for
sorghum in 5 year increments. The steep decline in the late 1980s can
be directly tied to certain farm policies. For example, the
Conservation Reserve Program took millions of acres in the western
Great Plains out of production. Further declines in sorghum acreage
were the result of economic and agronomic changes coinciding with the
planting flexibility gained in the mid-1990s. During this time, many
farms that had previously utilized sorghum in rotation with other crops
began to focus on producing their highest yielding and grossing crops
like cotton, corn and soybeans. Please do not misunderstand me. We
support a targeted CRP and the planting flexibility farmers now enjoy.
We just need to be careful in the development of farm policy to avoid
unintended consequences.

------------------------------------------------------------------------
Period Average Planted Acres
------------------------------------------------------------------------
1982-1986 17,757,000
1987-1991 11,268,000
1992-1996 11,074,000
1997-2001 9,682,000
2002-2006 7,894,200
2007-2011 6,707,000
2012-2016 7,324,400
------------------------------------------------------------------------

While sorghum has been knocked down over the years, we are not out.
Recently, sorghum demand and markets have increased significantly. In
fact, for an extended period in 2015 and 2016, sorghum was actually
trading at a premium relative to corn. China has accounted for much of
the increase in demand by importing sorghum to feed geese and ducks for
their domestic market and to supply distillers who prefer its unique
flavors. The domestic ethanol and feed markets are also growing. And,
sorghum is also experiencing greater demand in the high-end food
markets, catching the eye of top chefs, nutritionists, and bloggers as
a healthy, versatile whole grain alternative that also meets niche
consumer requests, being non-GM and gluten-free.
For years, the sorghum market was roughly as follows: \1/3\ for
domestic livestock feeding; \1/3\ for biofuels; and \1/3\ to exports,
with significant volumes used abroad for food aid. However, in the last
years, the sorghum market has changed dramatically as shown in the
charts included below.

2014 Market for Sorghum 2016 Market for Sorghum

Seed genetics and productivity are also on the rise for sorghum. In
fact, 2016 was a record year for sorghum yields with a national average
production of 77.9 bushels per harvested acre. This is further evidence
of a real and exciting trend as the 2014 through 2016 average of 73.8
bushels per acre exceeds the previous 10 year average by 16 percent.
Our sorghum yield contests are also highlighting remarkable
productivity gains as winners in the last few years have consistently
approached or exceeded 200 bushels per acre. This is truly remarkable.
With this backdrop, you can appreciate why we feel these are
exciting times for sorghum in the big picture and for the long-term.
But, as this Subcommittee well knows, times on the farm are not as
encouraging. Depressed commodity markets are yielding prices below
cost-of-production. This is a function of many things, including but
not limited to strong production worldwide, a strong U.S. dollar,
unpredictable export markets, and predatory trade practices used by
foreign countries. As is nearly always the case in agriculture, the
situation we find ourselves in today is not the result of anything that
we as farmers or ranchers can control. All we can do is develop a good
strategy for what might work best this year; do our best to implement
the plan as efficiently as possible, cutting costs wherever we can; and
pray the rain will fall right, that our crop will be better than we
could hope for, and prices rebound.
Since passage of the 2014 Farm Bill, prices received by sorghum
farmers have fallen precipitously, as is the case with most crops. In
the 5 years prior to the enactment of the current farm bill, sorghum
prices averaged $5.10 per bushel. For the 2014 crop, prices fell to
$4.03 per bushel--a 21 percent drop. For the 2015 crop, it fell even
further, to $3.31 per bushel--a 35 percent drop compared to the 5 year
benchmark. Worse yet, for the 2016 crop that was just harvested last
fall, USDA is projecting the price received by farmers will be $2.70
per bushel--that is 53 percent of the benchmark price, meaning it takes
twice the bushels to generate the same revenue for a farm. For the 2017
crop we are planting this spring, most farmers are again facing the
sorry prospect of burning through savings or equity. Today, in farming,
it is not a question of how to make a profit, but how to minimize our
losses to survive.
For sorghum specifically, we have also had to battle a very
significant emerging pest threat. The sugarcane aphid (SCA) is pressing
up costs of production even as market prices decline. In 2016, the SCA
reached all sorghum producing regions in the United States, impacting
over 70 percent of the planted acres. When present, the sugarcane aphid
increases operating expenses by as much as $40 per acre--an almost 30
percent spike in production costs. This translates into an additional
$200 million in expenses, nationally. When added to resulting yield
losses, we calculate the total burden incurred by U.S. sorghum farmers
on account of the sugarcane aphid approached $430 million in the 2016
growing season alone.
In summary on the state of sorghum and the sorghum economy, there
are some real reasons for optimism about growing sorghum markets and
increasing productivity for the crop. But, this positive outlook is
being over-shadowed by the economic reality facing our farmers right
now. While this current reality is really taxing farmers, one silver
lining may be that these conditions are a better lens through which to
view the importance and purpose of U.S. farm policy.
Title I--What is Working and What is Not?
Before getting into the details on our thoughts concerning the
commodity title of the farm bill, I do want to thank the Agriculture
Committee for its very strong Budget Views and Estimates letter that
rightly points out that the budget savings and contributions to deficit
reduction made in the 2014 Farm Bill are more than four times the
target you were expected to hit when you passed that measure. The
National Sorghum Producers was proud to add its name to a letter sent
last week to the Budget Committee asking that a portion of these
savings be reinvested into this critical sector of the economy. There
is no more basic, nor important infrastructure that serves this nation
and the world than the patchwork of independent family farms and
ranchers that dot the countryside and feed, clothe, and fuel America in
a manner unrivaled in history.
The National Sorghum Producers believes in the need for a strong
and reliable title I safety net that is appropriately balanced and
provides assistance when and where it is needed. One very real problem
with the current policy that is felt very acutely in times like this
has to do with something as simple as the timing of payments and the
problem this poses for farmers trying to cash-flow. The National
Sorghum Producers asks you consider moving up the timing of farm bill
assistance so the support is put in the hands of farmers earlier than a
full calendar year following the crop year it is meant to cover. For
money that will be paid either way, there should be no significant
budget impact. Along these lines, we would also ask that you
investigate the possibility of raising loan rates to make them more
relevant, which could also relieve cash-flow burdens in the marketing
year.
ARC and PLC
On the choice farmers were given under the 2014 Farm Bill, 5.966
million acres or 66 percent of the total sorghum acres were enrolled in
Price Loss Coverage, while 2.998 million or 33 percent were enrolled in
Agriculture Risk Coverage. In the first 2 years of the farm bill, ARC
paid an average $12.14 per acre for 2014, and $17.98 per acre for 2015.
It is expected that a comparable amount will be paid relative to the
2016 crop, even as crop prices have dropped to 53 percent of the
original benchmark average. PLC made no payments in 2014 since the
season average price of $4.03 per bushel was above the reference price
of $3.95 per bushel. However, for 2015, average payments of $28.23 per
acre were made, and for 2016 it is expected that relief to farmers will
increase to more than $50 per acre.
Clearly, with the 20/20 vision that hindsight offers, PLC is the
better safety net for sorghum farmers. PLC was very conservative up-
front when prices were still above $4.00 per bushel. But, the policy is
now kicking in to provide help when the help is desperately needed. In
contrast, ARC assistance was a virtual certainty when farmer elections
were being made. With a target county revenue generated from a $5.10
per bushel previous 5 year average, and futures prices sinking, the
logic was to take the bird in hand and put it to use, hoping the market
would turn around in the out-years. Unfortunately for farmers, markets
have not rebounded.
When assessing the relative value of ARC and PLC, then, we do not
look at the dollars generated but rather at the risk management or
downside protection that is provided. To us, the safety net is more
about the reliability, fairness and timeliness of help when help is
most needed. On all these counts, NSP believes PLC provides the better
safety net for our farmers. Going forward, we are very open to the idea
that the ARC model could be improved. We also believe PLC could be
improved, or that a hybrid approach might surface as the best model for
Title I assistance. What follows is just our frank assessment of how
these respective policies are working relative to the important goals
listed above.
In regard to reliability, ARC misses the mark because of the
revenue calculations that are used. The reality of PLC is that our
farmers know that if national prices are below $3.95 per bushel, some
help is on the way. Farmers can count on this, secure credit, make
plans, and leverage dollars based on this certainty. In the highly
uncertain business of farming, any certainty we can get is of
tremendous value to us. This is also why crop insurance is so
valuable--because of its rock-solid certainty. With ARC, even in the
first year where, due to price decreases, it was virtually certain that
some help would be on the way, no one could really count on it, and
bankers could not lend on it, because it all hinged on how the county
performed. In fact, many counties in heavy ARC areas did not receive
ARC assistance because of strong county yields. Problems of this sort
are greatly exacerbated for crops, like sorghum, that have variable
yields. With large sized counties and weather events, such as hail,
that can decimate one corner of the county while the bulk of the county
gets a nice rain, even counties that do receive an ARC payment have
both winners and losers. In short, because ARC is not reliable, it
cannot hedge risk or leverage dollars in the agricultural community as
effectively as PLC.
Falling Guarantees
Sorhgum ARC Revenue Guarantees, Maximum Payments, Loss Triggers, and
Actual Revenues in Rooks County, Kansas

Concerning fairness, ARC again falls short because of county
variability that does not always coincide with producer experience. PLC
pays the same rate based on national prices to all farmers based on the
historic yields they have proven on the farm. While it is not perfect,
it is fair. For both 2014 and 2015, we have counties that received
significant ARC payments next to counties that received no ARC payment.
And, in every county that received a payment, there are producers that
yielded well above the county average and producers that yielded well
below. Not to mention, the FSA's arbitrary 25 percent threshold
requirement for yields to be split between irrigated and non-irrigated
creates even more frustration. No policy is perfect, and the National
Sorghum Producers has and will continue to defend ARC against critics
of U.S. farm policy, but there is no question the county-based model
creates inequities and frustrations. That is why Congress has rejected
this kind of approach in the past. Perhaps some of these wrinkles can
be ironed out. But, as long as ARC remains a county-wide policy, it
will inherently create these kinds of issues.
And, finally on the issue of timeliness, our bedrock principle is
that help under the commodity title should be reserved for when help is
most needed. And, we believe that PLC better achieves this objective.
As prices for commodities have continued to collapse, the ARC safety
net has withered. In my home county of Rooks, Kansas, the ARC revenue
guarantee was $289.48 for 2014, $267.55 for 2015, and $246.13 for 2016.
For the 2017 crop to be planted, the revenue guarantee is significantly
diminished again--to $211.04 per acre--just as the maximum assistance
per acre has diminished from $33.66 when the fall started to $23.70
this year. Contrast this to PLC which, by remaining constant, has
effectively increased in significance to the farmer as the economy has
weakened. We believe that this is the better and more efficient model
going forward.
There are three more issues I would raise relative to the commodity
title. First is the issue of cotton and generic base. A significant
number of sorghum farmers throughout the south also have generic base.
The National Sorghum Producers support the National Cotton Council's
efforts to designate cottonseed as an oilseed or to otherwise restore
Commodity Title coverage for this important crop. The second issue is
that of payment limitations and means testing. Given that the National
Sorghum Producers believes the safety net should kick in to help cover
significant losses when times are hard, we also believe the safety net
that only partially covers losses should not be further reduced by
arbitrary limits. Third, concerning the issue of the Conservation
Reserve Program, which we recognize is not a title I policy but yet has
some implications for commodity policy, we would be open to ideas
around shorter term CRP contracts that would use cover crops, including
annual forages, with the caveat that communities and infrastructure can
suffer due to decreased economic activity when land goes out of
production for extended periods. We also note that if more sorghum were
planted around the country, there would be a lot more pheasants and
quail.
Finally, let me just reiterate again that the National Sorghum
Producers strongly support an effective and reliable safety net under
the commodity title. We are grateful to the Agriculture Committees for
the diligence and work you put into crafting a reasonable compromise in
the 2014 Farm Bill that is providing some important help during these
hard times, putting farmers and ranchers in a better place than we
would otherwise have been. However, the primary purpose of the safety
net under the commodity title is to provide a bridge to help
independent farm and ranch families stay in business through the tough
times, and we are genuinely concerned that if current price predictions
for the next few years come to pass, the current safety net in place
will fail many of our farmers. This is why we so ardently believe the
farm safety net must be strengthened. This is why we signed the letter,
referenced above, asking that a portion of farm bill savings be
reinvested to allow this Committee to patch up its weaknesses. This is
why we are as frank as we have been today.
We have witnessed time and again how a struggling farm economy is
left ailing for too long without a prompt and effective mitigation
effort through farm policy. And, without exception, the problems that
could have been fixed fairly cheaply early on mount and mount and so
does the cost of repair. When it comes to economic trouble in farm
country, an ounce of prevention is truly worth a pound of cure.
Crop Insurance
The National Sorghum Producers is strongly supportive of Federal
crop insurance and urges this panel and Congress to reject any attempts
to cut or weaken it. Make no mistake, proposals like that introduced by
Rep. Ron Kind are crafted to kill Federal crop insurance. To struggling
farmers and ranchers across this great country, there is absolutely
nothing affirming about Ron Kind's AFFIRM Act.
Crop insurance is indispensable for sorghum farmers, but that does
not mean it cannot be improved. For sorghum particularly, participation
rates and coverage levels are low when compared to other crops. As the
chart in my testimony illustrates, a full 19 percent of sorghum acres
are not insured--the highest among major row crops. Moreover, only 25
percent of acres have coverage at 75 percent or above compared, for
example, to 66 percent in the case of corn. There are many reasons for
this, but the single biggest reason is that sorghum insurance is too
expensive. Over the last 10 years the loss ratio for sorghum has been
0.88--lower than corn, for instance, and 12 percent lower than the
statutory target. Considering this window of time includes 3 years--
2011 through 2013--of record drought covering much of the Sorghum Belt,
we believe the rates for sorghum, generally, should be lowered.
NSP is very grateful for the improvements that were made to crop
insurance in the farm bill. Given the epic drought of 2011 through
2013, many of our producers have benefitted greatly from the Yield
Exclusion provisions of the Bill, along with the ability to purchase
different coverage levels between irrigated and non-irrigated farms.
While some Supplemental Coverage Option policies have been sold, it has
not met expectations. However, we expect these sales will pick up when
the pricing options become more attractive, and we would encourage the
Subcommittee to maintain this option, which can work well in
conjunction with PLC.
Crop Insurance Coverage As a Percentage of Planted Acres
2016 Crop Year

Source: RMA, NASS.

While all these movements are positive for farmers, we need to
recognize that crop insurance benefits cover what is planted and,
therefore, can impact plantings based on the relative competitiveness
of the policies. While we argue that our average rates are too high,
the real problem becomes obvious when we start comparing county by
county rates relative to competing crops. This is why NSP is so focused
on bringing sorghum crop insurance policies up to par with its
competing crops in all regions. We currently are working with private
partners and RMA on exploring means of improving the policies via the
508(h) process or other authorities. This is not a new effort. We have
worked in the past to increase options for sorghum silage, and more
recently annual forage crops. We hope to continue these efforts and
will keep the Committee apprised.
Finally, NSP recognizes that many of the professional critics of
agriculture policy who are not actually putting themselves at risk but
only booing from the sidelines have moved their vitriol from the fixed
or direct payments that were eliminated in the 2014 Farm Bill to crop
insurance. Congressman Ron Kind is again carrying their water with the
reintroduction of the AFFIRM Act. NSP believes Kind's bill has no place
in the business transaction of crop insurance, as previously noted.
Crop insurance is very expensive, but I appreciate the fact that I as a
fa[r]mer can choose to participate at whatever level I need and will
have bankable and reliable support. The value of crop insurance is not
the premium discount, or the indemnity, as the critics would have you
believe, but rather it is the certainty created by this contractual
arrangement where I have the peace of mind that comes with insurance on
my crops. NSP is absolutely committed to protecting and improving this
important tool.
Conclusion
Mr. Chairman, in closing, I want to say again how much we as farmer
members of the National Sorghum Producers appreciate the task you have
before you. We have focused on title I and crop insurance today, but I
hope from my comments you can see that we consider all aspects of the
farm bill to be critical, from research issues like the sugarcane
aphid, to rural development and bioenergy, to trade promotion and
market development policies. It is all important and a part of a piece,
but tough economic times like our current reality do cause us to focus
on the farm and making it through the next season--an area where title
[I] and crop insurance rightly take center stage.
NSP appreciates what was accomplished in the 2014 Farm Bill. We
look forward to working with the House Agriculture Committee and our
fellow commodity organizations to make it even better going forward.

The Chairman. Thank you. I appreciate the timely testimony
of the witnesses. I appreciate all of you being here.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
I would now like to recognize myself for 5 minutes.
I have a general question that any of you on the panel can
feel free to weigh in. During the course of the drafting of the
2014 Farm Bill, it was often said that crop insurance is the
cornerstone of the farm safety net. However, crop insurance is
not designed to provide multi-year protection. Have recent
years shown why we need other tools like ARC and PLC in
addition to a strong Federal crop insurance, or is insurance
alone all that is needed to manage risk? Mr. Spurlock, we can
start with you.
Mr. Spurlock. Yes, sir. As in my testimony, I was talking,
and we were visiting the fact that crop insurance is a same-
year risk management tool, as when your crops go through and
you go through the drought or hail or wind, the grain snaps and
any other problems in any of our other crops across the world,
the crop insurance takes care of that problem, that year. We
have to have the ARC and the PLC to work through the multi-year
problems that occur in agriculture, and I feel that both
programs are awfully important and needed.
The Chairman. Anybody else want to weigh in on that?
Mr. Moore. Yes, thank you, Mr. Chairman. I would agree that
they are both needed. There are certain areas of the country
that crop insurance is not a viable safety net for them, and so
they rely on ARC-County and PLC. In my opinion, you have to
have both of them to give safety net capabilities in the farm
bill.
Mr. Schemm. Mr. Chairman, thank you. As you referenced,
crop insurance does, in my area experiencing long-term
droughts, have an eroding factor on being able to support an
operation to even keep it viable. And that is where the PLC
with a price focus and ARC with a yield focus definitely comes
in and helps be a factor for our areas, for those producers who
tend to be more either price sensitive or yield sensitive,
those components help to finish out that tool that simply helps
the farmer to continue to maintain farming. It is not through
just crop insurance because of the eroding factor.
Mr. Friederichs. Crop insurance for barley growers is a
tough one because the malting doesn't go with the feed. It is
kind of a confusing situation. We are working on it, that is
all I can say at this point.
Mr. Atkisson. Within sorghum we do have an insurance
product that can help us maintain yield and revenue within a
year's span, yet we have these programs to average out and to
help us along. We have low periods, and that is very apparent
right now with a very dramatic downturn in the farm economy. We
have crop insurance to take care of some of the major risks,
but we need a safety net underneath that to support us through
these major downturns in the economy and through these very
tough times.
The Chairman. Thank you.
Mr. Spurlock, you mentioned in your testimony about 93
percent of corn base acres were opted into ARC-County program
and title I. Why was it so lopsided in 2014?
Mr. Spurlock. As the models that were put together by
Illinois and Texas A&M, when it came time to sign up for the
programs you could go to these models, and they ran the
formulas and they looked at what that year actually was. With
the later sign up, it worked in, it showed what payments were
going to come to you in the first year. And so as you looked at
those payments over what the price loss coverage would have
done, which there weren't any in the corn industry. It was a
timing effect and as it has come through, those payments have
come on and worked. And that formula will change as we go into
the future, the way it is set up in the ARC program.
The Chairman. Hindsight being 20/20, do you feel that ARC
is a program that will work long-term for corn growers?
Mr. Spurlock. Yes, sir. I think it will work. I also feel
that there is possibly some need that we may need to do a
little changing in its formula, and what that is I don't have
an answer for that, but I hope that you ladies and gentlemen
will be able to help in that with your research as you go
through in this farm bill process.
The Chairman. If given a chance to update, do you think
most corn growers would again opt in to ARC, their base acres?
Mr. Spurlock. Since we are in such very different financial
conditions today on what the markets were, and if you were to
take them back and take the price of today back to the
beginning where we were making these decisions, you would see a
very different process in it.
The Chairman. Thank you.
I will now recognize Ranking Member Nolan, for 5 minutes.
Mr. Nolan. Thank you, Mr. Chairman.
I have a question for Mr. Friederichs. And when our dear
colleague, who is as good and strong a champion anywhere in
America for agriculture, along with my colleague, Mr. Walz, Mr.
Peterson, said that he made reference to the fact that barley
production was down, and that he had pulled barley production
out of his farming unit, I thought he was going to conclude
that the reason why it is down is because he is not producing
anymore, but he didn't do that.
Are there any particular reasons for the relatively stable
barley prices, as compared to other agriculture commodities?
Historically, volatility is often the biggest reason for
financial instability, so it would be helpful to hear from you
about why barley prices don't seem to be prone to sudden
movement.
Mr. Friederichs. Well, as of right now, the barley prices
are, well, what is going on right now is that the contracts are
getting less and less every year. You have, like right now, for
my farm I am a third of what it was last year.
Mr. Nolan. It is?
Mr. Friederichs. And the prices are also going down because
of overproduction at this point is a big thing.
Mr. Nolan. And is that because, as you referred to in your
testimony, without a contract, people aren't going to plant? Or
did I hear that wrongly?
Mr. Friederichs. Yes, and then if you have a weather scare,
or a bad weather year, all of a sudden you have feed barley,
and then there is no malt.
Mr. Nolan. Yes.
Well, another quick question relating to barley, in
addition to creating the agricultural price loss coverage
programs in the 2014 Farm Bill, the farm bill also made an
important change in setting a reference price for barley based
on all barley, not just on feed barley. How has that impacted
the barley growers, and are there any related adjustments
needed in the next farm bill with regard to that issue?
Mr. Friederichs. Boy, you are getting a little over what I
can even answer at this point in time. It is going in the right
direction, the program is, we are doing okay there, it is just
a matter of we have to keep what we have.
Mr. Nolan. That has played a critical role, I presume, in
the ability of barley producers to stay in the business and
maintain a positive cash-flow?
Mr. Friederichs. Yes.
Mr. Nolan. All right.
Well, thank you, Mr. Chairman. I am going to yield the
balance of my time to my colleagues here.
The Chairman. All right, thank you very much.
I would recognize Mr. Gibbs, from Ohio, for 5 minutes.
Mr. Gibbs. Thank you, Mr. Chairman. Thanks for holding this
hearing.
Just to start off with these low prices, this will be to
the whole panel, I guess. Credit availability, how do you see
that you have a couple of years of losses for a producer out
there and how does that tie in with the title I programs, and
how does that all interact? Do you see what is happening with
the credit here in the next year or 2 for producers out there,
its availability?
Mr. Schemm. Thank you, Congressman. As I referenced in my
oral testimony, I just talked with my banker yesterday and some
of the points that we were discussing brings me to a lot of
concern as we do go forward. He has said that he is seeing a
significant amount of producers having to restructure our
short-term debt or lines of credit for our production, and roll
them over into long-term debt or land debt. And obviously, this
brings a lot of concern to us that more highly leverages our
operations.
I have seen many operations in my area bringing back
younger operators, and they have been trying to incorporate
this next generation. When we look at the average age of
American farmers being 58, being very critical to the role of
American ag and yet they were here through the good times, and
now as they struggle to go through these financial tough times,
we have a lot of concern what is going to happen to our small
communities out there in this generational transfer.
Mr. Gibbs. Now, do you feel like the ARC and PLC programs
are sufficient enough, or is it, I know coupled with crop
insurance, I guess one of the questions I had, and Mr. Spurlock
might have talked a little bit about it in his testimony, is, I
am a firm believer that crop insurance, we should strengthen it
whenever we can, not weaken it. For me as a public official,
policymaker, it is a lot easier to go out and talk to my non-
farm constituents about crop insurance because people
understand the principle of insurance versus the title I
programs. And I guess I am just kind of wondering, you all
talked about coupling them together, obviously, the importance
of title I and crop insurance, but is there a way we could
structure crop insurance in such a way that it would be
beneficial, and not be market distortion, and I guess that
relates to how sufficient the ARC and PLC programs are, going
forward, especially when you look at credit availability.
Mr. Schemm. My banker very much relies upon title I, ARC,
and PLC when we calculate into it. And there are challenges, as
I referenced in my oral testimony, in the aspect of, many times
that payment can be received a year and a half later. But it is
much easier to quantify that payment. They do realize and they
appreciate the crop insurance aspect, but again, crop insurance
only kicks in when there is basically almost a disaster level
that occurs either at a yield or a price level, and then the
problem that occurs with that again is the eroding stance as
you go forward with either price or in a drought situation of
yield that erodes that crop insurance. Again, this is where
this kicks in to the title I program to be very vital in my
operation, and the farmers that I talk to, in being able to
sustain or to be able to get that bank note with their banker.
Mr. Gibbs. Mr. Spurlock, for corn growers, what are your
thoughts on that? Do you see a way that we can improve crop
insurance to be a better safety net?
Mr. Spurlock. Yes, sir. I think that any time we work at
it, and as we go through these years new product development is
awfully important to us to look at and find that next level of
crop insurance policies that can improve and help all of our
producers.
Mr. Gibbs. Because I have heard from some of my producers,
I am hearing different things about title I, but I have heard
some of my producers say let's take that money and put it into
crop insurance. Would that be feasible or not?
Mr. Spurlock. No, sir, that would not be something we are
looking at. We have our risk management action teams are in the
process of running studies and looking at what is going on. And
all of this information from all of our states, you go back to
our grassroots level, and each state has been doing surveys and
town hall meetings and working together in bringing this all
out of the 26 organizations, bringing it back into this action
team, and working and developing a true desire and what we
think would work for the future, and a lot of what you have
already seen is there.
Mr. Gibbs. Okay. I guess the reason I just mentioned that,
the atmosphere is different now from the last farm bill because
commodity prices are opposite what they were. But, I was
amazed, we had a debate with our friends over on the side of
the Capitol, and some of our Senators said, ``Well, just do
away with title I.'' I was flabbergasted. And I don't know if
it is because we had high commodity prices maybe that morning,
mentioned this time with low commodity prices, but I thought it
was interesting, but they threw that out last time.
Mr. Spurlock. The choice of the two programs is what has
made this one work, and will make it really work well in the
future.
Mr. Gibbs. Right. Thank you. I yield back.
The Chairman. The gentleman yields.
I now recognize the gentleman from Minnesota, Mr. Walz, for
5 minutes.
Mr. Walz. Well, thank you, Mr. Chairman. And thank you all
for being here. I am grateful for it.
We are starting early. That is the right thing to do. We
know how important the farm bill is. All of us have the
stories. My district is proud to say it is the ninth largest
agricultural district, spread amongst a lot of commodities. Of
course, corn and soybean are king, and also a lot of animal
agriculture. And we found a way to make that work, providing
feedstock, as well as the biofuel industries that is absolutely
critical to the vitality of southern Minnesota, so I am
grateful you are all here.
Before I ask a question though, I would like to thank you,
Mr. Moore, for that full-throated endorsement of keeping the
farm bill together. We cannot separate those who produce food
from those who consume it. That is a huge mistake, and I can't
tell you that all of the important things you are talking about
will be derailed if that ideological piece goes forward. Again,
I thank you for that.
Mr. Moore. Well, thank you, Congressman. As I look at the
farm bill, it is more of a food bill, from the way I look it.
And what better place to have both the farm bill's, securities,
safety nets for the people who produce the food, and have it
also in the same bill that offers the opportunity for people
who need that additional food and nutrition to make sure their
families are comfortable and viable. What better place to have
that than in the same bill, both of them working together.
Mr. Walz. Absolutely. And the Chairman and I had a little
discussion the other day on AgriTalk, and he is a strong
champion of this articulation. And I have said it helps it
helps us build a coalition to understand where we are both
coming from. If we have an issue on the Clean Water Act, we
have friends who are willing to listen to us and understand
this isn't about us not caring about clean water, it is about
how we go about producing the food and doing that. If you
separate that, it makes it harder. Thank you both.
Mr. Schemm, thank you again too for your comments.
Beginning farmer and rancher focus has been a passion of mine.
You are absolutely right, it is not just demographic numbers,
we have a lot of folks that really want to live on the land, a
lot of folks who want to raise their children in this
lifestyle, a lot of small communities that are fabulous places
to live in southern Minnesota, but if we don't get this right
and get them on the land, you see the demographic shift if you
go back and look decade by decade. Mr. Friederichs, you have
seen it in Foxhome, if you will, as it gets smaller and smaller
and smaller. I lived in a town of 400 people. That is the city
for you. And when I went to high school, but you know what, we
had a grocery store, we had a high school, we had two gas
stations, we had stores, and all the nostalgic looking back,
the fact of the matter is the economics have changed and mostly
because there were no opportunities for young people.
So my question to you is, why have commodity prices, and I
will set you up for this one, commodity prices have gone down,
all of my folks tell me rent sure hasn't, land prices sure
haven't, and this is becoming a real problem. In my state, one
of the drivers about this is, and we have to be honest about
it, is to fund those local schools, the tax base falls heavily
back on those land owners who, at this point in time, might be
land wealthy and capital poor. How do you go about that? How do
we talk about land prices and getting young folks back on the
land? Have you got any ideas? I know it is a million dollar
question.
Mr. Friederichs. Yes, you have that right. Boy, I don't
know. In our area, the prices are totally different than what
it is making. The land values are $5,000, $6,000 an acre, and
if you figure a four percent interest rate on that, you have to
have 100 bushels, 150 bushels of corn to make it, break it.
Barley, you need 100 bushels. I don't know what the answer is.
Mr. Walz. It is a tough one, because if it is not
generational pass through of the land, it is very difficult. My
mom still has our farm, and my cousins are able to farm on it
because my mom rents it to them at a low rate because all she
wants to do is make back enough to pay for the taxes. If they
had to get that on the market, they wouldn't be farming right
now. That is very frustrating.
Mr. Friederichs. That is very frustrating.
Mr. Walz. Well, my final point and question to both of you
is, I said it there, I believe in these win-win situations,
biofuels has been an absolute American success story. It is
about innovation, it is taking us off of foreign oil, it is
making us more secure, it is a national security priority as
well as an economic priority. Do all of you worry, I have to
say, there are three names that keep me up at night in my area
are Icahn, Pruitt, and Tillerson, to be very honest with you,
have never said a lot. The thing that keeps me balanced in this
is, just south of me in Iowa, when President Trump gave a full-
throated endorsement of our biofuels industry.
Can I just, in closing, Mr. Spurlock and Moore,
specifically, are you hopeful that we can keep this industry
thriving?
Mr. Spurlock. Yes, sir. It is a little over \1/3\ of our
demand driver in the corn industry. As it has grown, and like
you said, it is a great rural economic development project, it
has put tremendous jobs into the rural areas, it has offset 540
million barrels of foreign oil that no longer comes into the
U.S. We produce a much greener fuel to go into the fueling
system, and we need all the support and help we can to keep the
Renewable Fuel Standard going strong and keep it going.
Mr. Walz. I appreciate it. My time is up. Mr. Moore, you
will have a chance to do this, say that as often as you can say
it, and I will too. We need to.
I yield back.
The Chairman. I thank the gentleman.
The gentleman from Texas is recognized for 5 minutes. Mr.
Arrington.
Mr. Arrington. Thank you, Mr. Chairman. And thank you
panelists. I thought that getting cotton back in the farm bill
as a covered commodity, was the greatest challenge and threat
to west Texas, until I heard the no barley, no beer comment,
and I am having to rethink that.
I want to make note and say a special thanks to Tim Lust
and to the National Sorghum Producers. And they are a real
asset to me, and a wealth of information, and they are great
advocates and they represent the industry very well.
Speaking of cotton, when we pulled cotton out of the farm
bill it had a disastrous effect on cotton producers. That is my
take after being with a bunch of cotton farmers for the last
year to year and a half. I also understand there were adverse
impacts, ripple effects, on other producers like peanut farmers
and soybean farmers. Can anybody comment on the ripple effect,
and the indirect, negative impact on other commodities?
Mr. Atkisson. Well, as a sorghum farmer, I can comment a
little bit on that, that is a direct way that policy affects
planted acreage. We always need to keep in mind how our policy
can affect the commodities that are grown in a certain area.
While planting a certain commodity might not make sense, our
farmers are seeking to make money, and they need to make money
to provide for their families. They are going to find the best
crop that will provide them with the most amount of income to
plant on their acreages. Especially during a time like this
where we need to have a safety net for some of those producers,
and they are going to weigh all their options and they are
going to find the commodity that is going to provide them with
the best benefit for their families.
Mr. Arrington. Other comments? Mr. Moore?
Mr. Moore. Yes, thank you, Congressman. Yes, we recognize
that all sectors of agriculture need to be viable. We don't
want to sacrifice any sector, or any commodity. ASA is very
supportive of making cottonseed oil a program crop. We
recognize that if there is a disincentive to grow a crop,
especially in the southern U.S. where they can grow multiple
crops, Illinois is predominantly soybeans and corn, but when
you disincentivize one particular crop from being grown, there
are going to be other crops grown on those acres. And so we
need to have all of agriculture to be successful so we can
raise the boat as the tide rises.
Mr. Arrington. Thank you, guys.
With respect to risk management for market risk, it seems
to me that we address one part of that equation by trying to
set a good and responsible reference price, and I am sure that
is a difficult thing to do with market fluctuations, but it
seems to me that the other part of the equation is the
production cost. And my question to you is, how would one
include production cost as part of the total equation in
providing support and market risk coverage? Anybody on the
panel. And is that even a good idea?
Mr. Schemm. Thank you, Congressman. That is one thing we
have been exploring as a wheat group. We are faced with the
challenge of six different classes of wheat grown over a very
wide variety of regions, and conditions within wheat. And so
the cost of production, obviously, varies much within our crop,
and the challenges of that. We have looked at the reference
price now and the impact that it has, what we have seen
specifically for wheat, and there are other commodities we can
associate this with too, is that it is not an effectively
functioning reference price. And that is why we are currently
exploring where we can tie in that cost of production to that
reference price, but achieve something that is fiscally
responsible and accurate, and reflects the regions and variety
of conditions that wheat is grown in.
Mr. Arrington. Other comments?
Mr. Spurlock. A lot of your work comes from the FAPRI, as
Dr. Joe Outlaw from Texas A&M, they have the set of farms that
go across the nation. They have them in the cotton industry,
they are in the corn and soybean, they are livestock and
everything. And Dr. Outlaw sent us a quick summary a few days
ago about the production costs. And there is such a difference
in production costs across the nation. What happens in the
Midwest on corn matches closely to the expenses of irrigated
corn in the Texas Panhandle, but then as you go across there
are different ones. That happens in every commodity. And the
production costs, it is more expensive to farm in some areas
than others, and how do we determine that is a hard question.
Mr. Arrington. I yield back.
The Chairman. The gentleman yields.
The gentlelady from Illinois, Mrs. Bustos, is recognized
for 5 minutes.
Mrs. Bustos. Thank you, Mr. Chairman. And because Mr.
Walz's time ran out on the biofuels question, I would actually
like to redirect that to Mr. Moore. I would like to hear about
it from the soybean perspective.
Mr. Moore. Thank you, Congresswoman. The feedstocks for
ethanol and soy biodiesel are a bit different, and so we want
to make sure that we use up the surplus soybean oil that is in
the marketplace right now, and not only is that a benefit to
the price, but it also helps our livestock partners in being
able to have soybean meal at a relatively stable price.
One of the things we don't really talk about, and I haven't
heard it here yet today, was the environmental benefits from
both using ethanol and soy biodiesel. It is extremely
beneficial to our environment as we go pulling a semi away from
a stop sign, you don't see the black smoke anymore because they
are using biodiesel B2 or B20, in our area is what we use is
B20. There are a lot of environmental benefits that we really
don't recognize anymore, it is more economic, but economics is
a great thing, but the environmental benefits of using ethanol
and biofuels is another reason to make sure that RFS is a
viable standard.
Mrs. Bustos. Okay, thank you, Mr. Moore.
The next question I have will be for Mr. Spurlock and Mr.
Moore. The 2014 Farm Bill has relinked conservation compliance
provisions to crop insurance premium subsidies eligibility.
Have the two of your organizations studied how compliance
requirements have affected your growers? And, Mr. Spurlock, we
can maybe start with you.
Mr. Spurlock. I am trying to think how to answer
completely. When it came in and we first did the compliance
into the Federal crop, people wondered how bad it would affect
it and what it would do, but I don't think we have really seen
a major problem with that. Since agriculture and owners of the
land, as we are generational, we are the first
conservationists. We go in, we take care of our land, our soil
health, we want the water to be as healthy as possible. And so
agriculture as a whole is the first environmentalist, we take
care of it well, and I don't think that it did create any
hardships for any of our producers.
Mrs. Bustos. Thank you.
Mr. Moore. ASA has not done any studies to my knowledge
about your question, but two things; it is a great example of
how things work in D.C. where you have to build coalitions to
get a bill passed. Agriculture was successful in the last bill
working with conservation groups to get them onboard, and so we
could get something to pass.
The other thing that you want to talk about is, in the
soybean industry we talk a lot about being sustainable and
using sustainable practices. And so I was not opposed to having
conservation tied to Federal crop insurance because as we go
talk to our customers overseas, we use that aspect of
sustainability and that eight to eleven percent of the farms
across the United States are spot-checked very year to make
sure we are following our conservation plans. And so that is
one of the talking points we use when we go talk to our
customers overseas about how sustainable soybean production is
in the United States.
Mrs. Bustos. Okay. And just one last question, and I am
going to direct this one to Mr. Moore as well. It is kind of
the hometown advantage of having you up there. And by the way,
Mr. Chairman, I do think that when you can talk about beer and
baseball and pizza all in a hearing, that is a sign of success.
Mr. Moore, in your testimony you suggested changes for
selecting yields under the ARC-County program. I understand
that the American Soybean Association believes that RMA data
should be used as the default county yield data; however, in
your opinion, is county-level data always the most appropriate,
and do you see value in a regional or state-level breakdown?
Mr. Moore. In my experience, and the discussions that we
have had in our organization, the closer you can get to my farm
the better off we are when we do those kind of ARC-County or
PLC calculations. I understand that that has to be a different
price tag to it than a state level or regional level, but my
personal opinion, the closer we can get to my farm and the
information that I have, that I calculate every year and submit
to the USDA office, is more accurate and more beneficial to
each individual farmer.
Mrs. Bustos. All right, with that, with the 5 seconds left,
I yield back.
The Chairman. Thank you.
I would now like to introduce or recognize, rather, the
distinguished Chairman emeritus. Before I do, I have to
translate the Latin. Emeritus means old, and distinguished
means gray-haired, which he got because of the 2014 Farm Bill.
That is a compliment. You earned all of that. I recognize the
distinguished Chairman emeritus for 5 minutes.
Mr. Lucas. I would say to the Subcommittee Chairman, thank
you very much, and I very much respect that. And by the time
you have lived through this process, you might look like me
too. That is not a threat, that is an observation.
With that, I would like to turn to Mr. Spurlock. One of the
proclaimed benefits of ARC that we heard during the
consideration of the 2014 Farm Bill was that it was a more
market-oriented approach to farm policy, and that the guarantee
follows the 5 year average prices. Does that same logic apply
now that we have entered this new paradigm on cash prices?
And that is an affectionate question, sir. In a positive
way.
Mr. Spurlock. Yes, sir. As we have moved into a new
paradigm, as you have said, of the lower prices, the formula
has worked well coming down, but then the Olympic average will
begin to make the payments less as it goes on. And so as we
look at redoing it, there is something, ARC has validity to go
into the future. It may need a little bit of formula changing
to make it work, but at this point is where that choice will
come in, and as we start the new farm bill, if given the choice
again to pick one or the other, we will be able to look at the
formulas and look at from our land-grant institutions, which
model works best and then we will know whether it is the PLC or
the ARC for the future.
Mr. Lucas. I appreciate those comments about the virtues of
choice. That was quite a discussion 5 years ago as we launched
into this process; should there be choice or should we all be
tied in together.
Corn, of course, is in a unique position, as you yourself
stated. Did you say 30 percent of the crop goes in to producing
renewable fuel? Did I understand that, did I misunderstand
that?
Mr. Spurlock. Yes, sir, about \1/3\ of our crop, 4.2
billion bushels.
Mr. Lucas. About \1/3\ of the crop.
With the exception of our soybean friends, really no one
else has quite that set of circumstances, and I very much
appreciate that.
That said, the biggest challenge, and I do not speak out of
turn for the full Committee Chairman or the full Committee
Ranking Member, part of the big challenge that we will face in
this coming year is when the revenue numbers, the new budget
process, what is available to us when we have a number to work
with, that will essentially determine, again, as it did last
time, what kind of a farm bill we have. And I would hope that
what you have just stated, and listening to your colleagues on
the panel, that the framework is there, it is a matter of how
do we handle the adjustments within the framework, and that all
comes down to the money equation.
Just for a moment, I have to turn to my wheat friend over
here, Mr. Schemm. I have heard many of my producers express
concern about the effects that the quality losses can have on
their production history from crop insurance. Could you visit
for a moment about what kind of changes you think would help
prevent those from affecting their yield history?
Mr. Schemm. Thank you. The challenge, especially it was
espoused this year in the PNW region of the country with our
wheat producers when they had what they called falling numbers
occur to them. And many of them became very concerned on their
crop insurance side when they went to deliver and sell those
bushels at their elevator, that even though they did not make
any claim on that quality loss there, that their actual yield
or APH on their operations was reduced as a reflection of that
quality loss. And we have a very large concern that a dynamic,
even though their yields were higher, got pulled down and it
erodes that risk management tool there. What we would like to
see developed is a quality loss tool within crop insurance so
that it will not affect their yield, but instead can affect the
quality loss side of it.
There are even impacts we have had, I would suggest, of
quality that occurred within the Hard Red Winter wheat region
as well as this year with a very large crop, but quality that
was not what the market wanted, but the market does not have a
good quality factor into it, and so as a result at local
elevators, the actual cash price widened to a significant
amount, versus what the futures price was. And once again
there, that eroded their crop insurance side of it because they
were not able to receive an indemnity that would be recipient
of what a cash price they were having because the crop
insurance was based upon a futures price.
So we are continuing to work and look at ways that we can
address these quality loss things, and would like to work
further with the Committee too.
Mr. Lucas. I appreciate the gentleman's observations.
My time has expired. I yield back to the young-looking
Subcommittee Chairman.
The Chairman. I thank the gentleman.
I recognize the gentleman from Georgia, Mr. Scott, for 5
minutes.
Mr. David Scott of Georgia. Thank you, Mr. Chairman.
Mr. Spurlock, in the last year, 2015, when there was an
assessment of the prices in production of corn, it was stated
that it cost farmers $675 per acre to produce the corn, yet
they could only get $611 back in revenue. Now, according to my
calculations, that is a loss of $64 for every acre that is
planted. They don't even break even. They lose $64. How can we
continue to do this, particularly my own state, we planted corn
on 344,000 acres and yielded back to us $210 million. But if
you deduct that $64 for each acre, it appears to be a losing
position. What is your recommendation as to what we must do to
fix that? And this is particularly true with the climate we are
in. For example, President Trump's budget proposal says that we
should cut agriculture by 21 percent. Now, that budget comes
out and it normally doesn't go anywhere, but once your name is
called that somebody is out to get you, you really need to take
heed and begin to plan for that. And I want to know what we
need to do to deal with this deficit between planting the corn,
costing us $675, and then harvesting that where we lose $64 per
acre for producing it.
Mr. Spurlock. As we come through the last year, a lot of
the talks that I have done and the work I have done I have
talked about three different things; demand, demand, and
demand. And our demand that we work with is trade, is our
exports. As we look at our exports and where they are at, we
need our new Administration, as they go in and they work to
rewrite NAFTA and bring it up to a newer level from a 23, 25
year old program, we need that trade, we need to be out talking
to Japan, to the Koreas, to the world, to improve these deals
and move this demand at that level.
The next demand we have goes back to the same thing.
Livestock is our major buyer. They are the biggest part of the
corn in the U.S., goes into our livestock industry. They have
to have that ability to access the world also with their
proteins. There is a rising middle-class in the world that
wants more protein, and so our ability to ship the poultry, the
pork, beef, our dairy products, and any of that that we export
is grain that is being fed in the U.S., and so we are there
working that.
And then the last you get to is the ethanol industry, our
biofuels industry, which has been so successful in working
through the timeframe.
Mr. David Scott of Georgia. Yes, and you testified on the
area, the Renewable Fuel Standard of it, and I don't think
enough emphasis is being given to corn in terms of making sure
that our corn farmers are making money in a healthy way. And I
am wondering, as we approach this new farm bill, if we need to
really set aside here, because it is just used for us, going to
the grocery store, getting a good ear of corn, I love corn, I
was brought up on a farm, and I realize the hogs love corn too,
the horses, everybody loves corn. Even the fuel now is turning
to corn. We have a real serious dynamic here. Is there anything
that you would suggest we do in terms of singularly addressing
the farmer, given this demand, given this weakness of return on
production, that we can help them with some sort of subsidy,
something that would make up and give them a comfort level out
there?
Mr. Spurlock. I was going to say that is where our safety
net is at that we are working with, and that your Subcommittee
and the Agriculture Committee will work with, and we appreciate
all the work and effort on risk management and the title I
also.
Mr. David Scott of Georgia. All right.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman.
And I recognize the gentleman from Florida, Mr. Dunn, for 5
minutes.
Mr. Dunn. Thank you very much, Mr. Chairman. And again, let
me thank the panel for making the trip up here. I am sure you
had many other things you could be doing with your time.
This is, we recognize, a difficult time. You have sustained
low incomes and increasing debt. I would like to turn our
attention to the question of the debt problem, if we may.
Mr. Moore, in your testimony you discussed the increasing
difficulty of obtaining operating loans, and I guess what I
would like to know is what are the concerns you have, and what
are the pressure points in your industry and in your locale for
obtaining credit on the farm? And, if we have the time, we have
each of you in your different locales and your industries tell
me what the problems are underwriting those loans or to get to
the underwritten loans there. Thank you, Mr. Moore.
Mr. Moore. Thank you, Congressman. Working a case, I am a
community banker. I am going to sit on the Board of Directors
of community bankers. I borrow money and I oversee the part of
the loan group that looks at our loans.
Mr. Dunn. And so you are really attuned to----
Mr. Moore. The working cash is king. And we came off of
extremely profitable times. I paid more in income tax for 2
years in a row than I paid in the prior 25 years put together,
and was happy to do it because we made money. I saw 3 years
that this was going to be an issue of these low prices as they
started to decline. Everyone told me that, ``Oh, no, it is not
the same as it was in the 1980s.'' And I lived through the
1980s, I survived. And we have more working cash, we don't
borrow as much money as we used to back then, and land prices
are way higher. Well, we burned through working cash so fast in
the last 2 years. That is what bankers are looking for. If you
burn through your equity that you have, that means you have to
go refinance, restructure your loan, like Dave was talking
about. It puts an enormous amount of stress on peoples'
families, their farming operations, they can't do the things
they need to do to continue to be successful and profitable and
sustainable. We are in the middle of this, and we still have
some time to go before we are out of it, but it is critical
that farm policy is created that doesn't harm our ability to
produce food for people.
Mr. Dunn. Thank you. And right down the line, Mr. Schemm,
in your industries what do you see?
Mr. Schemm. I am very much referencing what Mr. Moore said
as well. In my discussions with my banker I have had, and
talking with him about our area, he has seen a huge impact
particularly upon our dryland farms as they are many times
challenged with more inconsistent production and variables, and
he is seeing right now they are the ones that are being hit the
most. And again, restructuring short-term debt into long-term
debt, the unfortunate side effect, obviously, is that raises
their debt-to-asset ratio, and as that ratio gets higher and it
puts stresses on more farms, we are now starting to see, and
seeing across the country, a softening of land prices. And on
any operation one of your key asset collaterals that you use to
borrow money, and can borrow money against, is those land
values. And as those land values drop, you have less collateral
to utilize to be able to continue farming operations.
Mr. Dunn. Mr. Moore made reference to community banks and
loaning money. Do you borrow from community banks or from a
Farm Credit institution?
Mr. Schemm. I borrow from a community bank, and I have a
lot of concern with some of the challenges that they have to
meet when they deal with various regulations of trying to make
sure that their own banks have a good and viable balance sheet.
Mr. Dunn. Yes. Mr. Friederichs. In your industry, Mr.
Friederichs? Yes.
Mr. Friederichs. Well, in my area the farmers, there are a
lot of different commodities that are growing in my area, so
the sugar industry has really taken a big hit, and that is
where a lot of it is, they are hanging in there, but the
bankers are saying your cash-flow is going away, you are using
up your reserves, and it is the same all over.
Mr. Dunn. Okay. Well, I thank you very much. I wanted to
get a picture of that, and it is interesting to me to know that
your community banks are able to participate in the farm loans.
We usually see those go to the Farm Credit System for the most
part.
Mr. Chairman, I yield back. Thank you.
The Chairman. The gentleman yields back.
The gentlelady from Delaware is recognized for 5 minutes.
Ms. Blunt Rochester. Thank you, Mr. Chairman. I want to
first thank the witnesses. I was fortunate to be here for all
of your testimony and found it really very interesting,
especially as a new Member to the Agriculture Committee.
My first question is really for all of the witnesses. What
I have heard is one of the biggest challenges that farmers face
right now, and the agriculture economy in general, is market
volatility. And so if you could talk a little bit about market
volatility. The 2014 Farm Bill provided new programs to respond
to this, and I am just curious do you feel that the commodity
programs and the crop insurance programs adequately smoothed
volatility, and are there other things that you think the
Committee should consider? And we can start at this end.
Mr. Spurlock. Yes, ma'am. As we have gone through these
programs, the market volatility comes as we have had such a
tremendous ability to produce these crops, so now we have
carryovers that are carrying over in all commodities; in the
corn, the wheat, soybeans I know are the ones that I see the
most right now. But as we look at these, we have these ARC and
PLC payments, and working with them, they have done a good job
of trying to do the best they can. I mean nothing is perfect
and there is always the ability to improve on these, and we
would hope that your ability to improve on them would take the
same template and the same work and make it better for the
future with prices that we are at right now.
Ms. Blunt Rochester. Okay, thank you.
Mr. Moore. I would agree that they are working well, but
some things, just off the top of my head, we haven't got policy
on it, but raise the reference price, the marketing loan price
on all commodities. I take advantage of that low-interest loan
that the Commodity Credit Corporation offers, and right now it
is about $5 on soybeans, and that has been about \1/2\ the
price of the case of soybeans, but the market has come down.
The Olympic average that is being used to calculate the ARC
price, as we come down in prices, you are taking out the high
and taking out the low, but everything is going to be low now
and so you are not going to be using that. And if you could end
up with a 5 year instead of a 3 year average, that might be
beneficial. And moving that payment up to the current year,
current tax year, for example. Waiting for a year and a half
after receiving a payment in 2018 for the 2017 crop year is
difficult. It doesn't work with cash-flows.
Ms. Blunt Rochester. Thank you.
Mr. Schemm. Mr. Moore and I share many of the same
concerns. The challenges that we have with wheat is that some
of our producers tend to be a little bit more yield-concerned
because of variability yield, and some of our producers tend to
have a little bit more consistent yield because of the areas
that they grow in, maybe under irrigation, things like that, so
they will tend to be a little bit more price-sensitive on it.
And so the ability for them to choose either the ARC or PLC
programs has been very viable for them to be able to choose
that, and helps to complete the whole aspect of the farm bill.
As we have looked at those, part of the challenges on the price
side, as you have referenced, when we talk about volatility is
making sure, as Mr. Moore said, is that reference price is an
accurate reference price, that it does not get set too low, and
that is what we feel has happened in wheat with the $5.50
reference price, it has been set so low that it will not
trigger and adequately help a producer deal with the challenges
of the cost of production.
Ms. Blunt Rochester. Okay, thanks.
Mr. Friederichs. As of right now, the barley industry is
doing fine as far as triggering the PLC and the ARC, but in the
future I believe that it is going to start to kick in and
hopefully it works right.
Ms. Blunt Rochester. Okay, thanks. Okay.
Mr. Atkisson. And I will echo what some of my colleagues
down the table said. Within sorghum, we had a higher percentage
of producers went with the PLC program. PLC did what it was
designed to do. When we had a dip in the market PLC was there
as a safety net for those low prices, as crop insurance
provided the year-to-year benefit of providing those producers
with yield loss coverages and things like that. With the two
tools, we have crop insurance, and then within the commodity
programs those choices have provided us with the tools we need,
but going through these times of the depressed economy we feel
like we should step further into title I.
Ms. Blunt Rochester. Thank you.
I would yield back my time if I had some.
The Chairman. I thank the gentlelady.
And I would now recognize the distinguished Chairman of the
full Committee from Texas, Mr. Conaway.

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

Mr. Conaway. Well, I thank the Chairman. I appreciate the
discretion you have shown insulting the former Chairman and not
the current Chairman.
Before I get to my questions, Mr. Moore, in your written
testimony you mentioned that your team was in favor of perhaps
moving cottonseed into the other oilseed program, as long as we
didn't take the money away from you to do that. I certainly
appreciate that. But at the end, you made a comment that as
long as it was WTO-compliant. Now, was that gratuitous kind of
comment just thrown in, or are you legitimately concerned that
title I programs are not WTO-compliant, what was that for? Why
did you stick that in there?
Mr. Moore. We want to make sure everything we do in
agriculture here is WTO-compliant.
Mr. Conaway. I understand that, but are you legitimately
concerned that our title I programs are not WTO-compliant as
they currently stand, as a team? That would be helpful to know
if that is the case, because if it is, you have me really more
concerned than I was otherwise. Because I believe they are, and
I am not sure why that was tossed in there.
Mr. Moore. Personally, I don't believe that they are in
risk of being deemed not WTO-compliant.
Mr. Conaway. Okay, I got you.
Well, first off, thank you for all your policy teams going
at it right now. Get that stuff to us sooner rather than later.
And next spring or whenever we start putting pencil to paper,
the longer you wait to give us your new good ideas, you create
barriers that might have not otherwise have been there had you
got those in early. Encourage your folks to come to their
conclusions and decisions as early as you can, because it would
make our collective efforts at getting those factored in, in as
fulsome a way as you can to make that happen.
Mr. Moore, you also estimated that you think the ARC-County
program will be less ascribed to, going forward, and you folks
may move to PLC, and that you suggest we take another look at
ARC-County by expanding that. Does it make more sense to do
that, or just stick with the PLC program that people are moving
to?
Mr. Moore. We won't know for sure. I don't think we would
be able to answer that for sure until we get the numbers in
front of us, but farmers prefer a choice, they don't want ten
choices but a couple of choices are good, and making sure that
both of those choices are available is important.
Mr. Conaway. Well, I intend to keep the choices available,
I am just wondering if you would expand the coverage on the
ARC-County payment system versus doing something better under
PLC.
Mr. Moore. My opinion of enhancing the ARC-County would be
beneficial, more revenue base for the farmers that we represent
instead of just price loss.
Mr. Conaway. I got you. One of the struggles we have is who
to help, who to try to give risk management tools to folks who
have been in business throughout that run-up to congratulations
on the 2 years you paid more taxes than you had the former 25
years. That is a good thing, quite frankly. It is going to make
it hard for you to run for office somewhere, so you build up
equity during those years, and then in the hard years you are
running through that, you are burning through cash equities,
you mentioned earlier. Is the structure of our program such
that we should give more attention to the folks who have not
had a chance to build up equity, because they have burned
through whatever they have as well, you have burned through
equity. Are we structured right to go at, or ignore that issue
as to how long people have been in business in terms of our
programs?
Mr. Moore. Anything you can do to encourage young people to
enter into agriculture, I have a son who started farming 3
years ago so he doesn't have any equity.
Mr. Conaway. Right.
Mr. Moore. And so for him to take over our farming
operation he couldn't do it if he had to borrow all of the
money because he has no equity built up. And so his risk is
much greater than my risk.
Mr. Conaway. Right, so should we structure, and this is for
everybody, all the others, in the entire minute I have left,
should we structure the programs towards those folks or try to
be neutral in that regard and just have risk management tools?
Anybody.
Mr. Atkisson. Mr. Chairman, I will handle that one, I am
\1/2\ of the average age of the average farmer in the United
States. When I was younger I took advantage of some of those
programs within the FSA that were targeted towards young and
beginning producers, and those programs have greatly benefitted
our small communities within western Kansas. Going forward,
farmers are always about being fair to each other, and the fact
that we need to support our young producers, but like Mr. Moore
said, our young producers that are coming back are going to be
at much more risk than our older, more established producers.
Mr. Conaway. Yes, Mr. Spurlock.
Mr. Spurlock. I think that as we look at it, we have to
remember that our young producers are coming back behind an
older set of farmers, and as long as we protect all farmers at
the same time, we keep the older generation in agriculture at
this time, we have to have these programs work for everybody
evenly, and when those families are healthy and in good shape
they can bring back their next generations and bring them in,
and the two will work together.
Mr. Conaway. I got you. Thank you, Mr. Spurlock.
Again, thank you for your early work on policy. The sooner
you can get it to our team and we can start folding it into the
system, the better it is all going to work for everybody.
I yield back. Thank you.
The Chairman. Thank you, Mr. Chairman.
I recognize the gentlelady from the Virgin Islands, Ms.
Plaskett, for 5 minutes.
Ms. Plaskett. Thank you, Mr. Chairman.
Mr. Conaway, that was very interesting, and it led me to a
question that I was wondering about. The balancing that has to
be done with the older farmers, the established farmers, and
then these new farmers that are coming up. In the Virgin
Islands, we had a lot of young people who come from economic
and finance backgrounds that are interested in farming now, and
are trying to assist the older farmers with the technical and
the compliance expertise so they can go to the next level.
Would it be possible, or should we have programs that
assist in that respect where the risk of the younger farmer,
the greater risk that he has, if he is partnering with an older
farming establishment, might be able to assist them in growing
that business? Have you seen any? Do we have programs like
that?
Mr. Spurlock. At National Corn, we are working within a
couple of our different action teams trying to develop and put
together what needs to be done for the younger farmers, looking
at new programs and analyzing the ones that are there and
seeing if there is a better way to do it, that we can bring
more of these back into agriculture and keep them----
Ms. Plaskett. I would love to hear about those or assist
you in any way possible in that. That is really important for
us to have the next generation of farmers to come onboard, and
to think that it is a very vibrant possibility for them. And
not strictly those who have grown up on a farm, this is
something that can take us to the next level of innovation in
farming in the United States.
Mr. Spurlock. Yes, ma'am. In the last two meetings we have
had, we have a gentleman from Minnesota that is wanting to turn
his farm over, and he has stood up and we have talked, he gave
a plea trying to find someone, because his family is not in
agriculture and not coming back, so he is asking and through
social network and through the ag families, looking to find
those next young farmers to go help him continue his farm on.
Ms. Plaskett. Well, if he is a Minnesota farmer, he is
probably a good Lutheran, and that is what the Virgin Islands
is full of, we are from that Danish background. We may have one
or two----
Mr. Spurlock. He may need to look in the Virgin Islands
then. Yes, ma'am.
Ms. Plaskett. Mr. Moore, one of the things that you talked
about in your testimony is the need in advocating for keeping
the nutrition program as part of the farm bill and not
splitting the two. Could you go into more detail about that?
Mr. Moore. Sure. It is imperative that we keep that in the
farm bill. It not only builds a coalition because there are a
few Members in Congress that have agriculture in their
district, but everybody eats. I live in a community of 1,000
people, and my family has been involved in a local food pantry,
and we live in rural Illinois with 17,000 people that live in
my county, 1,000 in my hometown. The need out there for
nutrition assistance was staggering to me, as we found out how
many people needed to take advantage of that in the middle of
rural America, where we grow cattle, hogs, soybean, corn. The
need is out there. Any time we can provide great service to
people who need that food, whether I am a farmer or whether you
are in the anti-hunger groups, it is critically important. That
is part of what sustainability is, is making our communities a
better place to live, and that is what we are doing in
Illinois.
Ms. Plaskett. Thank you.
And then just quickly, I don't know if one or two of you
may be able to answer this. President Trump has threatened to
impose the 20 percent tariffs on all imports from Mexico, which
may have, in effect, a retaliatory response by Mexico. How
might that affect some of the commodities in your own trade
within your organizations? Have you discussed this or thought
about this?
Mr. Schemm. Within the wheat industry we have a huge
concern over this. With over 50 percent of our wheat that is
exported out of this country, this absolutely factors into a
huge component of the price that our farmers are able to
receive for their product.
Ms. Plaskett. Yes.
Mr. Schemm. And without that trade component being in
there, we obviously cannot eat all the wheat that we produce in
this country, especially when we get up into the PNW, Pacific
Northwest, part of our country where there are areas where they
export 80 to 85 percent of it. And so again, trade is a vital
component there and we have a lot of concern, and we definitely
want to see new trade agreements, or trade agreements that can
be beneficial to ag, because ag in general benefits from the
export market.
Ms. Plaskett. Wow. Okay, thank you.
And I yield back. Thank you, Mr. Chairman.
The Chairman. I thank the gentlelady.
I now recognize the gentleman from Georgia for 5 minutes.
Mr. Allen. Thank you, Mr. Chairman. And thank you all for a
very interesting conversation about the state of our
agriculture industry. It is amazing that the more productive
you get, the less money you make, I tell you, but that seems to
be the case. And obviously, the taxpayers out there have
spoken, they are interested in efficiency. Frankly, a lot of
people, of course I represent them, agriculture is the number
one industry in my district, so I understand it, I understand
the importance as far as national security of our farm program,
and why we need to make sure that not only that we keep our
existing farmers in business, but to add more folks. As the
demand for food grows in this world, we have to be prepared to
meet that need. And as, Mr. Moore, you said, not everybody
farms but everybody does eat. And so it is critically
important.
Talk about trade, I have looked at this situation where,
frankly, those countries that ship goods in here don't pay a
tax, and when we ship goods into the other countries our
producers have to pay a tax. Have you all come up with any
solutions to that, because we have manufacturers, we have money
moving offshore, we have manufacturers moving offshore, what
can we do from an ag standpoint to deal with this? Mr. Schemm,
Mr. Moore, you have any suggestions?
Mr. Moore. Well, the American Soybean Association was very
supportive of the TPP, and the benefits to agriculture in
reducing those tariffs, making it fair trade and making it
equitable, we continue to hope that as the Administration goes
towards making bilateral agreements, they will use the
agricultural benefits and the language in the TPP as a template
as they go forward speaking with bilateral, for example, Japan
for TPP and on NAFTA they are the same thing. We want to make
sure as they modernize the NAFTA agreement that those benefits
that agriculture has had over the last 20+ years are still in
place. And we understand the need that all three countries need
to modernize that.
Mr. Allen. Okay. Mr. Schemm?
Mr. Schemm. We were very happy to see the U.S. pursue
negotiations with China over their violations of trade there
that has occurred there. And so it is a key component with
trade agreements that we do have enforcement of those trade
agreements. According to the study that the wheat organizations
have done, it cost the U.S. wheat growers almost $650 million
because of China's lack of fulfilling their commitment to
purchase wheat, and the subsidies that they give to their
producers. This is something that, again, has huge impacts, we
have calculated anywhere from 30 to 40 per bushel to our
American wheat farmer, and so it is critical that those
agreements get enforced. And as I referenced earlier though, it
is also very critical that we have an agreement in the first
place.
Mr. Allen. And speaking to that, we grow a lot of cotton in
my district. In fact, Mr. Chairman, we grow the best cotton in
the United States in my district.
Mr. Conaway. Your objective criteria.
Mr. Allen. But, one of the things that if you look where we
buy all of our goods, we buy from Asia, yet they pay us market
base, which is 60 a pound, and they pay their own farmers
$1.40 a pound for inferior cotton. This trade thing, and what
the President is up to here, it may be good. I think that we
need to talk to our neighbors across the world about what is
fair. And that is what I am interested in because, again, the
American taxpayers, they are good folks and we have to make
sure our farm industry is healthy, but at the same time, we are
getting taken advantage of by the rest of the world. And I
realize that the WTO is involved, and we are a developed
nation, and some of them are underdeveloped, and all that sort
of thing, but we have to figure out a way to make this work.
With your help, we would appreciate that and get something here
in this next farm bill that will help us with that.
I yield back, my time is up. Thank you.
The Chairman. I thank the gentleman.
I now recognize the gentleman from Florida, Mr. Lawson, for
5 minutes.
Mr. Lawson. Thank you very much, Mr. Chairman. And it is an
honor to be here with you gentlemen today. And probably before
I got here, there was a considerable amount of discussion about
different areas of insurance, commodity insurance and so forth,
that is very important. What I have been trying to get my hands
around, and see I have pretty big hands, from being an athlete,
but there has been a great deal of discussion about immigrants,
and I know there is a big difference from being a farmer and
working on a farm. My concern, which has happened in America
and it has been really publicized a great deal during the last
campaign is, with all the immigration reform, I am told by most
farmers that a lot of time they would not be able to get their
crops to market without immigrants' labor because Americans
just don't want to do it. And so as we work here to come to
some commonsense about immigration reform, I would just like
you all to respond how important is this issue to being able to
get your products to market?
Mr. Spurlock. Sir, it is a very important issue in
agriculture. As you look at the vegetable industry and the
amount of hand labor it takes to do that, and when you have to
advertise in papers to try to get local people, and nobody
shows up to work, then you have to find the labor to do that.
In the meat packing industry it is a large percentage of
migrant workers that are working in the meat industry. The
dairy industry is the same. And on our crop farms across the
nation, these things all come to pass.
The programs that we have right now, if you use H-2A and
you work hard to get those gentlemen in or those ladies, the
people, the workers, they can only be here for so many months
and then they move on. Well, the meat packing plants, the
dairies, they go year-round. We have a major problem in our
work labor force, the program tends to be broke, and if there
is a way we can find to fix this to be able to use this labor
and use it efficiently and consistently, it would be of great
interest to agriculture.
Mr. Lawson. Yes, go ahead.
Mr. Schemm. I was just going to say that the ag industry
stands to be one of the hardest-hit industries in this country
when it comes to immigration and the ability, as you
referenced, getting those crops out. And it affects all of us
across the industry, whether it is fresh produce or even in my
situation with wheat, and we see every year a mammoth migration
of custom harvesters moving across the Great Plains. And even
this year I was able to have a young man from Argentina on my
operation, just learning the different farming techniques out
in the world. And I can only believe that that cultural
exchange will be able to benefit all of us. And so it is
something that our producers have expressed a lot of concern as
they have dealt with the challenges of trying to be able to
deal with getting their crop to market.
Mr. Lawson. Right. I have a lot of tomato growers up in
Gadsden County, and I know the type of labor, because I have
been out there in the field, that they are using, and some of
the people are afraid that they are going to get deported or
something of this nature, but I notice that Gadsden County is a
county where they have probably the largest population of
African Americans, but they are not able to get those
individuals to go out in the fields to harvest the crops as
they come up. Like we get off maybe two tomato crops before it
really gets cold, two in north Florida and then maybe one
coming off in north Georgia. And so my concern is, when I go
back to address those individuals, I want to do everything that
I can to help those farmers so that they can keep those workers
there to get their crops to market.
Mr. Chairman, what influence that we can have on this next
farm bill to deal with that kind of situation is extremely
important to me, and it is important to the farmers. And I will
say that I have never seen anything like it, when I go out into
the fields to take a look around and they are really working,
and really working hard, and I don't think they are causing all
these problems that people have been talking about.
I yield back.
The Chairman. I thank the gentleman.
I now recognize the gentleman from Nebraska for 5 minutes.
Mr. Bacon. Thank you, Mr. Chairman. It is an honor to be
here. Thank you for representing your various markets there and
growers.
I wanted to ask you: with the current drop in prices, 45,
50 percent, will the ARC and the PLC in their current forms be
a sufficient safety net for you in the commodities that you are
working?
Mr. Spurlock. Yes, sir. As we go into this farm bill work
that you have in front of you, that we think that small tweaks
in these two programs will be able to make them viable for the
next 5 years.
Mr. Bacon. Okay. Some minor tweaks is what you are saying.
Mr. Spurlock. Yes, sir.
Mr. Bacon. Thank you. Go ahead, Mr. Moore.
Mr. Moore. Yes, I would agree, but I want to make sure that
both the ARC program and the PLC program are offered as options
for farmers to take. The minor tweaks, dropping the Olympic
average or using some other reference price changes would be
helpful.
Mr. Bacon. Okay, thank you. Mr. Schemm.
Mr. Schemm. Again, agreeing with my colleagues, choice is a
critical component. The key things from our perspective is,
while it does lay a good foundation that, within the ARC, is
going to be as simple as using more accurate data within PLC,
it is a reference price for wheat that we just do not feel
adequately helps protect that producer. Again, tweaks, but key
critical tweaks.
Mr. Bacon. Thank you. Mr. Friederichs.
Mr. Friederichs. I would have to agree with the three
gentlemen on my right there. I believe it is probably going to
be sufficient.
Mr. Bacon. Okay.
Mr. Friederichs. I guess time will tell.
Mr. Bacon. Mr. Atkisson.
Mr. Atkisson. As my colleagues down the table have already
iterated the programs are working, especially within sorghum
within the PLC program design, it has done exactly what it was
designed to do. While we have had a drop-off in the ag economy
and prices have dropped down, it has provided us with the
safety net that we have needed. No program is perfect. We think
there is always room to tweak a program and to make it more
viable for farmers, but so far ARC and PLC have done exactly
what they were designed to do.
Mr. Bacon. I am hearing even with the 45 percent to 50
percent drop in prices, that the 2014 Farm Bill has worked for
you. Would you agree? Has it been an effective farm bill
through this hard time?
Mr. Moore. No. I don't think it has, at least on the
fellows that I deal with in Illinois and the farmers that I
deal with. There is always room for improvement in everything
that gets done. I think there needs to be the tweaks to make it
more effective and make it more predictable as we go through
trying to secure operating notes. It is hard to know today,
when I go to my banker, what I am going to get in October of
2018 for a crop I am growing. I won't know what I am going to
get for sure from the 2016 crop until October of 2017, and so
since we don't know, it can't be included in our cash-flow
calculations.
Mr. Bacon. Okay, thank you for that. Does anybody want to
expand upon that, or is there agreement?
Mr. Schemm. I would concur with Mr. Moore that, no, they
haven't, but they have laid the foundation again. And with
those tweaks into those programs, they can do the job of
adequately handling that price drop, but we have to make sure
we make those changes into those programs.
Mr. Bacon. One last question. During the 2014 Farm Bill,
some had intended for there to be a $50,000 payment limit on
ARC and PLC payments. How would a $50,000 payment limit be
impacting your operation today in this period of multiple years
of low prices if that had been proposed successfully?
Mr. Spurlock. That would be something we would definitely
have to look at and try to evaluate how it affects most people.
Any of the larger producers that are having the same problems
possibly would need larger limits than that. At the level of
what we are right now, they tend to be working. Most producers
don't even advance and get to those limits, but it is something
really to watch and evaluate.
Mr. Bacon. Anyone else?
Mr. Atkisson. Yes. Growers in the western Sorghum Belt
where I am located, we are going into a time where we are
really needing a safety net. Our PLC program is going to
fulfill that, however, when you look at those western growers
and the amount of acres that they have, and the amount of
leverage, those that have leverage against them, $50,000 is not
going to be much when you consider what they have at risk on a
day-to-day basis.
Mr. Bacon. Anyone else? I want to thank you for your, okay,
go ahead. Looks like Mr. Schemm has something.
Mr. Schemm. I just wanted to briefly mention that part of
the challenges with that limit is that both LDPs and market
consistent loans would also fall underneath that limit, and
that is where our producers have really fallen back and used
currently. We would have to evaluate it, but we do have
concerns.
Mr. Bacon. I greatly appreciate your expertise.
Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
Just following up on Mr. Bacon's line of questioning there
real quick, I am ready to close, but kind of the theme
throughout the hearing has been if we can make some tweaks here
and there to PLC, but then he asked the question is the farm
bill working and then we get a hard no. I am trying to figure
out how we reconcile the tweaks with a hard no. Are we going to
tweak it a little bit or are we in agreement that this is an
abject failure?
Mr. Spurlock. In the corn industry the programs have worked
well as it was designed at the time it was, and then
unexpectedly the markets did take the tumble.
The Chairman. Okay.
Mr. Spurlock. The ARC program has worked well for the corn
industry.
The Chairman. Yes.
Mr. Spurlock. Flexibility going both ways is something we
might have an interest in looking at as we go into the future.
The Chairman. Great. That is what we should be about, is
being flexible on this, because we are not going to achieve
perfection. And I don't think anybody would agree, in this room
or any other, that we have achieved perfection with the 2014
Farm Bill, far from it, but it is a heavy lift. The general
consensus being we can make some modifications to these
programs, we all agree on that.
Mr. Schemm. I would just liken a quick analogy to when I go
drill wheat into residue, and if I have the wrong down pressure
on that drill it turns to what I call a giant rake and it plugs
up all the field. But if I adjust my down pressure just a
little bit, then it will work.
The Chairman. Yes.
Mr. Schemm. What the current market conditions here showed
was that with the current conditions and the down pressure I
had, I turned into a big rake.
The Chairman. Yes.
Mr. Schemm. It did not work. But with a tweak of the down
pressure I can make it work.
The Chairman. I would agree with that.
I appreciate you all being here today. Before I close, let
me make one quick announcement. The ag tax reform hearing was
rescheduled for next week. One of our witnesses will focus on
how the Tax Code can hinder the transfer of farms from one
generation to the next, which has been something we have
discussed here today. And for all my colleagues interested in
that topic, I would encourage you to attend that hearing next
week as well.
Once again, gentlemen, I appreciate your time today and
your testimony.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Subcommittee on General Farm
Commodities and Risk Management is adjourned.
[Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]

THE NEXT FARM BILL

(THE FUTURE OF SNAP)

----------

TUESDAY, MARCH 28, 2017

House of Representatives,
Subcommittee on Nutrition,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:03 p.m., in
Room 1300 of the Longworth House Office Building, Hon. Glenn
Thompson [Chairman of the Subcommittee] presiding.
Members present: Representatives Thompson, Crawford, Davis,
Yoho, Comer, Marshall, Faso, Arrington, Conaway (ex officio),
McGovern, Adams, Evans, Fudge, Lujan Grisham, Lawson, Panetta,
Soto, Maloney, Costa, O'Halleran, and Peterson (ex officio).
Staff present: Caleb Crosswhite, Callie McAdams, Haley
Graves, Jennifer Tiller, Mary Rose Conroy, Stephanie Addison,
Kellie Adesina, Lisa Shelton, Liz Friedlander, Troy Phillips,
and Carly Reedholm.

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

The Chairman. This hearing of the Subcommittee on Nutrition
entitled, The Next Farm Bill: The Future of SNAP, will come to
order. I want to welcome everyone to today's hearing.
Good afternoon. Today's Nutrition Subcommittee hearing on
the future of SNAP continues the Committee's series to review
current policy and to set the stage for the next farm bill.
Thank you to everyone for taking the time to be here,
particularly our five witnesses.
The Committee on Agriculture completed a comprehensive
review of SNAP during the 114th Congress known as the Past,
Present, and Future of SNAP, and the purpose of the review was
to provide a better understanding of SNAP, the population it
serves, how the program administers food benefits and other
services to assist that population, and to examine ways the
program can be improved. While the series highlighted specific
ways that vulnerable populations are well-served, it also
exposed several areas for improvement. While prior witnesses
have touched on the future of SNAP in the context of specific
hearing topics, this hearing's purpose will be to solely
discuss the future.
SNAP, formerly called the Food Stamp Program, is designed
primarily to increase the food purchasing power of eligible
low-income households to help them buy a nutritionally-
adequate, low-cost diet. Benefits vary by household size,
income, and expenses, like shelter and medical costs, and
averaged nearly $126 per person per month in 2016. SNAP is the
largest program in the domestic hunger safety net, currently
offering nutrition assistance to 42.9 million eligible, low-
income individuals and families, all the while providing
economic benefits to communities.
SNAP has seen considerable growth in recent years. The cost
of the program more than doubled from $37.6 billion in 2008, to
nearly $80 billion at its peak in 2013. Likewise, participation
in the program increased from 28.2 million participants in
2008, to 47.6 million participants in 2013. As the economy has
recovered from the recession, participation and costs of SNAP
have slowly started to decrease. In 2016, total costs were
$70.97 billion, with participation at 44.2 million.
Now this hearing will provide additional opportunity for
stakeholders to discuss their priorities for improvements to
SNAP in the upcoming farm bill, in areas such as ensuring
adequate nutrition, strengthening the pathway toward self-
sufficiency, bettering outcomes for children and families via
education, and further advancing program efficiency and
integrity.
The panel we will hear from this afternoon will offer
insight based on their operational and policy experience. These
well-informed perspectives are critical as we look towards farm
bill reauthorization, with a focus on acknowledging what works,
reducing administrative burdens, and discussing areas for
improvement. Our goal is to ensure that SNAP benefits reach
those most in need in the most effective and efficient manner
possible.
I want to thank all of our witnesses for sharing their time
and expertise.
[The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good afternoon, and welcome to today's Nutrition Subcommittee
hearing on the future of SNAP. This hearing continues the Committee's
series to review current policy and set the stage for the next farm
bill. Thank you to everyone for taking the time to be here,
particularly our five witnesses.
The House Committee on Agriculture completed a comprehensive review
of SNAP during the 114th Congress. Known as the Past, Present, and
Future of SNAP, the purpose of the review was to provide a better
understanding of SNAP, the population it serves, how the program
administers food benefits and other services to assist that population,
and to examine ways the program can be improved. While the series
highlighted specific ways that vulnerable populations are well-served,
it also exposed several areas for improvement. While prior witnesses
have touched on the future of SNAP in the context of specific hearing
topics, this hearing's purpose will be to solely discuss that future.
SNAP, formerly called the Food Stamp Program, is designed primarily
to increase the food purchasing power of eligible low-income households
to help them buy a nutritionally-adequate, low-cost diet. Benefits vary
by household size, income, and expenses--like shelter and medical
costs--and averaged nearly $126 per person per month in 2016. SNAP is
the largest program in the domestic hunger safety net, currently
offering nutrition assistance to 42.9 million eligible, low-income
individuals and families, all the while providing economic benefits to
communities.
SNAP has seen considerable growth in recent years. The cost of the
program more than doubled from $37.6 billion in 2008, to nearly $80
billion at its peak in 2013. Likewise, participation in the program
increased from 28.2 million participants in 2008, to 47.6 million
participants in 2013. As the economy has recovered from the recession,
participation and costs of SNAP have slowly started to decrease. In
2016, total costs were $70.97 billion, with participation at 44.2
million.
This hearing will provide additional opportunity for stakeholders
to discuss their priorities for improvements to SNAP in the upcoming
farm bill, in areas such as ensuring adequate nutrition, strengthening
the pathway toward self-sufficiency, bettering outcomes for children
and families via education, and further advancing program efficiency
and integrity.
The panel we will hear from this afternoon will offer insight based
on their operational and policy experience. These well-informed
perspectives are critical as we look toward farm bill reauthorization.
With a focus on acknowledging what works, reducing administrative
burdens, and discussing areas for improvement, our goal is to ensure
that SNAP benefits reach those most in need in the most effective and
efficient manner possible.
I want to thank all of our witnesses for sharing their time and
expertise. I now recognize Mr. McGovern for any opening comments he
would like to make.

The Chairman. I now recognize the Ranking Member of the
Subcommittee, Mr. McGovern, for any opening comments he would
like to make.

OPENING STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE
IN CONGRESS FROM MASSACHUSETTS

Mr. McGovern. Thank you, Mr. Chairman. It is always good to
be with you, and I want to thank our expert witnesses for being
here today. I look forward to your testimony.
The title of today's hearing is, The Next Farm Bill: The
Future of SNAP. If I may, let me offer my colleagues a little
constructive advice. First, let me say don't even think of
separating the nutrition title from the farm bill. That would
be a huge mistake, and if it is done, I guarantee you there
will be no farm bill. Second, with regard to SNAP, don't screw
around with the program, period. There is no reason whatsoever,
based on all of our now 20 hearings, to undermine SNAP through
structural changes, block grants, further restrictions, more
onerous requirements, or cuts. Please do not do anything that
will make hunger worse in our country.
I have read some news reports that the ABAWD population
might be in the Committee's crosshairs. That is able-bodied
adults without dependents. As my colleagues know, the majority
of people on SNAP who can work, do work. ABAWDs, under current
law, are told if they don't have a job or are not in a job
training program within a 3 month period of time, they are
thrown off of SNAP for 3 years. I quite strongly disagree with
that approach. And now, I am reading that there are some on the
Committee who don't even want to give a person 3 months.
Who are ABAWDs? Some are veterans trying to reintegrate
back into their communities. Some are homeless. Some have
undiagnosed mental illnesses. Some live in areas of high
unemployment where job training programs are few or filled.
Some live in rural areas without transportation where it is
difficult to get a job or to get to a job training program. In
short, this is a very complicated population. But as usual,
there are some who are more interested in a sound bite rather
than the reality, and I would just say, ``Enough.'' We should
at least do a hearing on the ABAWD issue before making the
lives of millions of Americans more miserable.
If we are talking about the future of SNAP, we need to
focus on how to make the program even better. We need to make
sure that anyone who needs modest food assistance benefits has
access to them. We need to support and expand innovative
programs that help increase the purchasing power of SNAP. And
we need to increase SNAP benefits, which currently average a
mere $1.40 per person per meal, to provide families who benefit
from the program with access to more nutritious food that lasts
them through the entire month.
Mr. Chairman, I look forward to hearing from our witnesses
today, and based on their prepared testimony, I would say that
these witnesses will concur with all the other witnesses that
we have had before this Committee, both brought forward by the
Majority and the Minority, who have said that SNAP is a good
program. It is a successful program. It is a program with a low
fraud and error rate. It is a program that provides people food
assistance, and that it is important that we not undermine it
in any way. And that is how I hope we proceed. And again, I
thank you and I yield back my time.
The Chairman. The gentleman yields back.
The chair would request that other Members submit their
opening statements for the record so that the witnesses may
begin their testimony and to ensure that there is ample time
for questions.
I am pleased now to welcome our witnesses to the table.
Thank you so much for taking the time and everything else it
takes to come here to share your passion, your expertise on
this incredibly important topic. And our witnesses include Ms.
Stacy Dean, Vice President for Food Assistance Policy, Center
on Budget and Policy Priorities in Washington, D.C.; Mr.
Russell Sykes, Director of Center for Employment and Economic
Well-Being, American Public Human Services Association,
Washington, D.C.; Mr. Joe Arthur, Executive Director of Central
Pennsylvania Food Bank, Harrisburg, Pennsylvania; Mr. Josh
Protas, Vice President of Public Policy, MAZON--A Jewish
Response to Hunger, based here in Washington, D.C.; and Ms.
Jennifer Hatcher, Senior Vice President, Government and Public
Affairs, Food Marketing Institute based in Arlington, Virginia.
Ms. Dean, please begin with your 5 minutes of testimony
when you are ready.

STATEMENT OF STACY DEAN, VICE PRESIDENT FOR FOOD
ASSISTANCE POLICY, CENTER ON BUDGET AND POLICY
PRIORITIES, WASHINGTON, D.C.

Ms. Dean. Thank you. Chairman Thompson, Members of the
Subcommittee and full Committee, thank you very much for the
invitation to testify today. I am Stacy Dean, Vice President
for Food Assistance Policy at the Center on Budget and Policy
Priorities, a nonpartisan policy institute here in D.C. I am
very pleased to be here with you today to talk about SNAP and
to share ideas for the next farm bill. I have worked on the
program for more than 20 years, and this will be my fifth farm
bill.
SNAP is the nation's most important anti-hunger program. It
currently helps about 43 million low-income Americans to afford
a nutritionally adequate diet at more than 200,000 retail
outlets. Despite its modest benefits, it has powerful short-
and long-term impacts, and SNAP's success can largely be
attributed to its national entitlement structure. It helps
families and communities weather tough economic times. It
reduces poverty and food insecurity. It improves health, and it
supports work. The program has proven to be particularly
important to families with very young children, having lasting
effects on their health and development. Maintaining and
building upon these strengths is the first step towards a
successful title IV.
So let me turn now to some ideas for the next farm bill.
The list I will run through draws from my written statement and
highlights areas for consideration, and they include benefit
adequacy, eligibility policy, access to SNAP, program
integrity, and employment and training.
First, benefit adequacy. SNAP's maximum benefit per person
per meal, based on USDA's Thrifty Food Plan, is about $1.90,
while the average benefit is $1.40. Evidence is mounting that
the Thrifty Food Plan is insufficient for households to
purchase a healthy diet. SNAP's core purpose is to meet low-
income households' basic nutritional needs. If its basic
benefits cannot achieve that goal, then they really must be
reconsidered.
Let me move onto eligibility policy. SNAP is generally
available to low-income households, regardless of their
demographics. There are some additional restrictions, though,
which can impede SNAP's ability to help some struggling
individuals and families meet their food needs. The ABAWD rule
mentioned by Mr. McGovern is one of them. This group are
childless adults working less than 20 hours per week. Despite
their very-low-incomes, this group is only eligible for 3
months of SNAP out of every 36, unless they can maintain a job
at 20 hours a week. This harsh time limit is frequently called
a work requirement, but states are not actually required to
offer these individuals a work slot before terminating their
benefits, and most don't. We really encourage the Committee to
consider easing this tough rule.
In the area of SNAP access, it is important to highlight
that SNAP is incredibly successful at reaching eligible people.
USDA estimates that 83 percent of eligible individuals
participate, one of its true successes. Yet some groups have
participation well below this level. For example, only 42
percent of eligible seniors participate in the program. Many of
the same low-income seniors also are eligible for and similarly
miss out on Medicare's Low-Income Drug Subsidy Program, and
assistance from Medicaid to pay their Medicare premiums. Rather
than tackle low senior enrollment issues in SNAP alone, I
propose considering low or no cost ideas that would more
effectively package these three benefits together to respond to
the needs of low-income seniors more holistically. The Social
Security Administration already acts as an application hub for
these benefits, and that role could be strengthened.
Shifting to program integrity, my written testimony
includes several ideas that would enhance program accuracy,
such as increasing access to current wage records for states.
And while fraud is a minimal problem in SNAP, it is important
to keep making improvements in this area. One suggestion is to
expand a current pilot FNS is running to check for dual
enrollment across states in the Southeast, to make that pilot
go nationwide.
Finally, SNAP's employment and training program is one of
the most active areas of discussion and innovation within SNAP
today. It is a significant program serving over one million
people last year. Many states are considering how to shift
their programs from punitive process oriented approaches to
ones focused on longer-term success, which engage participants
ready to build up their skills and move up the economic ladder.
A new investment in employment and training, perhaps through a
competitive grant program, could allow states to expand
programs that support individuals who face difficulty finding
employment, or offer career and technical training that is
informed by the local business community.
So in conclusion, over the many years that I have worked on
SNAP, Congress has truly endeavored to balance the need to
maintain SNAP's successful structure and design with changes to
the program that respond to the needs of under-served groups,
such as working families and seniors, and to test and implement
new ideas to improve the program's efficiency, without
compromising its effectiveness. And as you consider ideas for
the new farm bill, I urge you to keep those goals your
priority. I look forward to the discussion today. Thank you.
[The prepared statement of Ms. Dean follows:]

Prepared Statement of Stacy Dean, Vice President for Food Assistance
Policy, Center on Budget and Policy Priorities, Washington, D.C.
Thank you for the opportunity to testify today. I am Stacy Dean,
Vice President for Food Assistance Policy at the Center on Budget and
Policy Priorities, an independent, nonprofit, nonpartisan policy
institute located here in Washington. The Center conducts research and
analysis on a range of Federal and state policy issues affecting low-
and moderate-income families. The Center's food assistance work focuses
on improving the effectiveness of the major Federal nutrition programs,
including the Supplemental Nutrition Assistance Program (SNAP). I have
worked on SNAP policy and operations for more than 20 years. Much of my
work is providing technical assistance to state officials and other
stakeholders and researchers who wish to explore options and policy to
improve SNAP's program operations to more efficiently serve eligible
households. The Center on Budget and Policy Priorities receives no
government funding.
My testimony today is divided into two sections: (1) SNAP's
critical role in our country as a Federal nutrition program; and (2)
ideas for consideration to strengthen SNAP for the future.
SNAP's Critical Role
I've testified several times recently about the critical role SNAP
plays in our country. I'm going to quickly summarize here the most
important points about SNAP's successful features and results, in part
because these themes were so successfully drawn out in the series of
hearings before this Committee on SNAP over the past 2 years and
highlighted in the comprehensive report the Committee issued late last
year.
SNAP is a highly effective anti-hunger program. Much of its success
is due to its entitlement structure and its national benefit structure,
which focus its benefits to the households with the lowest incomes
available to purchase groceries and assists poor families to obtain
adequate nutrition, regardless of where they live. As of last December,
SNAP was helping 43 million low-income Americans to afford a
nutritionally adequate diet by providing them with benefits on a debit
card that can be used only to purchase food. On average, SNAP
recipients receive about $1.40 per person per meal in food benefits.

SNAP has largely eliminated severe hunger and malnutrition
in the United States. A team of Field Foundation-sponsored
doctors examined hunger and malnutrition among poor children in
the South, Appalachia, and other very poor areas in 1967
(before the Food Stamp Program, as SNAP was then named, was
widespread in these areas) and again in the late 1970s--after
the program had been instituted nationwide. These physicians
found marked reductions over this period in serious nutrition-
related problems among children and gave primary credit to the
Food Stamp Program.\1\ Findings such as this led Senator Robert
Dole to describe the Food Stamp Program as the most important
advance in U.S. social programs since Social Security.
---------------------------------------------------------------------------
\1\Nick Kotz, Hunger in America: The Federal Response (New York:
Field Foundation, 1979).

SNAP is targeted at need and reduces poverty. SNAP reaches
more than 80 percent of eligible households, USDA estimates.\2\
It delivers the largest benefits to those least able to afford
an adequate diet; roughly 92 percent of benefits go to
households with monthly incomes below the poverty line, and 57
percent go to households below \1/2\ of the poverty line, or
below $840 a month for a family of three in 2017.
---------------------------------------------------------------------------
\2\Kelsey Farson Gray and Karen Cunnyngham, ``Trends in
Supplemental Nutrition Assistance Program Participation Rates: Fiscal
Years 2010 to 2014,'' USDA, June 2016.

These features help account for SNAP's large anti-poverty impact.
SNAP kept 8.4 million people out of poverty in 2014, including
3.8 million children, and made millions of others less poor,
according to Census data using the Supplemental Poverty Measure
(which counts SNAP and other non-cash benefits as income). SNAP
also lifted 2.1 million children above \1/2\ of the poverty
line.\3\
---------------------------------------------------------------------------
\3\CBPP analysis of 2014 Census Bureau data from the March Current
Population Survey, SPM public use file; corrections for under-reporting
from HHS/Urban Institute TRIM model. This is an update from a previous
analysis published in a paper by Arloc Sherman and Danilo Trisi,
``Safety Net More Effective Against Poverty Than Previously Thought,''
CBPP, May 6, 2015, http://www.cbpp.org/research/poverty-and-inequality/
safety-net-more-effective-against-poverty-than-previously-thought.

SNAP helps low-income households put food on the table. SNAP
benefits reduce food insecurity (which occurs when households
lack consistent access to nutritious food because of limited
resources) among high-risk children by 20 percent and reduces
fair or poor health (as reported by their parents) by 35
percent, one study found.\4\ Another recent study found that
participating in SNAP reduced households' food insecurity by
about five to ten percentage points and reduced ``very-low-food
security,'' which occurs when one or more household members
have to skip meals or otherwise eat less because they lack
money, by about five to six percentage points.\5\
---------------------------------------------------------------------------
\4\Brent Kreider, et al., ``Identifying the Effects of SNAP (Food
Stamps) on Child Health Outcomes When Participation Is Endogenous and
Misreported,'' Journal of the American Statistical Association,
107(499), 2012: 958-975, http://batten.virginia.edu/sites/default/
files/research/attachments/JASA_KPGJ_online(1).pdf.
\5\James Mabli, et al., ``Measuring the Effect of Supplemental
Nutrition Assistance Program (SNAP) Participation on Food Security,''
prepared by Mathematica Policy Research for the U.S. Department of
Agriculture, Food and Nutrition Service, August 2013, https://
www.fns.usda.gov/sites/default/files/Measuring2013.pdf.

SNAP improves long-term health and educational outcomes.
Recent research comparing the long-term outcomes of individuals
in different areas of the country when SNAP gradually expanded
nationwide in the 1960s and early 1970s found that
disadvantaged children who had access to food stamps in early
childhood and whose mothers had access during their pregnancy
had better health and educational outcomes as adults than
children who didn't have access to food stamps. Among other
things, children with access to food stamps were less likely in
adulthood to have stunted growth, be diagnosed with heart
disease, or be obese. They also were more likely to graduate
from high school.\6\
---------------------------------------------------------------------------
\6\Hilary Hoynes, Diane Whitmore Schanzenbach, and Douglas Almond,
``Long-Run Impacts of Childhood Access to the Safety Net,'' American
Economic Review, 106(4): 2016, 903-934.

SNAP is highly responsive to the economy. SNAP is the most
responsive means-tested program to changes in poverty and
unemployment during economic downturns. It expands to meet need
and then shrinks when need recedes, most recently during and
after the Great Recession of 2007-09. This automatic response
not only eases hardship for people directly hit by a downturn
but also boosts economic activity in communities across the
country, thereby acting as an ``automatic stabilizer'' for the
---------------------------------------------------------------------------
weak economy.

SNAP supports work. SNAP is designed to both supplement the
wages of low-income workers and support workers during
temporary periods of unemployment. Most SNAP recipients who can
work do. The number and share of households that have earnings
while receiving SNAP has been on the rise. Among SNAP
households with at least one working-age, non-disabled adult,
more than \1/2\ work while receiving SNAP--and more than 80
percent work in the year prior to or the year after receiving
SNAP. The SNAP benefit formula is structured so that
participants have a strong incentive to work longer hours or to
search for better-paying jobs. SNAP benefits gradually decline
as earnings rise, reducing the ``benefit cliff'' effect in
SNAP. And, as I discuss in more detail below, SNAP provides a
state option to all but eliminate any benefit cliff effects in
SNAP.

SNAP is efficient and effective. USDA and states take
seriously their roles as stewards of public funds and emphasize
program integrity throughout program operations. The
authorizing committees have mandated in SNAP some of the most
rigorous integrity standards and systems of any Federal
programs. States and USDA have achieved the highest program
integrity levels for SNAP in recent years in terms of both the
payment error rate and the percentage of SNAP benefits that are
illegally exchanged for cash. States and USDA devote
significant resources and take advantage of the most modern
tools to pursue allegations of fraud and root it out when
found.

SNAP's national benefit structure is key to these successes.
States have a high degree of flexibility in how they operate
the program, but SNAP's benefit levels and eligibility rules
are largely uniform across the states. The national benefit
structure was established under President Nixon after an
initial effort to operate the program without such standards
resulted in enormous disparities across states, with some
states setting income limits as low as \1/2\ the poverty line.

The national benefit structure ensures that poor families can
obtain adequate nutrition, regardless of where they live. It
also substantially reduces differences across the states in
their overall financial support for poor children--a fact of
special importance to southern states and rural areas, which
have lower cash assistance benefits, higher poverty, and lower
fiscal capacity.

I also believe that the Federal and state agencies that oversee
SNAP are committed to the program, its participants, and strive for
continuous improvement. In part, the 5 year farm bill cycle helps to
foster an atmosphere of continual self-evaluation, a healthy sense of
external scrutiny, coupled with the opportunity to pursue improvements
when needed. While the core design of SNAP is largely unchanged since
its origin, USDA and states have worked to strengthen and modernize the
program to reflect new opportunities as well as respond to emerging
challenges. This farm bill will be no different and we look forward to
the opportunity to work with the Committee on continuing to improve
SNAP and to build upon its core strengths.
Farm Bill Ideas for Consideration
The focus of today's hearing is on ways to build on the strengths
of SNAP. Over the past 2 years, the Committee has undertaken a serious
effort to learn about SNAP, including the people it serves, how the
program operates at the state level, and opportunities for improving
its effectiveness. This learning is reflected in the Committee's
report, which details the program's strengths, including the ways in
which SNAP's basic structure contributes to its effectiveness. Given
the findings of the report, it is appropriate for the Committee to
consider future policy improvements recognizing that the program is
working well and meeting its key goals.
The remainder of my testimony will focus on a set of policy
improvements that could strengthen the program without undermining the
key programmatic elements that make it effective today. These policy
ideas are informed by the Committee's hearings, academic research on
the program, and our work with state officials, client advocate, and
service provider groups, as well as our own research. The following is
not a comprehensive or final list of the Center's suggestions for the
2018 Farm Bill. Instead, it is meant provide an overview of some of the
key areas we recommend that you consider.
Improving SNAP's Basic Benefit
SNAP's maximum benefit per person per meal is about $1.90 and the
average benefit is about $1.40, reflecting that most households are
expected to contribute a share of their own income to purchase food.
SNAP expects families receiving benefits to spend 30 percent of their
net income on food. Families with no net income receive the maximum
benefit, which is tied to the cost of the Department of Agriculture's
Thrifty Food Plan (a diet plan intended to provide adequate nutrition
at a minimal cost). For all other households, the monthly SNAP benefit
equals the maximum benefit for that household size minus the
household's expected contribution.
Given the modest maximum and average benefit, SNAP delivers strong
outcomes. In recent years, however, there has been increasing concern
and growing evidence that SNAP's basic benefit level is out of date and
not sufficient to ensure that participating households can afford a
healthy diet. This evidence includes research by leading academics:

James P. Ziliak, a professor of economics at the University
of Kentucky, makes the case that SNAP benefit levels are
``based on increasingly outdated assumptions, including
unreasonable expectations about households' availability of
time to prepare food, and need to be modernized . . .'' The
current Thrifty Food Plan assumes that households can spend
close to 2 hours per day preparing food, while households
typically spend 30 minutes to an hour a day preparing food.\7\
In addition to this assumption, the current Thrifty Food Plan,
in an effort to develop a very low cost plan, assumes that
households will consume a diet that is far outside the norm for
what Americans eat, including far more of certain types of
food--such as dry beans and fluid milk--and far less of other
foods, including items commonly consumed like cheese and
chicken.
---------------------------------------------------------------------------
\7\James Ziliak, ``Modernizing SNAP Benefits,'' Hamilton Project,
Brookings Institution, May 2016, http://www.hamiltonproject.org/assets/
files/ziliak_modernizing_snap_benefits.pdf.

Studies also show that households experience a range of
adverse outcomes due to running out of food at the end of the
SNAP benefit month. For example, one study found that the rate
of hospital admissions for low blood sugar (which can occur
when diabetics reduce their food intake) among low-income
individuals in California was 27 percent higher in the last
week of the month compared to the first, an increase not found
among higher-income individuals--suggesting that exhausting
food budgets contributes to these hospitalizations. (California
distributes SNAP in the first days of the month.)\8\ Studies
have also found that participants consume fewer calories and
that diet quality decreases towards the end of the month as
households exhaust their benefits.\9\
---------------------------------------------------------------------------
\8\Hilary Seligman, et al., ``Exhaustion of Food Budgets at Month's
End and Hospital Admissions for Hypoglycemia,'' Health Affairs, January
2014, 33(1): 116-123, https://www.ncbi.nlm.nih.gov/pmc/articles/
PMC4215698/.
\9\Jessica Todd, ``Revisiting the Supplemental Nutrition Assistance
Program cycle of food intake: Investigating heterogeneity, diet
quality, and a large boost in benefit amounts,'' Applied Economic
Perspectives and Policy, 2014; Michael Kuhn, ``Causes and Consequences
of the Calorie Crunch,'', UKCPR Discussion Paper 2016-11, http://
uknowledge.uky.edu/cgi/
viewcontent.cgi?article=1109&context=ukcpr_papers; Jesse Shapiro, ``Is
there a Daily Discount Rate? Evidence from the Food Stamp Nutrition
Cycle,'' Journal of Public Economics, Volume 89, Issues 2-3, February
2005.

Economics professors Patricia M. Anderson and Kristin F.
Butcher\10\ in a paper we recently commissioned, found that
boosting SNAP benefits would raise not only the amount that
low-income households spend on groceries but also the
nutritional quality of the food purchased. The authors
estimated the impact of an increase in SNAP benefits of $30 per
person per month--or the equivalent of just under $7 per person
per week. (This amounts to a roughly 20 percent increase in the
Thrifty Food Plan.) Based on food spending patterns of
households with somewhat more resources, the researchers found
that a $30 increase would result in about $19 per person per
month more in food spending. (This is less than the SNAP
benefit increase, even though SNAP can be spent only on food,
because the added benefits would free up household income for
other necessities such as utility bills or non-food groceries
that SNAP doesn't cover.) That increase in food spending, in
turn, would raise consumption of more nutritious foods,
notably, vegetables and certain healthy sources of protein
(such as poultry and fish, and less fast food. The increased
food spending would also reduce food insecurity among SNAP
recipients.
---------------------------------------------------------------------------
\10\Patricia Anderson and Kristin Butcher, ``The Relationships
Among SNAP Benefits, Grocery Spending, Diet Quality, and the Adequacy
of Low-Income Families' Resource'' Center on Budget and Policy
Priorities, June 14, 2016, http://www.cbpp.org/research/food-
assistance/the-relationships-among-snap-benefits-grocery-spending-diet-
quality-and-the.

Such a significant increase may not be feasible in the 2018 Farm
Bill. Yet, evidence is mounting that SNAP's benefit is insufficient for
all families to meet their basic food needs with a healthy diet. This
topic merits further discussion and consideration. SNAP's core purpose
is to meet low-income households basic nutritional needs. If its
benefit levels compromise the program's ability to achieve that goal,
then they must be reconsidered.
The Benefit Cliff
Some policymakers and service providers have raised concerns that
programs that provide assistance for low-income families may discourage
work if participants are worried that they will face a ``cliff'' where
they lose their benefits all together if they take a job or increase
their earnings above the program's income limit. SNAP currently
contains three features that result in a fairly minimal benefit cliff
for households with income right at the upper end of SNAP's income
eligibility limit.
First, SNAP's benefit formula, which targets benefits based on a
household's income and expenses, phases out benefits slowly with
increased earnings and includes a 20 percent deduction for earned
income to reflect the cost of work-related expenses and to function as
a work incentive. As a result, for most households with each additional
dollar of earnings the household's SNAP benefits will decline by only
24 to 36. Most SNAP households, as a result, will see an increase in
their total income when their earnings go up modestly.
The program does, however, have a Federal gross income limit at 130
percent of the Federal poverty line, a rule that creates a small but
meaningful benefit cliff or benefit loss for some households who might
increase their earnings above that level. For example, a typical
household of three with income at 120 percent of the poverty line would
lose about $200 a month in SNAP benefits if it took a new job or got a
raise that lifted its monthly income above the gross income limit
(which at 130 percent of poverty is about $2,200 a month for a family
of three). This loss of SNAP would cancel out the higher earnings and
the household would be no better off, and in some cases could be worse
off.
Fortunately, states currently have an option to lift the gross
income limit through ``broad-based categorical eligibility''. More than
30 states have taken advantage of the option thereby allowing benefits
to phase out gradually for all working households. Consider the
previous example in a state that used the categorical eligibility
option to adopt a higher gross income limit. The household's SNAP
benefit would drop by only about $60 to $90 a month, so the household
would still be better off with the higher paying job. This state option
to raise the gross income limit through broad-based categorical
eligibility is the second protection in SNAP against a benefit cliff.
Maintaining this option will allow more states to smooth SNAP's phase
out and eliminate the relatively modest benefit cliff.
The third protection against a benefit cliff is its structural
guarantee to make food assistance available to every household that
qualifies under program rules and applies for help. SNAP households
that leave the program because they find a job or get a raise and no
longer qualify can count on SNAP being available if they need help
again later. Without this guarantee a household that loses its job
might have to wait until funding became available to resume benefits--
as occurs now with child care and other benefits that are constrained
by funding limitations from serving all who are eligible. The fact that
SNAP is an entitlement lowers the perceived risks of working, making it
easier for low-income families to take a chance on a new job or
promotion.
We plan to do some more detailed analysis on SNAP's income phase
out and resulting benefit cliff and will publish those findings shortly
in order to help inform the Committee's review of this issue.
Assessing SNAP's Response to Individuals with Disabilities
SNAP provides needed food assistance to millions of people with
disabilities. Over one in four SNAP participants, equivalent to over 11
million individuals in 2015, has a functional or work limitation or
receives Federal Government disability benefits, according to CBPP
analysis of data from the 2015 National Health Interview Survey. The
program makes an important difference in the lives of these
individuals. Yet, people with disabilities are more likely to live in
poverty, endure material hardships, and experience food insecurity.
Lower family income, higher disability-related expenses, and the
challenges of providing needed assistance and care to disabled family
members undermine the economic well-being of people with disabilities
and their families. People with disabilities are at least twice as
likely to live in poverty and struggle to put enough food on the table
as people without disabilities. Disabling or chronic health conditions
may be made worse by insufficient food or a low-quality diet.
The Center has a forthcoming analysis on the role SNAP plays for
low-income individuals with disabilities and how we might improve the
program to better address their needs. At a minimum, this issue merits
further study by the Committee and USDA to determine whether Federal
nutrition programs could be improved or implemented better to meet the
needs of individuals with disabilities.
Maintaining and Improving Access to SNAP
SNAP is very successful in reaching eligible people. USDA estimates
that some 83 percent of eligible individuals participate in the
program. Working to ensure that eligible households continue to access
the program remains a top priority. Despite this strong participation
rate, there are groups who participate at lower rates. Low-income
seniors are an example. And, we are concerned that vulnerable SNAP
participants, such as pregnant women, infants, and toddlers may be
missing out on important supplemental supports through WIC. We believe
there are effective low- and no-cost efforts to make better connections
between eligible people and Federal nutrition benefits.

Increasing eligible senior enrollment in nutrition and
health benefits. Many low-income seniors who are eligible for
SNAP are also eligible for Medicare Savings Programs (MSPs),
which defray Medicare premiums and/or cost-sharing charges for
poor and some near-poor seniors not enrolled in the full
Medicaid program. Similarly, many SNAP-eligible seniors are
also eligible for the Low-Income Subsidy (LIS) for the Medicare
Part D prescription drug benefit. But participation rates in
these programs among eligible low-income seniors are very low--
generally in the range of only 35 to 50 percent. Connecting
eligible poor seniors to the available Federal health and
nutrition benefits for which they are already eligible would
make a major dent in hardship for low-income seniors.

In addition to lack of knowledge among low-income seniors about
their potential eligibility for both nutrition and health
benefits, senior participation also is inhibited by
unnecessarily duplicative and uncoordinated application
procedures. These procedures also push up administrative costs.
While these programs have similar eligibility rules, seniors
typically must apply for them via three duplicative processes--
through the Social Security Administration (SSA) for LIS, at
their state Medicaid agency for the MSPs, and at their state
SNAP agency for SNAP (although the last two can be combined,
and if a senior applies first for MSP, he or she should be
deemed automatically eligible for the LIS).
Eligible seniors who don't enroll forgo significant financial
assistance that could make a large positive effect in helping
them make their ends meet.\11\ Tackling low participation rates
across programs would be more effective in helping low-income
seniors make ends meet than working to improve SNAP
participation rates alone.
---------------------------------------------------------------------------
\11\For example, the MSPs pick up annual Medicare Part B premiums
of about $1,258 in 2016, as well as help with the Part B deductible of
$166 and other co-insurance charges for those with incomes below the
Federal poverty line. SSA estimates that the Low Income Drug Subsidy,
which pays for Medicare Part D premiums, deductibles, and co-payments,
has an annual value of about $4,000 for those who are enrolled. USDA
estimates that elderly individuals who are eligible for SNAP but not
enrolled would qualify for more than $90 a month, or about $1,100 a
year.
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While some of these issues are outside of the purview of the
Agriculture Committee, the farm bill represents an opportunity
to engage on improving services for low-income seniors. One
suggestion would be to support innovative pilots that test
using Social Security field offices in high-poverty
neighborhoods to enroll low-income seniors and people with
disabilities in a broad set of benefits. Interested local sites
could test models in which a single process could facilitate
enrollment in Social Security, LIS, MSP, and SNAP for
struggling elderly and individuals with disabilities.

Ensuring SNAP's infants and toddlers are connected to WIC.
Nutrition assistance programs play an especially important role
for young children, whose brains are rapidly developing.
Unfortunately, young children are likelier to live in poor and
food-insecure families than older children and are particularly
vulnerable to the negative health effects associated with a
lack of proper nutrition. Low-income pregnant and post-partum
women, infants and children up to age 5 who participate in SNAP
are also income eligible for the Special Supplemental Nutrition
Program for Women, Infants, and Children (WIC). WIC provides
nutritious foods, nutrition education, breastfeeding support,
and referrals to health care and social services to its
participants. SNAP and WIC's nutritional support lessens the
impact of hardship in early childhood and improves health and
economic stability into adulthood.

SNAP does an excellent job of reaching eligible children, but it
is unclear how many of SNAP's young children are connected to
WIC. Our analysis of administrative and Census data suggests
that many toddlers and preschoolers enrolled in SNAP are
missing out on WIC, despite being eligible and despite the
supplemental assistance WIC could provide and the positive
long-term health outcomes of the WIC program. Given these
programs' proven benefits on the long-term health and economic
outcomes of young children, more can be done at the state level
to ensure successful cross enrollment in these two
complementary nutrition programs. USDA could promote this
connection, set an expectation that states connect eligible
SNAP participants to WIC and measure states' success with
respect to connecting infants and toddlers to these two
effective interventions. Setting an expectation that states
will assist low-income infants and toddlers with available
Federal nutrition assistance and then measuring states against
that expectation will elevate this issue and likely drive
improved outcomes. An effort like this would not require new
spending and would improve the delivery of Federal nutrition
programs to SNAP's infants and toddlers.
Eligibility
In general, SNAP is available to all households that meet the
Federal income and asset rules. The amount that households receive is
calibrated to their individual financial circumstances and their
ability to purchase a basic diet. There are several groups, however,
whose participation is further restricted based on their demographic or
other circumstances. An example of one of those restrictions worthy of
reconsideration is on individuals subject to the SNAP's 3 month time
limit.
One SNAP's harshest rules limits unemployed individuals aged 18 to
50 not living with children to 3 months of benefits in any 36 month
period when they aren't employed or in a work or training program for
at least 20 hours a week.\12\ Under the rule, implemented as part of
the 1996 welfare law, states are not obligated to offer all individuals
a work or training program slot, and most do not. SNAP recipients'
benefits are cut off after 3 months irrespective of whether they are
searching diligently for a job or willing to participate in a
qualifying work or job training program. As a result, this rule is a
time limit on benefits and not a work requirement, as it is sometimes
described.
---------------------------------------------------------------------------
\12\For a more comprehensive discussion of the time limit rule,
see: Ed Bolen, et al., ``More Than 500,000 Adults Will Lose SNAP
Benefits in 2016 as Waivers Expire,'' Center on Budget and Policy
Priorities, updated March 18, 2016, http://www.cbpp.org/research/food-
assistance/more-than-500000-adults-will-lose-snap-benefits-in-2016-as-
waivers-expire.
---------------------------------------------------------------------------
Unemployment Rates Are Higher for Workers with Less Education
Monthly Unemployment Rate

Source: U.S. Bureau of Labor Statistics, Current Population
Survey.

Many of the individuals subject to the time limit struggle to find
employment even in normal economic times. Those subject to this rule
are extremely poor, tend to have limited education, and sometimes face
barriers to work such as a criminal justice history or racial
discrimination. They also tend to have less education which is
associated with higher unemployment rates. About a quarter have less
than a high school education, and \1/2\ have only a high school diploma
or GED.\13\ SNAP participants subject to the 3 month cutoff are more
likely than other SNAP participants to lack basic job skills like
reading, writing, and basic mathematics, according to the Government
Accountability Office (GAO).\14\
---------------------------------------------------------------------------
\13\Steven Carlson, Dorothy Rosenbaum, and Brynne Keith-Jennings,
``Who Are the Low-Income Childless Adults Facing the Loss of SNAP in
2016?'' Center on Budget and Policy Priorities, February 8, 2016,
http://www.cbpp.org/research/food-assistance/who-are-the-low-income-
childless-adults-facing-the-loss-of-snap-in-2016.
\14\``Food Stamp Employment and Training Program,'' United States
General Accounting Office (GAO-3-388), March 2003, p. 17.
---------------------------------------------------------------------------
Unemployment rates for lower-skilled workers tend to be high. The
unemployment rate for people lacking a high school diploma or GED--who
make up about a quarter of all non-disabled childless adults on SNAP--
stood at 7.5 percent in 2016, while the overall unemployment rate was
4.9 percent.\15\ (See Figure 1.) Unemployment rates for workers in many
lower-skilled occupations, such as those in the service industries, are
also substantially higher than the overall unemployment rate. In
December of 2015, unemployment in the food services industry was 6.9
percent, above the national overall average of 4.9 percent.\16\
---------------------------------------------------------------------------
\15\Bureau of Labor Statistics.
\16\Industries at a Glance: Food Services and Drinking Places,
Bureau of Labor Statistics, https://www.bls.gov/iag/tgs/iag722.htm.
---------------------------------------------------------------------------
While there have been few in-depth studies of those who are subject
to the time limit, some evidence suggests that a sizable portion have a
criminal history, which has a significant impact on job prospects. A
detailed study of childless adults who were referred to community-based
workfare in Franklin County (Columbus), Ohio found that about \1/3\ had
a felony conviction.\17\ People with criminal records find it harder to
be hired due to discrimination as well as low levels of education and
poor work histories.\18\ In addition to the stigma of incarceration, a
number of states prohibit people with criminal histories from working
in certain occupations. As a result, people with criminal backgrounds
work less and have reduced earnings.
---------------------------------------------------------------------------
\17\Ohio Association of Food Banks, ``Franklin County Comprehensive
Report on Able-Bodies Adults Without Dependents, 2014-2015,'' October
14, 2015, http://admin.ohiofoodbanks.org/uploads/news/
ABAWD_Report_2014-2015-v3.pdf.
\18\Maurice Emsellem and Jason Ziedenberg, ``Strategies for Full
Employment Through Reform of the Criminal Justice System,'' Center on
Budget and Policy Priorities, March 30, 2015, http://www.cbpp.org/
research/full-employment/strategies-for-full-employment-through-reform-
of-the-criminal-justice.
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In addition to being harsh policy that punishes individuals who are
willing to work, the rule is one of the most administratively complex
and error-prone aspects of SNAP law. Many states also believe the rule
undermines their efforts to design meaningful work requirements as the
time limit imposes unrealistic dictates on the types of qualifying job
training. For all of these reasons, many states and anti-hunger
advocates have long sought the rule's repeal.
The Senate versions of the 2002 and the 2008 Farm Bills included
provisions that would have softened the limit by extending benefits to
6 months out of every 12 for these unemployed adults to better reflect
the length of time they would typically avail themselves of the program
in the absence of a time limit. And, that rule would be simpler for
states to administer. Rep. Adams through H.R. 1276, the Closing the
Meal Gap Act of 2017, would convert the time limit to an actual work
requirement by reframing the rule to say that that states cannot
enforce the time limit unless they offer individuals subject to the
rule a work slot or job training program that would meet the law's
strict standard. Both of these approaches would be meaningful
improvements to the current situation which results in cutting off food
assistance to individuals who are willing to work but unable to find 20
hours per week of employment.
Program Integrity and Oversight
The farm bill is an important opportunity to equip USDA and states
with new tools to improve SNAP's program integrity (which encompasses
fraud and common error--the larger of the two issues). As new
technology becomes available and as awareness improves of how problems
arise, there are opportunities to improve SNAP accuracy and prevent
fraud. And, with respect to fraud, while a relatively small problem,
it's an ever-changing concern. Criminals are adaptable, and the
government's response to them must also remain nimble and responsive to
emerging patterns of fraud.
Often, our biggest obstacle to helping states implement new
measures that would increase the accuracy of benefit issuance is cost.
Modernized eligibility systems, access to useful third-party data, and
the appropriate level of staff to process cases with a high degree of
accuracy can be costly for states. While the Federal Government shares
in the costs of administering the program, state budgets are the
limiting factor to ensuring the best systems and technology are
deployed throughout the program. Many states downsized their program
operations during the recent recession and have not yet rebuilt the
capacity necessary to take full advantage of new options and
technology.
We offer the following suggestions as areas that Congress might
want to consider to enhance SNAP's program integrity.

A joint Federal-state effort to analyze client and retailer
data for predictors of fraud and to share effective methods of
identifying cases or stores that contain fraud or that are
guilty of trafficking after a more in-depth investigation.
Congress may wish to review whether USDA needs more resources
or authority to remove offending stores from the program more
quickly. In a hearing I participated in before the House
Oversight Committee last year, one witness raised concerns that
retailers that could be disqualified through a SNAP
administrative process were not always removed from the program
in a timely manner in order for law enforcement to build a more
powerful criminal case against the store.

Taking the National Accuracy Clearinghouse nationwide.
Through an FNS pilot, several southeastern states and Lexis/
Nexis are working to run checks across states for dual
enrollment in SNAP. This pilot project appears to have been
quite successful at identifying a small, but unacceptable,
number of individuals enrolled in two states. We encourage you
to discuss with FNS whether the farm bill could assist with
rolling out the effort nationwide. Our only caveat would be
that we want to be sure that states are required to disenroll
clients when they report a move to another state. Our
understanding is that some states are slow to take such action
because they want evidence that the client is moving (which can
be difficult to provide). Not being able to disenroll when
moving can result in an unintended dual enrollment or a
household being prevented from being able to enroll in SNAP in
their new state because the originating state has not yet
closed the household's case.

Some states pay (with the support of Federal matching funds)
a private company, Equifax, for access to employment and wage
records for some SNAP households. Employers with large numbers
of low-wage workers often prefer to have a third party handle
inquiries regarding their employees' wages and hours. State
SNAP agencies report that when their case workers are able to
easily access such current income information for applicants
and participants, they have higher accuracy and less paperwork
burden on both participants and employers. The Committee may
wish to explore whether access to these private third-party
data sources is something the program can and should provide to
all states from the Federal level. A single procurement might
be a cost effective approach. The Federal Government, for
example, now provides such data to state Medicaid programs
through the Federal data hub. Unfortunately that data is too
old to be very useful to SNAP, which does a more current
assessment of household circumstances. But the service HHS
provides to states is worthy of replication in SNAP.
Employment and Training
SNAP's existing employment and training (E&T) program allows
states, within certain parameters, to design work and job training
programs that help SNAP participants gain the skills, training or
experience needed to gain regular employment. States can determine
which populations and geographic locations to target for services and
what types of employment services to offer. A number of states have
been actively revising, expanding, and improving their E&T programs
over the past few years.
As part of the 2013 Farm Bill, Congress authorized ten pilot
projects to test, with a rigorous evaluation, whether SNAP E&T could
more effectively connect unemployed and underemployed recipients to
work. The selected pilots, announced in March 2015, include a mix of
mandatory and voluntary E&T programs. Several of the pilots target
individuals who face significant barriers to employment, including
homeless adults, the long-term unemployed, individuals in the
correctional system, and individuals with substance addiction. Many of
the pilots involve multiple partners that help connect SNAP
participants to resources and services that are available in the
community and can help them prepare for, find, or retain employment.
This includes partners that provide training, help recipients secure
child care assistance and other supportive services, and assist job
seekers identify job opportunities.
These pilots are intended to help both states and the Federal
Government understand how SNAP E&T can most effectively help SNAP
recipients connect to needed job-related services and which of those
services the E&T program needs to provide itself to produce the best
employment outcomes possible. In addition, the farm bill requires USDA
to work with states to establish performance standards by which to
assess E&T programs. Both of these initiatives are underway and are
built upon USDA's fairly robust effort over the past several years to
support state efforts to improve their employment and training
services, primarily by ensuring that their programs are preparing SNAP
recipients for in-demand jobs, such as technical training and
education-based programs. As a result of these policy initiatives, E&T
is one of the most active areas of discussion, collaboration, and
innovation within SNAP today.
We encourage the Committee to consider making new investments in
E&T to expand job training opportunities for SNAP participants, perhaps
through a competitive grant program. Such grants could be targeted to
states with a proven track record producing positive employment
outcomes in their E&T programs. Grants could support a wide range of
programs including those targeted at removing barriers for individuals
who face a difficult time finding employment such as ex-offenders or
the homeless, providing case management services (a common theme in
many of the pilots), or offering career and technical training informed
by the local business community. The Committee may also wish to
consider proposals that would assist states that currently focus their
E&T program primarily on job search and workfare--programs that have
not been shown to be effective in improving employment outcomes for
opportunity of participants--with the kinds of supports such as peer
coaching and a learning collaborative that could help them to build
more effective job training programs.
Assessing EBT
SNAP Electronic Benefits Transfer (EBT) is the electronic system
that allows a recipient to authorize transfer of their government
benefits from a Federal account to a retailer account to pay for the
groceries they buy. EBT is used in all 50 states, the District of
Columbia, Puerto Rico, the Virgin Islands, and Guam. EBT has been fully
implemented since June of 2004. As the system has been in place for
more than 10 years, this farm bill offers the opportunity to review how
well the system is serving the program, whether it's leveraging payment
technology innovations, whether the reliability of the system matches
commercial systems, and whether the costs of the EBT system are
competitive with other similar technologies now available. One area of
potential concern is the small number of vendors for SNAP EBT services
and whether there is sufficient competition in the market for price and
service. Today, only two vendors virtually hold all EBT contracts with
states.
Issues External to SNAP for Consideration
Much of my testimony has been about how to improve or strengthen
SNAP from within the program. It's also useful to consider external
factors that will set the context for what SNAP must respond to in the
coming years.
The Labor Market
While reshaping SNAP's employment and training program to be one
that helps workers climb the economic ladder is a priority, no job
training program can change the landscape of the low-wage labor market.
As I mentioned earlier, the majority of working-age SNAP participants
who can work, do work, but often the jobs they are working in, or are
in-between, pay low wages, have variable, unpredictable schedules,
don't provide full-time hours to workers who want them, and don't
provide paid sick leave or other benefits. These workers often lack
access to child care and other crucial job supports, and as a result of
these conditions, these jobs tend to have high turnover. (For example,
workers in jobs with paid sick leave are more likely to be able to stay
employed in their current job than workers without, who may lose a job
if they or a family member falls ill and they are unable to take the
time off.)\19\
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\19\Heather Hill. ``Paid Sick Leave and Job Stability,'' Work and
Occupations, Vol. 40 Issue 2, April 2013, https://www.ncbi.nlm.nih.gov/
pmc/articles/PMC3825168/.
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SNAP participants who work are most likely to have service, sales,
or office occupations, in occupations such as cooks, home health aides,
janitors and maids, and personal care aides. They are most likely to
work in the education and health industries (such as in schools,
hospitals, home health services, and nursing homes), in retail trade
(particularly in grocery stores and discount stores), and in leisure
and hospitality (such as in restaurants and hotels).\20\ These jobs
tend to pay low wages and offer part-time and variable hours.
---------------------------------------------------------------------------
\20\Unpublished CBPP analysis of March 2016 Current Population
Survey and 2015 American Community Survey data.
---------------------------------------------------------------------------
As a result, SNAP will continue to be an important support for low-
wage workers and its features that respond and adapt to fluctuating
earnings are important. It's also important to note that many workers
will experience periods of unemployment or underemployment due to the
nature of the labor market and SNAP is a crucial support to them during
that time.
Repealing the Affordable Care Act
While changes to the Affordable Care Act are still under
consideration, it's worth noting that the outcome of that debate will
have an impact on SNAP. First, research has shown that medical expenses
can affect food insecurity, as low-income individuals with health
problems can face tradeoffs between food and medicine. For example, one
study found that one in three people with chronic conditions were
unable to afford food, adequate doses of medication, or both.\21\
Another found that the probability of food insecurity increases as out-
of-pocket medical expenses increase.\22\ Legislation that reduces
health coverage or increases out-of-pocket medical expenses for low-
income individuals could have an impact on SNAP. Moreover, when
individuals go without care they need, their health status may decline,
making it more difficult to get and keep jobs--and making the job of
E&T efforts that much more challenging.
---------------------------------------------------------------------------
\21\Seth A. Berkowitz, Hilary K. Seligman, Niteesh K. Choudhry,
``Treat or Eat: Food Insecurity, Cost-related Medication Underuse, and
Unmet Needs,'' American Journal of Medicine, 2014.
\22\Robert Hielsen, Steven Garasky, and Swarn Chatterjee, ``Food
Insecurity and Out-of-Pocket Medical Expenditures: Competing Basic
Needs?'' Family and Consumer Sciences Research Journal, Vol. 39, No. 2,
December 2010, pp. 137-151.
---------------------------------------------------------------------------
In addition, SNAP is co-administered with Medicaid in most states.
When there are significant changes to that program that require states'
attention, it can divert their focus from SNAP. Until the debate on
health care concludes, it is premature to predict what the impact to
SNAP will be and whether the Committee will need to respond.
Nevertheless with changes as significant as those being contemplated by
the House, there will surely be ripple effects to SNAP.
Downward Pressure on Non-Defense Discretionary Spending
Earlier this month, the Administration released its initial Fiscal
Year 2018 budget proposal. The Administration's budget outline now
calls for cutting overall non-defense appropriations by another $54
billion below the full sequestration level. Under that proposal, the
cumulative inflation-adjusted cut since 2010 would grow to 25 percent.
For USDA, the Trump budget calls for cutting 2018 discretionary
appropriations by $4.7 billion or 21 percent below 2017.
While the initial budget did not provide many details, this lower
funding level raises concerns for SNAP. First, if FNS's administrative
budget is cut, that could mean reduced funding for USDA's SNAP
oversight, research, and program integrity initiatives. Second, the
budget proposal did single out for elimination several programs outside
USDA that also support SNAP households. The Low-Income Energy
Assistance Program (LIHEAP) provides low-income households with energy
assistance and is slated for elimination under the Administration's
budget proposal. Many LIHEAP recipients also receive SNAP. If low-
income families and seniors lose LIHEAP, it will make it more difficult
for them to cover their basic utilities, raising concerns about the
traditional trade-off in a struggling family's budget between ``heating
and eating.'' Similarly, cuts to rental assistance and other core forms
of support to very low-income households will further strain their
budgets and make it harder for them to afford life's basics, including
food.
Other proposed reductions, such as in the area of job training
programs, also can have an impact on SNAP. First, many SNAP state
agencies rely upon the job training and other services offered through
the Workforce Investment Opportunity Act (WIOA) for at least some of
their E&T training programs. Cuts to those programs will mean fewer
work slots for E&T participants. And in many cases, the community-based
organizations that provide SNAP job training are also working with
Department of Labor funding. Cutting a core source of their funding may
make their business less viable, reducing the overall pool of providers
in a community that can provide job training. When the Administration's
more detailed budget is released in May, there may be many more
proposed cuts that would impact SNAP participants or the program.
Chairman Conaway rightly described the Administration budget as a
``proposal,'' not policy. As the FY18 appropriations process moves
forward however, current law funding for non-defense discretionary
(NDD) programs continues to decrease relative to the FY10 level. Even
if Congress does not adopt the additional cuts to NDD as proposed by
the Administration, we can anticipate cuts to programs that will impact
SNAP participants and the program.
Conclusion
SNAP is an efficient and effective program. It alleviates hunger
and poverty and has positive impacts on the long-term outcomes of those
who receive its benefits. And, SNAP has exacting standards with respect
to eligibility determinations.
Over the many years that I have worked on this program, Congress
and USDA have endeavored to balance the need to maintain SNAP's
successful structure and design with making changes to the program that
respond to the needs of under-served groups such as working families
and seniors, and test or implement new ideas to improve the program's
efficiency without compromising its effectiveness. As we look to the
next farm bill, we look forward to working with you on changes that
will improve the effectiveness of SNAP, rather than weaken or
compromise its ability to meet the basic nutrition needs of struggling
Americans. As you consider policy proposals, I urge you to keep that
goal as your priority.

The Chairman. Thank you, Ms. Dean.
Mr. Sykes, go ahead and proceed with your 5 minutes of
testimony when you are ready.

STATEMENT OF RUSSELL SYKES, DIRECTOR, CENTER FOR
EMPLOYMENT AND ECONOMIC WELL-BEING, AMERICAN PUBLIC HUMAN
SERVICES ASSOCIATION, WASHINGTON, D.C.

Mr. Sykes. Thank you, Chairman Thompson and others, and a
particular thank you to my Congressman, John Faso, who I have
known and worked with for years.
My name is Rus Sykes. I am the Director, as I said. I work
at the American Public Human Services Association. We represent
the appointed CEOs of human services agencies nationwide, many
local organizations as well, and one of our affiliate
organizations is the American Association of SNAP Directors. We
like to think as the practitioners who run the program at the
ground level, that we have a sort of unique credibility to
speak about the pros and cons of the program.
I want to make it very clear that the overarching point is
that while there is always room for reform, modernization, and
improvement, SNAP is perhaps the most pivotal and economically
responsive program, federally, during times of economic
hardship to ensure that families and children have healthy
lives and economic and social well-being. It both reduces very-
low-food security very clearly and does it well, and it keeps
almost five million people, including over two million
children, out of poverty, based on 2013 data. It drives
benefits disproportionately at hard economic times into
distressed communities where unemployment is high, and other
issues exist. I want to say that whatever you do in
reauthorization, that essential responsiveness of the program
needs to be preserved.
I want to focus on specific points of work simplification
flexibility for states, the importance of system integration
and shared data, measuring program success in broader terms,
discussing honestly the issue that has come before you in the
past about purchase restrictions and whether they should or
should not occur, and finally, resources and the notion of an
income cliff that happens to some that are on the program.
Let me start with talking about work. We are strong
proponents of work, but we are strong proponents of work
programs that actually try to find people jobs, try to help
them stay in those jobs, and provide the short-term training
needed based on what actually is available in local
communities. We think that employers need to play a significant
role in developing that kind of curricula as do community
colleges, and it needs to be short-term. And we believe that
work, obviously, is the economic pathway out of poverty.
Turning to ABAWDs, as Ms. Dean mentioned, I just want to
simply say we are strongly in favor of work rules for able-
bodied adults, but, as Ranking Member McGovern pointed out, it
is a very complicated population, and when we come right down
to enforcing those rules, we have to make sure that we provide
real opportunity and don't use the enforcement of those rules
simply as a sanction policy, or we lose some of the people that
we very most need to be helping.
On simplification, I have seen this program over my 42
years working on it, I am dating myself, go from something that
was fairly simple in many ways to a very complex program from
the eligibility and verification standpoint. And so we really
would like to see the program focus more on outcomes and
simplify it a bit for states, and we also believe in state
flexibility. I know in your previous hearings that you
discussed how many waivers and options states do have at their
wherewithal already, but there is more that can be done on that
front, and we strongly urge that we think of those areas,
because states are closest to the ground. They understand their
clients. They understand their labor markets, and they
understand how important the program is in economic hard times.
System integration with Medicaid and multiple other
programs is absolutely critical. Tiny steps have been taken in
that direction with the Federal data hub and other areas, but
much more needs to be done. And shared data is really critical.
We need to do more in regard to building common databases so
people aren't reenrolling in every different program repeatedly
without having some sort of common identifier to help them be
in programs.
We have several new pilots that we would like to think that
you should explore. One, as Ms. Dean also mentioned, is whether
benefits are adequate. We really don't know, although there is
increasing evidence that they may not be. But what I would
suggest is that we ought to run a geographically diverse pilot
that tests the Thrifty Food Plan versus the Low Cost Food Plan,
and rigorously evaluate it to see whether it makes a difference
in very-low food security or not. Similarly, we ought to do the
same thing with the earned income disregard. When we talk about
needing to get those who do not work to work, we have many
people on the program who are already working, and it is a
critical income support for them, and they are able to deduct
20 percent of their earnings. We would like to see that raised
to 30 percent. We would like to see broader measurements of the
program than simply quality control and error rates. Those are
incredibly important from an integrity point of view, but there
are other things about poverty, very-low-food security
reduction, access of job placement.
On purchase restrictions I would close with this. We also
don't know, although we can see the public health division with
the anti-hunger community division around whether sugar-
sweetened beverages in particular lead to difficult health
outcomes in areas of obesity and diabetes. Again, a pilot
program that would look to test whether that kind of a
prohibition would result in simple substitution patterns of
someone's own money, or whether it really would reduce the
incidents of those kinds of diseases would be something very
important.
I look forward to a continuing dialogue with you. All of
these comments have been amplified in my written remarks, and I
look forward to talking further and look forward to the
discussion today. Thank you.
[The prepared statement of Mr. Sykes follows:]

Prepared Statement of Russell Sykes, Director, Center for Employment
and Economic Well-Being, American Public Human Services Association,
Washington, D.C.
Mr. Chairman and Members of the Subcommittee, thank you for this
opportunity today to discuss the evolution of the Supplemental
Nutrition Assistance Program (SNAP), formerly known and the Food Stamp
Program (FSP). I am Russell Sykes, director of the American Public
Human Services Association's (APHSA) Center for Employment and Economic
Well-Being (CEEWB), and, my comments today are shared through the lens
of our state and local public human services agency members across the
nation.
Our member agencies are responsible for directly implementing and
managing SNAP and a broad array of other connected human services aimed
at improving population health and well-being. APHSA also represents
human services administrators across the nation, including those who
direct each state's SNAP program and who are organized within APHSA as
the American Association of SNAP Directors (AASD). SNAP sits at the
cornerstone of an array of core services that assure all families have
access to food, housing and other supports essential to our basic
health and well-being. Building on its strong foundation and history,
the time is ripe for SNAP's next evolution--in coordination with other
key health and human services--to assure its efficiency and accelerate
its role in advancing the nation's overall population health and well-
being.
Over the last 40 years I have worked in social services, including
the FSP/SNAP, at every level of government and in many capacities,
outside of government. I have been a direct service provider; a
researcher; a Deputy Commissioner in New York State, where I
administered SNAP; a Congressionally appointed member of the National
Commission on Hunger; and a consultant on a variety of human services
issues to major research and policy organizations. It is hardly a
stretch to say that I have been in or around the program since its
inception. Over that time, I have seen the FSP/SNAP grow from a small
and straightforward elective program to one that is responsive to
market conditions and the principal means by which the Federal
Government reduces food insecurity. It has improved the material well-
being of many people and is a crucial support. But it is also ripe for
change in some areas due to its complexity, lack of flexibility for
states to innovate and the need to modernize and coordinate both
systems and data sharing with multiple other health and human service
programs.
SNAP is our nation's principal nutrition assistance program for
low-income Americans and is one of the largest means-tested programs in
both reach and cost. In 2015, SNAP provided 45 million people
(approximately 14 percent of Americans) with benefits in the average
month, and benefits averaged about $125 per person per month for a
total annual Federal cost of about $70 billion. SNAP also is a highly
effective work support and anti-poverty program that helped nearly five
million individuals including over two million children avoid poverty
in 2013 according to the Census Bureau's Supplemental Poverty Measure.
To be eligible, households must have monthly gross incomes below
130 percent of the Federal poverty level (in 2016, $2,117 per month for
a household of three) and net incomes below 100 percent of the Federal
poverty level. SNAP is designed to supplement a household's spending on
food but not pay for a household's food costs in their entirety. As
households earn more, they are expected to contribute more of their own
income toward food purchases.
SNAP benefits flow disproportionately to those struggling the
most--a surprisingly diverse population. In 2014, 58 percent of SNAP
benefits flowed to the 43 percent of SNAP households with gross incomes
of 50 percent or less of the Federal poverty guidelines. In that same
year, 22 percent of households receiving SNAP reported no gross income;
41 percent reported no net income; and only 31 percent had earnings.
Furthermore, ten percent of recipients were elderly; 44 percent were
children; and the rest were non-elderly adults.
How Did We Get Here: A Brief Evolutionary History
SNAP has evolved and grown into its current form over roughly the
past 50 years. Food assistance was initially a farm subsidy program and
an anti-hunger effort. In the late 1930s, farmers were producing
surpluses they could not sell. Many cities were plagued by high
unemployment, and some people could not afford food. In response, the
Department of Agriculture developed a program to solve both issues. It
allowed households to purchase with their own funds food coupons or
stamps of different colors and valuations for store or commodity food
purchases.
Under President Lyndon B. Johnson, the FSP became permanent. The
Food Stamp Act of 1964 maintained the general structure of purchasing
food coupons worth more than the dollars paid for them by outlaying 30
percent of their own money. Over the next decade, program rules were
standardized nationally. Participation grew from 500,000 to 15 million
individuals between 1965 and 1974.
The program changed significantly in the late 1970s, with the
elimination of the purchase requirement (EPR). The change was driven by
the concern that households had difficulty finding the up-front cash to
buy their food-stamp allotment. After EPR was implemented in 1979, the
30 percent household food contribution became a paper expectation
rather than an up-front cash outlay. Participation increased by 1.5
million in the month following the bill's passage.
Calls to destigmatize the program gained momentum in the mid-1980s.
This led to the EBT card, originally piloted in one county, which made
food stamps far less distinguishable from other forms of payment. In
the late 1980s, Congress officially allowed all states to use EBT and
passed other changes that expanded program access. The 1990s saw a
strong movement for welfare reform, and the Personal Responsibility and
Work Opportunities Reconciliation Act of 1996 (PRWORA) brought about
major changes to the FSP. Changes included eliminating eligibility for
most legal immigrants, imposing work registration requirements for work
eligible adults, but with little teeth as participation was voluntary,
and even stronger work requirements on able-bodied adults without
dependents (ABAWDs) that time limited eligibility to 3 in any 36 months
for those who did not become employed or participate in an allowable
work activity for 20 hours weekly.
The focus on tighter eligibility and work requirements began to
wane over the next decade. The 2002 Farm Bill restored eligibility to
many qualified aliens; adjusted the standard deduction by family size
and indexed it to inflation; simplified reporting for states; and
lengthened certification periods. Participation increased substantially
to 26 million people in July 2006. The 2008 Farm Bill maintained
emphasis on outreach and access. The legislation further simplified
income reporting, allowed states to submit waiver requests to replace
face-to-face interviews with telephone interviews and signatures, and
extended transitional benefits to those leaving state cash assistance
programs. To further destigmatize assistance receipt, the Federal
program changed its name from the Food Stamp Program to the
Supplemental Nutrition Assistance Program (SNAP).
The Great Recession and modifications to the program in response to
it further expanded participation. Under the American Recovery and
Reinvestment Act, SNAP benefit amounts were increased by 13.6 percent,
which was later rolled back because it exceeded actual food price
inflation. During the recession, participation rose rapidly: by 2013,
47.6 million people received SNAP benefits worth more than $76 billion.
This increase in participation (and therefore costs) is exactly how the
program was designed in order to be economically responsive to such
economic downturns. The rapid expansion during the recession shows how
SNAP is perhaps the most pivotal Federal program that secures the
economic well-being of individuals, families and children facing
unexpected circumstances due to job loss and general economic hardship.
With the economy improving, the 2014 Farm Bill shifted focus back
to reducing costs and increasing work. The final bill reduced spending
by an estimated $8 billion over 10 years. The debate over the bill
raised concerns about nonworking able-bodied SNAP beneficiaries. The
final bill included $200 million to fund pilot projects in ten states
to test the effectiveness of various education, training and job
placement programs for SNAP recipients. As of 2016, recipients and
costs declined to 44.2 million recipients at a cost of $66.6 billion
and are expected to remain on a decline as the economy improves.
Concerns remain that the caseload decline has not reflected, as much as
it perhaps should, a lower unemployment rate. That slower decline also
continues to reflect a sluggish economic recovery for many and a low
workforce participation rate among adults.
Where Should We Go From Here: SNAP Reauthorization and the Next Farm
Bill
While SNAP must retain its current strengths and economic
responsiveness, it can and should be modernized to assure its
efficiency and impact. The next reauthorization of the farm bill
presents the opportunity to take stock of the program at a foundational
level. Significant improvements can be considered in the following
areas:

Well-structured and constructive outcome-based work rules,

Simplification of overall program eligibility and
verification rules,

Increased state flexibility and a requirement that USDA-FNS
respond promptly to state waiver and demonstration requests,

System modernization and cross-program data sharing,

Innovative pilot approaches that are carefully evaluated for
success and replication,

Broader performance measures than simply payment accuracy,
and

An honest discussion about potential restrictions on certain
food purchases.

Those are among the areas my oral remarks will address today.
Specific Recommendations for SNAP Modernization
Test Innovation and Use What Works

Allow states greater flexibility to initiate
innovative approaches and impose a time limit on USDA/FNS
as to when they must approve or reject state waiver and
demonstration requests.

Several pilot programs should be enacted and
rigorously evaluated for potential future replication based
on effectiveness and affordability. We recommend pilots
testing an alternative benefit adequacy calculation to the
Thrifty Food Plan; expansion of the current Earnings
Disregard from 20 to 30 percent as more working families
receive benefits because of low wages; and prohibiting SNAP
dollars from being used to purchase a defined category of
unhealthy sugar-sweetened beverages (SSB's) to study if
such a policy actually leads to a decrease in SSB
consumption and better health or if households simply
substitute their own funds and maintain purchasing habits.

Expand the Summer EBT program option that increases
SNAP benefits for households with children during the non-
school year calendar in areas where operating an actual
Summer Food Program site is impractical due to geographic
distances, lack of sponsors or other obstacles.

Whenever pilots or demonstrations succeed and are
clearly replicable nationwide, permanently incorporate
their components into the program rather than requiring
constant waiver renewals.

Simplification

Simplify eligibility determination through longer
certification periods for stable income non-error prone
households, making Combined Application Procedures (CAP) a
regular component of the program, and eliminating the cost
neutrality provision so that SSI recipients can
automatically receive SNAP benefits.

Allow states, at their own option, to develop
agreements with federally recognized Tribal governments to
allow those entities to complete eligibility determinations
for SNAP where the Tribe is also running a Tribal TANF
program. In these cases, states would maintain oversight,
quality control and training functions.

Allow states to utilize temporary staff to determine
eligibility as long as they are under the direct
supervision of the state. States are experiencing increases
in workloads, but unable to add permanent FTE's to meet the
demands of these increases because of eroding Federal
administrative share of program costs.

Administrative Modernization and Data Sharing

Modernize systems in SNAP as well as system interfaces
with other programs, more broadly share available data
across programs to foster better program alignment and
efficiency and increase the emphasis and funding for
research regarding what works best in SNAP.

Return state administrative costs for SNAP, which have
eroded over the years, to their original 50/50 percent
split.

Support Work and Economic Capacity-Building as Key Ways to
Increase Family Well-Being

Thoughtfully expand the focus on work for work
eligible SNAP households, emphasizing real employment
outcomes rather than process outcomes and focus employment
and training programs to prepare clients for actual
available jobs in local communities. Expand available E&T
100 percent funds and broaden the allowable uses of E&T 50/
50 match funds to encourage additional state innovation and
better coordination with other programs under the Workforce
Innovation and Opportunity Act (WIOA).

Change the current 3 in 36 month ABAWD Time Limit work
rule to 6 or 9 in 36 months and coincide it with the
individual's certification period. Strictly enforce client
compliance but do not impose the time limit when no job or
available work slot that meets ABAWD requirements can be
provided to the individual.

Add transitional benefits of 1 to 3 months when wages
result in a full loss of benefits to avoid the cliff effect
of rapidly losing all SNAP benefits and assist families to
stabilize economically.

Current levels of allowable resources are too low and
have resulted in the use of Broad-Based Categorical
Eligibility (Cat-El) by 42 states as a work around with the
vast majority using it to eliminate any resource limit.
Raising the resource limit for all SNAP recipients to at
least $10K would make better sense and allow for families
and individuals to accrue modest savings without
compromising program integrity.

Accountability and Program Integrity--Program integrity and
fraud prevention in SNAP are critical. For years, the SNAP
error rate was among the lowest of any major program with an
extraordinary payment accuracy rate of over 96 percent.
Concerns surfaced in 2014 about whether case reviews at the
state level were somehow biased, often by the use of outside
second party contract reviewers. Since then USDA-FNS and states
have been working diligently and cooperatively to traverse and
correct any instance or implication of incorrect case accuracy
review. A national error rate review is currently awaiting
release based on a broad sample of cases nationwide and payment
accuracy is expected to remain very high. Additionally, all
bias, to the degree it exists, will be removed from the review
process going forward. This joint national and state effort has
revealed a number of changes that need to be made to ensure
consistency and the highest level of program integrity going
forward. Necessary reforms include:

Aligning QC rules consistently across FNS regions,
restoring the previous $50 case error threshold, which is
now at a very low level $25, simplification of QC sampling
requirements and allowing states to substitute phone or
online interviews for currently required QC face to face
interviews. It also shows that SNAP success should be
measured on multiple factors beyond just payment accuracy
and timeliness of benefits. High performance bonuses to
states should be awarded to states that demonstrate
continuous improvement in multiple program areas.
Conclusion
SNAP benefits provide crucial supports for eligible low-income
families and individuals to assist them in purchasing food, support
work for those with low earnings, and respond quickly to economic
downturns. SNAP also helps communities during economic downturns by
bringing additional Federal dollars into the local economy, freeing
dollars to be spent elsewhere. SNAP caseloads and spending also
fluctuate with economic conditions. This ebb and flow of participants
and costs based on economic circumstances is the key to SNAP's
effectiveness.
SNAP is effective in achieving its primary goal: reducing food
insecurity. The best measure is very-low-food security (VLFS), which
the USDA defines as a household in which ``eating patterns of one or
more household members were disrupted and their food intake reduced, at
least some time during the year, because they couldn't afford enough
food.'' The best evidence points to SNAP substantially reducing VLFS
and improving the general health and well-being of the overall
population. Evidence also suggests that food assistance has
particularly beneficial long-term impacts, especially for children.
SNAP is also a highly effective work support program and reduces
poverty. Calculations using the government's Supplemental Poverty
Measure, which counts SNAP as a financial resource, indicates that SNAP
kept 4.8 million people out of poverty in 2013, including 2.1 million
children. SNAP appears to be particularly effective for the most
vulnerable, lifting 1.3 million children out of deep poverty (50
percent or less of the poverty threshold) in 2013.
I appreciate the opportunity today as Director of our Center for
Employment and Economic Well-Being (CEEWB) to share the viewpoint of
APHSA's state and local members and our affiliate organization the
American Association of SNAP Director (AASD) who oversee SNAP daily. It
is fair to say that our members can lay claim to the most detailed
understanding of SNAP's important value as both a nutritional and anti-
poverty program as well as the need for future program reforms that can
further improve performance, address the need to help work-eligible
recipients find employment through meaningful interventions, provide
crucial bridge supports in economic hard times, and generally enhance
client services, cost effectiveness program integrity and the economic
well-being of individuals, families and children.
I am happy to answer your questions today and both APHSA's CEO,
Tracy Wareing Evans, and I are more than pleased to continue our work
with you as you grapple with reauthorizing, modernizing and improving
SNAP for the future. Please look to us as an ongoing resource for this
important effort.

The Chairman. Thank you, Mr. Sykes.
Now I yield to my colleague from Pennsylvania for the
purpose of introducing our witness from Pennsylvania.
Mr. Evans. Thank you, Mr. Chairman.
Mr. Chairman, Ranking Member, and Members of the Committee,
Joe Arthur is someone who I know extremely well. In my days in
the legislature, I was a part of something called the Hunger
Task Force, and working with Joe and others, we did something
called the Hunger Garden. But I want to make it very clear that
the Hunger Garden will not replace the aspect that you do need
SNAP, too, so you need both.
Joe was appointed Executive Director of the Central Food
Bank in July of 2011, after serving as the Associate Director.
Joe has served as a volunteer board member with the food bank.
As the food bank principle ambassador, Joe presented regularly
on issues of hunger in Pennsylvania to community groups,
legislative gatherings, government partners, prospective donor
organizations, and other forums. Joe is a leader in the anti-
hunger work through his engagement as board member for the
association Feeding Pennsylvania, Hunger Free Pennsylvania,
Hunger Free Lancaster County as a national conference
representative and food bank national affiliation. Joe will
tell you that is where I learned the difference between soil
and dirt, making that distinction.
Prior to joining the food bank in 2008, Joe worked 23 years
in financing and accounting, primarily with Pennsylvania
Community Bank. Joe holds a B.S. in accounting from Penn State
and is a member of the Pennsylvania Institution of Certified
Accountants.
Joe, I thank you for your leadership.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. I am now pleased to
recognize Mr. Arthur for 5 minutes of testimony.

STATEMENT OF JOSEPH ``JOE'' ARTHUR, EXECUTIVE
DIRECTOR, CENTRAL PENNSYLVANIA FOOD BANK,
HARRISBURG, PA

Mr. Arthur. Mr. Chairman, Ranking Member McGovern, and
distinguished Members of the House Agriculture Subcommittee on
Nutrition, and of course my friend from Philadelphia,
Representative Evans, thank you for inviting me to testify on
the importance of the Supplemental Nutrition Assistance
Program, and the program's direction in the next farm bill.
You have heard my introduction. The part you didn't hear is
that we distributed about 48 million pounds of food and grocery
products in our 27 county service territory last year. We
worked with over 900 community organizations that are our
member agencies in that work. And these agencies directly feed
thousands of hungry families throughout central Pennsylvania.
The 27 counties within our service territory in central
Pennsylvania represent the most rural of the Commonwealth.
While we have more than 1.8 million people in our state who
struggle with hunger, we are blessed with more than 57,000
family farms, 30,000 of which are in our service territory. In
a region as agriculturally rich as central Pennsylvania, there
is no reason that anybody should go to bed hungry. We are proud
of our partnerships with agriculture.
With respect to Pennsylvania's extensive dairy industry, we
are proud to share that our food bank operates the third
largest charitable milk program in the nation, distributing
over 1,600 quarts of fresh, refrigerated milk every business
day, and that we built this program in less than 3 years with
the help of our Pennsylvania Department of Agriculture, various
dairy industry experts, and promotional firms, and of course
dairy farmers and processors.
We are much more than a provider of food assistance, as
Chairman Thompson can attest from his many personal visits over
the years. We operate out of two healthy food hubs, separated
by driving 2 hours along the beautiful Susquehanna River. We
have equipped those with state of the art warehousing and cold
chain infrastructure, efficient loading docks to handle our 16
refrigerated trucks, and commercial quality demonstration
kitchens to teach healthy eating, cooking, and healthy shopping
habits.
While our food bank works tirelessly to provide emergency
food assistance to families at risk of hunger, the problem is
too big to fix without our taxpayer-funded safety net programs
such as SNAP.
While we do make a big difference for people in our
community, national programs reach far more people, and if that
system should be eliminated or seriously cut, we would not be
able to backfill the increased demand that would occur from
those actions. SNAP is the backbone of the national nutrition
safety net, the first line of defense against hunger, and helps
nearly 1.8 million people in Pennsylvania, or about 14.2
percent. It helps them buy groceries every month, and lifts
about 13 percent of those households out of poverty.
As the House Agriculture Committee works on a new farm
bill, we urge you to consider five key points. SNAP supports
agriculture, local economies, jobs, and retailers. On the
agriculture front, Pennsylvania's leading economic enterprise,
agriculture, benefits strongly from the SNAP program. For
example, the largest farm commodity in Pennsylvania is dairy.
About nine percent of spending by SNAP households is actually
on dairy.
Local economies. Economic research indicates that every
SNAP dollar redeemed expands the economy by roughly about
$1.70, leading to billions in local economic activity.
Billions, with a b. In fact, roughly $2.6 billion in SNAP
dollars issued in Pennsylvania in Fiscal Year 2015 generated
about $4.6 billion of economic activity. The economic benefits
spread through the entire food supply chain, benefitting
grocers, retailers, manufacturers, producers, and farmers, and
supporting millions of jobs.
Second, SNAP is timely and it responds to changes in need.
One of the strongest features of SNAP is its ability to respond
quickly. We have seen it grow since the recession, and now we
have also seen it in recent periods actually reducing. And in
fact, it contributed more than $30 billion in savings over the
course of the last farm bill, and contributed to more than $90
billion savings overall. It is a program that works, and it
works on the downside too.
Third, SNAP is temporary and encourages work, and we have
heard a great deal about that already.
Fourth, SNAP provides states flexibility and Federal
accountability; and fifth, SNAP is efficient and accurate.
As the Subcommittee works on a new farm bill, we look
forward to working with you to demonstrate how strong support
for nutrition programs and agriculture programs can strengthen
communities, such as the one that we serve in central
Pennsylvania. Thank you very much for this opportunity to
testify.
[The prepared statement of Mr. Arthur follows:]

Prepared Statement of Joseph ``Joe'' Arthur, Executive Director,
Central Pennsylvania Food Bank, Harrisburg, PA
Mr. Chairman, Ranking Member McGovern, and distinguished Members of
the House Agriculture Subcommittee on Nutrition, thank you for inviting
me to testify on the importance of the Supplemental Nutrition
Assistance Program and the program's direction in the next farm bill.
I am the Executive Director of the Central Pennsylvania Food Bank,
the largest nonprofit food distribution organization in Pennsylvania.
We are a member of Feeding America's food bank network that covers
every county in the United States. We live our mission of fighting
hunger, improving lives, and strengthening communities every day. We
truly believe no one should be hungry and are committed to working hard
every day to make that belief a reality. We are also a fine example of
public/private partnerships to benefit society, with generally 80
percent of our food and financial resources sourced through private
donations.
Hunger in Pennsylvania and the United States
The Central Pennsylvania Food Bank distributes more than 48 million
pounds of food and grocery products, equivalent to more than 40 million
meals, every year to more than 900 soup kitchens, shelters, and food
pantries in 27 central Pennsylvania counties. These agencies directly
feed thousands of hungry families throughout central Pennsylvania. We
could not do this without the generosity of food donors and financial
supporters from all sectors, including food companies, retailers,
farmers, corporate funders and individuals.
The 27 counties within our service territory represent the most
rural of the commonwealth. While we have more than 1.8 million people
in our state who struggle with hunger, we are blessed with more than
57,000 family farms--30,000 of which are in our service territory. In a
region as agriculturally rich as central Pennsylvania, there is no
reason that anyone should go to bed hungry. Farmers in our state and
across the country produce the safest, most affordable, most abundant
supply of food in the world. And we do our part every day at the
Central Pennsylvania Food Bank to ensure that we are sourcing and
distributing nutritious fruits and vegetables, protein and calcium that
are essential to food-insecure individuals. In doing so, we're not only
working to meet the supplemental nutrition needs of low-income people,
we are supporting Pennsylvania agriculture and food businesses across
the economic spectrum, and their employees.
The need is real, and the need is significant across the country.
According to research conducted by Feeding America, there is a
significant meal gap, or difference between the food low-income people
need and the resources they have to buy that food. Map the Meal Gap
2016\1\ shows that there are over eight billion meals missing from the
tables of low-income Americans per year. Thousands of Pennsylvanians
continue to struggle to get back on their feet and for many, work does
not provide protection from poverty and food insecurity. While many
people think that poverty impacts only a small number of people who
remain impoverished for many years, the reality is something different
. . . a majority of Americans experience food insecurity over the
course of their working lives, often due to unforeseen circumstances
such as job loss, inadequate hours, divorce or health issues.\2\
---------------------------------------------------------------------------
\1\Map the Meal Gap looks at food insecurity by county across
America and the amount of meals missing from food-insecure American
households.
\2\Rank, Mark Robert, Hirschl, Thomas A. and Foster, Kirk A.
Chasing the American Dream: Understanding What Shapes our Fortunes.
Oxford University Press, 2016.
---------------------------------------------------------------------------
Feeding America's quadrennial study of the people utilizing
charitable food assistance, Hunger in America 2014, reveals that about
\2/3\ of the people our food banks and their local agencies serve are
making impossible trade-offs between paying for food and other
necessities like rent, transportation, health care and utilities.
One example of this is Jonah, who recently called into our food
bank's Food Stamp Helpline. Jonah is a 40 year old, veteran, husband
and father of two teenage children who was always able to provide
shelter, food and other essential needs for his family. After being
honorably discharged from the military, Jonah started working full-time
for an Army Depot. Between his paycheck and veteran benefits, Jonah
made ends meet without assistance. Unfortunately, last year Jonah was
in an auto accident and had a brain injury which caused memory loss and
balance issues, led to an emergency spinal cord surgery, and affected
his ability to work. His last paycheck was in December and ever since,
his savings and checking accounts have been depleted. Although he still
receives his veteran benefit, this is not enough to cover his mortgage
let alone buy groceries. In February, Jonah and his family were
approved for nearly $400 a month in SNAP benefits. Not only has SNAP
provided Jonah's family the ability to purchase healthy nutritious
foods, but it supplements the limited food that he receives from his
local food pantry. In addition, because his family is eligible for SNAP
benefits his two children are eligible to receive free school meals,
lessening the family's grocery bill. Without the SNAP benefits, Jonah
and his family would have to make the choice of paying his mortgage or
paying for groceries. Fortunately, he is now able to provide a warm and
loving home as well as a healthy nutritious diet for his family because
of the SNAP program.
Our Nation's Nutrition Assistance Safety Net
While the Central Pennsylvania Food Bank works tirelessly to
provide emergency food assistance to families at risk of hunger, the
problem is too big to fix without our taxpayer-funded safety net
programs such as SNAP. While we do make a difference for people in our
community, national programs reach far more people--and we simply could
not backfill the increased demand on the charitable food system that
would result if any of these safety net programs were eliminated or
cut. We are already stretched to meet sustained high need. As stated as
a finding in the House Agriculture Committee's comprehensive review of
the SNAP program, the need for nutrition assistance cannot be addressed
by just one program or group--it requires collaboration between
governments, nonprofits, communities and individuals.
The people that we serve rely on these Federal programs to help
meet their families' needs, and these programs are an integral piece of
the safety net--working together and complementing one another. SNAP is
the backbone of the national nutrition safety net, the first line of
defense against hunger. SNAP helps nearly 1.8 million people (14.2
percent of Pennsylvanians) buy groceries every month and lifts 13.1
percent of those households out of poverty.
The Central Pennsylvania Food Bank operates a Food Stamps Helpline
that helps individuals find out if they qualify to receive additional
food assistance. Within our service territory, only 55 percent of those
individuals that are income eligible for the program are receiving
benefits, meaning over 200,000 potential SNAP-eligible central
Pennsylvanians are not in the program. Our goal is to inform the public
about this Federal nutrition program and to provide screening and
enrollment assistance to those who may need and are eligible to receive
benefits. As an example of our innovative efforts in central
Pennsylvania to appeal to more Snap-eligible people, we have presented
in Appendix A, a graphical image for a SNAP outreach campaign using the
theme ``Feed the Body, Fuel the Soul, Free the Mind''. I am proud to
share with you that this extraordinary campaign theme and related
graphics were developed, free of charge, by several students of the
Pennsylvania College of Arts and Design in Lancaster, Pennsylvania, in
a recent project for Hunger Free Lancaster County. All activities for
this campaign will be funded entirely by private donations.
One woman that our food bank educated, screened and helped to
enroll in SNAP, is a familiar story to more and more senior citizens
who are grandparents. Helen was retired and living on a fixed income in
low cost senior housing, able to pay for her own groceries, utilities,
and healthcare. In the spring of 2015, like many grandparents of late,
Helen found herself raising three young children due to their father
being involved with drugs and a mother who is in prison. Because Helen
lived in senior-specific housing, she was asked to leave when she
started to care for the children. She took her savings and bought a
house, which has increased her cost of living. When school let out for
the summer Helen started seeing her Social Security check dwindle down
faster and began dipping into her savings to purchase more groceries to
take place of the meals the children were receiving during the school
year. Although she was receiving food from a food pantry it still
wasn't enough to last until her next visit. In August, Helen didn't
know where else to turn and finally decided to apply for SNAP and was
eligible for more than $400 a month. Now that she can provide enough
food through her SNAP benefits, Helen can provide other necessities to
these children, such as clothing and shoes.
The impact of SNAP is vast. SNAP serves some of the most vulnerable
people in our country and directly supports farmers, the local economy,
retailers, processors, and many others. Without SNAP, many people would
maintain higher levels of food insecurity and farmers would have fewer
outlets for their products.
While we are here today to speak about SNAP in the context of the
farm bill, I think it is worth mentioning the looming appropriations
process that will be underway soon.
Appropriations Process and the Farm Bill
I commend Chairman Conaway and Ranking Member Peterson in their
recent communication to the House Budget Committee, requesting that the
Committee consider the current economic conditions within rural
communities and the significant contributions toward deficit reduction
already made by the Agriculture Committee. We wholeheartedly agree that
the Fiscal Year 2018 budget resolution must respect the cost savings\3\
and commitments made under the 2014 Farm Bill, and that the budget
process must provide flexibility necessary to develop solid agriculture
and food policy in the new farm bill before the current law expires.
Regarding the nutrition title of the farm bill, Chairman Conaway
acknowledged that ``CBO is projecting that the Nutrition Title is
achieving savings relative to the previous farm bill and significantly
more than anticipated during the last farm bill debate.''
---------------------------------------------------------------------------
\3\The Agriculture Committee saved $23 billion over 10 years in the
context of the 2014 Farm Bill; however, CBO's January 2017 baseline
estimates show that the current farm bill will save $104 billion, more
than four times what had previously been pledged.
---------------------------------------------------------------------------
I also thank the Chairman for conducting a top-to-bottom review of
SNAP and publishing its findings last year. As stated in the Chairman's
letter, ``However widely the views of Members of the Committee vary on
the subject of SNAP, we all share a common conviction in the dignity of
every person and the importance of creating economic opportunity so
each and every person is able to live the American dream. On this, we
are all agreed.''
SNAP Policy Considerations
As the House Agriculture Committee works on a new farm bill, we
urge you to consider five key points:

1. SNAP supports agriculture, local economies, jobs, and retailers.

Agriculture: Pennsylvania's leading economic enterprise,
agriculture, benefits strongly from the SNAP program. For
example, the largest farm commodity in Pennsylvania is
dairy. About nine percent of spending by SNAP households is
on dairy, providing Pennsylvania farmers with an important
source of revenue, and an important outlet for their milk.
This becomes even more important given the current
conditions within the dairy industry--that of tight
margins, a milk surplus, low demand on the market, and
disruption to foreign markets.

Local economies: Economic research estimates that every SNAP
dollar redeemed expands the economy by roughly $1.70,\4\
leading to billions in local economic activity. In fact,
roughly $2.6 billion in SNAP dollars issued in Pennsylvania
in Fiscal Year 2015 generated $4.6 billion in economic
activity.\5\ The economic benefits spread throughout the
entire food supply chain, benefiting grocers, retailers,
manufacturers, producers and farmers, while supporting the
millions of jobs they provide.
---------------------------------------------------------------------------
\4\Zandi, Mark M, Assessing the Macro Economic Impact of Fiscal
Stimulus 2008, pp. 3-4, Moody's, Jan 2008, https://www.economy.com/
mark-zandi/documents/Stimulus-Impact-2008.pdf.
\5\USDA, Supplemental Nutrition Assistance Program State Activity
Report Fiscal Year 2015, pp. 5, published October 2016, https://
www.fns.usda.gov/sites/default/files/snap/2015-State-Activity-
Report.pdf.

Jobs: A 2010 study by the USDA found that for every $1 billion
of added SNAP funding, between 8,900 and 17,000 jobs were
created.\6\ Per a study of SNAP's economic effects at the
state level, in Pennsylvania a ten percent cut in SNAP
funds would result in the destruction of 3,611 jobs.\7\
---------------------------------------------------------------------------
\6\Hanson, Kenneth, The Food Assistance National Input-Output
Multiplier (FANIOM) Model and the Stimulus Effects of SNAP, USDA,
Economic Research Service, October 2010, https://www.ers.usda.gov/
webdocs/publications/err103/8003_err103_reportsummary_1_.pdf.
\7\Thompson, Jeffrey and Garrett-Peltier, Heidi, The Economic
Consequences of Cutting the Supplemental Nutrition Assistance Program,
Published March 2012, The Center for American Progress, https://
www.americanprogress.org/issues/poverty/reports/2012/03/19/11314/the-
economic-consequences-ofcutting-the-supplemental-nutrition-assistance-
program/.

Retailers: SNAP spending accounts for more than ten percent of
all spending on food purchased to be eaten at home.\8\ The
resources provided by SNAP are critical to beneficiaries,
who spend them almost immediately--97 percent of SNAP
benefits are spent in the month they are issued.\9\ In 1
month in 2016, SNAP funded around $218 million of sales in
Pennsylvania.\10\
---------------------------------------------------------------------------
\8\Wilde, Park E., The New Normal: The Supplemental Nutrition
Assistance Program (SNAP), May 2012, mer. J. Agr. Econ. 95(2): 325-331.
\9\Center on Budget and Policy Priorities, Policy Basics:
Introduction to the Supplemental Nutrition Assistance Program (SNAP),
March 2016, http://www.cbpp.org/research/policy-basics-introduction-to-
the-supplementalnutrition-assistance-program-snap.
\10\USDA, Data from SNAP Nutrition Tables: October 2016, last
accessed December 2016, https://www.fns.usda.gov/pd/supplemental-
nutrition-assistance-program-snap.

2. SNAP is timely and responds to changes in need. One of the
strongest features of SNAP is its ability to respond
quickly to changes in need. This is the case both during
natural and economic disasters. During the recent
recession, SNAP participation grew alongside rising
unemployment and is falling as the economy slowly recovers.
CBO's January 2017 budget projections show SNAP savings of
more than $30 billion over the course of the farm bill
compared to estimates from just 1 year ago and project SNAP
contributing to more than $90 billion in savings overall,
which is far more than expected as the program contracts by
design. Participation continues to decline and as of
December 2016, the most recent data available, more than
4.8 million (or ten percent) lower than at its post-
recession peak in December 2012 and the lowest level since
---------------------------------------------------------------------------
September 2010.

3. SNAP is temporary and encourages work. SNAP supports households
as they get back on their feet, providing them with needed
nutrition and encouraging work.

New participants spend an average of only 12 months on SNAP and
most leave the program within 2 years. SNAP is structured
to provide a strong work incentive and was designed to
essentially not have a ``benefit cliff.'' In fact, for
every additional dollar a SNAP participant earns, their
benefits decline by about 30 not a full dollar. So,
participants have a strong incentive to find a job, work
longer hours, or seek better-paying employment.

More than \1/2\ of SNAP households with at least one working-
age, non-disabled adult work while on SNAP; more than 80
percent work in the year before or after receiving SNAP.
For many of these families, SNAP is an important support
while they are between jobs and looking for work.

4. SNAP provides states flexibility and Federal accountability.
SNAP's structure couples local decision-making with Federal
oversight to deliver a program that is both flexible for
state administrators and accountable to the Federal
taxpayer. States have a robust framework of state options
when administering SNAP, enabling them to adapt the program
to best meet the needs of their state.

At the same time, Federal oversight ensures that SNAP is
accountable both to taxpayers and to participants.
Consistent eligibility parameters and benefit levels across
states ensure that eligible families are guaranteed food
assistance when they fall on hard times, regardless of
where they live.

5. SNAP is efficient and accurate. Nearly 93 percent of Federal SNAP
spending goes for benefits to purchase food. The remainder
goes toward administrative costs including monitoring of
retailers that accept SNAP and anti-fraud activities, and
important services like employment and training that help
participants improve their employability and move toward
work or improve their prospects.

SNAP payments are accurate and the program has historically low
error rates. SNAP has one of the most rigorous payment
error measurement systems of any public benefit program. It
also has one of the best records of accuracy in providing
benefits only to eligible households. The most recently
available data show that more than 99 percent of SNAP
benefits are issued to eligible households.

As the Subcommittee works on a new farm bill, we look forward to
working with you to demonstrate how strong support for nutrition
programs and agriculture programs can strengthen communities such as
the one we serve in central Pennsylvania. These programs work well, but
with any policy or program, can always be improved to ensure that more
families and children have access to the nutrition they need.
Working together, we believe that we can achieve a farm bill that
helps strengthen our agriculture economy, provides support to rural
communities, and reduces hunger through partnership and collaboration.
On behalf of the Central Pennsylvania Food Bank, thank you for this
opportunity to present testimony.
Appendix A

The Chairman. Mr. Arthur, thank you so much for your
testimony.
Mr. Protas, please go ahead with your 5 minutes of
testimony whenever you are ready.

STATEMENT OF JOSH PROTAS, VICE PRESIDENT OF PUBLIC POLICY,
MAZON--A JEWISH RESPONSE TO HUNGER,
WASHINGTON, D.C.

Mr. Protas. Thank you, Chairman Thompson, Ranking Member
McGovern, distinguished Members of the Subcommittee on
Nutrition, and the Committee of Agriculture, thanks so much for
the opportunity to testify here today. I am pleased to be able
to share perspectives from MAZON--A Jewish Response to Hunger,
a national organization committed to ending hunger among people
of all faiths and backgrounds in the U.S. and Israel.
In Jewish tradition, and across all faith traditions, there
is a fundamental value of taking care of the most vulnerable
among us. In Leviticus, we are commanded to leave the corners
of our fields and the gleanings of our harvests and vineyards
for the poor and the stranger. This commandment is a clear
expression of our collective responsibility to each other. Its
wisdom respects the dignity of those who are poor, and gives
them a role in taking care of their needs by harvesting the
corners of the fields themselves. We are not to judge those who
are poor, nor should we assume to know the circumstances of
their lives.
In our country today, we are blessed to have a national
program that manifests this value and works effectively to
provide assistance to those who endure hardship. This program
respects the dignity of those who experience hunger and
poverty, responds when the needs increase, supports work,
promotes long-term health and well-being, contributes to our
economy, and provides vital assistance to the most vulnerable
in our society. Of course, this program is SNAP.
SNAP is not the only assistance that is available, but it
is the most essential. The problem of food insecurity is
profound and complex, with responses coming both from
government programs and from charitable and faith-based
community organizations. While some argue that charities should
do more to address food insecurity, the massive scale of this
problem and the realities of the charitable sector demonstrate
just how unreasonable this is. Many of these agencies are small
operations, run out of basements or closets in a local house of
worship, only a few days each week and for a few hours each
day. Only the Federal Government has the capacity to solve an
issue of hunger's magnitude, and SNAP plays a pivotal role,
providing needed assistance to tens of millions of Americans
who struggle.
Can SNAP be improved? Of course. But cutting the funding
and reach of the program is not an improvement, and
transforming SNAP into a block grant program threatens its
impact and its responsiveness.
Nothing speaks louder to the truth of SNAP than the voices
of those affected by hunger. MAZON commissioned photo
journalist Barbara Grover to collect stories from people who
have experienced this painful reality. One consistent refrain
heard is that SNAP benefits routinely don't last until the end
of the month, forcing families to take desperate measures to
make ends meet. Another is how SNAP recipients often purchase
cheap and unhealthy foods to fill them up.
To address this, MAZON recommends that Congress change the
SNAP benefit calculation to the USDA Low Cost Food Plan, in
order to provide a more appropriate level of assistance and
empower food-insecure families to better meet their nutritional
needs.
On the ABAWDs, too many able-bodied adults without
dependents have recently found themselves cut off from SNAP
benefits after the re-imposition of the 3 month time limit. Who
are these ABAWDs? They are 60,000 veterans. They are single
parents of children over the age of 18. They are homeless
individuals and ex-offenders who struggle to find employment.
They are residents of areas where economic recovery has failed
to materialize. They are 19 year olds who have just aged out of
foster care and have no family on whom to rely. Re-imposing
time limits seems cruel and misplaced when too little is being
done to ensure that these people have access to good paying job
opportunities and available job training slots. We recommend
that innovative and effective employment and training programs
be robustly funded, made more widely accessible, and set up
with reasonable parameters, including individualized case
management. It is critical that these are voluntary programs
that build people up, rather than mandatory sanction-based
programs that penalize individuals.
More needs to be done to connect under-served populations
with assistance. High rates of food insecurity among seniors,
veterans, Native Americans, college students, and LGBT
individuals are concerning, and more must be done to increase
SNAP participation for these groups. We recommend additional
outreach and education efforts to make individuals in these and
other under-served populations aware of the assistance
available to them through SNAP, and remove the barriers that
prevent them from accessing it.
MAZON's work reveals that stigma associated with SNAP is a
significant barrier to participation. The perpetuation of myths
and negative stereotypes of SNAP participants in the media and
by public officials is damaging to the program, hurts efforts
to expand access to people who are struggling, and makes it
more difficult to achieve the larger goal of ending hunger.
In conclusion, I would simply and vehemently state that
SNAP works. While there are certainly opportunities to make
program improvements, including increasing benefit levels and
expanding program access, the fundamental structure of SNAP as
an entitlement program is solid and should not be undermined.
Instead, robust and targeted investments to strengthen program
features should be considered.
Along with my written testimony, I have shared just a few
stories of people impacted by SNAP featured in MAZON's
traveling multimedia exhibition, This Is Hunger. I encourage
you to read these personal reflections, and keep in mind the
real people this program helps. Thank you.
[The prepared statement of Mr. Protas follows:]

Prepared Statement of Josh Protas, Vice President of Public Policy,
MAZON--A Jewish Response to Hunger, Washington, D.C.
Distinguished Members of the Subcommittee on Nutrition and
Committee on Agriculture, thank you for the opportunity to testify
before you today.
I'm pleased to be able to share the perspectives about the SNAP
program on behalf of MAZON--A Jewish Response to Hunger, a national
nonprofit organization working to end hunger among people of all faiths
and backgrounds in the U.S. and Israel.
In Jewish tradition--and across all faith traditions--there is a
fundamental value of taking care of the most vulnerable among us. In
Leviticus, we are commanded to leave the corners of our fields and the
gleanings of our harvest and vineyards for the poor and the stranger.
This commandment is a clear expression of our collective responsibility
for each other. Its wisdom respects the dignity of those who are poor
and gives them a role in taking care of their needs by harvesting the
corners of the fields themselves. We are not to judge those who are
poor, nor should we assume to know the circumstances of their lives.
In our country today, we are blessed to have a national program
that manifests these traditional values and works effectively to
provide assistance to the millions of people who struggle with food
insecurity. This program respects the dignity of those who experience
hunger and poverty, responds when the needs increase, supports work,
promotes long-term health and well-being, contributes to our economy,
and provides vital assistance to the most vulnerable in our society. Of
course, this program is the Supplemental Nutrition Assistance Program--
SNAP.
SNAP is not the only assistance that is available, but it is the
most essential. The problem of food insecurity is profound and complex,
with responses coming from both government programs and from charitable
and faith community organizations.
The charitable sector provides important short-term assistance
through an array of food pantries, food banks, and houses of worship,
but this assistance is inherently insufficient to address the systemic
problem of hunger or feed the significant and persistent number of
people who need help. While there are those who argue that charity
alone can address food insecurity, the massive scale of this problem
and the realities of the charitable sector demonstrate just how
impossible that is. Many of these agencies are small operations open
only a few days a week and for a few hours each day. They are often run
by volunteers out of basements or closets at their local houses of
worship, and they primarily distribute food that has been donated from
within their communities.
Charities cannot sufficiently fill the gaps created by the erosion
of government programs. The budget of the largest food charity is a
mere fraction of the Federal response to food insecurity. Only the
Federal Government has the capacity to solve an issue of hunger's
magnitude. It is essential that SNAP and other government nutrition
safety net programs are operated with the utmost effectiveness,
efficiency, and accountability, and the USDA works diligently to ensure
this is the case.
SNAP is a highly effective anti-poverty program that assists tens
of millions of Americans who struggle with food insecurity. The program
responded to the increased needs during the Great Recession as it was
designed to do, and program participation is dropping now as employment
rates and economic conditions have improved.
Can SNAP be improved? Of course. But dismantling the structure of
the program is not an improvement, and transforming SNAP into a block
grant program threatens its impact and responsiveness.
Studies have shown us a great deal about the success of SNAP and
where its limitations have kept it from living up to its promise. But
nothing speaks louder to the truth of SNAP than the voices of those
affected by hunger. MAZON commissioned photojournalist Barbara Grover
to collect stories across the country from people who have experienced
the painful reality of food insecurity. These stories are featured in
This Is Hunger, a multimedia exhibition that is currently traveling to
communities on the East Coast. One consistent refrain from people
interviewed is that their SNAP benefits routinely didn't last until the
end of the month, forcing their families to take desperate measures to
make ends meet. Another is how people confronted with a meager budget
for food often resort to purchasing cheap and unhealthy products to
fill them up, giving up fresh and more nutritious choices.
We recommend that Congress change the SNAP benefit calculation to
correlate with the USDA Low Cost Food Plan in order to provide a more
appropriate level of assistance and empower food-insecure families to
better meet their nutritional needs.
Too many able-bodied adults without dependents (ABAWDs) have
recently found themselves cut off from SNAP benefits after the re-
imposition of the 3 month time limit. Who are these ABAWDs? They are
60,000 veterans. They are single parents of children over the age of
18. They are homeless individuals and ex-offenders who struggle to find
employment. They are residents of states where the economic recovery
has failed to materialize. They are 19 year olds who have just aged out
of foster care and have no family on whom to rely. Re-imposing time
limits seems cruel and misplaced when too little is being done to
ensure that these SNAP recipients have access to good paying job
opportunities and available job training slots. SNAP Employment and
Training programs can offer innovative and effective means to
transition people back to work, as the new E&T pilot programs called
for in the last farm bill are demonstrating.
We recommend that such employment and training initiatives be
robustly funded, made more widely accessible, and set up with
reasonable parameters, including individualized case management. It is
critical that these are voluntary programs that build people up rather
than mandatory sanction-based programs that penalize individuals.
As a country, we must do more to encourage workforce participation
and pathways out of poverty, which must include support for affordable
and accessible childcare, expansion of tax credits, and living wages.
We also recommend more support for innovative strategies to promote
healthier eating among SNAP recipients, including building on the
success of programs such as the Food Insecurity Nutrition Incentive
grant program and the Senior Farmers Market Nutrition Program, which
contribute to notable increases in the consumption of fresh fruits and
vegetables.
More needs to be done to connect under-served populations with
helpful assistance from SNAP. High rates of food insecurity among
seniors, veterans, Native Americans, college students, and LGBT
individuals are concerning and more must be done to increase SNAP
participation for these groups.
We recommend additional outreach and education efforts to make
individuals in these and other under-served populations aware of the
assistance available to them through SNAP and remove the barriers that
prevent them from accessing it. MAZON's work reveals that stigma
associated with SNAP is among the biggest barriers to participation. We
regularly encounter misinformation about the program that makes older
Americans reluctant to participate. Similarly, MAZON's efforts to
remove barriers to access SNAP for food-insecure military families
reveals significant negative associations with the program that
exacerbate shame and stigma, making it more difficult for those who are
struggling to seek out help. On this topic, I would like to express
MAZON's sincere appreciation to Chairman Thompson and Ranking Member
McGovern for their co-sponsorship of the Military Hunger Prevention
Act, which was recently introduced by Representative Susan Davis and
would remove an unintentional barrier to SNAP access for currently
serving military families in need.
Too much rhetoric has been focused on criticizing the SNAP program
and impugning the character of SNAP recipients. The perpetuation of
myths and negative stereotypes of SNAP participants in the media and by
public officials is damaging to the program, hurts efforts to expand
access to people who are struggling, and makes it more difficult to
achieving the larger goal of ending hunger. The energies of the House
Committee on Agriculture would be better spent supporting and
cooperating with USDA to further reduce error rates and ensure that
SNAP is reaching and serving a greater proportion of those who need
assistance.
In conclusion, I would simply and vehemently state that SNAP works.
While there are certainly opportunities to make particular program
improvements, including increasing benefit levels and expanding program
access, the fundamental structure of SNAP as an entitlement program is
solid and should not be undermined. Instead, robust and targeted
investments to strengthen program features should be considered.
Along with my written testimony, I have shared just a few stories
of people impacted by SNAP who are featured in MAZON's traveling
multimedia exhibition This Is Hunger. I encourage you to read these
personal reflections and keep in mind the real people this program
helps. Thank you.
Attachment
Dylan from Commerce, Georgia

It was the best time, when my mom had a job. I actually enjoyed
life. I used to get to do whatever. Now, I get up in the morning and
put on my shoes like anybody else, but when I get to school, I think
about losing our house.
My mom got laid off 4 years ago from her job at the school
district. It really gets to me, it really does, that they let her go.
She'd been there 20 years and is more qualified than a lot of teachers,
but it seems that getting full time work around here is all political
now. The only work my mom can get these days is substitute teaching.
It's part time and not enough to pay for the basics. The fact that my
84 year old grandpa is keeping us from losing our house, pretty much
gets to me. Before I go to bed at night, I actually pray that we won't.
I have a lot of weight on my shoulders for a 14 year old. I can't
stand our situation. I've had to sacrifice a lot since my mom lost her
job. I'm actually wearing my mom's pants right now because we can't
afford to buy me clothes. I can't take the college classes I qualified
for because we can't afford them. My mom doesn't know it, but I quit
baseball so she wouldn't have to spend money on my uniform. It's not a
good feeling when you're sitting in the house eating chips and potted
meat as your friends are off playing ball and going to steakhouses when
they win. It's not a good feeling at all.
Our food stamps have gone from $300 to $200 a month for my mom and
me. We're not able to afford healthy foods that some people can. It's
usually chips, bologna sandwiches and all that. We've had to open up
canned foods from the pantry that's probably older than me. Eating like
this and knowing that your friends are eating regular food makes me
feel like I'm not normal. We run out of food some months and I go to
bed hungry. I've gone days without sleep because of hunger. The next
day, I'll go through class pinching myself, doing stuff to stay awake.
Being hungry affects your appearance, how you act. When I'm hungry,
I'm not in the mood for anything. I'm depressed. Then, my mom picks me
up and I continue to work as hard as I can in school. I've wanted to
become a surgeon since the fourth grade. I keep reminding myself that
if I work hard in life, I can get to where I'm fine. Then I can buy my
mom a new house.
It's not fair that we have to go through this. It's not fair for
anybody to have to go through this. You shouldn't have to worry about
where your next meal is gonna come from--especially people with kids.
Mollie from New Orleans, Louisiana

I used to have big money, the good income. I'd take friends out to
dinner and travel--to London and Scotland. If I saw a collectible
online I wanted, I'd buy it. I could not have perceived in a million
years that I would ever be unemployed and kicked out of my apartment.
Then, the recession hit and by 2012, my successful New England tour
company was making \1/5\ the income it did the year before. I'm a
single woman so I decided to cut my losses, sell the business, and move
back to New Orleans. That's the place that feels like home to me.
I did everything to find work and applied for countless jobs. But I
was either over-qualified or rejected because of my age. After 9
months, my savings ran out. I became late in my rent and couldn't pay
my utilities. I had to sell everything I owned--my car, art, CDs,
antiques--to have cash to live on. I was evicted from my apartment with
nowhere to go. I figured I could live on the streets, but not my dog. I
gave him to an Akita rescue organization, but that broke my heart since
he was the only thing left from my past. Four days later I followed him
to Thibidoux, Louisiana--a place I'd never heard of before.
Not long after I got here, I saw a long line of people in front of
a building. I was curious what they were doing, what was in the boxes
they were getting. That's how I found out about the food pantry. Before
that, I had never heard of food pantries. Since then, I've been going
to Good Samaritan Food Bank whenever I can. Although you don't get to
pick and choose what you want, it's good because they include things
you can't buy with food stamps--like toiletries and paper products.
These days, I'm eating pretty low level, just canned goods like
Vienna sausage, spinach, peaches, because $200 in food stamps is just
not enough for one adult. I drink a lot of water to help prevent
hunger. I can't afford fresh food. I only eat lunch and dinner and have
only coffee for breakfast. When my food stamps run out, it's kinda
scary not knowing if I'm gonna have any money to eat tomorrow. Every
time I go to the grocery store I look my receipt and say, ``O.K., how
much do I have until the sixth of next month when I get my food stamps
again?'' I'm worrying all the time, trying to save myself here. I'm
thinking: I've got so much to give, a lot of experience. I ask myself,
``What can I do next? What haven't I tried?'' So I pray, take a nap,
re-strategize, and pick myself up.
I've had moments of being embarrassed and on the verge of tears
because I don't understand why I can't control any of this. But when I
eat, I feel refreshed, and that maybe things will get better. They have
a bit. I'm working part time at a retail big box store. I make $8,
which comes to $800 a month. I'm living in a run-down trailer, but at
least it's with my dog. I'm hoping to get full time work, so I can
afford to move us to a better place. I don't know if I'll ever make the
money that I did up north, but I hope I can move back to New Orleans
someday. New Orleans has always been a happy place to me.
Belinda from Thibidoux, Louisiana

One afternoon, my brother was backing out his car and didn't see my
daughter. He ran over her. They told me that she was gonna die within
the first 45 minutes of the accident. That was in 2004. But here we are
in 2013, and she's still alive.
My normal child was left in a wheel chair with traumatic brain
injury and a trachestomy. Six months later, my mom got diagnosed with
cancer. Then Katrina hit and I lost my mobile home and some family
members. Then my parents died, one after another. My life has changed
dramatically over the past decade. To get through it, I just keep my
priorities are straight--to make sure my kids have the best education,
clothes on their backs and food on the table.
Before this, I made really good pay in nursing. I was able to take
care of my three daughters and help out my parents. But the first year
after the accident, we never knew what was going to happen and I had to
resign from my job to be by my daughter's bedside. When I tried to go
back to work, the recession had hit Louisiana and all they'd give me
was work on an as-needed basis. The thing that's so confusing is that
everyday I apply for these jobs in the newspaper, and I don't get any
calls back.
I'm a single mom and my only steady income since the accident is a
little less than $2,000 a month in government assistance. My mortgage
alone is $1,000 a month and paying that is my first priority because
I'm not gonna have my kids on the street. I need car insurance to get
my daughter to all her doctors appointments. She can't miss 'em. And I
have to pay the lights and water. All that's left for groceries is
between $150 and $300 a month. That's not enough to feed growing
children. When I make a little extra cash house cleaning or doing
private nursing, I go straight to the grocery store to buy food.
I applied for food stamps but was told my income was too much. If I
got food stamps, that would change our lives a lot. I would buy stuff
with vitamins in it, like fresh fruit and vegetables, instead of the
canned vegetables like spinach, corn, and baked beans that I can
afford. I am a parent that wants my kids to eat healthy food--stuff
that's gonna promote their growth and won't make them sick--but I'm
havin' to fry everything because that fills my kids up and stretches
the quantity versus giving them quality food. It makes me feel bad that
I have to say ``no'' to them, but I have to get them to understand that
we don't have enough food to share when their friends come over. That's
hard because I was raised to share everything we have.
I've made sacrifices to make sure that my kids don't starve. I'll
go without eating to make sure they can. I done sold radios, my TV,
even furniture to buy food. There are times when my kids wake up durin'
the night and they're hungry. I try to figure out if there's somethin'
in the house to give them, like the snacks that I get at the food
pantry, so they can go back to sleep. The food pantry is a blessing.
I'm just grateful that I can rely it, but I feel degraded to go there
because I don't wanna be dependent on nobody for nothing. But the
upside is I know my kids are gonna have food to eat if I go there.
I'd do whatever I had to do to make sure that my kids have. I try
to make the best out of every day. After all, one minute you can be up
and another minute you can be down.
Ashley from San Diego, California

My husband's an E4 Petty Officer on a warship. When he joined the
Navy, I didn't think it was going to be all sunsets and roses, but I
didn't expect that we'd have to eat ramen 7 nights a week because
that's what we could afford. We thought being in the military might be
a way out of living from paycheck to paycheck, but you know, a full-
time clerk at [T]aco [B]ell makes more than my husband. It's
frustrating that he risks his life to keep us safe from terrorism, and
misses holidays and birthdays, and doesn't get paid enough to feed the
family the way he'd like with healthy, fresh food.
When we found out my husband was being transferred to San Diego we
thought for sure he'd get a cost of living allowance on top of his
paycheck. They're given in Hawaii and other expensive places, so we
thought we'd definitely get it here. But there is no COLA for San Diego
so that makes living here really hard. We're not alone.
I'm shocked that so many military families are standing in line at
the food pantry because they really need help. Many of us struggle for
months before finding out that there are services for us, and then it's
pretty much word of mouth. I don't know a whole lot about FSSA, but I
looked into food stamps and it seemed like we made $100 a month too
much. Food stamps considers our housing allowance as income, even
though we don't see a penny of it, but my daughter qualifies for free
breakfast and lunch at school because our income is so low. I
understand how base pay, hazard pay, and family separation pay should
be considered income, but not the BAH. If that were changed, it would
help families like us tremendously because then we'd qualify for food
stamps and I could feed my family healthier food instead from a box.
My husband's base pay is so low that we are barely getting by. We
have to juggle our finances. We've given up cable and going to the
movies. The first place I cut is food because the consequences are too
great if I don't pay the car insurance or have gas money so my husband
can get to work. I try to put away $50 a month for emergencies. I go to
the food pantry because every bit helps. Some people would say it's
wrong to use the food pantry if I can save something, but if I was
forced to choose, I'd rather put that little bit into savings, as
opposed to using it to buy a small bag of extra groceries, so we'd have
money if we need to visit a sick parent or something.
I was so embarrassed at first to go the food pantry because I grew
up with everything I needed. But I'd rather be embarrassed and be able
to feed my family at least one extra meal a week and buy a bit of fresh
food. It's nice to be able to have my daughter say, ``I'd like a
snack'' and be able to give her an apple instead of chips, because when
she eats healthy, she isn't lethargic. It makes me so sad that my
daughter is 6 and I have to tell her ``no'' sometimes. But on the other
hand, I would rather grow up understanding that things costs money.
I looked for a job, but it wasn't worth it. We'd be negative $400
or $500 a month after paying for daycare and what would I do when my
husband is deployed? My daughter needs one parent around if she gets
sick or needs help with school. Like all military kids, she already
gives up a lot.
Cheryl from Tuba City, Arizona

Even though we never married, I never thought my boyfriend and I
would separate. We had it made--we had five kids, a nice apartment in
Flagstaff, our own washer/dryer, we ate out all the time. But at the
height of the recession, the place he worked at went out of business.
He tried to go out on his own, but he struggled. One day, he just
didn't come home after work. I was pregnant then with our youngest, and
to this day she hasn't met her father yet.
After that, I moved my family to the Navajo reservation where I
grew up. I got the piece of land that was my tribal right and put a
small RV on it. Right now, my only means of supporting my family is a
bit of child support, food stamps and WIC, which give me milk, cheese,
bread and cereal for my youngest kids.
I really want to work, but the jobs I could get won't pay enough
for me to afford daycare for the two who aren't in school yet. I can't
afford to hook up the water or electricity, so we're living without
power. I can't afford to feed the kids like I want--like they ate
before. I never know when or how much child support is coming in, so I
have to put aside a little money each month for times when a kid gets
sick and I'll need to buy cough syrup or something. It's hard to live
like this, but we do it. We're a tight family.
We live mostly on ramen, potatoes and Hamburger Helper and whatever
we get in the boxes from the food pantry. I am pretty good at budgeting
and making things stretch, but food is very expensive on the
reservation and my food stamps last for only 2 weeks. When my food
stamps come in, it's like Christmas for the kids because they get the
foods they've been waiting for--the things they've written down on a
list for me, like strawberries and apples. Sometimes the kids say,
``mom I'm hungry,'' and ``my friends eat better than we do,'' but I
tell them this is what we have. I think they understand what's going on
because when they see the food running low, they hide some of what
they're given in school and bring it home to eat later. It makes me
feel so sad inside that I can't give my kids all that they want, but I
don't let them see it. I try to make it up to them by getting them a
pizza once in a while.
I never thought I'd live in an RV, or have to chop wood for heat,
or shower outdoors with buckets. I thought I'd always be able to
provide for my kids. At least we're not bouncing around like some
families. At least we have a place we can call home.
Charles from Haman, Louisiana

My whole family was truck drivers, so it was in the blood for me to
be a truck driver. I hauled government jeeps and guns all over the
country. I just loved my job--going to different states and Canada. I
had a stroke 9 years ago, at 62, and it shut all that down. I wasn't
about ready to retire, but the stroke kept me from working. I'm
wheelchair-bound now.
I never imagined I'd get to this age and this would be my life.
Living on low-income you learn how to stretch your money. It was hard
at first because before the stroke, things were good. My family used to
go out to eat, to ball games and just had fun--invite people over for a
fish fry. But now, life's a struggle. My only income is $1,200 a month
from Disability. I live in low-income senior housing and get Medicare,
but after the monthly bills, I can't cover everything else I need.
I can only really afford to go to one doctor appointment a month,
but that just ain't enough. I try to have more money to spend on the
doctor by putting more blankets on the bed at night instead of using
the heat, but I still don't save enough for all the appointments I need
to treat my diabetes and a heart condition. It makes me feel terrible
that I can't afford to take care of my health. After my medical, I'm
only left with about $160, plus $17 in food stamps, to spend a month on
food. I used to eat grits, eggs, steaks and stuff like that, but since
the stroke, I don't buy what I want to eat, but what I can afford to
eat--mostly beans and lunchmeat, or something to make a sandwich with.
I'm supposed to be on a special diabetes diet, but I just can't afford
to buy that food. There are times towards the end of the month when all
I can afford to eat for days at a time is bread and milk. I don't like
it, but milk and bread kills the hunger a bit. When you're hungry and
your stomach's growling, I tell yah, it really don't feel good. Getting
the commodities once a month from the food pantry helps, but if I could
get $40 or $50 in food stamps, I could feed myself.
Where I live, we are low-income people and we don't have money to
buy everything we need, so we share. Sometimes the girls over in the
other quarter cook turkey neck bone, or something like that, and they
bring it over here. I've realized that's how we're surviving, by
sharing.
My wife is dead and kids are adults now. They're struggling too.
What really hurts me is when my daughter calls and asks for $25-$30 to
get her hair cut and I says ``baby if I had it, I'd give it to you.''
She's in college and I don't' have nothing to give her right now and
that's the hardest thing for me.

To read more stories of people who struggle with food
insecurity, visit thisishunger.org/stories.

The Chairman. Thank you, Mr. Protas.
Ms. Hatcher, go ahead and proceed with your 5 minutes of
testimony when you are ready. Thank you.

STATEMENT OF JENNIFER HATCHER, CHIEF PUBLIC POLICY OFFICER AND
SENIOR VICE PRESIDENT, GOVERNMENT AND PUBLIC AFFAIRS, FOOD
MARKETING INSTITUTE,
ARLINGTON, VA

Ms. Hatcher. Thank you for the opportunity to testify, and
for the work that each of you has already done to understand
SNAP and its importance.
First, the supermarket retailers, wholesalers, and
suppliers that FMI represents are fortunate to work with some
of the world's best farmers and ranchers to ensure that the
products we have on the shelf are safe, top quality, available
year round, and at the most affordable price possible.
From the food retail perspective, SNAP has evolved in a
positive way over the past several years. It has become more
efficient, more flexible to address unique needs and less prone
to fraud or error. We now have a national electronic program
with nationally approved products that is consistent from state
to state. We have seen tremendous operational efficiencies,
particularly around fresh products due to the expansion of the
dates SNAP benefits are distributed by state agencies to
customers. The administrative and licensing function is working
extremely well. SNAP has very adeptly addressed significant
fluctuation and the number of eligible beneficiaries.
A couple of suggestions moving forward. First, there is
enormous opportunity for USDA to continue to allow for
innovation and flexibility in how we serve the customer,
engaging the SNAP customer in a digital format. Second, we
continue our focus on the efficiency of the transmission part
of the transaction. Third, there should be no mandatory fees
charged to merchants. Fourth, we need to encourage new entrants
to the EBT contractor space to bring greater efficiency and
innovation. Finally, the USDA online pilot needs to include
more grocers, more locations as soon as possible to have a
greater impact on technology design.
There has been a great deal of thoughtful discussion
regarding what SNAP participants are buying and how those
products contribute to health. FMI's President and CEO, Leslie
Sarasin, recently testified before the Committee about how SNAP
restrictions would affect the grocery industry and our
customers. Additionally, last May, Kathy Hanna with the Kroger
Company testified about a partnership Kroger had entered with
AARP, who received a Food Insecurity Nutrition Incentive, or
FINI grant, from USDA. Another example of a successful and
growing FINI partnership is the Double Up Food Bucks Program,
operating in 17 Family Fare/(SpartanNash) stores in Michigan
and 51 Price Chopper stores in Kansas City, Missouri.
An amazing 95 percent of FMI's supermarket members report
employing dieticians at the corporate, regional, and store
level. Additionally, a growing number of FMI members are
employing in-store chefs.
Some have suggested that beyond the incentives, we should
look at penalties and restrictions. Thoughts coming from folks
on what these penalties or restrictions might look like are all
over the map. Some have proposed that penalties should only
apply to certain states or counties. Others have suggested that
penalties should only apply to certain people. The efficiencies
and simplicity of the administrative function of SNAP have
happened because of the consistency of a national program. If
we put a pilot or a block grant in place in one store or a
series of stores or in one county, it will require significant
IT spending. If a penalty were put in place in one county or
stores or state, the customer would simply avoid shopping in
the location with the restrictions in place, penalizing not
only the customer, but also the store owners. Many have said
that they don't want the penalty to apply to seniors or
veterans or the disabled, or those with young children. Recent
USDA figures indicate that 82 percent of SNAP benefit dollars
are currently utilized by those customers. If this concept was
developed into policy, would some kind of indicator be put on
the SNAP cards of those individuals for whom penalties would
apply? Would store clerks be charged with enforcement of that
process? Would a team of people at USDA be hired to develop and
update an electronic product list of those items that would
trigger a penalty or restriction, and send it electronically to
the 260,000 SNAP authorized retailers on a monthly basis? As
you can see, an idea that seems relatively simple in theory
could have enormous impact, expense, and complexity without a
clear benefit.
I would be pleased to try to answer any questions you may
have.
[The prepared statement of Ms. Hatcher follows:]

Prepared Statement of Jennifer Hatcher, Chief Public Policy Officer and
Senior Vice President, Government and Public Affairs, Food Marketing
Institute, Arlington, VA
Chairman Thompson, Ranking Member McGovern, and Members of the
Committee,

My name is Jennifer Hatcher, and I serve as Chief Public Policy
Officer and Senior Vice President of Food Marketing Institute,\1\ a
trade association that represents food retailers and wholesalers, as
well as their suppliers of products and services. FMI members are
located in every Congressional district across the country. FMI's tag
line when referring to its member companies is ``Feeding Families and
Enriching Lives,'' a responsibility we take very seriously.
---------------------------------------------------------------------------
\1\Food Marketing Institute proudly advocates on behalf of the food
retail industry. FMI's U.S. members operate nearly 40,000 retail food
stores and 25,000 pharmacies, representing a combined annual sales
volume of almost $770 billion. Through programs in public affairs, food
safety, research, education and industry relations, FMI offers
resources and provides valuable benefits to more than 1,225 food retail
and wholesale member companies in the United States and around the
world. FMI membership covers the spectrum of diverse venues where food
is sold, including single owner grocery stores, large multi-store
supermarket chains and mixed retail stores. For more information, visit
www.fmi.org and for information regarding the FMI foundation, visit
www.fmifoundation.org.
---------------------------------------------------------------------------
As this Committee considers policies regarding ``the Next Farm
Bill: The Future of SNAP,'' FMI very much appreciates the opportunity
to testify and the work each of you have already done to understand
SNAP and its importance.
First, supermarkets are fortunate to work with some of the world's
best farmers and ranchers in the world as supply chain partners to
ensure that the products we have on the shelf are safe, top quality,
available year round when customers want them, and at the most
affordable price possible.
We applaud the detailed review of agriculture policy and SNAP by
this Committee and would like to share some of the progress we have
identified with regard to SNAP, some of the changes we have seen in our
customers and stores over the past 6 years and then will look at the
future of SNAP and our partnership with USDA and the Congress.
From the food retail perspective, the Supplemental Nutrition
Assistance Program (SNAP) has evolved in a positive way over the past
several years. It has become more efficient, more flexible to address
unique needs and less prone to fraud or error.
We now have a national program with nationally-approved products
that is consistent from state to state. The evolution to 100%
interoperable electronic transactions, thanks in large part to the
foresight of this Subcommittee in 2001, has made the program much
easier for operations and compliance and much simpler for customers. It
allows states to share and compare data and retailers to look for
inconsistencies and fraud.
We have seen tremendous operational efficiencies particularly
around fresh product, on-shelf availabilities and fewer out of stocks
due to the expansion of the dates SNAP benefits are distributed by
state agencies to customers. Only seven states continue to issue
benefits on 1 day in the month, a number we continue to work to reduce
(benefits issuance chart attached).
The administrative and licensing function is working extremely
well. There is a very competent and responsive team at USDA charged
with this responsibility.

SNAP has very adeptly addressed significant fluctuation in
the number of eligible beneficiaries via both regular issuance
changes due to economic downturns and improvements and Disaster
SNAP (D-SNAP) special issuance for major disasters. Following
the major economic downtown, in December 2012, there were
47,792,056 people on the program vs. the most recent figures in
December 2016: 42,968,525 people (which represents the lowest
monthly level since September 2010).

Through this recent positive evolution of program elements, we have
also seen significant changes in our customers' tastes and desires and
approaches to shopping.

Households have moved to shared responsibility for shopping
(almost \1/4\ of shoppers have a 50/50 split in the shopping.)

Shoppers are visiting a broad array of stores for their
shopping.
Shoppers Continue To Shop Multiple Channels
Shoppers today are visiting a broad array of stores to get
their shopping done. The last 10 years have seen a slow but
steady shift of shoppers away from traditional supermarkets as
primary store to other channels, such as supercenters, club
stores and limited assortment retailers. Notably, in the past 3
years, a significant number of shoppers are no longer claiming
any one store as their primary store for groceries (see Chart
1.1).
Chart 1.1: Channel of Primary Store

Source: FMI U.S. Grocery Shopper Trends, 2016. Q; ``Which
store or service do you consider your primary source of
grocery-type items? In other words, where do you spend the most
money on grocery-type items for use in your home?'' 2016: n =
2,061. *``No primary store'' not measured prior to 2011. Other
channels (Convenience, Dollar, Drug, Ethnic, Military and On
line-only) account for approximately 2% of all primary store
channels selected in 2016. Other channels account for 1% of all
primary store channels selected in 2015. (See Appendix: Table
A.9).

Online is growing. We anticipate it starting to grow more
aggressively--perhaps reaching 20% by 2025.\2\
---------------------------------------------------------------------------
\2\``The Digitally Engaged Food Shopper.'' The Nielsen Company and
Food Marketing Institute, January 2017.
---------------------------------------------------------------------------
Chart 1.5: Past 30 Day Usage of Online Grocery, Trended By Generation

Source: FMI U.S. Grocery Shopper Trends, 2016. Q: ``Please
indicate the sources where you've purchased grocery-type items,
either in person or online in the past 30 days. (Online
channel.)'' 2016: n = 2,061. 2015: n = 2,265. (See Appendix:
Table A.8).

Shoppers are using digital tools to be better informed about
food, shopping and cooking.

Table 1.3: Shopper Activities Used Occasionally/Frequently Via
Smartphone, By Generation
------------------------------------------------------------------------
Shopper Online
Activities:
Occasionally/ Total Millennial Gen-X Boomer Mature
Frequently
------------------------------------------------------------------------
Use digital 49% 59% 45% 44% 18%
coupons
Look up recipes 47% 66% 47% 24% 8%
Check weekly 46% 55% 41% 41% 25%
sales specials
at your primary
store
Read reviews of 32% 41% 31% 22% 17%
products and
brands
Scan QR codes or 23% 29% 22% 15% 10%
traditional
barcodes of
grocery type
items to
compare pricing
across stores
(for example,
with Amazon)
Use the in-store 21% 29% 19% 15% 7%
item locator
Scan QR codes or 20% 23% 19% 18% 13%
traditional
barcodes of
grocery-type
items to learn
more about
their
nutritional
value
------------------------------------------------------------------------
Source: FMI U.S. Grocery Shopper Trends, 2016. Q: ``While at the grocery
store, how often do you use each of the following with your
smartphone? (Top-2 Box)'' (Among shoppers with smartphones) n = 731.
(See Appendix: Table A-36).

With the continued threat to center store, stores have to
rethink their focus and space allocations--some are getting
laser focused on fresh categories--ready to eats, private
brands--and some on pharmacy and expanded health and wellness
program offerings.

With nearly nine in ten shoppers having confidence in the
safety of food at the grocery store, stores are able to focus
more of their wellness attention to labels, analyzing
nutritional claims and other wellness distinctions.
Figure 3.1: Health & Wellness Conti[n]uum: From Food Safety to
Community Wellness

Source: FMI U.S. Shopper Trends, 2016. Q: ``How confident are
you that the food in your grocery store is safe?'' (See
Appendix: Table A.59). Q: ``What healthy aims do you look for
on the package when purchasing a product? (Select all that
apply)'' (See Appendix: Tables A.48-49). Q: 6 ``How concerned
are you about the nutritional content of the foods you eat?''
(See Appendix: Table A.45). *The Hartman Group.
``Transparency,'' 2015.

The factors consumers consider when choosing a store or a product
are getting morecomplex. Where once there were three key factors--cost,
taste, convenience--now more than\1/2\ of shoppers are also considering
additional considerations, including health andwellness, food safety,
and corporate social responsibility.
Future
First, there is enormous opportunity for USDA to continue to allow
for innovation and flexibility in how we serve the customer, engaging
the SNAP customer in a digital format with more product information,
menu planning, and better budgeting.
We need to continue our focus on the efficiency of the transmission
part of the transaction. We need more and better up time on EBT
systems; they are currently not performing at the same level of
efficiency as debit and credit card systems. Any system outage results
in hours and hours of back-end work matching failed transactions to
make sure customers are not double charged when a system returns to
functionality.
In spite of the lower performance in some cases, there have been
efforts by some processors to charge retailers fees on transactions--a
tactic that has been strictly prohibited for decades and needs to be
clarified in this farm bill. There should be no mandatory fees charged
to merchants.
One area where retailers see a growing challenge is the actual
transmission of the transaction through the state contracted
processors. Currently, states contract with payments processors to
handle SNAP and eWIC transactions. Unfortunately, there are very few
processors in this space, in fact, until recently only two. This lack
of competition has made the systems less reliable, and we have seen a
growing frequency of down-times where our members cannot process SNAP
transactions and customers cannot buy groceries. This is incredibly
disruptive at store level with abandoned baskets and slowing down of
checkout lines, all coming at a great cost to our members and a great
inconvenience to customers. Even more concerning, the state-contracted
processors are now beginning to propose that merchants and their
acquirers pay a fee to process SNAP transactions. This tactic has been
strictly prohibited for decades by the law written by this Committee.
FMI and our retail members will be seeking further legislative
clarification in the next farm bill that there should be no fees
charged to grocers for accepting SNAP.
We also need new entrants to the state SNAP EBT contractor pool as
competition inevitably leads to greater efficiency and innovation. As
mentioned earlier, until recently there were only two processors in the
market. Recently we learned of a new entrant, Solutran, currently
contracting to process both SNAP and eWIC, and we are excited to work
with them in some of these new areas. While three is better than two,
we look forward to working with the Committee on finding additional
ways to attract new entrants into the market.
The demographics of shoppers and how they shop is changing
dramatically. In January, USDA announced seven retailers and seven
states selected to participate in a 2 year pilot currently slated to
begin in August. While FMI has not had any additional communication
since the announcement about the project, we understand that it is not
moving very fast and seems to be limited to very few transactions.
Based on industry research, more grocery customers are shopping online.
If we wait 2 years for a small scale pilot and then evaluate data
before determining scalability and criteria, there will not be any
significant focus on new technology implementation for 3 years or more,
which is likely to be very late in the technology evolution to be able
to impact design. One thing we continue to learn is that integrating
functionality early in technology design and utilization is far simpler
and less expensive than after-the-fact retrofitting. FMI hopes that
USDA will move more quickly on a second round in the pilot to allow for
more grocer participation across the country.
Responding to consumer interest in having more information about
products, the retail grocery industry recently launched the SmartLabel
initiative under the leadership of FMI and GMA. Currently covering over
5,000 products and expecting 30,000 products by the end of 2017,
SmartLabel is a digital platform that organizes required and voluntary
product information and makes it accessible to customers from an app,
QR code or website. Through SmartLabel and Facts Up Front, which
launched in 2011, the retail grocery industry is working to help
consumers make more informed choices about food and their health.
FMI members have a strong commitment to reducing food waste in our
supply chain and addressing consumer confusion that can lead to waste
in the home for SNAP customers and for all customers. Since 2011, we
have worked with the Grocery Manufacturers Association (GMA) and
National Restaurant Association (NRA) as part of the Food Waste
Reduction Alliance (FWRA), which has established itself as one of the
leading industry-led coalitions fighting food waste in the United
States. FWRA provides a forum for sharing innovative best practices and
improving the measurement of food waste in our supply chains, and has
emerged as a ``go to'' resource for NGOs, academics and policy makers.
FMI has also worked with our partners at the Grocery Manufacturers
Association to reduce food waste by addressing consumer confusion
around date labels. In February, FMI and GMA announced a voluntary,
industry-led effort to begin reducing the dozen or more different terms
currently found on food packages to two consistent phrases--``BEST if
used by'' for packages where quality is the primary concern and ``USE
by'' for perishable or short shelf-life products. Efforts are already
underway to implement this new phrasing.
I would also be remiss if I did not mention one of our proudest
resources--the Food Keeper (available as an app or online at http://
www.fmi.org/industry-topics/consumer-affairs/foodkeeper-food-storage-
database)--which was developed as part of an innovative collaboration
between FMI, USDA, and Cornell University. The Food Keeper allows
consumers to look up individual product categories and receive guidance
on storage and preparation of the product to maximize freshness,
quality and shelf life.
The health and eating habits of SNAP participants is another area I
would like to address. There has been a great deal of thoughtful
discussion in the Committee on what SNAP participants are buying and
consuming. FMI's President and CEO, Leslie Sarasin, recently testified
before the Committee about how SNAP restrictions would affect the
grocery industry and our customers. Additionally, last May, Kathy Hanna
with the Kroger Company testified about a partnership Kroger had
entered with AARP who received a Food Insecurity Nutrition Incentive
(FINI) Grant from USDA. The partnership allows Kroger to incentivize
SNAP customers to purchase more fresh fruits and vegetables in their
stores. We recently received an update that the program is growing
strong with weekly coupon redemptions around $2,700. Currently the
program is active in seventeen of their stores around the Memphis, TN
area and will expand to another eight in the coming months.
Partnerships like these and even individual actions by grocers are
the creative incentives that are a win-win for local farmers,
supermarket and customers. Another example of a successful and growing
FINI partnership is the Double Up Food Bucks program operating in 17
Family Fare/(SpartanNash) stores in Michigan and 51 Price Chopper
stores in Kansas City, MO. (article attached).
There is a growing market for grocers to help all of their
customers make the right food choices for their families based on both
budget and nutrition. An amazing 95% of FMI's members report employing
dietitians at the corporate, regional and store level. Just recently
local grocer Giant Food Stores announced an expansion of its in-store
nutritionists program by adding three more to their staff.
Grocers like Giant employ in-store dietitians and nutritionists to
perform one-on-one consultations for customers with specific dietary
needs, store tours and community classes to help educate customers on
how to make the right selections for their families and prepare the
foods they buy. Additionally, a growing number of FMI's members are
employing in-store chefs who host cooking demonstrations, help with
menu building and provide recipes. These services are provided to all
customers regardless of how they pay.
Some have suggested that beyond the incentives, we should look at
penalties and restrictions. Thoughts coming from folks on what these
penalties or restrictions might look like are all over the map. Some
have proposed that penalties should only apply to certain states or
counties. Others have suggested that penalties should only apply to
certain people. I want to reiterate that the efficiencies and
simplicity of the administrative function of SNAP that have achieved
easier operation and compliance and a simpler customer experience have
happened because of the consistency of a national program. If we put a
pilot or a block grant in place in one store or a series of stores or
one county, it will require significant IT spending. The impact on the
card is also unknown. If a penalty were put in place in one county or
stores or state, the customer could simply avoid shopping in the
location with the penalties or restrictions in place--penalizing not
only the customer, but also the store owner. Another point that some
who have suggested a penalty or restriction for purchasing unhealthy
foods is that we don't want the penalty to apply to seniors or veterans
or the disabled or those with young children. Recent USDA figures
indicate that 82% of benefit dollars are currently utilized by those
categories of people. If this concept was developed into policy, would
some kind of indicator be put on the SNAP cards of those individuals
for whom penalties would apply? Would store clerks be charged with
enforcement? Would a team of people at USDA be hired to develop and
update an electronic product list of those items that would trigger a
penalty or restriction and send it to the 260,000 SNAP authorized
retailers on a monthly basis? As you can see, an idea that seems
relatively simple in theory, would have enormous impact, expense and
complexity without a clear benefit.
At FMI, we take the responsibility of providing our customers safe
and affordable food and nutrition very seriously. As discussions
regarding the future of food and agriculture policy continue, we very
much appreciate the opportunity to provide our insight as we learn from
our members and our customers.

State-by-State Monthly SNAP Benefit Issuance Schedule
(Current as of February 13, 2017; Food Marketing Institute Research)
------------------------------------------------------------------------
State Day(s) of SNAP Benefit Distribution
------------------------------------------------------------------------
Alabama In August 2013, the state expanded their
distribution dates, moving from the 4th
to the 18th of the month to the 4th
through the 23rd of the month. To
assist in the transition, recipients
received \1/2\ of their benefit on
their original date and \1/2\ on their
new date in the month.
Alaska** The main SNAP issuance is all on the
first day of the month. Smaller
supplemental issuances for new
applicants and late recertifications
occur daily throughout the month.
Arizona SNAP benefits are distributed over the
first 13 days of the month by the first
letter of the recipients' last name.
For example: last names that begin with
A or B are distributed on the first day
of the month; 2nd day of the month: C
and D; etc.
Arkansas Arkansans receive their benefits on
these 8 days: 4th, 5th, 8th, 9th, 10th,
11th, 12th or 13th of each month, based
on the last number of their [S]ocial
[S]ecurity [N]umber.
California California is different in that each
county distributes SNAP to those who
qualify. The payments go out to all
those who qualify between the 1-10 of
the month. Others (i.e., new
applicants) get paid throughout the
month depending on when they were
accepted.
Colorado Food Stamp benefits are distributed on
the first 10 days of the month by the
recipient's last digit of their
[S]ocial [S]ecurity [N]umber.
Connecticut SNAP benefits and cash are distributed
on the first 3 days of the month, by
the first letter of the recipient's
last name. (A-F are available on the
first; G-N on the second and O-Z are
distributed on the third day of the
month.)
Delaware Benefits are made available over 23
days, beginning with the 2nd day of
every month, based on the first letter
of the client's last name.
District of Columbia Benefits are made available from the 1st
to the 10th of every month, based on
the first letter of the client's last
name.
Florida All SNAP recipients moved from a 15 day
distribution to a 28 day distribution
in April 2016. In March 2016, to assist
in the new transition, benefits were
``split.'' Recipients received the
first \1/2\ of their benefits on their
``old'' date and received the second \1/
2\ of their monthly benefits on what
was their ``new'' date going forward.
The ACCESS Florida system assigns
benefit availability dates based on the
case number recipients received when
they became eligible for the SNAP
program.
Georgia In September 2012, SNAP benefits in
Georgia expanded from the 5th to the
14th, and then finally to the current
5th to 23rd of each month, distributed
every other day.
Hawaii Benefits are made available on the 3rd
and the 5th of every month, based on
the first letter of the client's last
name.
Idaho Benefits were previously made available
on the first day of every month. (Prior
to August 2009, benefits were
distributed on 5 consecutive days at
the beginning of each month, but this
was later moved to 1 day.) In 2014,
H.B. 565 was enacted. The bill requires
the state Department of Health and
Welfare to issue SNAP benefits over the
course of 10 consecutive days within a
month. Bonus money received from USDA
paid for the cost of the change.
Currently, and since July 1, 2016,
benefits are distributed over the first
10 days of each month based on the last
number of the birth year of the
recipient; for example, a birthday of 8/
25/64 would receive benefits on the 4th
day of each month.
Illinois SNAP benefits are made available on
these 12 days of the month: 1st, 3rd,
4th, 7th, 8th, 10th, 11th, 14th, 17th,
19th, 21st, and 23rd of every month,
based on a combination of the type of
case and the case name.
Indiana On January 1, 2014, the state
implemented an expanded schedule for
the distribution of benefits during the
fifth through the twenty-third day of
each month, to be issued every-other-
day, based on the first letter of the
recipient's last name. For example: A
or B = benefits available on the 5th;
first Letter of the Last Name is: C or
D = benefits available on the 7th.
Previously, benefits were made
available on the first 10 calendar days
each month. (TANF is issued on the
first of the month.)
Iowa Benefits are made available over the
first 10 calendar days of every month,
based on the first letter of the
client's last name.
Kansas Benefits are made available over the
first 10 calendar days of every month,
based on the first letter of the
client's last name.
Kentucky Benefits are made available over the
first 19 calendar days of every month,
based on the last digit of the client's
case number. This was recently expanded
from the previous 10 day distribution.
Louisiana Benefits are made available between the
1st and the 14th of every month, based
on the last digit of the client's SSN.
(Elderly and disabled benefits are made
available between the 1st and the 4th
of every month.)
Maine Benefits are available the 10th to the
14th of every month based on the last
digit of the recipient's birthday.
Maryland In January 2016, the distribution
schedule was changed. Benefits are now
distributed from the 4th to the 23rd of
every month, based on the first three
letters of the client's last name.
Previously, benefits were distributed
from the 6th through the 15th of the
month. This was accomplished through a
5 month phase-in.
Massachusetts Distribution is based on the last digit
of each recipient's [S]ocial [S]ecurity
[N]umber and distributed over the first
14 days of the month.
Michigan In January 2011, SNAP moved from a 7 day
distribution to the current
distribution, which is from the 3rd to
the 21st, distributed every-other-day,
based on the last digit of the head of
household's recipient identification
number. For example, clients' numbers
ending with 0 will receive food
benefits on the 3rd of the month;
numbers ending with 1, food benefits
will be available on the 5th of the
month.
Minnesota Benefits are staggered over 10 calendar
days, beginning on the 4th through the
13th of every month, without regard to
weekends or holidays, based on the last
digit of the client's case number.
Mississippi Effective February 2017, benefits are
made available from the 4th to the 21st
of every month, based on the last two
digits of the client's case number.
Benefits were previously distributed
from the 5th to the 19th (15 days) of
every month.
Missouri Benefits are made available over the
first 22 days of every month, based on
the client's birth month and last name.
Montana Benefits are distributed over 5 days by
the last number of the recipient's case
number, from the 2nd to the 6th of
every month.
Nebraska Nebraska distributes benefits during the
first 5 calendar days of the month. The
day of distribution is based on the
last digit of the [S]ocial [S]ecurity
[N]umber.
Nevada** In Nevada, food stamp benefits are
issued on the first day of each month.
New Hampshire** New Hampshire benefits are available on
the 5th of every month.
New Jersey The monthly SNAP allotment is available
over the first 5 days of the month. The
day is based on the number in the 7th
position of their case number. Some of
the cases still receive their benefits
based on the assignment at the time the
county was converted to EBT. In Warren
County, all benefits are made available
on the 1st of the month.
New Mexico Benefits are made available over 20 days
every month, based on the last two
digits of the SSN.
New York The process is twofold as follows: in
New York City, recipients receive their
SNAP benefits within the first 13
business days of the month, according
to the last digit of their case number,
not including Sundays or holidays. The
actual dates change from 1 month to the
next, so NYC publishes a 6 month
schedule showing the exact availability
dates. For the remainder of New York
State, recipients receive their
benefits within the first 9 days of the
month, also according to the last digit
of their case number, including Sundays
and holidays.
North Carolina Effective July 2011, the state expanded
its 10 day distribution schedule.
Benefits are now distributed from the
3rd to the 21st of every month, based
on the last digit of the primary
cardholder's Social Security Number.
North Dakota** Benefits are made available on the first
day of every month.
Ohio In April 2014, Ohio expanded its SNAP
distribution from the first 10 days of
the month to the first 20 days of the
month, staggered every 2 days. This
only affected SNAP recipients who moved
from one county to another; recipients
who experienced a 1 day or more break
in eligibility; and, all new
recipients. Recipients who were on SNAP
before April 2014 did not see a change.
Oklahoma Benefits are made available from the 1st
to the 10th of every month, based on
the last digit of the client's SNAP
case number.
Oregon SNAP is distributed on the first 9 days
of the month as such: [S]ocial
[S]ecurity [N]umbers ending with ``0''
or ``1'' distribute on the 1st day of
the month, numbers ending with a ``2''
are distributed on the 2nd day of the
month and so on.
Pennsylvania Benefits are made available over the
first 10 business days of every month
(excluding weekends and holidays) based
on the last digit of the client's case
number.
Rhode Island** Benefits are made available on the first
day of every month.
South Carolina In 2012, South Carolina expanded from a
9 day to a 19 day issuance. Current
recipients stayed within the 9 day
distribution, but all new recipients
were given a date that expanded into
the 19 days.
South Dakota** Benefits are made available on the 10th
day of every month.
Tennessee In October 2012, Tennessee expanded
distribution from 10 to 20 days.
Texas Benefits are made available over the
first 15 days of the month, based on
the last digit of the client's SNAP
case number.
Utah Benefits are made available on the 5th,
11th, or 15th of every month, based on
the first letter of the client's last
name: A-G available on the 5th; H-O
available on the 11th; P-Z available on
the 15th.
Vermont** Vermont benefits are available on the
first of every month.
Virginia On September 1, 2012, benefit
distribution was moved from 1 day a
month to 5 days, and then eventually to
the current 1st to the 9th day of every
month, based on the last digits of the
client's case number.
Washington Benefits are staggered over the first 10
days of the month based on the last
digit of the households' assistance
unit number. Weekends and holidays do
not affect the schedule. However,
beginning February 1, 2017, an
expansion of distribution was fully
implemented. Going forward, it will be
the first 20 days of the month.
West Virginia Benefits are made available over the
first 9 days of every month, based on
the first letter of the client's last
name.
Wisconsin Benefits are made available over the
first 15 days of every month, based on
the eighth digit of the client's SSN.
Wyoming SNAP is distributed on the first 4 days
of the month.
------------------------------------------------------------------------
Notes:
**States with asterisks are those that only distribute benefits on 1 day
a month. There are seven that still do so. Warren County, New Jersey
distributes only 1 day a month, although the rest of the state
distributes over 5 days. Also, there are four states that distribute
SNAP just 2 or 3 days a month.
Additional Distribution Information:
There is no limit on the number of days for stagger. The only condition
in regulation is that no single household's issuance should exceed 40
days between issuances.
Currently, benefit recipients may only be issued their benefits one time
a month, or within 40 days.

Attachments

Local Produce Incentive Program Expands
USDA-Backed Double Up Food Bucks Rolls Out to Dozens of Retail
Locations
Supermarket News
Mark Hamstra, Mar. 16, 2017

The Double Up Food Bucks program benefits local farmers while
enabling low-income consumers to purchase healthy produce.
Photos courtesy of SpartanNash.

An increasing number of food retailers have found that a healthy-
eating incentive program that was originally launched at farmers'
markets can help drive sales in their stores as well.
The program, called Double Up Food Bucks, offers low-income
consumers an incentive to buy local produce and to purchase more fruits
and vegetables overall. It has been growing quickly in the grocery
sector, with dozens more stores slated to come online around the
country this year.
This spring Double Up will be rolled out to 51 Price Chopper stores
in the Kansas City, Mo., market, after launching in just a handful of
Price Chopper locations in 2015.
``We're big proponents of the program, because it helps our
customers, it helps local farmers, and it's good for us, too, so it's a
win-win program all around,'' said Michael Beal, chief operating
officer, Ball's Food Stores.

SpartanNash offers Double Up Food Bucks at 17 Family Fare
stores in Michigan.

Ball's debuted Double Up Food Bucks in four Kansas City-area Price
Chopper locations in 2015 and has since expanded it to 14 stores. This
spring, several additional Price Chopper operators in the market are
planning to launch the program. In addition, a Whole Foods Market in
Overland Park, Kan., and Rollin' Grocer, a traveling store based out of
a trailer, also participate in the program in the Kansas City market.
Double Up Food Bucks was launched by the Ann Arbor, Mich.-based
Fair Food Network in five farmers' markets in the Detroit area in 2009.
Consumers who receive Supplemental [Nutrition] Assistance Program
(SNAP) benefits, formerly known as food stamps, can earn $1 toward the
future purchase of any produce item for every $1 they spend on local
produce at participating grocery stores.
The program received a boost through $100 million in funding that
was included in the 2014 Farm Bill, some of which was awarded last year
to local organizations supporting Double Up Food Bucks. The Food
Insecurity Nutrition Incentive (FINI) grants program was created to
support healthy food incentive programs like Double Up Food Bucks
across the country.
``It has energized this field, and incentivized more partners to
bring this program into their communities,'' said Emilie Engelhard,
communications director at the Fair Food Network, of the FINI program.
Beal said the Double Up Food Bucks program has driven up sales of
local produce in double digit percentages at Ball's Price Chopper
stores and has increased transactions among SNAP customers.
The local organization driving the program in the Kansas City area,
called Double Up Heartland, has a goal of expanding the program to 117
retail locations and 68 farmers' markets in the region by 2019,
according to Engelhard.
In addition to Kansas and Missouri, the Double Up Food Bucks
program has also been rolled out to grocery stores in Michigan,
Arkansas, New York, Colorado and New Mexico, and just last month was
introduced in California. The program launched in the San Jose, Calif.,
market in three retail locations--two Arteaga's Food Centers and one
location of Food Bowl 99.
This summer it is slated to debut at Schnuck Markets in the St
Louis, Mo., area, according to the Double Up Heartland website.
``We really do see grocery as being an important next tier for
incentive work,'' said Engelhard.

Retail banner D&W Fresh Market reflects SpartanNash's
commitment to fresh.

SpartanNash, based in Grand Rapids, Mich., in 2014 became the first
major retailer to offer Double Up Food Bucks in multiple stores when it
launched in two Family Fare supermarkets in Michigan. The program was
expanded to five Family Fare locations in 2015, and last year it
expanded the rollout to 17 Family Fare stores in Michigan.
In 2016, 80% of points earned toward produce were redeemed,
SpartanNash said. The company said it was in the process of
``significantly expanding its program for 2017.''
``I love that we can offer the Double Up Food Bucks program at our
store for the fourth year in a row,'' said Renee Harris, store director
of the Family Fare Supermarket in Battle Creek, Mich. ``Through the
program, we can support local products while helping our customers
stretch their food dollars and encourage healthier eating.''
SpartanNash said the program exemplifies its commitment to
corporate responsibility, including environmental sustainability and
social responsibility.
Fair Food Network said both Ball's Food Stores and SpartanNash have
been important to the growth of the program at retail.
``The partnership with SpartanNash significantly raised the profile
of the work within the grocery sector at large,'' said Oran Hesterman,
President and CEO of Fair Food Network. ``SpartanNash understood early
on the power of this work as a means to better serve its customers and
the broader community.''
SpartanNash and Ball's Food Stores both have long had a commitment
to local produce, and SpartanNash recently expanded its capabilities in
this area with the acquisition of Caito Foods Service, a distributor of
fruits, vegetables and prepared foods.
``We are excited to join forces with SpartanNash and increase our
footprint in providing local fresh products,'' Tony Mitchell, VP of
sales and procurement at Caito Foods, told SN. ``This acquisition will
serve to enhance our reach to a greater number of regional family farms
and consumers.''
He said consumer interest in local product, which is being driven
in large part by Millennials, continues to gain strength.
``We understand that customers have a growing appetite for locally
grown items, and SpartanNash has an equally strong appetite for
supporting local farmers,'' said Mitchell.
Beal of Ball's Food Stores said he continues to see growth in
demand for local produce as well.
``Our consumers are telling us they want fresh, and its almost to
the point where there's a perception by consumers that it's as
important as organic,'' he said, noting that many of the local farmers
who supply Ball's locations do farm organically.
``Local farmers want to get their goods to market, and we have been
doing that with local farmers for 18 or 20 years,'' said Beal. ``This
is just another benefit of working with local farmers, and we continue
to help them grow that business.''

Source URL: http://www.supermarketnews.com/produce-floral/
local-produce-incentive-program-expands.

The Chairman. Thank you for your testimony, Ms. Hatcher.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
We are joined in this hearing by the Ranking Member of the
full Agriculture Committee, so I am pleased to recognize Mr.
Peterson for 5 minutes of questioning.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Thank you, Mr. Chairman. I won't take 5
minutes, but I appreciate you holding this hearing. I
appreciate the witness' testimony.
This hearing is entitled, The Next Farm Bill: The Future of
SNAP. Well, I believe that the future of SNAP is in the farm
bill, and I think that everybody knows by now that I doubt if
it is not in the farm bill, then we won't even have a farm bill
in the future.
I know there are other Members of the Committee and other
Members of the House and Senate who agree with that assessment,
but I worry that the House leadership isn't on the same page,
and I don't want to find us in another situation where
leadership steps in and mucks this up by adding unrealistic
work requirements or some other ideological policy that would
blow up the whole bill, similar to what happened in 2013.
The Committee's review of SNAP covered a lot of issues. We
heard about the success of the program. We also heard some ways
that we may be able to improve performance. I hope that we can
keep these facts in mind and find some common ground to make
sure SNAP is as effective as possible, and that we maintain
this effective program.
Again, I am not quite sure where SNAP policy is headed, but
the farm bill is where it needs to stay. I want to thank the
Chairman for the time, and I yield back the balance of my time.
The Chairman. The gentleman yields back.
I will now take the liberty of 5 minutes of questioning.
First of all, just thank you to all five of our witnesses
for being here today and the experience you are contributing to
a great conversation. We don't get the good public policy
without good information, and you are serving a tremendous role
here. It is appreciated.
Mr. Arthur, we have seen many food banks evolve from simply
distributing food to providing more comprehensive anti-hunger
programming, and social service outreach to their local
communities. In your testimony, you speak of both the food
distribution and SNAP application assistance services that the
Central Pennsylvania Food Bank provides. How do you work to
connect families to these and other programs such as SNAP, or
employment and training that may be able to offer them longer-
term support and a path towards self sufficiency? And can you
reflect a little bit on how you work collaboratively with
partners and other local organizations in your community to
provide case management and other types of supportive services?
Mr. Arthur. Thank you, Mr. Chairman. I will take that in a
few parts.
First of all, we do direct SNAP outreach now as part of our
overall food assistance services. And just for the
Subcommittee, in our central Pennsylvania territory, if you add
up SNAP and the other Federal food assistance programs, WIC,
The Emergency Food Assistance Program, all of those, they are
about ten times larger in the amount of food that is
distributed in our service territory, ten to one. And we
distributed almost 50 million pounds of food last year, that is
to give you an idea of the scale here.
The second part of that, we do SNAP outreach because we
think it is a very efficient way to serve, and as I noted in my
written testimony, we are actually on the low end participation
rates for folks that might be eligible for SNAP in central
Pennsylvania, lower than the national average, lower than the
state average. We decided that something needed to be done,
that we needed to be in that type of work, and we actually
right now support that on just privately funded dollars, no tax
dollars. We believe that is a very important way to serve.
With respect to other services, we are proud that many of
our partners do very holistic services right in their
communities and their neighborhoods, community action programs,
Salvation Army programs, of course, many faith-based
organizations, and others that actually do, in addition to food
service, do direct assistance with job searches, training, et
cetera. We feel that we are a better partner if we can take
away all of the food assistance costs and work, and then lend
our shoulder to their work to help people get connected to
jobs. While we don't directly create a lot of jobs--although I
have 100 employees, we do help others that do that. We believe
that is very important.
Probably the newest work that we do is with healthcare. We
are working with some of the primary healthcare organizations
in central Pennsylvania. Names you might know would be like
Penn State Hershey Medical would be a big one, Geisinger Health
Systems. We work with them at the intersection of healthy
eating and good health outcomes, and there are a lot of details
in the programs that we do, but it is very important that we do
that work as well. And we also, as Chairman Thompson has seen,
we actually have teaching kitchens and we do a very robust
curricula around helping our member agencies and their clients
learn better habits on the whole food chain. We are very proud
of that, and last year we did over 1,600 hours of training like
that.
I am very proud that we are part of the broad spectrum of
not only making sure people are fed, but that they can sustain
their own lives. We are working to end hunger, not just to feed
people.
Thank you.
The Chairman. Thank you.
Mr. Protas, in your testimony, and I appreciate your
testimony. You really kind of touched on the diversity of
individuals that are within that able-bodied adults without
dependents classification or label. But in time limits and
subsequent employment and training programs, what do you see is
the key to engaging individuals? How do you do that so to
better engage recipients so you ensure that they are able to
reach their full potential and progress in their pathway out of
poverty?
Mr. Protas. Thanks for the question.
It is important that there are opportunities available to
these ABAWDs. In many locations where an individual may be
facing a time limit, there simply aren't enough job
opportunities or available job training slots, so to have the
expectation for somebody to participate in a job training
program that isn't there or to find a job that is not readily
available or accessible for them in the community where they
live is an unfair expectation. Investments should be made to
make sure that we have job training opportunities that are
readily available that have case management that will
effectively help that person along that path, and help that
person get back to work.
We heard in previous hearings testimony from other
witnesses about the importance of that individualized case
management, and that is just a critical component that more
investment is needed in.
The Chairman. Thank you. My time has expired. I am pleased
to recognize the Ranking Member for 5 minutes of questioning.
Mr. McGovern. Well thank you, Mr. Chairman. I want to
applaud the opening statement of our Ranking Member, Mr.
Peterson, as you can tell, some of us are just a little anxious
about where we might be going as we approach the farm bill with
regards to SNAP. And part of it is because of some statements
that we have seen in the press about additional requirements
and potential changes that make us a little bit uneasy, but we
need to be clear-eyed as we move forward and make sure that
whatever we are contemplating on doing, that it is actually the
right thing and it is based on reality and not based on
perception. Because some of the perception with regard to
people who are on SNAP is not reflective of real life. There
are many people on this program who work and they earn so
little that they still qualify for the benefit. We had 20
hearings and this is the 20th, and the Majority actually put
together a report, without any input from the Minority, so I
would like to ask unanimous consent to insert in the record a
letter I sent to Chairman Conaway giving my side of the story
on these 19 hearings.
The Chairman. Without objection.
[The information referred to is located on p. 964.]
Mr. McGovern. And again, the latest target seems to be
these able-bodied adults without dependents, and again, it is a
very complicated population.
Ms. Dean, in your testimony, you expressed concern about
the loss of benefits for vulnerable ABAWD populations. Can you
identify for us what some of the challenges might be for people
who can't meet the work requirements to avoid the current 3
month time limit, and what do you think about suggestions that
the waiver should be completely eliminated, or that we should
reduce the amount of time ABAWDs can spend on SNAP?
Ms. Dean. I think that is a very ill-advised policy
approach, to withdraw more food assistance from this
desperately poor group. I don't think it is going to improve
their well-being or the well-being of the communities that they
live in.
One of the mistakes we make about this group is thinking
that they are some kind of unified demographic solely by the
fact of their age, 18 through 49, and they are without children
and they are not working 20 hours a week. That is how the law
groups them together, but of course, in life, they are
different kinds of people. Mr. Protas' testimony pulled out
some terrific examples of folks who could struggle. An 18 year
old who just ages out of foster care with no family support
system and there is no more state support to help this
individual find work. An ex-offender, someone who has just left
prison is hopefully getting help for job training, but the
reality is the job market for ex-offenders is just not the same
as everyone else. And then also, the group overall tends to be
working in very low wage, low skill jobs that have a higher
unemployment rate than the overall unemployment rate, and so
our expectation that when they lose a job, or again, fall below
20 hours a week, working 18 hours a week is not enough. If they
lose a couple of shifts, it may take them more than what is
left on their 90 day clock to raise those hours again. There
are a lot of reasons why they struggle.
Mr. McGovern. And Mr. Protas, I appreciate your comments
about ABAWDs, and I am concerned about this population, and I
am concerned about how we characterize them here in Congress.
Oftentimes they are characterized as people who just don't want
to work, or they are lazy, or they are trying to take advantage
of the system, when in my experience, from what I have been
able to tell, again, that is not an accurate picture. I would
like to hear your response to how do the characterizations of
ABAWDs distract from our goal of ending hunger, and how can
these critical depictions discourage under-served populations
like veterans from getting the help that they so desperately
need?
Mr. Protas. Thank you for the question.
We regularly encounter instances where misinformation and
negative associations about SNAP make those who are struggling
reluctant to seek out help, including, as you said, seniors,
veterans, and surprisingly, currently serving military
families. And I want to just express thanks to Chairman
Thompson and to you, Ranking Member McGovern, for your support
of the Military Hunger Prevention Act. In our work with
military families, we know that many of them are very reluctant
to come for help and to apply for SNAP because of the negative
associations with the program, and that comes from public
discussions from things that are out there in the media. And
when people are struggling and need that help and are reluctant
to participate in a program and to apply for a program, it
hurts. It hurts their families, it hurts the kids in those
families. And so this negative rhetoric has real consequences,
and it really needs to stop.
Mr. McGovern. That is all my time. Thank you.
The Chairman. I thank the gentleman.
I am now pleased to recognize the gentleman from Arkansas,
Mr. Crawford, for 5 minutes of questioning.
Mr. Crawford. Thank you, Mr. Chairman. Thank you all for
being here today.
Ms. Hatcher, I want to start with some technology issues.
Since the program's inception, we know that technology has
moved at an exponential pace, and some of the changes that have
taken place have moved us more to an electronic-based type of
administration of the program. What are some of the challenges
that you see that retailers have to manage with regard to
maintaining pace with that technology, and how does that
affect, ultimately, the beneficiaries?
Ms. Hatcher. We have certainly benefitted by moving the
program finally to 100 percent electronic. In the days you were
talking about, with paper coupons there was a lot more
opportunity for fraud. What we are looking at now is taking the
next step and using some of the digital and online resources to
be able to offer those to SNAP customers as well. I know that
USDA has put in place a pilot project for seven states and
seven stores, but I guess what I am saying is that we can go
beyond that. Many things are moving to online and we need to
really get in at the ground level at this to make sure that we
are moving the technology along with SNAP in the right
direction.
Mr. Crawford. Do you think the agencies are keeping pace
with regard to that technology? Are there some barriers between
the retailer and the administrators, or are we staying in close
contact or are we having some challenges there?
Ms. Hatcher. I definitely think we are staying in close
contact. There are certainly additional opportunities, and we
want to make sure that we are not doing something that is going
to move us in the wrong direction.
One of the things we are trying to do is to encourage more
EBT contractors to enter the space, because with more
competition and more contractors, you get more ideas and more
innovation. We just had one recent addition that folks are
pretty excited about to add to the folks that are out there.
That is one of the things that we want to help to do is to get
that information out to other businesses that might be
interested in entering this environment to move down with
additional ideas.
Mr. Crawford. One of the topics that comes up invariably--
we are talking about food deserts and we are talking about
nutrition programs and things of that nature, and ironically,
this was a topic that we had earlier in a hearing today is one
of the most productive rural or agricultural districts in the
country, mine, and we have problems with access to healthy
food.
In previous hearings, we have talked about possibly grocery
stores serving as essentially distributors and going out into
rural areas that are relying on convenience stores almost
exclusively for their nutrition. Can you talk about what a good
model might be to help incentivize grocers to sort of act as
those distributors to small rural communities that don't
otherwise have access to healthy food? Because healthy food
choices are also a part of the problem, and when all you have
is access to prepared foods that aren't maybe necessarily the
greatest in health benefit?
Ms. Hatcher. No, I think that is a great point. We are
starting to see a lot of innovation in that space in a
community where it may not make sense to build a freestanding
grocery store in a particular area, we have seen more mobile
vans utilizing libraries and other community centers, as well
as, like you mentioned, convenience stores. More delivery
models where you could deliver some of those products rather
than having a freestanding store there. There are a lot of
potential opportunities, going forward, but the vans have
probably had a lot of promise where you have a store that has a
van that's going in a particular area or distributing to
another location.
Mr. Crawford. I am sure technology enhances that or
facilitates that to a large degree. Are you aware of any kind
of tax incentives that can be utilized to incentivize a
retailer to participate in that space?
Ms. Hatcher. I am not aware of any tax incentives right now
on that, but certainly will look into it and see if there is
anything anybody has tapped into, because that might be a
really good opportunity.
Mr. Crawford. Thank you, I appreciate it, and I yield back.
The Chairman. The gentleman yields back. I am pleased to
recognize the gentlelady from North Carolina, Ms. Adams, for 5
minutes of questioning.
Ms. Adams. Thank you, Mr. Chairman, and Ranking Member
McGovern, thank you. Thank you to the witnesses for your
testimony.
In the 12th District of North Carolina that I represent,
there are some parts of Charlotte that are enjoying economic
growth with real estate prices that rival those here in
Washington, D.C. However, many neighborhoods throughout the
city have not been able to participate in the new economic
opportunities that exist just a few miles down the road. Whole
communities have been left behind by how Charlotte has grown
over the last several decades. And so as the city works to
bring more equitable development and opportunities to everyone
in the city, we need the SNAP program more than ever to help
families put food on the table from one month to the next.
Ms. Dean, last year the State of North Carolina decided to
stop all waivers for SNAP work requirements for able-bodied
adults. Can you spell out how imposing SNAP work requirements
on able-bodied adults risks states kicking people off the
program who are still eligible to participate?
Ms. Dean. Thank you for that question. Yes, the state
legislature prohibited the governor from ever seeking a waiver
again in the future, which struck me as really short-sighted
with respect to policy, particularly in a state, for example,
that experiences so many hurricanes as natural disasters,
wanting the ability to respond to individuals, it seems to me
you would want that flexibility.
The North Carolina Budget and Tax Policy Center did a
terrific analysis of the states' decision to cut off all
waivers and therefore impose the time limit, and they actually
looked at some of the rural counties in North Carolina and
compared the number of available jobs to the number of
individuals who were going to be cut off, and the number being
cut off because they weren't working 20 hours a week exceeded
the number of available jobs collected by the governor. And of
course, available jobs doesn't mean jobs that these individuals
are qualified for.
So it is shifting an enormous burden to the charitable
sector to step in and help feed these individuals and it
undermines their ability to work when they spend most of their
time looking for how to feed themselves. It was a very
unfortunate decision.
Ms. Adams. Yes, thank you very much. I served 20 years in
the North Carolina House, and we haven't made the best
decisions all the time.
Ms. Hatcher. Congresswoman Adams, I wanted to call out to
Congressman Evans' work with one of our members in Philadelphia
on this issue with ex-offenders and finding positions, jobs for
them through Uplift Solutions. There are some public-private
partnerships that can be impactful.
Ms. Adams. Thank you very much.
As a follow up, Ms. Dean, we have discussed in previous
hearings that many states do not offer a standard medical
expense deduction for seniors and the disabled to document
their true cost of living when they apply or recertify for SNAP
benefits. In states that do offer standard medical deductions,
have you seen more seniors claiming the deduction in order to
increase their monthly SNAP benefits?
Ms. Dean. We have, and your bill offers a terrific policy
idea to make it easier for states to offer the medical expense
deduction, which basically targets more food assistance to
seniors and people with disabilities with significant out of
pocket medical expenses. It is an under-utilized feature of the
program, and sets up a dynamic between paying for drugs and
other health needs and food. SNAP has a feature to help seniors
and people with disabilities, and we want to see more states
take advantage of it.
Ms. Adams. Okay, and so you have documented through the
organization that these benefits have consistently not kept
pace with rising food costs, so how would switching to the Low
Cost Food Plan permit SNAP recipients to more adequately put
food on the table?
Ms. Dean. Well the Low Cost Food Plan is about 30 percent
higher than the USDA's estimate of a Thrifty Food Plan, so it
would provide additional food benefits. Just to be clear, SNAP
benefits do keep pace with food inflation, but what USDA hasn't
been able to do is reevaluate the Thrifty Food Plan in light of
our changing understanding of what makes a healthy diet. Access
to fresh produce, shifting away from extreme assumptions about
a SNAP household's getting their protein from milk and dried
beans as opposed to chicken and cheese. It is just out of sync
with what we are all buying and what the cost of a basic
healthy diet is.
Ms. Adams. Thanks very much. Mr. Chairman, I am out of
time.
The Chairman. I thank the gentlelady. I am now pleased to
recognize the gentleman from Kansas, Mr. Marshall, for 5
minutes of questioning.
Mr. Marshall. Thank you so much.
My first question is for Mr. Sykes. I am always interested
in efficiency. Whenever I am responsible for other people's
money, I try to take even better care of it, so talk a little
bit about efficiency. I read somewhere 93 percent is a number.
Has that been a pretty good number the past 20 years, or where
have we been up and down----
Mr. Sykes. I presume you are talking about payment accuracy
at this point?
Mr. Marshall. No, efficiency.
Mr. Sykes. I am sure that goes to----
Mr. Marshall. If we give you a dollar, how much of it is
actually being spent on food by the person?
Mr. Sykes. Well, virtually all of it is being spent on food
by the person because, other than small limitations on what can
be purchased, the interesting thing is we have reached over 83
percent of eligible households, which is an extraordinarily
high percentage of eligibles. And even more importantly, about
90+ percent of all possible benefits are being issued, which
means that some people that may be left out of the program----
Mr. Marshall. No, I guess that's a different efficiency.
The efficiency I am wondering is if we are giving a dollar to
the SNAP program, how much of that is being spent on food?
Ms. Dean. Ninety-three percent, you got it right. The rest
is on admin and programs like employment and training.
Mr. Marshall. And what has that been like the past 20
years? Is that a good number?
Ms. Dean. Yes, it has eked up just a bit, but that is about
the level. It has been around 93, 95 percent for a while.
Mr. Marshall. Okay. My next question is for Ms. Dean. Ms.
Dean, I am an obstetrician. WIC has been a very, very
successful program for my patients, pregnant moms and
breastfeeding moms, and the great thing about WIC, when my
patients touch those people, the whole family touches them, and
they are in the same building where maybe they get flu shots
and other public healthcare needs. Explain to me how WIC works
with SNAP and opportunities for working with each other.
Ms. Dean. I love the WIC program too. It is an incredible
evidence-based program that hits infants and toddlers right at
the moment that they most need it.
WIC is a prescription benefit, though, that provides
supplemental foods and assumes that the household is also
getting SNAP or has enough income to be able to buy a basic
diet. Whereas SNAP is available to purchase any or all foods,
WIC is prescriptive and limited, that is a big difference.
I do think, and I really hope that the Committee takes a
look at ensuring that all SNAP households with a pregnant or
post-partum mom, infants and toddlers also take advantage of
WIC. That is pretty true for infants, but it is not true of
toddlers through the age of 4, and I think that would be an
enormous and important benefit boost at that critical stage of
life. And even just measuring and ranking states could improve
performance there.
Mr. Marshall. Okay, I yield back.
The Chairman. The gentleman yields back. At 3:02, votes
have been called on the House floor. I apologize. The Committee
will stand in recess until they have been concluded. I
encourage all Members to return promptly so that we can
reconvene at that time after the conclusion of votes.
[Recess.]
The Chairman. This Committee on Agriculture Nutrition
Subcommittee will reconvene. My apologies for the recess. Votes
have a way of getting in the way of things around here.
I am pleased to recognize my good friend and colleague from
Pennsylvania, Mr. Evans, for 5 minutes of questioning.
Mr. Evans. Thank you, Mr. Chairman.
Ms. Dean, can you speak to the data that does not support
the view that the social safety net is discouraging labor for
SNAP?
Ms. Dean. I am sorry?
Mr. Evans. The question is can you speak to the data that
does not support the view that the social safety net is
discouraging labor for SNAP? In other words, you----
Ms. Dean. You mean that participation in public benefits
isn't discouraging labor force participation?
Mr. Evans. Right.
Ms. Dean. Yes, there have been a number of studies that
looked at whether participation in benefits such as Medicaid,
SNAP, other programs discourages engagement in labor force
participation.
Mr. Evans. Right.
Ms. Dean. And by and large, there is really no evidence to
suggest that it does dampen people's interest in working. There
is an enormous amount of labor force participation amongst
people in poverty. That is, in fact, how they get by. There is
effectively no cash assistance available. Work is the way for
everyone in this country, including people in poverty.
Mr. Evans. Mr. Arthur, I heard you in your testimony talk
about food banks and SNAP in terms of really addressing food
insecurity, which is ultimately an objective that we are
working towards. Maybe if you had your crystal ball, where do
you think we are relative to addressing food insecurity, even
with that strategy of food banks and the policy around SNAP.
Can you speak to that a little bit?
Mr. Arthur. I would say right now I am very optimistic if
we can prevent damage to the programs. In our work in central
Pennsylvania, we actually set a bold goal of actually closing
the meal gap by 2025, and we are well along in that work,
meaning make sure that everyone in need has three healthy meals
a day, and our numbers tell us we are getting close to 70
percent of closing that gap. But that gap implies that the
nutrition programs are going to remain in place, and we are
taking care of the folks who either are still slipping through
or need a little extra help. That dynamic, that equation can
change radically if there is any harm done to SNAP or other
nutrition programs.
The work that we do with our partners, it is very
collaborative, and across the board there is significant work
being done to not only feed people, but to help them be more
sustainable, help themselves be more sustainable. Do no harm
would be our strong recommendation to this Committee for SNAP.
Do no harm.
I would also, Representative Evans, like to take a moment.
I need to thank some folks really quick. We are 80 percent
privately funded, as I put in our written testimony. That 80
percent comes from over 300 food donors, commercial entities,
farms, et cetera, that produce that 50 million pounds that I
mentioned in my testimony. And we have over 25,000 monetary
donors that make up the 80 percent of our funding that is from
private donation. We are part of that public-private
partnership that works together to make sure the safety net is
sealed, that we are reaching everybody. And I have several
folks at this table that are donors or represent donors.
I, actually, am optimistic if we can hold the line in SNAP
and maybe make some improvements that we can continue to close
the meal gap and keep working on actually ending hunger, which
as we all know, is related to jobs.
Mr. Evans. Last question to Ms. Hatcher. Can you talk a
little bit about your retail partnership, because obviously
SNAP has an economic impact on retailers. Can you talk a little
bit about that?
Ms. Hatcher. Thank you, Congressman Evans.
Absolutely SNAP has an economic impact. What we see too now
is that our customers are our customers, and more than 50
percent of our customers are using multiple tender, so multiple
forms of payment in one transaction at the store. A person that
is using SNAP benefits is also using cash or a debit card or
another form of payment, so it truly is a supplement, which is
why it is so important that this electronic system stay in
place and that we maintain the efficiency that we have in the
program right now.
Mr. Evans. Thank you, Mr. Chairman. I yield back the
balance of my time.
The Chairman. The gentleman yields back. I am now pleased
to recognize the gentleman from New York, Mr. Faso, for 5
minutes.
Mr. Faso. Thank you, Mr. Chairman. I appreciate the
witnesses coming here today, and particularly I want to
recognize my friend, Rus Sykes, who has been working in this
field for many years, and he and I have collaborated on a
number of things.
One of the things that I raised with Mr. Sykes and Ms. Dean
before we had the vote was there has been some discussion in
the Committee today about the work requirements. And I was
wondering if you could just provide us with some data as to how
this is working. You mentioned there are some 30+ states that
are imposing work requirements now. Is that through waivers
where they get that permission, or is that just the statutory
authorization?
Ms. Dean. Every state has a SNAP employment and training
program, and they have a lot of flexibility on whether they
compel participation in the program and sanction food
assistance for individuals who refuse to participate or fail to
participate. Other states take a different approach, which
would be perhaps a more workforce oriented. They offer skills
based training or programs that could help remove barriers.
Mr. Costa represents where there is an incredible program
in Fresno that he can speak to you in great detail that does
barrier removal for individuals with child care issues, felony
convictions, all of those. There is a lot of diversity in
approaches. What Rus and I were talking about with you is we
would like to see states have the ability to ramp this up and
work with what is effective, and there are some terrific demos
in place that were authorized by the last farm bill that are
going to teach us a lot about what will work.
Mr. Sykes. Yes, I agree with everything Stacy said. One of
the things, we do gold standard research in the pilot programs
that we implemented in the last farm bill. We are not going to
really have any final data on them for about 2 or 3 more years
that are being studied by MDRC and Mathematica. But I am sure
there are replicable findings in them already, and they are a
mixture of voluntary and mandatory programs. They involve, a
number of them, employers which is really key, because in this
modern era, if the employers aren't involved, then they want
people with the soft skills to come to work, but if they are
not involved in developing the actual job curricula that has to
do with what they need as far as an employer, I don't think
they will succeed as much.
In fairness, USDA has begun to take the work programs far
more seriously. They had a very small staff devoted to it for
years. Now they have a person responsible for work programs in
every region and a core staff here nationally. I expect to see
much more thoughtful application of these programs in the
future, and hopefully more success that is measureable as far
as getting people off the rolls, not because we sanction them
for failing, as we should, but because we help them get jobs
that make them no longer eligible and more sufficient.
Mr. Faso. Well thank you, and I am wondering if there are
any particular states or localities that have programs, you
mentioned Fresno, where they seem to be doing a particularly
good job of coordinating work and getting people actually into
employment?
Mr. Sykes. Yes, one of the ones that is constantly touted,
and rightfully so, is the State of Washington. In fact, our
APHSA board chair does much of the work operating that program
in the State of Washington. They have a huge employer pipeline
network. They are really focusing on SNAP E&T and they are also
trying to intertwine that work with their WIOA programs and
with the TANF program, and I know Stacy, you have made examples
of others as well.
Ms. Dean. Yes, I will throw in Iowa and Connecticut as
examples of states that work with the community college system
to promote technical and skills based training.
Mr. Faso. Good. And Mr. Sykes, tell me a little parochially
here about New York.
Mr. Sykes. Well, I mean, New York has been the largest user
of SNAP E&T funds for many years. SNAP E&T funds come in two
forms. There is 100 percent share Federal money, which is
capped at $90 million or thereabouts, and then there is a more
open-ended stream of 50/50 match money where the state can put
up its own money and draw down Federal money. And New York has
done a fairly good job, I would say. One of the ones that looks
very well when you think about how seriously they take the
enterprise, and you know, my ex-colleague and very good friend
who is the Executive Deputy at OTDA now, Barbara Gwinn, is
someone you should really speak to about that.
One of the things we think is we would like to see the
resources expanded a bit for employment and training,
particularly on the 100 percent side and I think that would
help more states take it more seriously. USDA needs to be a
little more relaxed about what would count as 50/50 match
requirements. It is often very rigid as to what you can use as
state match and what kind of services you can offer through the
program.
Mr. Faso. Thank you very much. Mr. Chairman, I yield back.
The Chairman. The gentleman yields back. I am pleased to
recognize the gentleman from California, Mr. Panetta, for 5
minutes of questioning.
Mr. Panetta. Thank you, Mr. Chairman. Ladies and gentlemen,
thank you very much for being here. Your preparation, your
participation, and your time, I appreciate that.
Let's talk about fresh fruits and vegetables, something I
like to bring up quite often based on where I hail from, the
Salinas Valley, otherwise known as my colleagues are going to
get sick of me saying, the salad bowl of the world.
It was mentioned earlier by my colleague from Arkansas, Mr.
Crawford, talking about the challenges of getting people on
SNAP to consume more fruits and vegetables. And one of the
responses was a mobile van in rural areas. Any other ideas that
you can come up with to help ensure that people in rural areas
on the SNAP program can have more opportunities to consume
these items? I mean, we have a number of field workers who are
out there picking fruits and vegetables every day, hours upon
hours a day, yet they go home and they don't eat fruits and
vegetables, and that is an issue. And so I just wondered if
there are any other ideas that you had?
Ms. Dean. Let me just jump in on that quickly. First, I
would like to say, my first job was working for your father at
OMB, it was a great pleasure, so shout out for him.
Mr. Panetta. Thank you.
Ms. Dean. The main issue is whether the individuals have
the resources to purchase fresh fruits and vegetables, which it
may not be that they are expensive in the salad bowl of the
country, but in other parts of the country, they can be quite
expensive and out of reach. And that is why some of us today
talked about improving the adequacy of the benefits so that
those are more affordable for folks.
It is a separate issue about whether retailers have the
stock available, and it is a serious concern as to whether,
even with the resources, are they there for participants. But
most participants do shop at major grocery stores or
superstores, and would have access to them.
Mr. Sykes. We also have seen expansion of some Healthy
Incentives Pilot Programs that help people purchase fruits and
vegetables, and increasingly, farmers' markets, more and more
the EBT programs--the portable ones have penetrated that venue,
particularly in rural areas, at least that makes things a bit
more accessible.
Mr. Panetta. Great, great.
Ms. Hatcher. Congressman, just a couple of thoughts on the
supermarket side. Certainly there is the access piece,
availability of dollars to purchase. Some of the things that
are ongoing right now in terms of teaching folks, exposing them
to new fruits and vegetables, teaching them how to cook them.
We are seeing a lot more with dieticians in store. We now have
95 percent of our stores with dieticians. We are seeing a lot
more cooking demos and chefs in store, and you are really going
to start to see behavior, folks becoming more comfortable with
those different items.
And then you are talking about the other point, which is
the delivery point in rural areas of how do we get those items
directly to the customer, and we are seeing a lot more in
addition to the vans, the folks who are doing more online
shopping now too. We are seeing a lot of different
possibilities to make sure that, rather than if a community
can't support a full scale supermarket, is there an area, a
library, a community center, or a church where they can drop
off that fresh produce on a regular basis at a specific time.
The mobile vans, like I mentioned, that we are seeing, there
are a lot of possibilities, going forward. But there are
certain segments; first, we need to teach folks, to make them
available, make it affordable, but also then teach them how to
cook these items and how to make them delicious.
Mr. Panetta. Understood.
Mr. Protas. Just a quick note about the incentive programs.
We have seen really positive evidence about changes in behavior
from the FINI grants, the Senior Farmers' Market Nutrition
Program. There are some exciting pilots for Veteran Farmers
Market Nutrition Programs. Maybe there is a possibility of a
pilot program that would serve rural needs. We need you to look
more at the opportunities around those investments.
Mr. Arthur. Representative, you mentioned the rural areas,
and we serve rural areas, but I look over to the great work
that has been done in the Philadelphia area which provides a
great example to rural areas. We are learning from The Food
Trust. We are learning from Philabundance, which is a food
bank, and they are fair and square market. And we are also
learning from Brown's ShopRites over in the Philadelphia
market. Some of that work translates into rural areas, and
particularly around smaller stores, smaller format stores. Many
corner store markets in Philadelphia now have fresh fruits and
vegetables because of the great work by The Food Trust and the
Fresh Food Financing Initiative.
Mr. Panetta. Outstanding. Thank you. I yield back my time.
The Chairman. I thank the gentleman. The gentleman from
California, Mr. Costa, is not a Member of the Subcommittee, but
has joined us today. I have consulted with the Ranking Member,
and we are pleased to welcome him to join in the questioning of
witnesses. Mr. Costa, you are recognized for 5 minutes of
questioning.
Mr. Costa. Thank you very much, Mr. Chairman and Members of
the Subcommittee. This is an important issue. We have had many
hearings on it, of course. But the nutrition programs are a key
component of the farm bill, as we all know, and obviously, a
lot of discussion not only today, but in previous hearings has
been around the notion of how we make it more effective.
Obviously when we looked at the trim lines between 2008 that
were stated and present, and the amount of beneficiaries
obviously had a lot to do with the way the Great Recession
impacted so many communities throughout our country. And
obviously there was a great deal of need.
But we also, of course, want to provide opportunities for
people to gain their independence, and there has been a lot
that has been discussed about able-bodied adults without
dependents and there has been a lot of discussion on how the
safety net works during economically tough times.
I would like to focus my comments and maybe Stacy Dean, you
are the person to talk to, because the notion of training
programs and getting people back to an opportunity to gain full
employment and be able to be on their own two feet is discussed
a lot about here. But these training programs that have taken
place around the country have varying degrees of success, and
they cost money. We need to be aware of that, and if this farm
bill were willing to expand those training programs, we have to
be willing to put our money where our mouth is to make them
effective.
The Bridge Academy is one of those programs, and I have
been working with Pete Weber and a lot of other folks, and we
have a very significant success rate in terms of those that
have been able to benefit from it.
Ms. Dean, you have gotten a chance to come out there it was
selected as one of the ten pilot programs, the pathway to self
reliance all told for more than 80 percent of those enrolled
have gained employment. More than 80 percent of them have
retained their employment after a year, and about 30 percent
have achieved full self reliance within 18 months. And this is
has affected a combination of 1,200 families and 2,300 families
between 2016 and 2018. This deals with a whole lot of efforts
that include financial literacy, English classes, and digital
training.
How do we best expand upon this, Ms. Dean, since you had a
chance to get out there? The ABC approach, which is first, to
get a job; second, to get a better job; and then third, to get
a career?
Ms. Dean. Thank you, Mr. Costa. You stepped out the three
or four times I mentioned and highlighted the Bridge Academy,
because it is a terrific program.
Mr. Costa. But I came back.
Ms. Dean. You did, and as expected, you asked about this
terrific example.
So the number one way to do this, of course, we can't,
which is to replicate the Pete Weber's of the world to other
parts of the country, but some of the things that they do are
important and are potentials for other places.
First is they recruit incredibly carefully the clients that
they are going to work with. They can talk to 100 to 200 people
before they identify a family that is the right fit for them
who will match what they are offering, as opposed to trying to
push a round peg into a square hole. They spend 18 months with
these families. They work holistically with the whole family.
If mom is afraid to go to work because she doesn't think her
child is going to school and needs help, they try to address,
for example, both issues. They also will not place someone in a
job that doesn't have career advancement possibilities. They
have incredibly strict parameters around who they will work
with, and they have an unbelievable network in the community so
they can leverage services.
The two biggest issues that they say that their
participants face are transportation and childcare. Without
those, they have difficulty getting to work reliably and so
that is why Bridges tries to tackle those pieces.
SNAP's Employment and Training Program is actually
incredibly flexible in that it allows states, in fact, requires
states to provide transportation and childcare for households--
--
Mr. Costa. We should continue that and try to expand upon
it.
Ms. Dean. Absolutely. Absolutely, and also the flexibility
in the types of services, and not just to target the head of
household, but to be allowed to provide case management and
meet broader family needs that may be impeding the ability to
get back to employment.
Mr. Costa. Well I thank you. I thank you, Mr. Chairman, and
the Members of the Subcommittee for allowing me to participate
with you this afternoon, and I can tell you, having visited and
been a part of this effort for several years now, 4 years, it
works. And if you have the kind of resources and people who
want to make a difference, you can, in fact, make this
successful. We ought to build upon this as we are looking at
this year's farm bill so that we can have these kind of
successes around the country.
Thank you.
The Chairman. The gentleman's time has expired. I am
pleased to recognize Mr. Soto from Florida for 5 minutes of
questioning.
Mr. Soto. Thank you, Mr. Chairman.
My first question circles around whether SNAP benefits are
currently adequate or not. We see it is an average of $1.40 per
meal with a maximum of $1.90, so it would be great to hear from
all of you of whether you believe that is adequate to provide
healthy meals, and if not, what should it be?
Mr. Sykes. Well let me say first that the Thrifty Food Plan
is quite old, and was based on a study of food price costs over
40 years ago. One could say perhaps at the time it was
adequate, but it also took into account the fact that the kinds
of things you could purchase took long preparation hours and
extremely long times, beans and many other things that would be
healthy, and that is not really possible, quite often, today.
The Low Cost Food Plan, which is the next step up, which
has some more logic to it, but would be to move to it
completely would be an extraordinarily expensive issue. One of
the things that we have talked about is we really ought to
learn exactly what having a different basis for benefits would
do as far as lowering food insecurity even further, and so we
are recommending that we do a fairly lengthy broad-based pilot
that would substitute the Low Cost Food Plan for the Thrifty
Food Plan, study it, study what it does for health issues, low-
food security, and then if it is, begin to think about how to
replicate it on a broader scale.
Mr. Protas. I would just say the adequacy of the Thrifty
Food Plan is an important topic. In my written testimony, I
shared some stories from people who deal with food insecurity
and hunger, and I mentioned in my opening statement that it is
something that we hear routinely that people lament that their
SNAP benefits don't last until the end of the month and they
have to make very desperate choices. I am looking at Dylan's
story, which was part of the written testimony, who is a 14
year old who talks about going to bed hungry on a number of
occasions, and his mom sacrificing food in order to feed him.
That says it is not only the SNAP benefits, but the other
available resources for that household don't go far enough, so
there is clearly an issue and something that needs to be looked
at seriously.
Ms. Hatcher. Congressman, we certainly see it in shopping
patterns in terms of what SNAP customers buy at the beginning
of the month versus the middle of the month and towards the end
of the month. They are definitely at the end of the month
trying to find low-cost, high calorie items. We definitely see
it on that end.
Mr. Arthur. If I might respond also, the comment on the end
of the month brings us into perspective. In physical food
assistance, we are working with our member agencies, our
pantries to adopt more of a choice model and to have that align
with the MyPlate, the USDA MyPlate, and we believe that the
benefits for SNAP should align with that as well, and that is a
healthy diet format. Since so much work has gone into that, why
not align the benefit to actually achieve that type of healthy
eating? Our perspective is that you need a little more money to
eat healthy.
Mr. Sykes. Just to add one other thing. I mean,
realistically or not, the Thrifty Food Plan allotment, whatever
it winds up to be for the particular household side after you
do the equations of eligibility, is not the only money that is
being meant to be spent. I mean, households are meant to be
spending 30 percent of their own income after certain
deductions. That is not to say that we shouldn't look at the
Low Cost Food Plan, we definitely should and test it, for all
the reasons I said earlier.
Mr. Soto. Would anybody be willing to take a stab at what
it should be?
Mr. Sykes. More.
Mr. Soto. We hear that a lot around here. I yield back, Mr.
Chairman.
Mr. Arrington [presiding.] Thank you, Mr. Soto. I would now
yield 5 minutes to Mr. Lawson from Florida.
Mr. Lawson. Thank you very much, Mr. Chairman. I want to
thank you all for waiting on us here.
Each of you know that states are granted the flexibility in
administering SNAP and ensuring that vulnerable individuals are
receiving basic food assistance. In the State of Florida, for
instance, our Governor has elected not to allow waivers for the
work required for ABAWDs. But this decision by the Governor
prevents mayors and local elected officials from asking for an
exemption in the areas that have high unemployment or have
insufficient employment opportunity. Not only does Florida not
allow localized and informed geographic decisions by elected
officials, but it has brought to my attention that the
advocates in Florida across this country are having real
difficulty in getting data on the characteristics of who ABAWDs
are. A permanent group in Tallahassee, for instance, has been
paying the state thousands of dollars to get demographics about
ABAWDs. Sometimes there are not a lot of organizations that can
afford to do that. We don't know whether these individuals are
veterans, if they are struggling with mental health issues,
some form of disability. If they are waiting on disability
decisions, if they are illiterate or don't have access to
adequate employment. This is a real issue.
With that in mind, my question is leading up to the farm
bill. How can we expect to have an informed decision on the
changes that would affect ABAWDs without any sense of what
issues ABAWDs are facing and who these individuals are? To come
to a conclusion, how could this Committee benefit from, let's
say, a requirement in the upcoming farm bill that ensures
states collect and share adequate data on ABAWDs to help us
make informed decisions? And I know I don't have much time, but
anyone who wishes to answer that, please go ahead.
Ms. Dean. Thank you, Congressman. I will take a quick crack
at that. You are right that it is a very complex demographic.
We don't know a lot about them, you are right. Some are
veterans, some are homeless, some are individuals waiting for a
disability determination. Under the law, someone who has some
kind of impairment ought to be exempt from the rule, but many
states send a very complicated legalese letter to the
individual and put the entire burden of them to self-identify
as being exempt under a rule that most of us here would have
difficulty understanding if it was the first time we were
learning about it.
A better understanding of who this whole group is and its
impacts would be hugely beneficial to the Committee, but in the
end, these are very, very poor folks who just simply can't
afford to feed themselves, and SNAP has a rule that gets in the
way of offering food assistance to these individuals. Their
poverty and their food insecurity is one of the most important
things to know about them so that we can think about how SNAP
can address their needs.
Mr. Sykes. Just to add one more issue to that, a reason we
really need to have good employment programs for people, some
of the ABAWDs happen to be noncustodial parents as well of
children who may have a mother on TANF or other things of that
nature, and so rather than viewing the ABAWD requirement, the 3
and 36 month time limit rule as trying to get them off the
rolls, these are the very people we really need to engage in
honest work programs and get them income so they can be
participating not only in the workforce, but participating in
paying support for their children to the degree that they are
not custodial parents.
So one thing we have suggested about the ABAWDs is the 3
month limit is awfully quick, and it is really hard for states
to find adequate slots that meet the rules of ABAWDs. We have
suggested--one thing that we have done is if you are going to
maintain a time limit at all, that it should be expanded to 6
or 9 months, and it should be aligned with the individual's
certification period, so states have more ability to work with
someone on their individual needs for employment.
Mr. Arrington. Thank you, Mr. Lawson. The gentleman from
Arizona, Mr. O'Halleran, is not a Member of the Subcommittee
but has joined us today. I have consulted with the Ranking
Member and we are pleased to welcome him to join in the
questioning of the witnesses, so I will yield 5 minutes.
Mr. O'Halleran. Thank you, Mr. Chairman and Members of the
Committee, for this opportunity.
I would like to talk a little bit about my district first.
I represent 12 Native American Tribes in Arizona. The district
is larger than Pennsylvania. The Navajo Nation alone is larger
than West Virginia. The Native American communities suffer from
a much higher rate of food insecurity than the general
population. On the Navajo Nation, the rate of food insecurity
is five times the national average. I would like you to keep in
mind the fact that we have a tremendous amount of elderly,
cultural issues, tremendous amount of veterans based on per
capita, a much higher rate of veterans per family than anywhere
else in the United States. And because of the work requirement,
in an area that has very little economic development potential
even, high unemployment, 50 percent, 80+ percent in some of
these areas. I just would like to know what opportunities do
you see, and I would like to direct this to Mr. Protas. What
opportunities do you see in the farm bill to better address the
nutritional needs of Native Americans seeking work?
Mr. Protas. Thank you for the question, Congressman, and I
know the district well. I grew up in Phoenix and spent a very
enjoyable summer in Camp Verde working for the Park Service. I
also know that the food insecurity rates in Indian Country are
staggering, and particularly on the Navajo Nation where it is
upwards of 75 percent of the population.
You have a very complicated situation where you have high
food insecurity and high unemployment, also in an area that is
an agricultural producing area, so you have food insecurity in
food deserts and people who can't access that food. And so this
is an issue that impacts a lot of folks in Indian Country where
there are not the proper levels of economic investment and
business development for Native producers to really bring those
products to market, and also to contribute to the local food
economies.
Sadly in the recent news that we saw about the Trump
budget, there were proposals to cut funding for programs that
serve rural areas, including in Indian Country. Cuts and
elimination of programs, including rural development agencies,
rural business--cooperative grant programs, Rural Utilities
Services, and rental assistance grants.
So first off, those kind of proposals would have a
disastrous impact on rural communities in Indian Country.
Instead, what could be done is to have USDA look at targeted
investments in the agricultural systems to really lift up
Tribal producers and to make sure that that food is accessible
in Tribal contacts to be able to provide within the FDPIR food
package, and also to create jobs, because as you mentioned, the
unemployment rates are staggering in areas like the Navajo
Nation. Targeted investments are important to be able to
increase that employment to make people no longer dependent on
food assistance, and also to make that food available in Indian
Country.
Mr. O'Halleran. Thank you.
We have 4,000 miles just in the Navajo Reservation of dirt
roadways. It takes some students 4 hours round trip to get to
school. Obviously, and others that are unemployed can't afford
much gasoline, and yet I had heard you talk about superstores
and not being able to have enough money towards the end of the
month, and anybody can comment on this, but what does the rest
of the panel see as the potential to help these people out,
both in Indian Country and rural Arizona and rural America?
Because obviously what was just said highlights the fact that
it is an area that does not necessarily fit the urban
environment/suburban environment process where there is
poverty, but poverty located near resources. Please.
Ms. Dean. I think you highlight the challenges of rural
poverty quite well, and I do hope that part of the farm bill is
thinking about rural development, economic investment in rural
areas, as well as creating new opportunities for individuals
who live there.
One of the things we see looking at unemployment rates in
rural areas is they might be relatively low, but they, in fact,
in no way reflect the fact that jobs have just left the area.
The unemployment rate measures folks who are actively seeking
work, but if you live in a community where jobs left long ago,
you have just dropped out of the labor market. It doesn't mean
work is there, and it often goes unrecognized the difficulty of
rural America.
Mr. O'Halleran. Thank you, Mr. Chairman.
Mr. Arrington. The gentleman's time has expired. I now
yield to the gentlelady, and my neighbor in New Mexico, Ms.
Lujan Grisham, for 5 minutes.
Ms. Lujan Grisham. Thank you, Mr. Chairman, and I really
appreciate the comments that my colleague from Arizona has made
about the rural and frontier nature of our states, and
particularly highlighting what it looks like in Indian Country.
I might just add that there are still places in the Navajo
Nation where there is no running water or electricity. The
challenges are incredible, and these safety net programs are
incredibly valuable and important. And in this Committee, we
spend a lot of time, not today, but a lot of time talking about
fraud, we are talking about work requirements, and really
looking at constraining the program when, in my opinion, if we
were to look carefully, we are going to find that we really
have the opposite, that people cannot make it on these
benefits; that we are penalizing those poorest and most at risk
in our country.
In my district and in my state, unfortunately since my time
on the Agriculture Committee, we have been one of the hungriest
states in the nation with some of the hungriest children in the
nation. And I am going to focus somewhere else, even though we
also have the highest unemployment and in the areas that you
talked about in rural areas where there really aren't new jobs
and people leave the job market, and there is a sense that
because they had a job there must be another one is also not
accurate.
But I have another issue that I am really interested in
about how we work with USDA and through the farm bill to ensure
that states are held accountable to make sure that the benefits
that we do have available make their way to recipients. Because
there is a perverse incentive to do the opposite, and you may
or may not know that New Mexico is under Federal investigation
by USDA, which was no easy trick. After 7 years of having
consent decrees and finally a Federal judge last year saying we
need a special master and we need to pay attention, because, in
fact, we now know that the Human Services Department in the
State of New Mexico falsifies SNAP records; this is what they
do. They add assets so that they don't meet the expedited
requirement, because they don't want to get dinged when there
are insufficient state employees or insufficient attention to
meet those basic rules. There is a perverse incentive actually
to not provide SNAP benefits. And if you can imagine, homeless
veterans, families with children, that they aren't getting any
SNAP benefits because the state precludes them falsely from
having access, more than 300 in just the recent review in just
one community. And it took me well over 2 years to get USDA to
even agree to do the investigation, even though they were quite
clear, and I am quoting them when they said, ``We have one of
the most fouled up SNAP programs in the country.''
What can we do, both in terms of the farm bill, and in USDA
accountability that the assumption is the beneficiaries are
somehow the problem out there. Certainly, I have no tolerance
for a potential beneficiary who is doing it wrong or is trying
to cheat, but in fact, you can have whole Administrations that
are preventing these very necessary benefits from getting to
the very families who need them and deserve them. What do you
think?
Ms. Dean. First, I really want to thank you for how dogged
you have been in pursuing the appropriate administration of
SNAP in your state. Your constituents owe you a great debt.
For most states, timeliness is a core to the ethos of the
program. Benefits must go out to emergency applications within
7 days or 30 for a regular application. And in fact, in recent
years most states have pushed to do same day service, at least
for some share of their households. I would say what you are
raising as a concern, well, there is a much broader concern,
but narrowly that the timeliness metric, that we don't have
integrity there, that we can't count on it, and when we see it
falter, the agency isn't swift to swoop in and do something.
Which is not necessarily the case with respect to payment
accuracy.
The Committee could take steps to make the timeliness
measure more consistent and more scientific, and to bring to
bear the same weight of the agency on that that they do with
payment accuracy. In general, it really is an important thing
to states, but there are times when they are just so far out of
compliance that it becomes the norm that benefits can take 40,
60, 90 days to be issued to needy people, and that is
completely unacceptable. It should not ever be tolerated.
Ms. Lujan Grisham. Right, and maybe with my time almost
running out, Mr. Chairman, the thing to think about would be
that we have states tell you that they are going to be behind
and they are worried about their constituents, that there could
be staff assigned from USDA, and that is something that we
could put in the farm bill. You do a carrot, and then if it is
purposeful, I am happy with a really big stick.
Thank you very much.
Mr. Arrington. Thank you, Ms. Lujan Grisham. I will yield 5
minutes to myself. I don't know that I will need all 5 minutes.
I am sorry for coming in and out, so if I have repeated a
question or a conversation, especially being so gracious with
your time, I apologize in advance.
I did hear, Mr. Protas, your opening remarks where you
quoted Leviticus, I believe, and that is a great reflection on
the character of God and the compassion of God's heart, and how
we ought to reflect that compassion in our lives, but the
scripture tells us in 2 Thessalonians Chapter 3:10, it says
``For even when we were with you, we gave you this rule. If a
man will not work, he shall not eat.'' And then he goes on to
say ``We hear that some among you are idle.'' I think that
every American, Republican or Democrat, wants to help the
neediest among us, and it is a reasonable expectation that we
have work requirements. I think that gives more credibility,
quite frankly, to SNAP.
And so my question to you, and again, if I have missed the
conversation, I apologize, but tell me what is a reasonable and
responsible work requirement as part of the SNAP program? I
will tell you that when I travel the 29 counties in west Texas
in my district, this comes up often, and I need to be able to
explain to them what my colleagues and my stakeholder friends
think about a work requirement, and what is reasonable and
responsible. I will ask anybody to comment on that.
Mr. Sykes. Well I agree that work requirements are
important. I view them very similarly to a social contract.
People who are able-bodied and able to work, whether they be
with or without dependents, we ought to do everything we can to
help them reach a higher level of self-sufficiency, because we
do an excellent job in this country, even with people when they
have low wages of supplementing those wages.
But having said that, I mean, the work rules for ABAWDs and
the work rules in general, the ABAWD work rule, quite candidly,
is more so a time limit than it is a work rule, and it doesn't
take into account the fact that it often takes longer to work
with people who don't have labor force participation. What I
would say is that, if a state or a locality has done everything
in their power to work with the client and to try to help them
find a suitable employment training program that meets the
ABAWD standard, for instance, but unable to do that, then it is
wrong to penalize the client in my mind. If the client
willfully decides that they are just not interested, I don't
disagree with you that, quite candidly, they have set their own
situation in motion. But, what doesn't happen too often is
these programs aren't real. They aren't really focused on
getting people jobs. They aren't focused on outcomes. They are
often focused on seat time, and it is quite easy to just
ultimately say to the recipient, well, you didn't meet the work
rule, but we didn't do anything to help you meet it.
Mr. Arrington. Does anybody on the panel believe we ought
to enhance the work requirement? That we ought to have a
stricter work requirement for able-bodied adults?
Ms. Dean. No, I do not.
Mr. Arrington. Nobody on the panel?
Ms. Dean. I just want to make sure we are very clear,
because there is a distinction here. There is the 3 month time
limit on childless, unemployed adults. States separately have
very sweeping authority to impose work requirements on many
other adults in the program, and many, many do. It is not as if
nothing is going on, and I often fear that there is an enormous
misunderstanding about that, the level of intensity of the work
programs.
Mr. Arrington. Can I----
Mr. Arthur. Mr. Chairman, if I might just take a broader
shot at that.
There is----
Mr. Arrington. Please make it short, because I have a
little time and I want to get one more question in.
Mr. Arthur. I just wanted to state that there is an
implicit assumption in a lot of this discussion that poor
people and taxpayers are diametrically opposed, that taxpayers
are funding these poor folks. In our society, the level of
taxes at the Federal, state, and local level, income excess tax
fees, the poor are heavy taxpayers. They are just heavy
taxpayers, and we need to keep that in mind as we have these
discussions that poor folks pay a lot of taxes.
Mr. Arrington. I have just a few seconds here.
I struggle with the issue of what kind of foods somebody
ought to be able to purchase with tax funded SNAP funds, and
would you guys allow me to go over time just for a few seconds
here just to finish this question?
So I really do. I honestly have tension here. I don't want
the purchase of foods that may, in fact, cause in the long-term
taxpayers to pay out on the back-end for healthcare issues. But
I don't want the Federal Government to be involved in defining
what is healthy food, and I certainly don't want a nanny state.
You could probably predict from my line of questioning. How
does one incentivize in the SNAP program good choices, healthy
choices, as opposed to the Federal Government giving some top
down edict on what is and what isn't healthy?
Ms. Hatcher. Maybe I should start with that one. We are
seeing a lot of new incentives in terms of healthy foods. One
of those is happening at store level. We now have 95 percent of
our stores with dieticians in the store, either in the actual
store location or corporate. We are seeing changes in
behaviors, starting to teach customers how to cook some of
these healthy foods, how to identify things that they may not
have tried before and how to cook them. I know that we heard
from a couple others on the panel talking about these projects
that are going on to do that, and in addition to that, we have
seen some of these FINI grants with the Double Up Bucks
Program, the AARP Program that I think was in Congresswoman
Lujan Grisham's district, to see behaviors when you do show
folks how to use these products and how to get them more
affordably to really start to drive behavior. We are really
going to see a lot of new possibilities going on in that space.
Mr. Arrington. Thank you.
Before we adjourn, and thanks for indulging me in a few
more seconds there. Before we adjourn, I invite the Ranking
Member to make any closing remarks.
Mr. McGovern. Well thank you. Thank you. I appreciate it,
and I am sorry. We had another hearing that I went to, but we
got it done in time for me to come for my closing remarks.
I want to thank all of your for your testimony, and I
appreciate your answer on ways to incentivize people to make
healthier choices. There are programs that are up and running
now. We have a Healthy Incentives Pilot in Massachusetts that
is doing very well. You talked about the FINI grants and there
are all kinds of programs that are working. The challenge is to
make sure the resources are there so that they can be
widespread. And it is hard for people to make the kinds of
choices that a dietician would deem as nutritious when you are
basically talking about on average $1.40 per person per meal.
It is an inadequate benefit, from my vantage point.
But I do want to just say that I think that everybody here,
unless I missed it when I was gone, pointed out that the ABAWD
population is a vulnerable population. It is fair to say that
the system isn't working for them the way it should. It is a
complicated population. It doesn't fit into a nice, neat
stereotype. And I would just, again, I end as I began, to
caution this Committee and this Congress from doing anything
that would make it more difficult for this population. We are
talking about making sure people have enough to eat, and I
worry that, based on some of the reports that I have read in
the press, that we may be going down a road that might cause
more harm than good.
So thank you very much for your testimony, and Mr.
Chairman, thank you very much for yielding me the time to
close.
Mr. Arrington. You bet, absolutely.
Well thank you. I want to reiterate the Ranking Member's
sentiments for your time, and sorry you had to wait longer
because of votes, but I appreciate your thoughtful remarks in
response to our questions.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member. This hearing
of the Subcommittee on Nutrition is adjourned.
[Whereupon, at 4:41 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Hon. K. Michael Conaway, a Representative in
Congress from Texas
March 15, 2017

Dear Colleague:

The Supplemental Nutrition Assistance Program (SNAP) is the most
important nutrition assistance program in the United States, with
approximately $70 billion in benefits currently serving just shy of 43
million individuals. As with many means-tested benefit programs, there
is a detailed framework of Federal law and regulation governing SNAP.
However, the program is ultimately administered by states that have a
number of options for implementing certain policies as well as access
to waivers of Federal law and regulations in specific cases. SNAP
benefits are fully funded by the Federal Government, with
administrative expenses divided equally between the Federal and state
governments.
The House Committee on Agriculture, by way of a hearing series
entitled, Past, Present, and Future of SNAP, heard from 60 witnesses
over the course of 16 hearings in the 114th Congress. These hearings
afforded the Committee the opportunity to learn more about recipient
characteristics, program administration and function, and the
innovative initiatives of Federal, state, local, and private entities.
Compiled by my staff, the enclosed report outlines the program
history and structure of SNAP and includes 15 key findings across four
broad themes. The report identifies a number of ways the program is
working successfully and a number of areas in need of improvement. That
said, nothing in the enclosed report suggests gutting SNAP or
abolishing a program that serves so many.
In the 115th Congress, we have initiated the work of reauthorizing
the farm bill, including SNAP. While there will be a time for formal
input on the farm bill, I welcome your feedback on the report along
with your suggestions for moving forward. Please feel free to send your
thoughts to Jennifer Tiller, Professional Staff, at Redacted.
Sincerely,

Hon. K. Michael Conaway,
Chairman,
House Committee on Agriculture.
attachment
committee on agriculture
k. michael conaway, chairman

Past, Present, and Future of SNAP
Hearing Series Findings: 114th Congress
``We can all agree that no one ought to go hungry in America,
and SNAP is essential in protecting the most vulnerable
citizens during tough times. For many it is a vital lifeline to
keeping food on the table.''
Chairman K. Michael Conaway.\1\
---------------------------------------------------------------------------
\1\K. Michael Conaway, Chairman of the House Committee on
Agriculture. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP. February 25, 2015.
Washington, D.C.
---------------------------------------------------------------------------
Executive Summary
The House Committee on Agriculture completed a comprehensive review
of the Supplemental Nutrition Assistance Program (SNAP) during the
114th Congress. Known as the Past, Present, and Future of SNAP, the
purpose of the review was to provide a better understanding of SNAP and
the population it serves, to review how SNAP utilizes cash and noncash
benefits to serve that population, and to examine ways the program can
be improved. While the series highlighted specific ways that vulnerable
populations are well-served, it also demonstrated several areas for
improvement. The series also highlighted that there is sincere interest
on both sides of the aisle in ensuring that SNAP is meeting the needs
of those it is intended to serve. Several key findings emerged from the
testimony of 60 witnesses across 16 hearings:
Findings Theme 1: Serving SNAP Recipients through Innovation and
Flexibility in Program Delivery
1a. SNAP serves a wide-ranging demographic, and the program must
adapt to meet the needs of each recipient.
1b. States can take advantage of available state options and
waivers, as well as new and developing technologies.
1c. Broad-Based Categorical Eligibility (BBCE) is the most
significant state option in SNAP recipient eligibility determinations.
1d. The need for nutrition assistance cannot be addressed by just
one program or just one group--it requires more collaboration between
governments, charities, businesses, health systems, communities,
individuals, and many others.
1e. The diversity of programs serving low-income households has
simultaneously generated overlaps and gaps in recipient services.
Findings Theme 2: Climbing the Economic Ladder through Work
2a. Unemployment and underemployment are leading causes of poverty,
and promoting pathways to employment is the best way to help
individuals climb the economic ladder out of poverty and into self-
sufficiency.
2b. Combined with other welfare programs, SNAP recipients may face
a ``welfare cliff'' when they are just above the income eligibility
level, which can create disincentives to finding work or increasing
earnings.
2c. Better enforcement of work requirements is needed in some
states, and enforcement needs to be coupled with more effective SNAP
employment and training (E&T) programs.
Findings Theme 3: Maintaining Program Integrity
3a. SNAP needs clear program goals and must be evaluated according
to metrics aligned with those goals to generate program improvement.
3b. SNAP fraud rates can be improved through innovative state and
Federal strategies and technologies.
3c. SNAP error rates are only as good as the program parameters on
which they are based.
3d. State flexibility in administering SNAP should not jeopardize
program integrity.
3e. Data availability--with robust privacy protections--is a key
concern in ensuring SNAP is functioning as intended.
Findings Theme 4: Improving Food Access and Promoting Healthy Food
4a. Americans in both urban and rural communities cannot improve
their diets without adequate access to healthy food.
4[b]. Nutrition education--working in tandem with targeted
incentives--can help SNAP recipients develop healthy lifestyles and
healthy eating habits.
From the Chair
December 7, 2016

Through our Past, Present, and Future of SNAP hearing series, the
House Committee on Agriculture heard from 60 witnesses in 16 hearings
over the course of the past 2 years on the Supplemental Nutrition
Assistance Program (SNAP), the most important nutrition assistance
program in the United States. With around $70 billion in benefits going
to more than 43 million SNAP recipients each year, even small program
improvements can result in better nutrition for hungry families and in
taxpayer resources being used more effectively. This report documents
the findings of the hearing series, which reviewed characteristics of
SNAP recipients, the functioning of the program, and innovations in
serving those in need of nutrition assistance.
While it may have generated ``hearing fatigue,'' the review of SNAP
was an essential part of our work as we prepare to reauthorize SNAP in
the 115th Congress. SNAP is a complex program implemented uniquely by
each state. It serves diverse populations with a wide range of needs,
many of which are not visible without taking a deeper dive into the
program to see how it works.
We know that we live in a country with the safest, most affordable,
and most abundant food supply in the world. While Americans on average
spend less of their disposable income on food than any other country in
the world, those on the lower end of the income ladder in the United
States spend more than 34 percent of their disposable income on food--
if they have any disposable income at all. It is our responsibility to
help our most vulnerable citizens, whether they are children, the
elderly, the disabled, veterans, or those who are down on their luck
due to no fault of their own. SNAP serves that purpose, partnering with
many other organizations to put food on the plates of those who would
otherwise be hungry. It is the Committee's role to ensure we are
successful in accomplishing that purpose.
You will find nothing in this report that suggests gutting SNAP or
getting rid of a program that does so much to serve so many. What you
will find are a number of ways the program is working successfully and
a number of areas in need of improvement. You will find areas for
innovation, for adjustment, for education and training, and for
rethinking the best ways to serve those in need.
There is common ground to be found on SNAP, both in understanding
the needs of the population SNAP serves, and in working collaboratively
to improve SNAP. That common ground must be found not only within
Congress, but across government agencies, nonprofits, the private
sector, universities, communities, recipients, and a host of other
partners involved in meeting the needs of our nation's most vulnerable
citizens.
SNAP serves a critical mission: to feed those who need it and to
empower those who are able to move from SNAP to self-reliance. This
report focuses on how SNAP currently achieves this mission, and
highlights the suggestions of our many witnesses on how SNAP can more
effectively fulfill its mission.

Hon. K. Michael Conaway, Hon. Jackie Walorski,
Chairman, Chairwoman, Subcommittee on
House Committee on Agriculture; Nutrition,
House Committee on Agriculture.

Table of Contents
Overview of Hearing Series
History of SNAP
Findings Theme 1: Serving SNAP Recipients through Innovation and
Flexibility in Program Delivery

Finding 1a
Finding 1b
Finding 1c
Finding 1d
Finding 1e

Findings Theme 2: Climbing the Economic Ladder through Work

Finding 2a
Finding 2b
Finding 2c

Findings Theme 3: Maintaining Program Integrity

Finding 3a
Finding 3b
Finding 3c
Finding 3d
Finding 3e

Findings Theme 4: Improving Food Access and Promoting Healthy Food

Finding 4a
Finding 4b

Appendix A: Hearings and Witnesses
Appendix B: Description of Federal Nutrition Programs
Appendix C: Glossary
Overview of Hearing Series
Over the course of the 114th Congress, the House Committee on
Agriculture undertook a top-to-bottom review of SNAP. The Committee
conducted 16 educational hearings from February 2015 to November 2016
during its hearing series entitled the Past, Present, and Future of
SNAP. These hearings took a closer look at how SNAP works and examined
the challenges faced by recipients. A wide array of witnesses,
including hunger advocates, researchers, USDA officials, and SNAP
recipients testified before the Committee. See Appendix A for a
complete listing of hearings and witnesses.
SNAP is the largest program under the jurisdiction of the
Committee, accounting for 79 percent of total farm bill spending.\2\
CBO currently projects that SNAP will cost an average of $69.75 billion
per year over the next 10 years, making it the largest Federal food
program serving low-income families in the United States.\3\
---------------------------------------------------------------------------
\2\Congressional Budget Office. Estimated Budgetary Effects of H.R.
2642, the Agricultural Act of 2014. https://www.cbo.gov/sites/default/
files/113th-congress-2013-2014/costestimate/hr2642lucasltr00.pdf.
\3\Congressional Budget Office. Baseline Projections for Selected
Programs. August 2016. https://www.cbo.gov/about/products/baseline-
projections-selected-programs.
---------------------------------------------------------------------------
Program participation nearly doubled (up 81 percent from FY 2007 to
FY 2013) as a result of the recent recession. In an average month in FY
2007, 26.3 million people (or about nine percent of the U.S.
population) were enrolled in SNAP. That increased to 47.6 million
people (or about 15 percent of the U.S. population) in FY 2013, owing
to the fact that the economy was slow to recover and many families
remained reliant on SNAP. Even now, with a 4.6 percent unemployment
rate (compared to a 9.6 percent unemployment rate for 2010), there were
still 43.4 million SNAP participants as of July 2016.4-5
Because of the magnitude of the program, the House Committee on
Agriculture devoted significant time and effort to educating Members on
how SNAP works, who it serves, and what can be done to make it more
effective.
---------------------------------------------------------------------------
\4\U.S. Department of Labor, Bureau of Labor Statistics. November
2016. http://data.bls.gov/timeseries/LNS14000000.
\5\USDA Food and Nutrition Service (FNS). Supplemental Nutrition
Assistance Program (SNAP) Summary--Latest Available Month: July 2016.
http://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-
snap.
---------------------------------------------------------------------------
Several critical themes emerged as witnesses presented their
testimony based on research, work in the community, or personal
experience with SNAP. This report summarizes the key findings from the
hearing series. The report also presents additional background
information as needed to facilitate an understanding of the issues that
were discussed in the hearings.
History of SNAP
While the United States has a long history of providing nutrition
assistance to its citizens, the Supplemental Nutrition Assistance
Program (SNAP), as we know it, traces its roots to the 1960s. In 1963,
President Kennedy proposed permanently authorizing a small pilot
project--which had been introduced in 1961--called the Food Stamp
Program (FSP). The authorizing legislation, the Food Stamp Act of 1964,
began with a lofty goal of utilizing ``the nation's abundance of food .
. . to safeguard the health and well-being of the nation's population
and raise levels of nutrition among low-income households.''\6\
---------------------------------------------------------------------------
\6\P.L. 88-525.
---------------------------------------------------------------------------
In response to growing hunger across the United States, Congress
amended the Food Stamp Act in 1971 to establish national-level
eligibility and benefit standards. The program also included a purchase
requirement for food stamps. That is, recipients paid for the stamps
(limited to no more than 30 percent of their income with the 1971
amendments), and then received a ``bonus'' payment to cover the
difference between the amount paid and the amount needed to attain a
low-cost, nutritionally adequate diet.\7\
---------------------------------------------------------------------------
\7\USDA FNS. From Food Stamps to the Supplemental Nutrition
Assistance Program: Legislative Timeline. http://www.fns.usda.gov/
sites/default/files/timeline.pdf.
---------------------------------------------------------------------------
The Food Stamp Act of 1977 eliminated the purchase requirement and
replaced it with the ``net income rule'' whereby recipients were
expected to spend 30 percent of their net income on food and use the
stamps as a supplement. The Act also established statutory income
eligibility based on the Federal poverty level, established ten
categories of excluded income, and established the principle that
stores must sell a substantial amount of staple foods to be authorized
to accept food stamps.
Electronic Benefit Transfer (EBT) technology was established as an
issuance alternative to the paper stamps in the 1990 Mickey Leland
Memorial Domestic Hunger Relief Act. EBT cards allow a recipient to
authorize the transfer of their government benefits from a Federal
account to a retailer account to pay for products received.
Demonstration projects were conducted by state implementation agencies
until the welfare reforms of 1996--officially known as the Personal
Responsibility and Work Opportunity Reconciliation Act (PRWORA)--
mandated states implement EBT systems as the source of benefit issuance
by October 2002.\8\ The EBT card works in the same way as a debit card,
with recipients using a PIN number at the point of sale. Some states
use the EBT card for multiple Federal welfare programs, including the
Special Supplemental Nutrition Program for Women, Infants, and Children
(WIC) and the Temporary Assistance for Needy Families (TANF) program.
See Appendix B and Appendix C for a description of Federal welfare and
nutrition programs, including both WIC and TANF.
---------------------------------------------------------------------------
\8\USDA FNS. A Short History of SNAP. http://www.fns.usda.gov/snap/
short-history-snap.

------------------------------------------------------------------------

-------------------------------------------------------------------------
1996 Welfare Reform\9\
\9\Vee Burke, Congressional Research Service. The 1996 Welfare Reform
Law. July 1, 2003. http://royce.house.gov/uploadedfiles/
the%201996%20welfare%20reform%20law.pdf.
The Personal Responsibility and Work Opportunity Reconciliation Act
was signed into law on August 22, 1996. The changes in this Act
reshaped cash and food welfare programs and helped reduce Federal
welfare spending. The biggest reform from 1996 was replacing the Aid to
Families with Dependent Children (AFDC) with fixed annual grants to
states for TANF. The impact of welfare reform on each state General
Assistance (GA) program differed based on a number of factors,
including whether populations that were no longer eligible for Federal
assistance as a result of the Act would have become eligible for a
state GA program and whether a state chose to provide benefits to those
groups no longer eligible for Federal assistance. The 1996 Welfare
Reform also impacted food stamps by:

Giving states more control over food stamp operations and
coordination with family cash aid;

Adding work rules and time limits for adults without
dependents and expanding existing work requirements;

Cutting future benefits; and

Placing greater limits on eligibility and expanding
penalties for violating rules.
------------------------------------------------------------------------

The Food Security and Rural Investment Act of 2002 (2002 Farm Bill)
also made significant changes to SNAP. The Quality Control system was
reformed, improving payment accuracy by 34 percent between FY 2000 and
FY 2004. Optional policy changes for states were also included, such as
aligning the definition of income and/or resources to that used in TANF
or Medicaid, adopting a simplified reporting system, and providing
transitional benefits for recipients leaving TANF.\10\
---------------------------------------------------------------------------
\10\USDA FNS. A Short History of SNAP. http://www.fns.usda.gov/
snap/short-history-snap.
---------------------------------------------------------------------------
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
formally changed the name of FSP to SNAP. It made substantive spending
and programmatic changes, authorizing an increase of more than $10
billion in spending on Federal nutrition programs over the following 10
years. Household benefits were increased and eligibility was expanded
via adjustments to asset tests.
SNAP is now a catchall for individuals and families who receive no
or lower benefits from other welfare programs, largely because the
eligibility criteria in SNAP are relatively more relaxed. As a result,
the net effect has been to increase SNAP enrollment. For example, in
the welfare reforms of 1996, the cash welfare program Aid to Families
with Dependent Children (AFDC) was converted into a block grant known
as TANF, which has rather rigorous work and activity requirements and
includes a time limit. Another program available to those who are laid
off from work is Unemployment Insurance (UI). These benefits require
individuals to have a work history and to be fired through no fault of
their own to be eligible for assistance. UI benefits are also time-
limited, typically lasting 6 months. A third program, Federal
disability benefits, requires individuals to prove they are unable to
work. For many families who have not collected SNAP in the past, SNAP
is now a default option for filling in the gaps.
SNAP grew considerably in response to the Great Recession, touched
off by the financial crisis from 2007 to 2009. As the U.S. economy
suffered and unemployment rose to nearly ten percent, enrollment in the
program increased from 28.2 million participants in FY 2008 to 47.6
million in FY 2013, as shown in the following chart.\11\ Enrollment in
SNAP often lags the economy, as it takes time for changes to work
through from businesses to individuals, ultimately resulting in the
need for food assistance.
---------------------------------------------------------------------------
\11\U.S. Department of Labor, Bureau of Labor Statistics. Labor
Force Statistics from the Current Population Survey. Series ID
LNU04000000. http://data.bls.gov/timeseries/
LNU04000000?years_option=all_years&periods_option=specific_periods&perio
ds=Annual+Data.
---------------------------------------------------------------------------
SNAP Program Participation and Average Benefits

Source: USDA FNS. SNAP Program Participation and Costs. Data
as of October 7, 2016.

Accordingly, the cost of the program more than doubled from $37.6
billion in FY 2008 to nearly $80 billion at its peak in FY 2013.
Although the latest unemployment estimates have largely returned to
pre-recession levels, SNAP participation levels have been slow to
respond. CBO estimates that SNAP participation will remain above 33
million people (and well above pre-recession levels) through FY 2026,
assuming a continued unemployment rate of 5.0 percent.\12\ USDA data
shows that spending on SNAP remains three times what it was prior to
the recession ($23.09 billion pre-recession average compared to $73.99
billion post-recession in FY 2015). However, SNAP spending is now
projected to be significantly lower than it was estimated at passage of
the 2014 Farm Bill.
---------------------------------------------------------------------------
\12\Congressional Budget Office. Baseline Projections for Selected
Programs. March 2016. https://www.cbo.gov/about/products/baseline-
projections-selected-programs#20.
---------------------------------------------------------------------------
SNAP Spending Pre- and Post-Recession

Source: USDA FNS. SNAP Program Participation and Costs. Data
as of October 7, 2016.
Program Structure
Similar to many of the other means-tested benefit programs, there
is a detailed framework of Federal law and regulation governing SNAP.
However, the program is ultimately administered by states that have a
number of options--for example, asset testing and transitional
benefits--for implementing certain policies as well as access to
waivers of Federal law and regulations in specific cases.\13\
---------------------------------------------------------------------------
\13\FNS allows states to submit waivers that may be approved under
certain criteria. These waivers all relate to regulations FNS requires
of states. http://www.fns.usda.gov/snap/waivers-rules.
---------------------------------------------------------------------------
SNAP benefits are fully funded by the Federal Government, although
state policy options may play a role in increasing or decreasing the
size of the caseload. Administrative expenses, such as those used for
determining initial and ongoing eligibility, are divided equally
between the Federal and state governments.
While SNAP is an entitlement program--meaning that those who
qualify for assistance are entitled to the assistance--it is unique in
that it is funded through the annual appropriations process. In order
to prevent the program from running out of funds for benefits, there is
also a $3 billion contingency fund that is also appropriated annually,
with 2 years of availability. This means that in any year, there are up
to $6 billion in contingency funds available. Congress would need to
appropriate additional funds if both the currently appropriated funds
and contingency funds were exhausted.
SNAP Eligibility
SNAP eligibility is tied to the Federal poverty level, a measure of
income issued by the Department of Health and Human Services to
determine eligibility for a number of welfare benefits. To qualify for
SNAP, applicants must meet the eligibility and income requirements
mandated by Congress, both of which are discussed at length in this
report. While eligibility requirements are nuanced and vary widely
based on state options, SNAP recipients are generally subjected to
income requirements mandated by Congress.
The basic SNAP beneficiary unit is the household. A household can
be either a person living alone or a group of individuals living
together. Most households must meet both the gross and net monthly
income tests provided in the following table to receive SNAP benefits,
but households with an elderly person or an individual who is receiving
certain disability benefits only have to meet the net income test. If
eligible for SNAP, an applicant household also undergoes a calculation
of its monthly benefit amount (or allotment). This calculation utilizes
the household's net income as well as the maximum allotment, a figure
that equals the current value of the ``Thrifty Food Plan'' (TFP).\14\
Developed in the 1930s and now updated monthly, the TFP is USDA's
national standard estimate of the minimum cost of eating at home and is
broken out by gender and age.
---------------------------------------------------------------------------
\14\Randy Aussenberg, Congressional Research Service. Supplemental
Nutrition Assistance Program (SNAP): A Primer on Eligibility and
Benefits. February 2, 2016. http://www.nationalaglawcenter.org/wp-
content/uploads/assets/crs/R42505.pdf.
---------------------------------------------------------------------------
Households that have income over the amounts listed in the
following table cannot receive benefits. For example, a household of
four would be ineligible for SNAP if their gross monthly income exceeds
$2,633 (or if their net monthly income exceeds $2,025). These
thresholds are critical because they determine program eligibility for
many Americans.

Maximum Income by Household Size for SNAP Eligibility
------------------------------------------------------------------------
Gross
Monthly Net Monthly
Income (130 Income (100
percent of percent of
the Federal the Federal
poverty poverty
level) level)
------------------------------------------------------------------------
1 $1,287 $990
2 $1,736 $1,335
3 $2,184 $1,680
4 $2,633 $2,025
5 $3,081 $2,370
6 $3,530 $2,715
7 $3,980 $3,061
8 $4,430 $3,408
* +$451 +$347
------------------------------------------------------------------------
*Each additional member.
Note: Gross income is a household's total, non-excluded income before
any deductions have been made. Net income is gross income less
allowable deductions.
Source: USDA FNS. SNAP Eligibility. http://www.fns.usda.gov/snap/
eligibility.

To put these thresholds in context, in FY 2015, approximately 82
percent of SNAP households lived below the Federal poverty level.
Forty-two percent of SNAP households had incomes less than or equal to
\1/2\ of the Federal poverty level, and they accounted for 57 percent
of all benefits.\15\ Regardless of income, all eligible one- and two-
person households are guaranteed a minimum benefit equal to eight
percent of the maximum benefit for a one-person household. For FY 2017,
the minimum benefit for one- and two-person households in the
contiguous U.S. is $16.\16\
---------------------------------------------------------------------------
\15\USDA FNS. Characteristics of Supplemental Nutrition Assistance
Program Households: Fiscal Year 2015. Report No. SNAP-16-CHAR. November
2016. http://www.fns.usda.gov/snap/characteristics-supplemental-
nutrition-assistance-households-fiscal-year-2015.
\16\USDA FNS. SNAP Fiscal Year Cost-of-Living Adjustments. Memo
dated August 10, 2016. http://www.fns.usda.gov/sites/default/files/
snap/SNAP-Fiscal-Year-2017-Cost-of-Living-Adjustments.pdf.
---------------------------------------------------------------------------
For FY 2017, the maximum monthly benefit in the 48 contiguous
states and DC is $194 for a one-person household, $357 for a two-person
household, and $649 for a four-person household.\17\ In determining a
household's benefit, the net monthly income of the household is
multiplied by 30 percent (because SNAP households are expected to spend
30 percent of their income on food), and the result is subtracted from
the maximum benefit to determine the household's benefit.
---------------------------------------------------------------------------
\17\USDA FNS. Supplemental Nutrition Assistance Program (SNAP): How
Much Could I Receive? http://www.fns.usda.gov/snap/how-much-could-i-
receive.
---------------------------------------------------------------------------
Findings Theme 1: Serving SNAP Recipients through Innovation and
Flexibility in Program Delivery
SNAP serves a diverse group of low-income individuals, primarily by
providing benefits for the purchase of food. SNAP is intended to assist
low-income individuals in strengthening their food purchasing power
while they work to lift themselves out of poverty. This point was
clearly illustrated by Robert Greenstein of the Center on Budget and
Policy Priorities: ``a family whose rent and utility costs consume \2/
3\ of its income will have less money to buy food than a family that
has the same income but receives a rental voucher to cover a portion of
its rental costs.''\18\ Most SNAP recipients face more challenges than
food insecurity. They also face housing, utility, transportation, and
childcare costs, to name a few. As noted earlier, this program has
become a catchall for low-income individuals who either do not qualify
for a more targeted program like WIC or who need to supplement their
income (and other forms of public assistance) to purchase food.
Challenges facing recipients may also differ depending on whether the
recipient is a single parent, part of a two-parent household, an older
American, a veteran, currently serving in the military, disabled, or is
in an urban or rural environment. Jim Weill with the Food Research and
Action Center (FRAC) pointed out the often surprising fact that ``rural
food insecurity rates are higher than metro area rates; and food
insecurity rates are roughly the same in every region of the country,
albeit they are highest in the South.''\19\ To best serve this diverse
population, one must understand the demographics and the specific
challenges they face.
---------------------------------------------------------------------------
\18\Robert Greenstein, President, Center on Budget and Policy
Priorities. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP. February 25, 2015.
Washington, D.C.
\19\Jim Weill, President, Food Research and Action Center. Hearing
of the U.S. House of Representatives, Subcommittee on Nutrition,
Committee on Agriculture. Past, Present, and Future of SNAP: Developing
and Using Evidence-Based Solutions. July 15, 2015. Washington, D.C.

``rural food insecurity rates are higher than metro area
rates; and food insecurity rates are roughly the same in every
region of the country, albeit they are highest in the South.''
Jim Weill, Food Research and Action Center.

In FY 2015, about 45.8 million people living in 22.5 million U.S.
households participated in SNAP in an average month. Of those
households:\20\
---------------------------------------------------------------------------
\20\Id., n. 15.

---------------------------------------------------------------------------
32 percent had earned income;

22 percent had zero gross income; and

40 percent had zero net income.

Seventy-five percent of households included a child, an elderly
individual, or an individual with a disability, and these households
received 82 percent of all SNAP benefits. A majority of SNAP households
with children were single-adult households. In total, almost \2/3\ of
participants are children, elderly, or disabled: 44 percent of
participants were under age 18, 11 percent were age 60 or older, and
ten percent were disabled nonelderly adults.\21\
---------------------------------------------------------------------------
\21\Id., n. 15.
---------------------------------------------------------------------------
SNAP Household Participation and Characteristics: Decreasing Share of
Households with Children, and Increasing Share of Households
with No Gross or Net Income\22\
---------------------------------------------------------------------------
\22\Id., n. 15.

Source: USDA FNS. Characteristics of Supplemental Nutrition
Assistance Program Households: Fiscal Year 2015. Report No.
SNAP-16-CHAR. November 2016. http://www.fns.usda.gov/snap/
characteristics-supplemental-nutrition-assistance-households-
---------------------------------------------------------------------------
fiscal-year-2015.

A more comprehensive listing of the characteristics of SNAP
recipients for FY 2015 is provided in the following table and provides
important context for the discussion of recipients in the next section.

SNAP Households, Participants, and Benefits Summary
----------------------------------------------------------------------------------------------------------------
Participants
SNAP in Households Approximated
Households Percent (%) with Household Percent (%) Annual Dollars Percent (%)
(000) Characteristic (000) Based on
(000) SNAP QC Sample
----------------------------------------------------------------------------------------------------------------
Total
----------------------------------------------------------------------------------------------------------------
Total 22,293 100.0% 45,184 100.0% 68,012,160 100.0%
Children [9,510] 42.7% 30,774 68.1% 44,824 65.9%
Seniors 4,361 19.6% 5,503 12.2% 6,703,452 9.9%
Non-Elderly Individuals 4,498 20.2% 8,349 18.5% 10,409,256 15.3%
with Disabilities
Adults Age 18 to 49 without 4,265 19.1% 5,098 11.3% 10,027,836 14.7%
Disabilities in Childless
Households (ABAWDs)
----------------------------------------------------------------------------------------------------------------
Locality
----------------------------------------------------------------------------------------------------------------
Metropolitan 18,325 82.2% 36,952 81.8% 56,300,844 82.8%
Micropolitan 2,177 9.8% 4,520 10.0% 6,455,412 89.5%
Rural 1,451 6.5% 3,087 6.8% 4,387,500 6.5%
----------------------------------------------------------------------------------------------------------------
Countable Income Source
----------------------------------------------------------------------------------------------------------------
No Gross Income 4,943 22.2% 7,574 16.8% 16,454,208 24.2%
No Net Income 8,837 39.6% 15,011 33.2% 32,155,152 47.3%
No Earned Income 15,212 68.2% 25,241 55.9% 42,283,800 62.2%
TANF Income 1,293 5.8% 3,850 8.5% 6,276,360 9.2%
SSI 4,559 20.5% 7,912 17.5% 10,557,420 15.5%
Social Security Income 5,451 24.5% 8,026 17.8% 8,827,512 13.0%
----------------------------------------------------------------------------------------------------------------
SNAP Benefit
----------------------------------------------------------------------------------------------------------------
Minimum Benefit 1,610 7.2% 1,931 4.3% 309,372 0.5%
Maximum Benefit 9,160 41.1% 15,333 33.9% 32,906,256 48.4%
----------------------------------------------------------------------------------------------------------------
Note: the values in this table are calculated based on the SNAP QC sample and may vary from the programmatic
totals also published by USDA.
Source: USDA FNS. Characteristics of Supplemental Nutrition Assistance Program Households: Fiscal Year 2015.
Report No. SNAP-16-CHAR. November 2016.

Finding 1a: SNAP Serves a Wide-Ranging Demographic, and the Program
Must Adapt To Meet the Needs of Each Recipient
SNAP serves a wide variety of individuals, both young and old. It
serves veterans. It serves the disabled. It serves individuals,
couples, and large families alike. The needs of these populations are
wide-ranging and require various programmatic adaptations to meet those
needs. This section provides an overview of SNAP participant
characteristics that were highlighted throughout the hearing series.
Seniors
Seniors have the lowest rates of SNAP participation among eligible
households of any demographic. While the low participation rate has a
variety of causes, a prominent explanation is the stigma associated
with SNAP and welfare in general. Many factors contribute to a lack of
access to food among seniors, including a lack of a substantial income,
the gap between Medicaid and the cost of living, limited income with
specialized diets, and mental and physical illnesses.\23\ The issues
facing these populations must be viewed holistically, with SNAP as one
piece of a larger solution to solving hunger for seniors.
---------------------------------------------------------------------------
\23\Lynda Ender, AGE Director, The Senior Source. Hearing of the
House of Representatives, Committee on Agriculture. Past, Present, and
Future of SNAP: The World of Nutrition and the Role of the Charitable
Sector. April 15, 2015. Washington, D.C.
---------------------------------------------------------------------------
At the Committee's hearing on Special Populations, Eric
Schneidewind with AARP detailed the unique impact age can have on food
insecurity:

``Elderly households, which are defined as those with an
individual over age 60, represented 19 percent of all SNAP
recipients in FY 2014. Out of this cohort, 85 percent received
either Supplemental Security Income (SSI) or Social Security,
and 82 percent of elderly households receiving SNAP consisted
of an elderly individual living alone. On average, elderly SNAP
households received an average benefit of $129 per month.
According to research by the AARP Foundation--a charitable
affiliate of AARP--over 17 percent of adults over the age of 40
are food-insecure. Among age cohorts over age 50, food
insecurity was worse for the 50-59 age group, with over ten
percent experiencing either low or very low food security.
Among the 60-69 age cohort, over nine percent experienced
similar levels of food insecurity, and over six percent among
the 70+ population. This emphasizes the fact that the younger
segment of older Americans are often at deeper risk for food
insecurity than their older counterparts, primarily because
they have yet to receive Social Security benefits and--even if
they have specialized needs or limitations--might not qualify
for other nutrition assistance programs geared toward older
Americans.''\24\
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\24\Eric Schneidewind, President-Elect of AARP. Hearing of the
House of Representatives, Subcommittee on Nutrition, Committee on
Agriculture. Past, Present, and Future of SNAP: Addressing Special
Populations. January 12, 2016. Washington, D.C.

Beyond the affordability of food and complexities of
transportation, seniors often have specific dietary needs, and
specialized diets can be difficult to afford on a limited income.
Metabolic illnesses, such as diabetes, require special consideration.
Vinsen Faris with Meals on Wheels pointed out that for seniors ``. . .
even a slight reduction in nutritional intake can exacerbate existing
health conditions.''\25\ A person with diabetes may be unable to eat
foods with added sugars or even foods, such as grains, that turn into
fructose when digested. While many food banks and pantries are trying
to provide a larger range of healthy foods for families with dietary
restrictions, the increasing number of seniors with dietary
restrictions still poses a significant challenge.
---------------------------------------------------------------------------
\25\Vinsen Faris, Executive Director, Meals on Wheels of Johnson
and Ellis Counties in North Central Texas. Hearing of the House of
Representatives, Subcommittee on Nutrition, Committee on Agriculture.
Past, Present, and Future of SNAP: Addressing Special Populations.
January 12, 2016. Washington, D.C.
---------------------------------------------------------------------------
A number of SNAP options and other programs are designed to address
these challenges. Elderly and disabled SNAP recipients are able to
assign their EBT card to another individual so that person can purchase
food. Congregate (community meal) food sites--similar in concept to
group sites for providing summer meals for children--allow seniors to
gather for a prepared meal. There is also a special Senior Farmers'
Market program to promote the purchase of fresh fruits and vegetables.
Finally, the Commodity Supplemental Food Program (CSFP) works to
improve the health of low-income elderly persons at least 60 years of
age by supplementing their diets with nutritious, USDA-surplus foods
provided in boxes delivered to their homes through local food banks.
Children
SNAP serves 9.5 million households with children, which account for
43 percent of all SNAP households.\26\ While single-parent households
are more susceptible to food insecurity, especially those with single
mothers, two-parent families also struggle with food insecurity. Among
married couple families with children, the rate of hunger among
individuals is 3.5 percent (3.9 million individuals); whereas for
households headed by a single mother, the rate is 13.2 percent (4.7
million individuals); and for households headed by a single father, the
rate is 7.2 percent (0.8 million individuals).\27\
---------------------------------------------------------------------------
\26\Id., n. 15.
\27\Coleman-Jensen A., Rabbitt M.P., Gregory C., Singh A.
Statistical supplement to household food security in the United States
in 2014. Washington, D.C.: U.S. Department of Agriculture, Economic
Research Service. September 2015. https://www.ers.usda.gov/webdocs/
publications/err194/53740_err194.pdf.
---------------------------------------------------------------------------
The Committee hearing Breaking the Cycle focused on how to best
give children who grew up in low-income households a chance to climb
the economic ladder. Dr. Caroline Ratcliffe with the Urban Institute
pointed out that ``roughly 29 million of today's children are expected
to live below the poverty line before age 18.''\28\
---------------------------------------------------------------------------
\28\Dr. Caroline Ratcliffe, Senior Fellow and Economist, Urban
Institute. Hearing of the House of Representatives, Subcommittee on
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP:
Breaking the Cycle. October 27, 2015. Washington, D.C.
---------------------------------------------------------------------------
Educational attainment (including technical school or local
community college) is a key component of breaking the cycle; in fact, a
parent's education level can influence whether or not a child grows up
in poverty. Gaining skills to be in a long-term stable job can bring
about higher wages and more opportunity for economic mobility.
Education is becoming increasingly important as Dr. Elisabeth Babcock
of the Crittenton Women's Union noted: ``Seventy-five percent of the
jobs in the economy as of 2020 are predicted to require education
beyond high school, and all of the jobs that pay family sustaining
wages require this.''\29\
---------------------------------------------------------------------------
\29\Dr. Elisabeth Babcock, President and CEO, Crittenton Women's
Union. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP: The Means to Climbing
the Economic Ladder. June 10, 2015. Washington, D.C.
---------------------------------------------------------------------------
Poverty has negative consequences on a child's cognitive and
physical development. Poverty has a trickle-down effect that can impact
the emotional well-being of children, in both the long- and short-term.
Dr. Eduardo Ochoa, Jr. from Children's HealthWatch outlined the
negative impacts poverty and food insecurity can have on the
development of children:\30\
---------------------------------------------------------------------------
\30\Dr. Eduardo Ochoa, Jr. Children's HealthWatch. Hearing of the
House of Representatives, Subcommittee on Nutrition, Committee on
Agriculture. Past, Present, and Future of SNAP: Breaking the Cycle.
October 27, 2015. Washington, D.C.

Household food insecurity increases the risk of
developmental delays by approximately 70 percent in early
---------------------------------------------------------------------------
childhood;

Mental health problems such as depression and anxiety
disorders in mothers and behavioral problems in preschool age
children are more common when mothers are food-insecure;

Food insecurity is linked to developmental consequences for
both girls and boys during kindergarten through third grade;
and

Food-insecure children are more than twice as likely to be
in fair-to-poor health than are food-secure children.

Nutrition programs that are especially targeted to children provide
much-needed nutrition assistance in key periods of a child's
developmental growth, promoting their health and well-being, and
impacting their ability to learn, grow, and develop to their full
potential.\31\ Ruth Riley, a former WNBA player shared her own
experience with SNAP: ``I often joke that growing up I was tall, lanky
and uncoordinated. Looking back, I can't imagine what my path would
have been if I'd been tall, lanky, uncoordinated . . . and
hungry.''\32\
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\31\National Commission on Hunger. Freedom from Hunger: An
Achievable Goal for the United States of America. 2015.
\32\Ruth Riley. WNBA Athlete. Hearing of the House of
Representatives, Subcommittee on Nutrition, Committee on Agriculture.
Past, Present, and Future of SNAP: Breaking the Cycle. October 27,
2015. Washington, D.C.

``I often joke that growing up I was tall, lanky and
uncoordinated. Looking back, I can't imagine what my path would
have been if I'd been tall, lanky, uncoordinated . . . and
hungry.''
Ruth Riley, former WNBA player.

Several programs outside of SNAP also serve children's nutrition
needs. WIC provides Federal grants to states so beneficiaries--low-
income pregnant or postpartum women and infants and children under 5
who are at nutritional risk--can purchase specific healthy foods. The
School Breakfast Program (SBP) and National School Lunch Program (NSLP)
provide children with meals at free or reduced prices, depending on
income eligibility. A child that lives in a household that receives
SNAP automatically qualifies for school meals. Because nutrition is so
important to a child's development, when the SNAP benefit allotment is
calculated for a household, there is no reduction in the SNAP benefit
amount due to the child receiving meals at school.
Many of the factors associated with a child's future success go
beyond what any single government program can or should achieve. SNAP
is not the only means of breaking the cycle of poverty, but it can play
a key role in increasing the food security of children.
Veterans
Veterans make incredible sacrifices on behalf of our country;
therefore, it is imperative they have the resources they need to be
successful in civilian life. Of the 22 million veterans in the United
States, about 1.7 million are in households currently participating in
SNAP (which is approximately eight percent of all veterans in the
United States). Veterans vary in age, functional capacity, and
financial need. Approximately 46 percent of our veterans are seniors,
including those that served in World War II, Korea, or Vietnam.\33\
While younger veterans may align more closely with the able-bodied
populations, they may also have widely-varying levels of disabilities
or limitations.
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\33\U.S. Department of Veterans Affairs. National Center for
Veterans Analysis and Statistics. FY 2016 Q1. VA Benefits & Health Care
Utilization. http://www.va.gov/vetdata/docs/pocketcards/fy2016q1.pdf.
---------------------------------------------------------------------------
Some veterans are able to reenter the workforce immediately after
returning home, while others may need assistance adjusting to civilian
life and training to reenter the workforce. Some have mental
impairments, such as post-traumatic stress disorder (PTSD), that need
to be treated and cared for in order for them to live a healthy life.
Some veterans are unable to reenter the workforce at all. In most
cases, veteran advocacy groups are focused on obtaining earned Veterans
Affairs benefits which can take months, but they do not immediately
connect veterans to SNAP which can be available immediately. Again,
SNAP cannot solve all of the challenges a veteran faces, but it is an
important component of serving eligible veterans once they return home.
Active-Duty Military
As Abby Leibman of MAZON--A Jewish Response to Hunger points out:
``For currently serving members of the military, food insecurity is
triggered by a number of different circumstances, including low pay
among lower ranking enlistees, high unemployment among military
spouses, larger household sizes, challenges around activation and
deployment, and unexpected financial emergencies.''\34\
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\34\Abby Leibman, President and CEO, MAZON--A Jewish Response to
Hunger. Hearing of the House of Representatives, Subcommittee on
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP:
Addressing Special Populations. January 12, 2016. Washington, D.C.
---------------------------------------------------------------------------
Historically, active-duty military members had the option to
participate in the Family Subsistence Supplemental Allowance (FSSA),
administered by the Department of Defense, rather than utilizing SNAP.
This program assisted military members that were in the lowest pay
bracket and had multiple children. FSSA benefits could be used at the
same places as SNAP, including military commissaries. In addition to
financial requirements, military personnel were required to request
access to FSSA up through their chain of command. The program was
officially disbanded on September 30, 2016, for individuals serving
within the United States or U.S. territories. It was determined the
benefit was duplicative, underutilized, hard to qualify for, and less
valuable than SNAP, with as few as 100 military families utilizing
FSSA. In contrast, in 2014, USDA projected that there were as many as
22,000 military families receiving SNAP in the United States.
A significant barrier facing some military families is how they
receive their housing allotment. If families live in military housing,
it is treated as an in-kind benefit and is not counted toward their
SNAP eligibility calculation, lowering their income and increasing
their SNAP benefit amount (SNAP eligibility is discussed in detail
later in this report). However, if the family receives the Basic
Allowance for Housing to reside off base, then the housing allowance is
counted as income for the family when computing eligibility, increasing
the family's income and decreasing the SNAP benefit. This simple
distinction can be the determining factor for whether military families
qualify for SNAP.
Finding 1b: States Can Take Advantage of Available State Options and
Waivers, As Well As New and Developing Technologies
As Chairman Conaway pointed out in his opening statement at the
March 2, 2016, hearing: ``State flexibility can be an important tool in
helping a family move out of poverty, however, the American taxpayer
needs confidence that government programs are being targeted to those
most in need.''\35\
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\35\K. Michael Conaway, Chairman of the House Committee on
Agriculture. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP: Examining State
Options. March 2, 2016. Washington, D.C.
---------------------------------------------------------------------------
SNAP implementing agencies have various policy options made
available through statute, regulations, and waivers. By using the
flexibility available to them, states have the ability to adapt their
programs to meet specific needs within their local communities. These
can improve access to the program and improve efficiency of program
administration.
States have the ability to expand SNAP categorical eligibility
beyond recipients who receive cash benefits from another specified
program (e.g., TANF, SSI, or GA). Known as Broad-Based Categorical
Eligibility (BBCE), households that receive noncash benefits funded by
TANF or Maintenance of Effort (MOE) funds are deemed eligible for SNAP,
thus indirectly aligning a state's SNAP asset and income limits with
the TANF noncash benefit program. Other state options include the
ability to centralize or decentralize administration of SNAP; to make
adjustments to how often recipients have to report changes in income;
to determine how soon the state must take action on changes in income;
to determine adjustments to allowances for utilities and homeless
housing; to determine how vehicles are treated as assets; to determine
how various types of income are treated; to decide how drug felons are
treated; to determine whether transitional benefits are offered; to
offer online applications; and to make use of various technology
options. Additional details are provided in the table that follows.\36\
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\36\USDA FNS SNAP. State Options Report. April 15, 2016. http://
www.fns.usda.gov/snap/state-options-report.
---------------------------------------------------------------------------
Many witnesses pointed to the importance of state options in
allowing SNAP to target those in need. Examples of requests for
additional flexibility include allowing states to ask for additional
information in filing an online application and for flexibility in
determining when interviews for initial certification or
recertification are conducted.\37\
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\37\Stephanie Muth, Deputy Executive Commissioner for the Office of
Social Services, Texas Health and Human Services Commission. Hearing of
the House of Representatives, Committee on Agriculture. Past, Present,
and Future of SNAP: Examining State Options. March 2, 2016. Washington,
D.C.
---------------------------------------------------------------------------
Waivers are awarded to states at the discretion of USDA's Food and
Nutrition Service (FNS), whereas state options are used at the
discretion of states. Many waivers that are widely used eventually
become state options. As Stacy Dean of the Center on Budget and Policy
Priorities pointed out, the use of waivers from USDA allows states to
test new ideas: ``USDA can waive certain SNAP requirements to test
whether a change would be in the program's interest.''\38\ Jon Baron of
the Laura and John Arnold Foundation also pointed out a need for
testing ideas at the state level, and then using that information to
inform FNS and SNAP agencies in other states. However, he cautioned
that ``to build a body of proven effective strategies within SNAP, as
in welfare, will require a much larger effort, specifically strategic
trial and error.''\39\ There is a need for balance between state
options, waivers, and program efficiency and integrity. FNS plays an
important role in providing guidance and oversight to states, as well
as in centralizing key program functions.
---------------------------------------------------------------------------
\38\Stacy Dean, Vice President for Food Assistance Policy, Center
for Budget and Policy Priorities. Hearing of the House of
Representatives, Committee on Agriculture. Past, Present, and Future of
SNAP: Examining State Options. March 2, 2016. Washington, D.C.
\39\Jon Baron, Vice-President for Evidence-Based Policy, Laura and
John Arnold Foundation. Hearing of the House of Representatives,
Subcommittee on Nutrition, Committee on Agriculture. Past, Present, and
Future of SNAP: Developing and Using Evidence-Based Solutions. July 15,
2015. Washington, D.C.

``to build a body of proven effective strategies within SNAP,
as in welfare, will require a much larger effort, specifically
strategic trial and error.''
Jon Baron, Laura and John Arnold Foundation
States have the option to make a number of determinations on
program administration, reporting, eligibility, and resources, even
beyond those included in this report. Select decisions that states must
make in deciding how to operate SNAP are included in the table below.

Select State Options for SNAP
------------------------------------------------------------------------
It Is the State's Option to
Title of State Option Determine:
------------------------------------------------------------------------
Program Administration Is it a state or county administered
program?
Reporting Requirements How frequently must SNAP recipients
report changes in household
circumstances?
Simplified Reporting--Action on Must the state agency act on all
Changes changes reported during the
certification period, or only on
changes that increase household
benefits?
Simplified Reporting-- How often will a state certify
Certification Length households based on various
circumstances (e.g., 6, 12, 24 or
months)?
Simplified Income and Resources Will some types of income and
resources be excluded to align SNAP
policy with TANF or Medicaid policy?
Simplified Self-Employment Will the state adopt a simplified
Determination method for determining the cost of
doing business for the self-
employed? If so, will the method be
a flat percentage, a figure based on
average costs, or another method?
Simplified Homeless Housing Cost Will the state use a standard $143
per month for homeless shelter
expenses?
Standard Utility Allowances Will the standard utility allowance
(SUAs) be mandatory (thus, the state is
opting out of prorating SUA's for
households that share a living space
and is required to use a SUA that
includes specific treatment of
utility costs for public housing
residents)?
Treatment of Vehicles Will the state's SNAP vehicle policy
be aligned with their TANF policy
(only if it will result in lower
attribution of household assets)?
Will the state opt to exclude all
vehicles or exclude at least one
vehicle? Will the state raise the
exception amount above the standard
exception amount of $4,650 to fair
market value?
Treatment of Income and For non-citizens who would have been
Deductions of Ineligible Non- ineligible for SNAP prior to PRWORA,
Citizens will the state count all, or a pro-
rated share of the individual's
income and deductions when
determining the benefit level of
other household members? For non-
citizens who are ineligible for SNAP
because of PRWORA, will the state
count none, or a pro-rated share of
the individual's income and
deductions when determining the
benefit level of other household
members?
Child Support Expense Income Will the state treat legally
Exclusion obligated child support payments as
deductions or income exclusions?
Child Support Related Will the state disqualify individuals
Disqualifications who fail to cooperate with child
support enforcement, who are in
arrears in court-ordered child
support, or both?
Comparable Disqualifications Will the state disqualify SNAP
applicants or recipients who fail to
perform actions required by other
means-tested public assistance
programs? (Applies to that
individual only, not entire
household)
Drug Felony Disqualifications Will the state opt out entirely from
the permanent disqualification of
SNAP eligibility of drug felons, or
chose to implement less severe
restrictions, or leave the lifetime
ban in place?
Work Requirements and For work requirements, will the state
Disqualification Policy (1) establish disqualification (DQ)
periods longer than the minimums?
Will the state (2) make the DQ
permanent upon the third occurrence?
Will the state (3) sanction the
entire household if the head of
household fails to comply?
Broad-Based Categorical Will the state expand categorical
Eligibility (BBCE) eligibility to ``Broad-Based
Categorical Eligibility'' (BBCE),
making eligible households that
receive noncash benefits that are
funded by TANF or Maintenance of
Effort (MOE) funds? (Households must
still provide documentation of
income and expenses for benefits to
be calculated, must meet all other
SNAP rules, and have net incomes low
enough to qualify for benefits).
Transitional Benefits Alternative For households leaving TANF or state-
(TBA) funded cash assistance programs,
will the state offer up to 5 months
of benefits at a level equal to the
amount the household received prior
to TANF termination (adjusted for
the loss of TANF income)? Will state
agencies exclude households where
all members are ineligible to
receive SNAP benefits because of
means-tested programs, failure to
cooperate with child support
agencies, and/or are delinquent on
court-ordered child support?
Document Imaging Will the state create a paperless or
less paper intensive certification
process?
Demonstrations for the Elderly Will the state implement a more
and Disabled streamlined application and
certification process for the
elderly (ESAP)? Will the state
request a demonstration waiver to
establish a Standard Medical
Deduction (SMD) for elderly or
disabled SNAP household members in
lieu of calculating actual
allowable, out-of-pocket medical
expenses?
------------------------------------------------------------------------
Note: This table reflects state options reflected in the most recent
USDA FNS State Options Report. April 15, 2016.
Source: USDA FNS SNAP. State Options Report. Options as of October 1,
2015. Published April 15, 2016. http://www.fns.usda.gov/snap/state-
options-report.

Technology plays an important role in implementing these state
options. For example, the use of computers streamlines the application
process and makes SNAP more accessible to low-income families. The use
of technology can also ease administrative burdens and enhance program
integrity.
Finding 1c: Broad-Based Categorical Eligibility (BBCE) Is the Most
Significant State Option in SNAP Recipient Eligibility
Determinations
Given that SNAP is a state-administered program, states have a
number of options at their disposal for determining the eligibility of
SNAP participants. One of the most significant state options is the
type of categorical eligibility states choose to implement: regular,
narrow, or broad-based. Categorical eligibility provides flexibility
and administrative ease for states to administer several welfare
programs simultaneously, in particular by altering or eliminating asset
tests, gross income tests, and net income tests. States that elect the
broadest form of categorical eligibility are unable to guarantee that
they are only serving households with limited assets.
In general, to become eligible for SNAP, households must meet gross
income, net income, and asset thresholds. In summary, the income and
asset requirements for SNAP eligibility are:\40\
---------------------------------------------------------------------------
\40\Id., n. 14.
---------------------------------------------------------------------------
Gross Income: gross monthly income (all income as defined by SNAP
law) for the household must be at or below 130% of the Federal poverty
level.
Net Income: net household monthly income (with SNAP-specific
deductions subtracted) must be at or below 100% of the Federal poverty
level.
Assets: household assets are limited to a maximum of $2,250 per
household (adjusted for inflation) or $3,250 (adjusted for inflation)
for households that have an elderly or disabled member, with various
exceptions for assets like homes, vehicles, and retirement savings.

------------------------------------------------------------------------

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SNAP Asset Test Summary\48\

Asset tests in SNAP are intended to limit program eligibility to
those households who are most in need. This directs program benefits to
those with the fewest financial resources. Federal rules impose a
resource test on a household's liquid assets, with the limit dependent
on whether the household includes an elderly or disabled member,
effectively applying a less restrictive asset test to those groups.
SNAP legislation in 1964 left it to the states to set asset
limits.\41\ This changed in 1971, when the Secretary of Agriculture was
required to set asset limits with exceptions for elderly
households.\42\ Since that time, SNAP asset limits have been raised and
lowered and adjusted for inflation, and additional exceptions were made
for households with disabled members.43 47 For FY 2017, the maximum
value of counted assets for most households is capped at $2,250, and
the maximum value of counted assets for households with an elderly or
disabled member is capped at $3,250.
\41\P.L. 88-525, 5.
\42\P.L. 91-671, 4
\43\P.L. 95-113 1301.
\44\P.L. 96-249, 108, 138.
\45\P.L. 99-198, 1514.
\46\P.L. 107-171, 4107.
\47\P.L. 110-246, 4104.

Included Assets:

Cash on hand.

Checking and savings accounts.

Savings certificates.

Stocks and bonds.

Nonrecurring lump sum payments and lump sum payments that
have been disregarded as income.

A portion of the value of vehicles (in some cases).

Recreational property.

Excluded Assets:

Household's primary residence (home and surrounding
property).

Business assets.

Personal property (household goods and personal effects).

Lump sum earned income tax credit and other non-recurring
payments.

Burial plots.

Cash value of life insurance policies.

Value of all tax-recognized pension savings/plans and
education savings.

Certain other resources whose value is not accessible to
the household.

Certain other resources that would not yield more than
$1,000 if sold.

Certain other resources that are required to be disregarded
by other Federal laws.

Of note is the vehicle asset limit, which is exercised as a state
option. States have the option to align their SNAP vehicle policy with
their TANF policy when it will result in a lower calculation of assets.
The standard excluded amount of a vehicle is $4,650; however states may
raise this amount to fair market value, opt to exclude the full value
of at least one vehicle, or opt to exclude the value of all
vehicles.\49\
\48\Id., n. 14.
\49\Id., n. 36.
Editor's note: the footnotes were out of sequence in the document, they
have set as submitted.
------------------------------------------------------------------------

Federal law provides two basic pathways for SNAP eligibility: (1)
by meeting program-specific Federal requirements (including those
above), or (2) by being deemed automatically, or ``categorically''
eligible, based on participation in other low-income assistance
programs. In general, categorical eligibility eliminates the need for
making a financial eligibility determination for SNAP if a household
has already been through a determination for another low-income program
(even if the eligibility criteria are not the same). However,
categorically eligible households generally must still meet prescribed
income requirements to receive SNAP benefits.
For states electing to use categorical eligibility, there are three
types:\50\
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\50\Gene Falk and Randy Aussenburg. Congressional Research Service.
The Supplemental Nutrition Assistance Program (SNAP): Categorical
Eligibility. February 2, 2016. http://www.nationalaglawcenter.org/wp-
content/uploads/assets/crs/R42054.pdf.
---------------------------------------------------------------------------
Traditional Categorical Eligibility: All members of a household are
automatically made eligible for SNAP based on the receipt of needs-
tested cash aid from TANF, SSI, or GA. These households have already
met the income and asset tests for cash aid, and these thresholds are
generally stricter than those for SNAP.
Narrow Categorical Eligibility: A less restrictive eligibility
standard than traditional categorical eligibility, with eligibility
conveyed through receipt of cash or specific noncash benefits from
TANF, such as child care and counseling. Relative to traditional
categorical eligibility, more households are eligible with narrow
categorical eligibility.
Broad-Based Categorical Eligibility (BBCE): The least restrictive
option, where households may become eligible for SNAP because they
qualify for any noncash TANF or state MOE funded benefit. This broadens
the eligibility for SNAP because noncash TANF benefits typically are
available to a broader range of households and at higher income levels.
By allowing states to align their SNAP eligibility (and asset
tests) with TANF eligibility (and asset tests), BBCE has eliminated the
asset test for SNAP in many states. As shown in the following map, as
of January 2016 there are 42 states that currently use BBCE. Only five
of the 42 states that utilize BBCE have an asset test that applies to
most applicants. In the other 37 BBCE states, there is no asset test
for households that qualify for SNAP under BBCE rules.\51\ In contrast,
there are six states that use only traditional categorical eligibility.
Since states that do not administer an asset test generally do not
collect data on the assets of SNAP households, it is not possible to
determine the extent to which BBCE has resulted in households with
assets above the usual SNAP asset limit receiving benefits. Households
that are not deemed categorically eligible for SNAP may apply for and
receive SNAP benefits under regular SNAP rules.\52\
---------------------------------------------------------------------------
\51\USDA FNS. Broad Based Categorical Eligibility. August 2016.
http://www.fns.usda.gov/sites/default/files/snap/BBCE.pdf.
\52\Ibid.

Source: Gene Falk and Randy Aussenberg. Congressional
Research Service. The Supplemental Nutrition Assistance Program
(SNAP): Categorical Eligibility. February 2, 2016. http://
nationalaglawcenter.org/wp-content/uploads/assets/crs/
---------------------------------------------------------------------------
R42054.pdf.

Karen Cunnyngham of Mathematica highlighted the impacts of BBCE:
``We estimate that, in [FY] 2014, eight percent of SNAP households were
eligible solely through state expanded categorical eligibility
programs.''\53\ She also reported that within BBCE, approximately three
percent of households were eligible through higher income limits, and
five percent of households were eligible through higher asset limits.
---------------------------------------------------------------------------
\53\Karen Cunnyngham, Senior Researcher, Mathematica Policy
Research. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP: Examining State
Options. March 2, 2016. Washington, D.C.
---------------------------------------------------------------------------
Compared to the other options available to states, BBCE has the
most significant impact on determining eligibility. While households
eligible solely due to categorical eligibility receive lower-than-
average benefits, recipient benefits for the eight percent of
households made eligible due to BBCE could still account for hundreds
of millions of dollars in benefits.
In contrast to BBCE, most other state options deal more with
program administration than with eligibility. By allowing states to
grant eligibility to those who receive noncash benefits in other
specified programs, some state options broaden the pool of recipients
and eligible applicants and extend benefits beyond the original
parameters of the program. There are few other state options that do
this, and none of them do it to the same extent as BBCE.
Finding 1d: The Need for Nutrition Assistance Cannot Be Addressed By
Just One Program Or Just One Group--It Requires More
Collaboration Between Governments, Charities, Businesses,
Health Systems, Communities, Individuals, and Many Others
Private-sector charitable organizations play a vital role in
assisting families living in poverty. Whether it is a food bank helping
families put food on the table or a nonprofit researching the best way
to engage families so they can successfully transition out of poverty,
all of these organizations play a role. ``Everyone; the Federal
Government, state governments, not-for-profits, the private sector,
researchers, and recipients themselves, have a role to play in lifting
Americans out of poverty and up the economic ladder,'' stated
Subcommittee Chairwoman Jackie Walorski during the hearing focused on
Addressing Special Populations.\54\
---------------------------------------------------------------------------
\54\Jackie Walorski, Chairwoman of the Subcommittee on Nutrition,
Hearing of the House of Representatives, Committee on Agriculture.
Past, Present, and Future of SNAP: Addressing Special Populations.
January 12, 2016. Washington, D.C.

``Everyone; the Federal Government, state governments, not-
for-profits, the private sector, researchers, and recipients
themselves, have a role to play in lifting Americans out of
poverty and up the economic ladder.''
Rep. Jackie Walorski (IN-2), Nutrition Subcommittee Chairwoman.

Public-private partnerships emphasize the value in understanding
what is happening within communities, and holistically in the life of
individuals, in order to best meet their needs. As Dustin Kunz of the
Texas Hunger Initiative stated in his testimony, ``Complex problems
require complex, creative, and collaborative solutions. Public
challenges, such as food insecurity, require a response that exceeds
the capabilities and resources of any one department, organization, or
jurisdiction. Collaboration provides a way to stretch those resources
and accomplish more with less, and the benefits of these partnerships
include cost savings and enhanced quality and quantity of services,
while also addressing community needs, enhancing trust, and increasing
citizen support.''\55\ SNAP should work in tandem with the services
that are being provided locally. The Federal Government should then
work to enhance the work on the ground and not impede it. This also
requires the individual in need to be invested in working toward self-
sufficiency. Unless the individual, local, state, and Federal
organizations are all working together, efforts to improve the
circumstances may be in vain. Jonathan Webb with Feed the Children
affirmed that by stating, ``when we are looking at these solutions, it
needs to be a broad-based approach to the solution that understands
that poverty is a component, education is a component, employment is a
component, and bringing these collaborative folks to the table to take
their piece of the issue in a way that gives them flexibility to test
new ideas is the approach that we are suggesting.''\56\
---------------------------------------------------------------------------
\55\Dustin Kunz, Research Project Manager, Texas Hunger Initiative.
Hearing of the House of Representatives, Committee on Agriculture.
Past, Present, and Future of SNAP: The World of Nutrition and the Role
of the Charitable Sector. April 15, 2015. Washington, D.C.
\56\Jonathan Webb, Director of Foundations and Community Outreach,
Feed the Children. Hearing of the House of Representatives, Committee
on Agriculture. Past, Present, and Future of SNAP: The World of
Nutrition and the Role of the Charitable Sector. April 15, 2015.
Washington, D.C.
---------------------------------------------------------------------------
Establishing best practices and forming models based on evaluation
metrics leads to stronger case management and informs what works best
for specific communities. Jeremy Everett of Texas Hunger Initiative
asserts that ``when public and private partnerships are carefully
informed by research and evaluation, stronger networks are likely
formed between clients and local organizations, thus building a
foundation for increased social capital for low-income families.''\57\
For public-private partnerships to work, it is important to understand
the needs and resources in a community and how those can be leveraged
to assist low-income individuals to climb the economic ladder.
---------------------------------------------------------------------------
\57\Jeremy Everett, Director, Texas Hunger Initiative. Hearing of
the U.S. House of Representatives, Subcommittee on Nutrition, Committee
on Agriculture. Past, Present, and Future of SNAP: Developing and Using
Evidence-Based Solutions. July 15, 2015. Washington, D.C.

``when public and private partnerships are carefully informed
by research and evaluation, stronger networks are likely formed
between clients and local organizations, thus building a
foundation for increased social capital for low-income
families.''
Jeremy Everett, Texas Hunger Initiative.

The charitable sector provides case management as a key component
in improving the overall well-being of a low-income individual or
family. Case management allows the holistic needs of the individual to
be recognized by identifying barriers, providing tools and skills, and
connecting clients to available resources. This has been applied in the
SNAP Employment and Training (E&T) program and in the initial
application process to ensure clients are receiving the government
benefits they qualify for, as well as services that might be available
to them in their community. This was highlighted by Jon Anderson of
Georgia's Division of Family and Child Services, who emphasized the
importance of coordinating nutrition services with other government
services through the use of case management.\58\ Although case
management differs based on the community, organization, and its goals,
it has proven a critical component of ensuring that SNAP recipients
have an increased chance of upward mobility. Patrick Raglow with
Catholic Charities of the Archdiocese of Oklahoma City, emphasized the
success of case management strategies: ``Case management as employed by
Catholic Charities and similar agencies, seeks to engage those we serve
in a relationship to best address the conditions which bring the client
to us, and not merely transfer resources to cover immediate needs. We
accompany people on their journey to self-sufficiency, drawing from
each client's own resources, talents, aspirations, and
objectives.''\59\
---------------------------------------------------------------------------
\58\Jon Anderson, Deputy Division Director, Division of Family and
Children Services. Hearing of the House of Representatives,
Subcommittee on Nutrition, Committee on Agriculture. Past, Present, and
Future of SNAP: Improving Innovation and Success in Employment and
Training Programs. September 13, 2016. Washington, D.C.
\59\Patrick Raglow, Executive Director, Catholic Charities of the
Archdiocese of Oklahoma City. Hearing of the House of Representatives,
Committee on Agriculture. Past, Present, and Future of SNAP: The Means
to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.
---------------------------------------------------------------------------
Food banks provide another example of the combined efforts of
charitable organizations and government programs to alleviate hunger.
Many food banks receive some level of government funding through The
Emergency Food Assistance Program (TEFAP) and CSFP. TEFAP provides
assistance to food banks through mandatory funding in the farm bill,
bonus purchases made by USDA to provide support to agriculture markets,
and through storage and distribution funds provided through the
appropriations process. While Federal commodities and funds are
important to food banks, the majority of their food is donated by
retailers, manufacturers, and private donors. In addition to working
through TEFAP and CSFP, food banks are very involved in many facets of
SNAP. They can be the grantees of SNAP E&T, SNAP Outreach, and/or SNAP-
Ed (officially, the Nutrition Education and Obesity Prevention Grant
program funding).
Many food banks also have staff that provide support in signing up
low-income individuals for public benefits. While food banks do play a
crucial role in assisting low-income individuals, it is important to
note that the United States cannot simply ``food bank'' its way out of
hunger. Rather, it takes the coordinated effort of all Federal, state,
and local partners. Leveraging existing resources and promoting
successful practices on the ground is an important step in reducing
hunger and poverty in the United States. As Kate Maehr with the Greater
Chicago Food Depository stated, ``if we can keep the Federal nutrition
programs strong, then the dollars that we get from private donations
can actually help us support innovative efforts.''\60\
---------------------------------------------------------------------------
\60\Kate Maehr, CEO, Greater Chicago Food Depository. Hearing of
the House of Representatives, Committee on Agriculture. Past, Present,
and Future of SNAP: The World of Nutrition and the Role of the
Charitable Sector. April 15, 2015. Washington, D.C.
---------------------------------------------------------------------------
Finding 1e: The Diversity of Programs Serving Low-Income Households
Simultaneously Generates Overlaps and Gaps in Recipient
Services
While addressing food insecurity in the United States must involve
a variety of organizations meeting a diversity of needs of low-income
individuals, that complexity has led to duplication among welfare
programs. The resulting confusion is pervasive at all levels--Federal,
state, and local--in both public and private organizations. Dr. Eugene
Steuerle with the Urban Institute had this to say about current
policies that assist those in poverty:

``With some exception, 20th century social welfare policy has
entailed a liberal-conservative compromise that has never had a
primary focus on mobility and opportunity, upon work and the
gains that come about when individuals or households unite in
marriage and other joint efforts. It has also failed for the
most part to integrate programs efficiently and equitably,
leading to high combined marginal tax rates, a weakened ability
to adjust to individual circumstances, a lack of coordination
among programs serving the same people, an inadequate targeting
of benefits to those who qualify, and--relative to a focus on
human capital and work--a lower growth rate for the economy as
a whole.''\61\
---------------------------------------------------------------------------
\61\Dr. Eugene Steuerle, Senior Fellow, Urban Institute. Joint
Hearing of the House of Representatives, Subcommittee on Nutrition,
Committee on Agriculture and the Subcommittee on Human Resources,
Committee on Ways and Means. Past, Present, and Future of SNAP: The
Means to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.

Federal food assistance is provided through a decentralized system
that involves multiple Federal, state, and local organizations. The
complex network of 18 food assistance programs (listed in Appendix B)
emerged in a piecemeal fashion over the past several decades to meet
various needs. In hearing testimony, the U.S. Government Accountability
Office (GAO) noted that according to USDA and local providers, the
multiple food assistance programs help to increase access to food for
vulnerable or target populations.\62\ However, GAO also testified that
this patchwork of food assistance programs shows signs of program
overlap. This can create unnecessary work and lead to inefficient use
of resources. Further, overlapping eligibility requirements create
duplicative work for both service providers and applicants. According
to Dr. Angela Rachidi with the American Enterprise Institute, ``The
extent to which we can limit the burden on staff and on families by
better consolidating and coordinating food assistance programs, the
better these families will be served and the better the government's
money will be spent.''\63\
---------------------------------------------------------------------------
\62\Kay Brown, Director, Education, Workforce, and Income Security,
U.S. Government Accountability Office. Hearing of the House of
Representatives, Subcommittee on Nutrition, Committee on Agriculture.
Past, Present, and Future of SNAP: The World of Nutrition, Government
Duplication, and Unmet Needs. May 20, 2015. Washington, D.C.
\63\Dr. Angela Rachidi, Research Fellow, American Enterprise
Institute. Hearing of the House of Representatives, Subcommittee on
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP:
The World of Nutrition, Government Duplication, and Unmet Needs. May
20, 2015. Washington, D.C.
---------------------------------------------------------------------------
According to GAO, some food assistance programs provide comparable
benefits to a similar population, but are managed separately, which
could be a potentially inefficient use of Federal funds:\64\
---------------------------------------------------------------------------
\64\Id., n. 62.

Six programs--NSLP, SBP, Fresh Fruit and Vegetable Program
(FFVP), the Summer Food Service Program (SFSP), the Special
Milk Program, and the Child and Adult Care Food Program
(CACFP)--all provide food to eligible children in settings
outside the home, such as at school, day care, or summer day
---------------------------------------------------------------------------
camps.

Two programs--CSFP and the Elderly Nutrition Program--both
target older Americans.

Individuals eligible for groceries through the CSFP are
generally eligible for groceries through both TEFAP and SNAP.

The Federal Emergency Management Agency's Emergency Food and
Shelter National Board Program and TEFAP both provide groceries
and prepared meals to needy individuals through local
government and nonprofit entities.

SFSP is similar to the Summer Seamless Option of the NSLP.

This patchwork system did not develop overnight, and the current
framework is the result of a variety of factors. In fact, some of the
overlap is rooted in split jurisdiction among the authorizing
committees in Congress. For example, in the House of Representatives,
the House Committee on Agriculture has jurisdiction over SNAP;
Nutrition Assistance Program grants for Puerto Rico, American Samoa,
and the Commonwealth of the Northern Mariana Islands; Food Distribution
Program on Indian Reservations (FDPIR); CSFP; TEFAP; Community Food
Projects; the Senior Farmers' Market Nutrition Program; and authorizes
the funding for FFVP. The House Committee on Education and the
Workforce handles WIC; SFSP; NSLP; SBP; WIC Farmers' Market Nutrition
Program; Special Milk Program; CACFP; and FFVP, generally. TANF, SSI,
the Children's Health Insurance Program (CHIP), and Medicaid are
authorized by the Committee on Ways and Means, and the housing programs
are overseen by the Financial Services Committee.
Various Federal, state, and local agencies are then responsible for
administering this patchwork of programs on the ground. Regarding SNAP,
the operation of the program is at the discretion of each state. For
instance, in California, SNAP is a county-run program. In Texas, SNAP
is administered by the state. The same goes for E&T programs within
states. For example, New Jersey operates its E&T programs out of its
Workforce Commission while some other states, such as Georgia, run
their E&T programs out of their Health and Human Services departments.
Dr. Angela Rachidi of the American Enterprise Institute cited a
specific example in New York City where SNAP, WIC, school food
programs, and child and adult care programs are all administered by
different agencies and the result is that each agency must determine
eligibility and administer benefits separately. According to Dr.
Rachidi:

``A better system would be to consolidate programs that share
the same goals and coordinate programs across one or two
governing bodies, with a focus on the person or household. This
will save the government money and reduce the burden on
participating families. It may also improve service delivery to
families by ensuring that they are made aware of all the
benefits they are eligible for, as well as limiting the chance
for errors, fraud, and abuse. I provided three specific
examples where coordination could be beneficial--setting
nutrition guidelines, authorizing retailers, and administering
nutrition education programs--and reducing inefficiencies in
eligibility determination should also be explored.''\65\
---------------------------------------------------------------------------
\65\Dr. Angela Rachidi, Research Fellow, American Enterprise
Institute. Hearing of the House of Representatives, Subcommittee on
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP:
The World of Nutrition, Government Duplication, and Unmet Needs. May
20, 2015. Washington, D.C.

While the preceding examples concern nutrition programs, silos
exist throughout the welfare system. Eligibility workers within one
program may not know the eligibility requirements for another welfare
program. This uncoordinated system makes it challenging to share
information on participating households. In the Committee's first Past,
Present, and Future of SNAP hearing, Douglas Besharov with the
University of Maryland confirmed this, saying, ``there is a great need
to modernize the program and to coordinate it with TANF, with
unemployment insurance, with SSI, with SSDI, and as well, the earned
income tax credit.''\66\
---------------------------------------------------------------------------
\66\Douglas Besharov, Professor, University of Maryland School of
Public Policy. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP. February 25, 2015.
Washington, D.C.

``there is a great need to modernize the program and to
coordinate it with TANF, with unemployment insurance, with SSI,
with SSDI, and as well, the earned income tax credit.''
Douglas Besharov, University of Maryland.

A system that works in silos has a higher likelihood of fraud and
error going undetected. States are beginning to focus more on
coordination through data sharing across states and throughout the
various programs.
Findings Theme 2: Climbing the Economic Ladder through Work
In the early days of the Food Stamp Program, eligibility
requirements were established on a state-by-state basis. When the
program expanded nationally, the Federal Government began establishing
uniform standards of eligibility, which included work requirements.
There are now two main types of work requirements for SNAP: general
work requirements and what is known as the ``ABAWD time limit'', which
is a time limit for receiving SNAP benefits for Able-Bodied Adults
without Dependents (ABAWDs). While some form of work requirements have
historically been mandated, it is up to states as to how they are
carried out. A recurring critique of work requirements is the degree to
which they are enforced by states. As Dr. Ron Haskins with the
Brookings Institution stated in his testimony, ``[SNAP] currently has
modest work requirements, but they do not appear to be rigorously
enforced.''\67\
---------------------------------------------------------------------------
\67\Dr. Ron Haskins, Senior Fellow, Brookings Institution. Hearing
of the House of Representatives, Subcommittee on Nutrition, Committee
on Agriculture. Past, Present, and Future of SNAP: Breaking the Cycle.
October 27, 2015. Washington, D.C.

``[SNAP] currently has modest work requirements, but they do
not appear to be rigorously enforced.''
Dr. Ron Haskins, Brookings Institution.

The current general work requirements were created in 1971 by an
amendment to the Food Stamp Act of 1964 (P.L. 91-671). Additional
changes in the 2008 Food and Nutrition Act mandated that in all states,
non-exempt participants must:

Accept a suitable job if offered one; and

Not voluntarily quit a job without good cause or reduce work
effort below 30 hours per week.

Certain participants (who constitute a large share of SNAP
participants) are exempt from these requirements because they are
physically or mentally unfit for work; under age 16; over age 59;
between 16 and 18 and not the head of household and attending school;
and for various other reasons. It is also important to note that the
general work requirements are a requirement to register for work, not a
minimum for hours worked.
The welfare reforms of 1996 also added the time limit for ABAWDs
who are not working and not otherwise exempted. Adults aged 18-49 who
are not physically or mentally unfit for work or caring for a minor
child are now ineligible for SNAP if they have received 3 months of
SNAP benefits during the previous 36 months, unless the participant:

Works at least 20 hours per week;

Participates in an E&T program for at least 20 hours per
week; or

Participates in a state's ``workfare'' program.

The welfare reforms of 1996 allowed states to request a temporary
waiver from USDA--typically for up to 12 months--for the ABAWD time
limit in all or parts of the state when unemployment is high or there
are not enough jobs available. After the 2008 economic crisis, a
majority of states operated under the statewide ABAWD time limit
waivers. As the economy recovered, fewer states were eligible to extend
their statewide waivers beyond January 2015. As of October 1, 2016,
there were 16 states without ABAWD waivers, 26 states approved for
partial waivers, and 11 states with waivers for the entire state or
territory.
All states are also granted an exemption to be administered at the
state's discretion, allowing them to continue to provide SNAP benefits
for up to 15 percent of recipients who would otherwise be made
ineligible by the ABAWD time limit.
Finding 2a: Unemployment and Underemployment Are Leading Causes of
Poverty, and Promoting Pathways to Employment Is the Best Way
To Help Individuals Climb the Economic Ladder Out of Poverty
and Into Self-Sufficiency
According to the National Commission on Hunger and others, work is
a crucial factor in helping low-income individuals lift themselves out
of poverty.68-69 While many families on SNAP work, there are
a large number of households that do not report earned income, which is
income that a person receives for doing work (such as salaries, wages,
tips, etc.). According to the most recent USDA SNAP Characteristics
Report, 68 percent of total SNAP households reported no earned income.
When looking at the SNAP households that one might expect to generate
an earned income (e.g., households that do not contain children,
disabled, or the elderly), only 20.6 percent of these households
reported earned income.\70\
---------------------------------------------------------------------------
\68\Id., n. 67.
\69\National Commission on Hunger. Freedom from Hunger: An
Achievable Goal for the United States of America. 2015.
\70\Id., n. 15.
---------------------------------------------------------------------------
It comes as no surprise that employment is highly correlated with
income. In 2014, according to the U.S. Census Bureau, only 2.7 percent
of full-time workers lived below the Federal poverty level, compared
with 32.3 percent of adults who do not work. Even part-time work makes
a significant difference, with only 17.5 percent of part-time workers
living below the poverty level.\71\
---------------------------------------------------------------------------
\71\U.S. Census Bureau. Income, Poverty, and Health Insurance
Coverage in the United States: 2012. http://www.census.gov/prod/
2013pubs/p60-245.pdf.
---------------------------------------------------------------------------
During the hearing The Means to Climbing the Economic Ladder,
Members heard testimony from organizations that work within local
communities to provide job training to low-income individuals.
Recipients come from a range of situations that require various levels
of job training to prepare for a successful job. Without a strong
foundation in work skills, individuals may need more assistance in
gaining and maintaining a job. WeCare, a job training program located
in New York City, grouped SNAP recipients in four categories: (1) fully
employable, where no accommodations were needed; (2) employable, with
accommodations; (3) temporarily unemployable, which is also referred to
as needing wellness or condition management; or (4) possible Federal
disability benefits.\72\ ``It is not just about giving people food. It
is about worker training. It is about getting people in the community
back on their feet,'' Subcommittee Ranking Member Jim McGovern
stated.\73\ The ability of the Federal Government to account for these
special circumstances is limited; therefore, it is crucial that state
and local partners are invested.
---------------------------------------------------------------------------
\72\Grant Collins, Senior Vice President, Fedcap Rehabilitation
Services, Inc. Hearing of the House of Representatives, Subcommittee on
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP:
The Means to Climbing the Economic Ladder. June 10, 2015. Washington,
D.C.
\73\James P. McGovern, Ranking Member of the Subcommittee on
Nutrition. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP: The World of Nutrition
and the Role of the Charitable Sector. April 15, 2015. Washington, D.C.

``It is not just about giving people food. It is about worker
training. It is about getting people in the community back on
their feet.''
Rep. Hon. James P. McGovern (MA-2), Nutrition Subcommittee Ranking
Member.
Finding 2b: Better Enforcement of Work Requirements Is Needed in Some
States, and Enforcement Needs To Be Coupled With More Effective
SNAP Employment and Training (E&T) Programs
The importance of work has always been recognized, but not
necessarily emphasized, as noted by David Stillman with the Washington
Department of Social and Health Services. According to Stillman,
``While [SNAP] has had a requirement to include an [E&T] component
since 1998, most states' programs have consisted of a referral to a job
search program.''\74\ SNAP E&T programs assist in providing job
training and job readiness to SNAP recipients. USDA's FNS gives each
state funds and a set of requirements to implement their E&T programs.
States decide which department will run their programs (e.g., Health
and Human Services, Workforce Commission, etc.) and whether or not they
work in tandem with other work-support programs in the state (e.g.,
TANF, Workforce Innovation and Opportunity Act Programs). Each state is
required by law to operate a SNAP E&T program, though they have
considerable flexibility in the design and scope of their programs.
States must submit annual state E&T plans identifying, among other
things, the services the state plans to offer; the categories and types
of individuals the state intends to exempt from E&T participation;
characteristics of the population the state agency intends to place in
E&T; and the geographic areas covered and not covered by the E&T plan.
Services offered must include one or more of the following components:
---------------------------------------------------------------------------
\74\David Stillman, Assistant Secretary, Economic Services
Administration, Washington State Department of Social and Health
Services. Hearing of the House of Representatives, Subcommittee on
Nutrition, Committee on Agriculture. Past, Present, and Future of SNAP:
Improving Innovation and Success in Employment and Training Programs.
September 13, 2016. Washington, D.C.

---------------------------------------------------------------------------
Job search activities;

Job search training, including skills assessments, job
finding clubs, training in employability techniques, and job
placement services;

Workfare programs;

Programs designed to improve the employability of eligible
individuals through actual work experience, training, or both;

Educational programs to improve basic skills and literacy;

Programs designed to increase an individual's self-
sufficiency through self-employment;

Programs to provide job retention service for up to 90 days
following employment; or

Other employment, educational, or training programs approved
by the Secretary of Agriculture or the state.

States also have the flexibility to determine what type of
participation to require under the program--either mandatory or
voluntary participation. States can also choose to work with local
nonprofits. State E&T programs are generally operated on a county-by-
county basis and offer different services to different SNAP recipients
based on where they live. In most cases, especially in rural counties,
recipients get basic assistance in the form of being provided a
computer for job searches. Seattle Jobs Initiative, an innovator in the
employment training space, has partnered up with FNS to provide best
practices to programs across the country to assist in providing better
services.
The 2014 Farm Bill enjoyed bipartisan support in focusing on the
importance of work via SNAP E&T Pilots. The grants to implement these
pilots were awarded to ten states to focus their efforts on different
community needs and implementation methods, including focusing on both
urban and rural settings, comparing voluntary versus mandatory
participation, and evaluating whether job readiness training versus on-
the-job training better prepares recipients for work. While the pilots
are a few years away from having tangible metrics, they are still able
to provide initial best practices in improving recipients' job skills
and job entry. Pete Weber with the Fresno Bridge Academy cited research
from the Center on Budget and Policy Priorities on common
characteristics across effective E&T programs. They found that the most
effective programs include providing education or remediation to allow
individuals with low education levels to access industry-specific
training programs; individualized, hands-on work to build life skills;
and provision of supportive services (transportation and flexible funds
to help purchase items to help individuals work or look for work).\75\
---------------------------------------------------------------------------
\75\Pete Weber, Founder, Fresno Bridge Academy. Hearing of the
House of Representatives, Subcommittee on Nutrition, Committee on
Agriculture. Past, Present, and Future of SNAP: Improving Innovation
and Success in Employment and Training Programs. September 13, 2016.
Washington, D.C.
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If the Federal Government is going to help enable recipients to
climb the economic ladder, first there must be a better understanding
of what is happening at the local level and what can be improved upon.
As stated earlier in this section, there is concern that general work
requirements are not adequately enforced. States must engage in greater
oversight of the enforcement of the general work requirements to ensure
those who can work do. At the Federal level, the way states enforce the
work requirements must be taken into account to ensure that this can be
done with administrative ease.
Successful E&T programs paired with work requirements promote the
importance of work and help maintain program integrity. ``There is
little evidence that harsh provisions are necessary to encourage able-
bodied adults to work. Reasonable requirements, strongly enforced, and
accompanied by the carrots for work provided by the work support
system, may well be enough to encourage adults to work,'' stated Dr.
Ron Haskins with the Brookings Institution. Those that can work should
work, and they need to be provided with the tools to aid in their
upward economic mobility. This ``builds the participants' confidence in
their own natural ability and self-worth.''76-77
---------------------------------------------------------------------------
\76\Id., n. 67.
\77\Leon Samuels, Executive Director, Strive DC. Hearing of the
House of Representatives, Committee on Agriculture. Past, Present, and
Future of SNAP: The Means to Climbing the Economic Ladder. June 10,
2015. Washington, D.C.
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Finding 2c: Combined With Other Welfare Programs, SNAP Recipients May
Face a ``Welfare Cliff'' When They Are Just Above the Income
Eligibility Level, Which Can Create Disincentives To Finding
Work Or Increasing Earnings
SNAP does not operate in a vacuum. The recipients of one Federal
program are often the recipients of multiple Federal programs. During a
joint hearing on the welfare cliff, then-Chairman of the House Ways and
Means Committee Paul Ryan pointed out that, ``right now we have a
safety net that is designed to catch people falling into poverty. What
we need is a safety net to lift people out of poverty.''\78\ According
to the most recent SNAP Characteristics Report, 20 percent of SNAP
recipients receive SSI, 24 percent receive some form of Social Security
benefits, nine percent receive child support enforcement payments,
seven percent receive support from TANF, and four percent receive UI. A
recipient just below the income threshold of certain programs may see a
significant decrease in the amount of assistance they receive when they
obtain employment that provides earned income over a certain threshold,
leading to what is known as the ``welfare cliff.'' This phenomenon is
highlighted in the figure below.
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\78\Paul Ryan, Chairman of the House Committee on Ways and Means.
Joint Hearing of the House of Representatives, Subcommittee on
Nutrition, Committee on Agriculture and the Subcommittee on Human
Resources, Committee on Ways and Means. Past, Present, and Future of
SNAP: The Means to Climbing the Economic Ladder. June 10, 2015.
Washington, D.C.

``right now we have a safety net that is designed to catch
people falling into poverty. What we need is a safety net to
lift people out of poverty.''
Rep. Paul Ryan (WI-1), former Ways and Means Chairman.
Tax and Transfer Benefits for Universally Available and Additional
Programs

Note: This scenario applies to single adults with two
children.
Source: Dr. Eugene Steuerle, Senior Fellow, Urban Institute.
Joint Hearing of the House of Representatives, Subcommittee on
Nutrition, Committee on Agriculture and the Subcommittee on
Human Resources, Committee on Ways and Means. Past, Present,
and Future of SNAP: The Means to Climbing the Economic Ladder.
June 10, 2015. Washington, D.C.

Individuals may be forced to decide whether to reduce the number of
hours worked and gain more government benefits, or work and lose said
benefits but have less monthly income than if the recipient was to
forgo working. In discussing the welfare cliff, Dr. Casey Mulligan of
the University of Chicago highlighted two reasons government tax and
spending rules reduce the reward for work. First, there are income
contingencies that occur--if a household receives more income from
work, it receives fewer benefits. Second, there are employment
contingencies--the more employment a household has, the more its taxes
and benefit amounts are impacted even if its income is the same.\79\
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\79\Dr. Casey Mulligan, Professor, Department of Economics,
University of Chicago. Joint Hearing of the House of Representatives,
Subcommittee on Nutrition, Committee on Agriculture and the
Subcommittee on Human Resources, Committee on Ways and Means. Past,
Present, and Future of SNAP: The Means to Climbing the Economic Ladder.
June 10, 2015. Washington, D.C.
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Chanel McCorkle, a SNAP recipient, described her experience with
the welfare cliff: ``After I lost my job I applied for Temporary Cash
Assistance through the Department of Social Services. Thirty days after
I applied I was granted cash assistance, and immediately received
daycare vouchers and an increase in food stamp assistance. The daycare
vouchers I so desperately needed while I was working were finally
granted to me after it cost me my job.''\80\
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\80\Chanel McCorkle, Candidate, America Works of Maryland. Joint
Hearing of the House of Representatives, Subcommittee on Nutrition,
Committee on Agriculture and the Subcommittee on Human Resources,
Committee on Ways and Means. Past, Present, and Future of SNAP: The
Means to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.
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The answer to fully addressing the welfare cliff does not wholly
rely on SNAP; instead it relies on coordination across committees and
welfare programs to ensure they reduce poverty and hunger while
encouraging work that leads to greater economic success. Erik Randolph
with the Illinois Policy Institute described the welfare cliff by
providing the following example: ``A single parent in Lake County,
Illinois, who earns $12 per hour brings home just over $22,000 in net
pay. However, that same single parent is eligible for an array of
welfare benefits as follows:

``Refundable tax credits from the Earned Income Tax Credit,
the Additional Child Tax Credit, and the Illinois Earned Income
Tax Credit;

``Food assistance, including SNAP, food packages from WIC,
and the National School Lunch Program;

``Housing assistance from the Housing Choice Voucher
Program;

``Subsidized child care services; and

``Medical assistance for both the parent and her children.''

Randolph continued, ``When you add up the value of those potential
benefits, it comes to an astounding $39,534, bringing the total net
receivables in terms of earned income and benefits to $61,655. In
comparison, suppose you earn $18 per hour, bringing home about $33,000
in net pay. That is a gain of about $11,000 in earned income. However,
your potential welfare benefits will drop drastically to $5,236 from
$39,534, for a loss of more than $34,000. Why would any sane person
voluntarily give up $34,000 in benefits to gain only $11,000?''\81\
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\81\Erik Randolph, Senior Fellow, Illinois Policy Institute. Joint
Hearing of the House of Representatives, Subcommittee on Nutrition,
Committee on Agriculture and the Subcommittee on Human Resources,
Committee on Ways and Means. Past, Present, and Future of SNAP: The
Means to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.
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Findings Theme 3: Maintaining Program Integrity
Program integrity within SNAP is critical for both the functioning
and long-term sustainability of the program. Jessica Shahin of USDA FNS
emphasized this in her testimony at the Evaluating Error Rates and
Anti-Fraud Measures to Enhance Program Integrity hearing: ``As vital as
the program is to so many, and as well as it operates, we can all agree
that it can do even better, and it is up to all of us, the Federal
Government, the states, and the local providers to work together to
improve it by holding ourselves accountable. FNS is committed to
continually improving the integrity of SNAP. FNS has long recognized
that SNAP cannot succeed without strong public confidence, so good
stewardship of tax dollars is one of our most important
objectives.''\82\
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\82\Jessica Shahin, USDA FNS, SNAP Associate Administrator. Hearing
of the House of Representatives, Committee on Agriculture. Past,
Present, and Future of SNAP: Breaking the Cycle. October 31, 2016.
Washington, D.C.

``FNS has long recognized that SNAP cannot succeed without
strong public confidence, so good stewardship of tax dollars is
one of our most important objectives.''
Jessica Shahin, USDA FNS.

At the same hearing, Dave Yost, Auditor of State in Ohio, discussed
the public perception and impact of food stamp fraud: ``Food stamp
fraud hardens the hearts of good people and deafens their ears to the
sound of hunger. Every dollar wasted or fraudulently spent is a dollar
that could be used for its intended purpose: to feed the poor. For
those who hunger, and for those who pay the bill, we owe a greater
effort toward integrity.''\83\
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\83\Dave Yost, Auditor of State, State of Ohio. Hearing of the
House of Representatives, Committee on Agriculture. Past, Present, and
Future of SNAP: Breaking the Cycle. October 31, 2016. Washington, D.C.

``Food stamp fraud hardens the hearts of good people and
deafens their ears to the sound of hunger. Every dollar wasted
or fraudulently spent is a dollar that could be used for its
intended purpose: to feed the poor. For those who hunger, and
for those who pay the bill, we owe a greater effort toward
integrity.''
Dave Yost, Auditor of State in Ohio.

Both of these witnesses highlighted how critical it is to seek
constant and continuous improvement in SNAP. They also pointed out how
important it is to understand any issues or problems that arise with
payments and to ensure that sufficient steps are taken to address and
prevent future issues.
In any discussion of program integrity, it is important that terms
be carefully defined. In the context of SNAP:

Improper payments, or ``SNAP errors'', are under or
overpayment of benefits due to:

Unintentional administrative errors in eligibility or
benefit determination; and

Misrepresentation of eligibility;

Fraud is the intentional misuse of SNAP benefits. It
includes:

Benefits trafficking, which is the exchange of SNAP
benefits for cash or noncash goods or services (other than
eligible food) by recipients and/or retailers;

Misrepresentation of eligibility resulting in benefits
being improperly awarded to recipients; and

Misrepresentation of information by businesses or
individuals when applying to become a SNAP authorized
retailer.

As made clear by these descriptions, there is overlap between the
components of fraud and improper payments, and addressing program
integrity is a challenging and complicated issue. Clarity in what is
being measured and how those metrics can be used to ensure benefits
reach intended recipients are critical considerations in the structure
of the program.
Finding 3a: SNAP Needs Clear Program Goals and Must Be Evaluated
According to Metrics Aligned With Those Goals To Generate
Program Improvement
The Food and Nutrition Act of 2008, as amended, lays out
Congressional intent for SNAP:

``It is hereby declared to be the policy of Congress, in
order to promote the general welfare, to safeguard the health
and well-being of the nation's population by raising levels of
nutrition among low-income households. Congress hereby finds
that the limited food purchasing power of low-income households
contributes to hunger and malnutrition among members of such
households. Congress further finds that increased utilization
of food in establishing and maintaining adequate national
levels of nutrition will promote the distribution in a
beneficial manner of the nation's agricultural abundance and
will strengthen the nation's agricultural economy, as well as
result in more orderly marketing and distribution of foods. To
alleviate such hunger and malnutrition, a supplemental
nutrition assistance program is herein authorized which will
permit low-income households to obtain a more nutritious diet
through normal channels of trade by increasing food purchasing
power for all eligible households who apply for
participation.''\84\
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\84\Food and Nutrition Act of 2008 as Amended, Declaration of
Policy, Section 2.

Throughout the hearing series, witnesses emphasized that SNAP does
not simply provide nutrition to low-income recipients. It also provides
nutrition education, better access to fresh fruits and vegetables,
valuable employment and training opportunities, and coordination with
other welfare programs. Monitoring the progress on all of these
objectives is a major challenge, and witnesses documented the need for
targeted program metrics and evaluations.
SNAP program performance is currently evaluated in a number of
ways. Some of those evaluations provide the characteristics of SNAP
recipient households, including household composition; presence of
children, elderly, or disabled persons; gross and net income; and other
characteristics.\85\ Other evaluations provide information on the over
250,000 retailers who participate in SNAP and on FNS's monitoring and
evaluation of retailers. USDA publishes a report of compliance activity
for retailers, reflecting sanctions (including disqualifications) and
other compliance actions. In FY 2015, USDA flagged over 17,900 stores
for potential violations and initiated over 3,700 compliance actions on
authorized firms found in violation of SNAP regulations.\86\
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\85\Id., n. 15.
\86\USDA FNS. SNAP Retailer Management FY 2015 Year End Summary.
http://www.fns.usda.gov/snap-retailer-data.
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In another method of program monitoring and evaluation, states and
FNS have quality control (QC) procedures in place to review household
eligibility determinations. States review a sample of their SNAP cases,
and FNS subsequently verifies a sub-sample of those cases. The results
of this review are used to calculate state error rates, and the state
error rates are averaged (weighted) to estimate the national error
rate. Much of the information on SNAP performance is collected at the
state level because the states are responsible for making SNAP
eligibility determinations.
The design and structure of programs can also be critical in
ensuring they are able to be monitored and evaluated adequately. For
example, the 2014 Farm Bill funded ten pilot projects designed to
reduce dependency and increase work, all of which are required to have
a ``control group'' that does not participate in the program, in order
to be able to measure whether the pilots achieve their desired
outcomes.
One area of SNAP that differs from the program evaluation methods
of other means-tested programs is that SNAP includes bonuses tied to
error rates. USDA provides states with financial bonuses and imposes
sanctions to reduce or maintain low error rates. In general, $24
million is allocated among states with the best payment accuracy and
most improved payment accuracy.\87\
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\87\Kay Brown, Director, Education, Workforce, and Income Security,
U.S. Government Accountability Office. Hearing of the House of
Representatives, Committee on Agriculture. Past, Present, and Future of
SNAP: Evaluating Error Rates and Anti-Fraud Measures to Enhance Program
Integrity. July 6, 2016. Washington, D.C.

``The Federal Government could greatly accelerate evidence
building within SNAP by creating strong incentives for states
to use their existing funds to rigorously test new employment/
training strategies.''
Jon Baron, Laura & John Arnold Foundation.

There are differences of opinion regarding state bonuses and the
basis on which they should be awarded. Some believe these bonuses serve
as an important incentive to states to focus on particular areas of
SNAP success. For example, as Jon Baron at the Laura and John Arnold
Foundation noted, ``The Federal Government could greatly accelerate
evidence building within SNAP by creating strong incentives for states
to use their existing funds to rigorously test new employment/training
strategies.''\88\
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\88\Jon Baron, Vice-President for Evidence-Based Policy, Laura and
John Arnold Foundation. Hearing of the House of Representatives,
Subcommittee on Nutrition, Committee on Agriculture. Past, Present, and
Future of SNAP: Developing and Using Evidence-Based Solutions. July 15,
2015. Washington, D.C.
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However, there is also concern about whether the reporting and
evaluation that are done are adequate to measure the intended outcomes
of the program. This is critical for determining whether SNAP is
successful or not, and in what ways the program can be improved. As
pointed out by Dr. James Sullivan of the University of Notre Dame: ``By
steering resources towards the most effective social programs, evidence
of what works and what doesn't can significantly improve the lives of
the poor.''\89\ He further states, ``By guiding funds away from
ineffective programs, high quality impact evaluations allow us to do
more good with the limited resources available.''
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\89\Dr. James Sullivan, Rev. Thomas J. McDonagh, C.S.C., Associate
Professor of Economics, University of Notre Dame and Director, Wilson
Sheehan Lab for Economic Opportunities. Hearing of the House of
Representatives Subcommittee on Nutrition, Committee on Agriculture.
Past, Present, and Future of SNAP: Developing and Using Evidence-Based
Solutions. July 15, 2015. Washington, D.C.
---------------------------------------------------------------------------
Witnesses who testified at the hearings on reporting and evaluation
suggested that using evidence to guide policy can generate positive
outcomes. This requires actions such as incentivizing innovation and
measurement of program effectiveness. Measurement of effectiveness is
highly dependent on data available, and the decentralized nature of
SNAP administration has long hampered data collection efforts.
The importance of adequate reporting metrics is readily apparent in
efforts to track and prevent churn. Churn occurs when ``SNAP households
rapidly cycl[e] on and off the program, usually due to lapses through
the recertification process.''\90\ Churn imposes costs both to
participants and to agencies administering the program. For agencies,
churn increases costs by requiring agencies to process additional
applications from households reentering the program. For participants,
costs include the loss of benefits that they otherwise would have
received, the administrative burdens of the reapplication process, and
other burdens related to coping during the period without benefits.
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\90\Gregory Mills, Senior Fellow, Urban Institute. Hearing of the
House of Representatives, Subcommittee on Nutrition, Committee on
Agriculture. Past, Present, and Future of SNAP: Recipient
Characteristics and Dynamics. February 26, 2015. Washington, D.C.
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Data and research are conflicting regarding how long SNAP
participants are on the program. Stephen Tordella of Decision
Demographics testified on a recent study of SNAP participation dynamics
his organization conducted. Based on their findings, SNAP spells (or
continuous time on the program) have gotten longer over the past
decade: \1/2\ of those who entered the program between 2008 to 2012
(``new entrants'') exited within 12 months, compared to 10 months
during the mid-2000s and 8 months in the early 2000s. SNAP spell
lengths were shorter for individuals in families without children and
for ABAWDs. Spell lengths were longer for new entrants living in
poverty, those in single-parent families, nonelderly disabled adults,
and children.
Overall, however, most entrants left the program within 2
years.\91\ Understanding why a recipient is moving on and off the
program is of benefit to the recipient and could lower administrative
costs. Adequate reporting and evaluation metrics can get at the root of
the issues recipients face and allow states to best know what
individuals are facing.
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\91\Stephen Tordella, President, Decision Demographics. Hearing of
the House of Representatives, Subcommittee on Nutrition, Committee on
Agriculture. Past, Present, and Future of SNAP: Recipient
Characteristics and Dynamics. February 26, 2015. Washington, D.C.
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Finding 3b: SNAP Fraud Rates Can Be Improved Through Innovative State
and Federal Strategies and Technologies
Fraud rates are one of several important indicators of SNAP program
integrity. Fraud is especially malicious because it is intentional.
SNAP recipient fraud can occur when applicants make misleading or false
claims to obtain benefits or when applicants misuse benefits by trading
them for cash or noncash goods or services (this particular type of
fraud is known as ``trafficking''). Examples of trafficking include the
illegal sale of SNAP benefits for cash and sales of SNAP benefits for
ineligible items. For example, from 2009 to 2011, trafficking of SNAP
benefits for cash at a discount to food retailers diverted an estimated
$858 million annually from SNAP benefits, and overall, approximately
1.3 percent of total SNAP benefits were trafficked via retailers.\92\
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\92\USDA FNS. Nutrition Assistance Program Report. The Extent of
Trafficking in the Supplemental Nutrition Assistance Program: 2009-
2011. August 2013. http://www.fns.usda.gov/sites/default/files/
Trafficking2009.pdf.
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While these numbers are alarming, a September 2012 USDA Office of
Inspector General (OIG) report found that the exact amount of recipient
fraud is difficult to estimate accurately and recommended that FNS
determine the feasibility of creating a uniform methodology to
calculate recipient fraud in the same way across states. FNS ultimately
determined that to do so would require legislative authority mandating
significant state investment of time and resources in addressing fraud
beyond current requirements.\93\
---------------------------------------------------------------------------
\93\Id., n. 87.
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Responsibility for addressing SNAP fraud falls on both FNS and
states. At the Federal level, FNS is responsible for managing retailer
fraud. SNAP retailers are approved nationally, and any fraud they
commit could have implications across state borders. At the state
level, individual state or local agencies that administer SNAP are
responsible for detecting, investigating, and prosecuting fraud
committed by recipients. FNS retains responsibility for providing
guidance and monitoring state activities.
Strategies for addressing fraud are wide-ranging and include:
cross-referencing across state databases to identify duplication,
monitoring transactions that are for an even dollar amount, conducting
undercover investigations, and using an electronic audit trail of EBT
transactions to identify trafficking. GAO's hearing testimony also
pointed out that many states employ fraud reporting hotlines and
websites, and that many states do extensive review of school
enrollment, vehicle registration, vital statistics, and credit reports
to detect potential fraud. However, the depth of this analysis varied
considerably and at the time of GAO's report, for example, Florida was
routinely reviewing EBT transactions data for suspicious patterns,
while Texas was only reviewing transactions for households that had
been referred for potential fraud. Some states, but not all, monitored
postings on social media and e-commerce sites to monitor for
individuals selling SNAP benefits. States have reported limitations on
their ability to track fraud due to inadequate staffing levels.\94\
---------------------------------------------------------------------------
\94\Id., n. 87.
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At the Federal level, FNS has over 100 analysts who analyze
retailer data, conduct undercover investigations, and process cases
against violating retailers. The Federal Government also collects
delinquent SNAP recipient claims via the Treasury Offset Program; these
claims could be because of intentional program violations by the
client, inadvertent household error, or a state agency error.\95\
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\95\USDA FNS. What is FNS Doing to Fight SNAP Fraud. http://
www.fns.usda.gov/fraud/what-fns-doing-fight-snap-fraud.
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Reducing or eliminating SNAP fraud is critical to program integrity
and continuing to provide benefits to eligible individuals and
households. Although fraud is an ongoing concern, efforts to address it
are also ongoing.
Finding 3c: SNAP Error Rates Are Only As Good As the Program Parameters
On Which They Are Based
The SNAP error rate is an often-cited parameter of SNAP program
integrity. USDA's SNAP payment error rate is determined via the SNAP
Quality Control System, which measures the accuracy of eligibility and
benefit determinations made by states. The SNAP payment error rate is
the sum of overpayments and underpayments, but notably excludes errors
of less than $37 per month.\96\ As of FY 2014, the SNAP national
payment error rate was 3.66 percent, which reflected a combined rate of
2.96 percent overpayments and 0.69 percent underpayments.\97\ Using the
$69.99 billion in total payments in FY 2014, overpayments of 2.96
percent were equal to just over $2.07 billion. There has been a long-
term downward trend in SNAP error rates calculated as a percent of
benefits, but it is important to note that these have come as the value
of benefits from the program have been increasing, and the dollar value
of overpayment of benefits was on a general uptrend through FY
2011.\98\ Regardless of the improvements in SNAP error rates, taxpayer
dollars must be used and protected appropriately, since even low error
rates represent significant taxpayer cost.
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\96\Agricultural Act of 2014, Section 4019. Note that the $37/month
is adjusted annually at the rate of changes in the value of the Thrifty
Food Plan.
\97\USDA FNS. Supplemental Nutrition Assistance Program (SNAP):
Quality Control. http://www.fns.usda.gov/snap/quality-control.
\98\USDA FNS. SNAP Quality Control Error Rates. http://
www.fns.usda.gov/snap/snap-quality-control-error-rates.
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While fraud is clear cut in that it requires malicious intent, SNAP
administrative errors are considered unintentional. Although they are
unintentional, error rates vary substantially based on program design.
Using the policy options provided in SNAP statute, states have the
option of implementing an option called ``simplified reporting,'' which
requires households to report changes in income only when their income
rises above a certain level. Simplified reporting may lower error rates
because it reduces the frequency of required reports. States that do
not utilize this option require households to report their earnings
more frequently. This option is discussed at length later in the
report.
In another example of the potential for variation in error rates,
the use of BBCE in determining eligibility for SNAP means that there
are fewer steps required in an agency determination of household
eligibility. By linking SNAP eligibility to receiving noncash services
provided by TANF, the state effectively removes or increases SNAP asset
limits, increases the SNAP gross income limit, and removes the SNAP net
income limit (because they are using the TANF noncash asset and income
limits instead). According to GAO, ``state flexibilities that
simplified program policies or procedures may therefore have
contributed to decreases in the SNAP improper payment rate, though the
rate was likely affected by additional factors as well, such as changes
in the number of SNAP applicants and state staffing levels.'' In other
words, if fewer hurdles are required to determine SNAP eligibility,
there are fewer opportunities for making errors. Reducing the error
rate may not necessarily be a good thing if it comes at the expense of
robust eligibility requirements. Of 33 state options GAO reviewed, 17
likely reduced the potential for error. In some cases, potential to
reduce the error rate was also a key factor in a state's decision to
adopt certain policies.\99\
---------------------------------------------------------------------------
\99\Id., n. 87.
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Another concern with SNAP error rates was highlighted in the USDA
OIG's review of the QC process to determine whether there are
sufficient controls in place to ensure the integrity of SNAP error rate
determinations. After reviewing national, regional, and state level
procedures, OIG found that states ``weakened the QC process by using
third-party consultants and error review committees to mitigate
individual QC-identified errors, rather than improving eligibility
determinations'' and that error cases were also treated non-uniformly.
They also found that ``FNS' two-tier QC process is vulnerable to state
abuse due to conflicting interests between (1) accurately reporting
true error rates and incurring penalties or (2) mitigating errors and
receiving a bonus for exceeding standards.'' Further, OIG concluded
that ``FNS' QC process understated SNAP's error rate.'' OIG recommended
that FNS consider changing QC from a two-tier process to a one-tier
process in which FNS or a third party reviews the cases.\100\ These
concerns are of particular importance because states are also eligible
to receive high-performance bonuses based on their error rates. This
can create perverse incentives for states to seek ways to hide errors
rather than seek actual program improvement.
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\100\USDA Office of Inspector General. FNS Quality Control Process
for SNAP Error Rate. September 2015. Audit Report 27601-0002-41.
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In response to OIG's findings, USDA FNS has undertaken an extensive
review of the QC process, including issuing strong guidance to states
on the integrity of the SNAP Quality Control system. States were
provided directives on preventing bias, on misusing error review
committees and third party systems, and on their responsibilities for
addressing improper payments.\101\ USDA's review process revealed data
quality concerns in 42 states for FY 2015. USDA has indicated it will
not be releasing national error rates for FY 2015. However, in November
2016, USDA released the error rates for 11 states where QC data can be
validated. In accordance with Federal policy, ten of those states will
receive payment accuracy bonus awards.
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\101\USDA FNS. Integrity of the SNAP Quality Control System.
Quality Control Policy Memo: 16-02. Jan. 20, 2016.
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The presence of state flexibilities and concerns with the QC system
show that there are ways that states can significantly lower error
rates without necessarily improving program integrity. Thus, SNAP error
rates must be considered in the context of any changes in program
design and state options for implementing SNAP. Perhaps more
importantly, additional consideration is needed in whether performance
bonuses based on SNAP error rates are warranted, given subjective
program design and implementation.
Finding 3d: State Flexibility in Administering SNAP Should Not
Jeopardize Program Integrity
Some state flexibility within SNAP is critical to better targeting
benefits to those in need, for streamlining program administration, and
for coordinating with other programs. However, the discussion of SNAP
error and fraud, as well as the extensive needs of some SNAP
beneficiaries, indicates that flexibility and accountability must be in
balance. As described in extensive detail earlier, states have a long
list of options they can take at their discretion as well as the
ability to apply to FNS for waivers from many SNAP program
requirements. State options can be difficult to track because they are
implemented at the option of the state and are typically reported to
FNS primarily via an annual state plan submission.
Further, after reviewing 33 state options, GAO concluded that the
majority of state SNAP policy flexibilities likely reduced payment
errors. Of the 17 that potentially reduced the likelihood of payment
errors, 11 simplified the SNAP program requirements (generally reducing
opportunities for participants and caseworkers to make errors) and six
modified the procedures for receiving and processing information. One
of the most commonly used options relates to recipient reporting
frequency.\102\
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\102\Id., n. 87.
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Recipient Reporting Frequency
SNAP implementing agencies are granted flexibility in determining
the requirements for recipients to report changes in income (or other
key household changes). However, flexibility in reporting comes with a
tradeoff in the timeliness of the information the state agency has on
recipients.
A perfect example of this tradeoff can be seen in reporting
requirements for the elderly or disabled. Households in which all
members are elderly or disabled have a certification period of up to 24
months with a 12 month periodic reporting requirement.\103\ This
reduces the burden on the household and on the state agency for
handling reporting; however, a year could pass with no update in
household status, in which time the household composition could change.
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\103\Food and Nutrition Act of 2008. Section 3(f).
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State agencies have the option of requiring SNAP recipients to
report household circumstances at various intervals and in various
ways. State agencies can use different reporting systems for different
types of households, or different geographical areas, but each
household is subject to only one reporting system:

For change reporting, recipients may be required to report
changes periodically or within a certain time, typically within
10 days, after certain changes in circumstances occur.

Under periodic reporting, participants report either
monthly, quarterly, or using a simplified system with reduced
reporting requirements. Under simplified reporting, households
are required to report changes in income between certification
and scheduled reporting periods when total countable income
rises above 130 percent of the poverty level or when work hours
for ABAWDs fall below 20 hours per week. State agencies have
the option to act on all changes reported during the
certification period, or to act only on certain changes that
result in an increase in household benefits. States that have
chosen to act on all changes must act to verify any changes
reported and take appropriate action, even if this change
reduces the client's benefit. This option allows states that
have combined SNAP/TANF programs to more seamlessly integrate
the two. It avoids a situation where the TANF program has acted
on a change, but SNAP has not, and it decreases caseworker
burden by aligning the programs.

Households certified for SNAP for longer than 6 months must submit
a periodic report at least once every 6 months, but no more than once
every 4 months, during the certification period. Some [state] agencies
have opted to certify simplified reporting households for 12 months,
with a periodic report at 6 months. Others have opted to certify these
households for 6 months.\104\
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\104\Id., n. 36.
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The net result of the state option for simplified reporting, and
other state options such as BBCE, is that states can generate
reductions in their state error rate without necessarily increasing the
likelihood that the program serves those most in need.
Beyond reporting requirements and other state flexibilities, there
is also an important systematic role that FNS plays in SNAP program
consistency and oversight. Important efficiencies are gained by
retaining some roles in program administration at the Federal level.
Because SNAP retailers, transactions, and recipients can all reach
across state lines, a unified approach to management of these portions
of SNAP and oversight of implementation are all critical in program
integrity.
Unfortunately, there are significant examples of when states fell
short in their responsibility to protect SNAP program integrity. As was
mentioned at several of the hearings, a USDA review of New Mexico's
Human Services Department and its implementation of SNAP found severe
compliance issues with SNAP administration, primarily with recipient
certification, improperly slowing the application process, and
improperly paying benefits.
A balance must be struck between enhancing program integrity and
ensuring ``that the administration of benefit programs does not impose
additional burdens on working families.''\105\ Requiring an individual
to take off work and stand in a long line to see a caseworker, for
instance, creates an undue burden on the recipient. Addressing the
administrative burden of reporting requirements while utilizing data
sharing among and within states could ease administrative burdens while
improving program integrity.
---------------------------------------------------------------------------
\105\Dr. Olivia Golden, Executive Director, Center for Law and
Social Policy. Joint Hearing of the House of Representatives,
Subcommittee on Nutrition, Committee on Agriculture and the
Subcommittee on Human Resources, Committee on Ways and Means. Past,
Present, and Future of SNAP: The Means to Climbing the Economic Ladder.
June 10, 2015. Washington, D.C.
---------------------------------------------------------------------------
Finding 3e: Data Availability--With Robust Privacy Protections--Is a
Key Concern in Ensuring SNAP Is Functioning As Intended
Because SNAP is state (and in some cases, county) administered,
program data and eligibility determinations are managed at the state
agency level. The Committee's review of SNAP points to room for
improvement in how data is collected among state and county agencies
and FNS. Currently, data modeling is used to augment actual data. For
example, Karen Cunnyngham of Mathematica highlighted the use of this
approach to ``compare poverty, SNAP eligibility, and SNAP participation
across states.''\106\
---------------------------------------------------------------------------
\106\Karen Cunnyngham, Senior Researcher, Mathematica Policy
Research. Hearing of the House of Representatives, Committee on
Agriculture, Subcommittee on Nutrition. Past, Present, and Future of
SNAP: Evaluating Error Rates and Anti-Fraud Measures to Enhance Program
Integrity. February 26, 2015. Washington, D.C.
---------------------------------------------------------------------------
At the request of Chairman Conaway, GAO recently reported on
practices that can enhance the utilization of data by states.\107\
States are required by law and regulation to determine eligibility for
SNAP. Verification of that information, and in particular, verification
of income information of potential SNAP beneficiaries, is a critical
challenge for states and is a data-intensive process, as noted by GAO:
``One financial criterion for SNAP eligibility and benefit amount
involves household income, which can come from various sources,
including earned income, such as wages and salaries, and unearned
income, such as payments from other government programs.''\108\
---------------------------------------------------------------------------
\107\U.S. Government Accountability Office. Report to the Chairman,
Committee on Agriculture, House of Representatives. Supplemental
Nutrition Assistance Program: More Information on Promising Practices
Could Enhance States' Use of Data Matching for Eligibility. GAO-17-111.
October 2016.
\108\Ibid.
---------------------------------------------------------------------------
Agencies at the state and county level that administer SNAP
simplify this process with data matching to (1) obtain information on
households' income, (2) verify information provided on income, and (3)
identify discrepancies. Data matching can also inform agencies on
changes in income for interim checks and recertification of recipients.
A survey of all states shows that they conduct multiple data
matches for income. In total, 16 types of state data matches were
reported. Examples of data sources used by states for data matching
include:\109\
---------------------------------------------------------------------------
\109\Ibid.

Old Age, Survivors, and Disability Insurance (OASDI) income
information can be obtained from multiple data matches with the
Social Security Administration (SSA) and is used by 51 of 53
---------------------------------------------------------------------------
state agencies.

SSI information comes from several direct data matches with
SSA and is used by 51 of 53 state agencies.

The Work Number' is a commercial verification
service operated by Equifax Inc. that provides payroll
information from participating employers for a fee and is used
by 45 of 53 state agencies.

Public Assistance Reporting Information System (PARIS)
Interstate file from the Department of Health and Human
Services (HHS) provides information on individuals' benefit
receipt in other states, but is used by 40 of 53 state
agencies.

The GAO study showed that the opinion of state officials on the
usefulness of each data match varied widely. For example, SSI and OASDI
were overwhelming viewed as useful. In contrast, the National Directory
of New Hires (NDNH) and the Beneficiary Earnings Exchange Record (BEER)
were considered not at all or somewhat useful by a majority of states.
Opinions about usefulness generally were derived from concerns about
accuracy (and ability to verify accuracy) and timeliness of data that
is being used to determine program eligibility and benefits.
States recognize the need for improving their data matching
processes. Some states are targeting and streamlining their data
matching activities, including prioritizing which matches need follow-
up. For example, Texas, Virginia, and Washington have enabled
caseworkers to look up data from multiple data systems with a single
search.
SNAP is not the only Federal program that requires data on
household income, and there is a particular opportunity to leverage
information and systems used for TANF and Medicaid income verification.
For example, the Center for Medicaid and Medicare Services (CMS)
created the Federal data services hub (``the Hub'') that provides a
single access point to gather information for eligibility
determinations for Medicaid. That includes access to data from SSA and
Work Number'. Although this data is also used for SNAP, data
use agreements currently in place do not allow the use of this
information for SNAP eligibility determinations. This hindrance is a
concern for states interviewed by GAO and is an area where additional
access to data and technology could enhance program functionality and
efficiency.
Robert Greenstein of the Center on Budget and Policy Priorities
testified on the use of data to improve program integrity.\110\ He
noted that innovation that is used in states such as Utah, Washington,
and Idaho, enables caseworkers to access data in real time and to
process reported changes in household income. Other suggestions include
helping states share tools and innovations across states via
establishment or procurement of IT solutions, removal of barriers to IT
adoption, or increased incentives for states to adopt well-regarded
options. These solutions would not only improve program integrity but
also reduce the burden on SNAP recipients. As Representative Ashford
pointed out, ``. . . data collection, and then also being able to rely
on data to make decisions in a coordinated way, is the most important
thing we can do.''\111\
---------------------------------------------------------------------------
\110\Robert Greenstein, President, Center on Budget and Policy
Priorities. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of the Supplemental Nutrition
Assistance Program. February 25, 2015. Washington, D.C.
\111\Brad Ashford, Member of the House Committee on Agriculture.
Hearing of the House of Representatives, Committee on Agriculture.
Past, Present, and Future of the Supplemental Nutrition Assistance
Program. February 25, 2015. Washington, D.C.
---------------------------------------------------------------------------
Findings Theme 4: Improving Food Access and Promoting Healthy Food
Limited access to supermarkets, grocery stores, and other sources
of nutritious food may make it more difficult for many Americans to
consume a healthy diet. This is a particular concern for SNAP, with
Federal spending intended to provide nutrition to millions of
Americans. Hearing witnesses indicated that recipients would benefit
from improved access to healthy food.
Areas with limited access to fresh food are oftentimes called
``food deserts.'' According to USDA, to qualify as a low-access
community, at least 500 people and/or at least 33 percent of the Census
tract's population must reside more than 1 mile from a supermarket or
large grocery store; for rural areas the distance is more than 10
miles. This becomes an issue when the easiest store to get to primarily
provides packaged and processed food. SNAP recipients may find the
convenience of a local market is greater than the cost and time it
takes to travel farther to a supermarket. High-calorie foods with
minimal nutritional value can often be a staple for families with
limited resources.
As Dr. James Ziliak of the University of Kentucky noted, ``Many of
our low-income families, especially in urban areas, don't have ready
access to the whole spectrum of foods that make up the Thrifty Food
Plan that underlies USDA's plan for the SNAP benefit.''\112\ His
concerns were also echoed by Dr. Kimberlydawn Wisdom of the Henry Ford
Health System: ``Today, SNAP recipients live in neighborhoods and
communities where making healthy choices can be challenging, if not
impossible, due to the lack of safe, well-equipped, and well-maintained
places to work and play, and the absence of nearby full-service grocery
stores and other health services. These factors contribute to the
malnutrition that now coexists with overweight and obesity.
Comprehensive literature reviews examining neighborhood disparities and
food access have found that neighborhood residents with better access
to supermarkets tend to have healthier diets and reduced risk for
obesity.''\113\
---------------------------------------------------------------------------
\112\Dr. James P. Ziliak, Founding Director, Center for Poverty
Research; Professor and Carol Martin Gatton Endowed Chair in
Microeconomics, Department of Economics, University of Kentucky. Joint
Hearing of the House of Representatives, Subcommittee on Nutrition,
Committee on Agriculture and the Subcommittee on Human Resources,
Committee on Ways and Means. Past, Present, and Future of SNAP: The
Means to Climbing the Economic Ladder. June 10, 2015. Washington, D.C.
\113\Dr. Kimberlydawn Wisdom, Senior Vice President, Community
Health and Equity, Henry Ford Health System. Hearing of the House of
Representatives, Committee on Agriculture. Past, Present, and Future of
SNAP: Evaluating Effectiveness and Outcomes in Nutrition Education.
June 22, 2016. Washington, D.C.
---------------------------------------------------------------------------
Finding 4a: Americans in Both Urban and Rural Communities Cannot
Improve Their Diets Without Adequate Access to Healthy Food
A number of approaches have been taken to address the well-
documented concerns of access to healthy food. The Committee heard from
multiple witnesses about how small and local retailers help provide
access to food in both urban and rural areas where large-format stores
are not easily accessible.114-115 For example, Eric
Schneidewind of AARP noted that the AARP Foundation in Chicago is
connecting fresh food supplies to food deserts.\116\ Another witness,
Jimmy Wright, owner of Wright's Market, spoke about the opening of
Carver Neighborhood Market in South Atlanta, an area that was
previously considered a food desert. Wright has also started a shuttle
service for all customers, including SNAP recipients, who are not able
to reach his store in Opelika, Alabama, due to a lack of
transportation. He is also now working on an online ordering and home
delivery option to enable greater access to nutritious food for his
customers.\117\
---------------------------------------------------------------------------
\114\Doug Beech, Counsel, Casey's General Store. Hearing of the
House of Representatives, Committee on Agriculture. Past, Present, and
Future of SNAP: The Retailer Perspective. March 2, 2016. Washington,
D.C.
\115\Carl Martincich, VP of Human Resources, Love's Travel Stops
and Country Stores. Hearing of the House of Representatives, Committee
on Agriculture. Past, Present, and Future of SNAP: The Retailer
Perspective. March 2, 2016. Washington, D.C.
\116\Eric Schneidewind, President-Elect of AARP. Hearing of the
House of Representatives, Subcommittee on Nutrition, Committee on
Agriculture. Past, Present, and Future of SNAP: Addressing Special
Populations. January 12, 2016. Washington, D.C.
\117\Jimmy Wright, Owner, Wright's Market. Hearing of the House of
Representatives, Committee on Agriculture. Past, Present, and Future of
SNAP: The Retailer Perspective. March 2, 2016. Washington, D.C.
---------------------------------------------------------------------------
Other programs like those presented by Dr. Shreela Sharma of the
University of Texas and Brighter Bites, combine food delivery with
nutrition education. Brighter Bites is a three-part program in low-
income communities for 16 weeks during the school year and 8 weeks
during the summer that (1) delivers 30 pounds of fresh produce, (2)
provides nutrition education in school and for parents, and (3) gives
families an opportunity to try a healthy, tasty recipe.\118\ Brighter
Bites has achieved promising results, with 98 percent of families
increasing their fruit and vegetable consumption and cooking more at
home, having more fruits and vegetables available at home during meals,
and using nutrition labels to make purchasing decisions.
---------------------------------------------------------------------------
\118\Dr. Shreela Sharma, Professor of Epidemiology at the
University of Texas, Co-Founder of Brighter Bites. Hearing of the House
of Representatives, Committee on Agriculture. Past, Present, and Future
of SNAP: Evaluating Effectiveness and Outcomes in Nutrition Education.
June 22, 2016. Washington, D.C.
---------------------------------------------------------------------------
Allowing SNAP benefits to be utilized for online purchases is a
prominent way retailers are working to bring nutritious food to both
urban and rural areas that might not have had easy access before. While
this is not yet a reality, the 2014 Farm Bill allowed for the
implementation of five online retailing pilots. Speaking on the
potential impact of the online pilots, Eric French with Amazon said,
``this would open up new options for millions of SNAP recipients, while
providing our existing customers who are SNAP recipients with the
ability to stretch their SNAP dollars and choose the payment type that
is best for them.''\119\ Members are watching with interest to see the
impact these online pilots have on improving food access.
---------------------------------------------------------------------------
\119\Eric French, Director of Grocery, Amazon. Hearing of the House
of Representatives, Committee on Agriculture. Past, Present, and Future
of SNAP: Opportunities for Improving Access to Food. November 16, 2016.
Washington, D.C.
---------------------------------------------------------------------------
Technology allows organizations to create innovative ways to
increase access to nutritious food and to understand what people are
purchasing. This innovation includes how grocery stores and farmers'
markets are using point-of-sale equipment to implement an initiative
called Double Up Food Bucks in their respective models. Double Up Food
Bucks is a program started by the Fair Food Network which provides an
incentive for purchasing fruits and vegetables at participating grocery
stores and farmers' markets. Another example is the creation of an app
for use at farmers' markets that accepts all forms of tender (SNAP,
WIC, Debit, Credit, etc.). The app assists in tracking what people
purchase at the market, measuring ``actual changes in purchasing
patterns, track[ing] improvements, and figur[ing] out what works to
increase customers' consumption of the most nutritious foods.''\120\ As
Gunnar Lovelace of Thrive Market pointed out, ``The proliferation of
technology, specifically information technology, has increased in ways
that no one could have predicted. Presently, 75 percent of individuals
living in poverty have a smartphone. Through their smartphone, they can
now order goods and services that may have previously been out of reach
to them, either geographically, or in some cases, financially.''\121\
---------------------------------------------------------------------------
\120\Pamela Hess, Executive Director, Arcadia Center for
Sustainable Food and Agriculture. Hearing of the House of
Representatives, Committee on Agriculture. Past, Present, and Future of
SNAP: Opportunities for Improving Access to Food. November 16, 2016.
Washington, D.C.
\121\Gunnar Lovelace, Executive Director, Thrive Market. Hearing of
the House of Representatives, Committee on Agriculture. Past, Present,
and Future of SNAP: Opportunities for Improving Access to Food.
November 16, 2016. Washington, D.C.
---------------------------------------------------------------------------
A variety of innovative approaches are appropriate and much-needed
in improving access to healthy food for SNAP recipients. SNAP has an
opportunity to adapt to changing consumer demographics and preferences
while improving program delivery and access.
Finding 4b: Nutrition Education--Working In Tandem With Targeted
Incentives--Can Help SNAP Recipients Develop Healthy Lifestyles
and Healthy Eating Habits
Nutrition education is often provided in conjunction with food
benefits to encourage healthy eating. This is accomplished through
SNAP-Ed and the Expanded Food and Nutrition Education Program (EFNEP),
both authorized in the farm bill.
SNAP-Ed is an approximately $400 million program awarded via
Federal grants to state agencies. The state agencies can then award
grants to various organizations in the state, such as food banks, land-
grant universities, or nonprofits. SNAP-Ed targets low-income
individuals and communities through a variety of public health
approaches to improve the likelihood that persons eligible for SNAP
will make healthy choices within a limited budget and choose active
lifestyles consistent with the current Dietary Guidelines for
Americans. The Healthy, Hunger-Free Kids Act of 2010 amended SNAP-Ed to
place greater emphasis on evaluations and measuring program
effectiveness. It also restructured the allocation formula to provide a
more even distribution among the states. SNAP-Ed has the flexibility to
work in schools, grocery stores, parks, or public gyms. SNAP-Ed offers
many different forms of direct education and takes community input into
consideration when developing education programs.
In contrast, EFNEP is an approximately $68 million program operated
through the Cooperative Extension Service at 1862 and 1890 Land-Grant
Universities. EFNEP delivers direct education via peer educators in a
series of interactive, hands-on lessons to improve four core areas:
diet quality and physical activity; food resource management; food
safety; and food security. EFNEP tends to be less flexible in how it
delivers services than SNAP-Ed, but it has the capacity to reach more
people than SNAP-Ed because it operates in more areas--both urban and
rural--across the country.
SNAP-Ed and EFNEP both have the ability to focus efforts on
ensuring that low-income individuals have access to nutritious food and
the knowledge of how to prepare food. SNAP-Ed programs tend to focus
more heavily on younger children, while EFNEP programming focuses more
on the family. Dr. Jo Britt-Rankin with the University of Missouri
acknowledged the gap in home economic skills, saying, ``we know that
many of our young people today are almost two generations from having
cooking skills.''\122\ Both programs work to address the climbing
obesity and diabetes rates that correlate with poor eating habits. Even
so, the number of individuals these programs reach is expansive and is
continuing to grow as the programs become stronger and as FNS
implements requirements for evaluation metrics and shares best
practices. Sue Foerster with the Association of SNAP Nutrition
Education pointed out that ``the size of our population that we are
trying to influence is 90 million people that have incomes below 185
percent of poverty. Of that, about 40 million are already SNAP
participants, and [you] can see that the scope of our effort is quite
large.''\123\
---------------------------------------------------------------------------
\122\Dr. Jo Britt-Rankin, Extension Committee on Organization and
Policy. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP: Evaluating
Effectiveness and Outcomes in Nutrition Education. June 22, 2016.
Washington, D.C.
\123\Susan Foerster, Founding Member, Association of SNAP Nutrition
Education. Hearing of the House of Representatives, Committee on
Agriculture. Past, Present, and Future of SNAP: Evaluating
Effectiveness and Outcomes in Nutrition Education. June 22, 2016.
Washington, D.C.
---------------------------------------------------------------------------
A number of incentive approaches have also been explored in SNAP,
either independently or in conjunction with nutrition education. For
example, the 2014 Farm Bill began the Food Insecurity Nutrition
Incentive (FINI) grants. FINI grants support projects to increase the
purchase of fruits and vegetables among low-income consumers
participating in SNAP by providing incentives at the point of sale.
Examples of this include using loyalty cards in a grocery store to put
bonus amounts into SNAP recipients' accounts.\124\ In Memphis and North
Tennessee, Kroger has also partnered with AARP on its FINI grant to
incentivize SNAP customers to purchase more fruits and vegetables.\125\
Many programs pair an incentive for healthy eating with additional
education on selecting and preparing healthy food.
---------------------------------------------------------------------------
\124\Mike Beal, Chief Operating Officer, Balls Food Stores. Hearing
of the House of Representatives, Committee on Agriculture. Past,
Present, and Future of SNAP: Opportunities for Improving Access to
Food. November 16, 2016. Washington, D.C.
\125\Kathy Hanna, Senior Director Enterprise Payments and Store
Support, The Kroger Company. Hearing of the House of Representatives,
Committee on Agriculture. Past, Present, and Future of SNAP: The
Retailer Perspective. March 2, 2016. Washington, D.C.
---------------------------------------------------------------------------
Food Eligibility
Discussions about incentivizing healthy purchases are often coupled
with discussions about restricting the foods eligible for purchase with
SNAP benefits. Currently, the Food and Nutrition Act of 2008 defines
eligible food for SNAP as any food or food product for home consumption
and also includes seeds and plants that produce food for consumption by
SNAP households. Since the definition of food is a specific part of the
Act, any change to this definition would require action by Congress.
In general, SNAP recipients can use SNAP benefits to buy any food
products except:

Beer, wine, liquor, cigarettes or tobacco;

Vitamins and medicines;

Food that will be eaten in the store; and

Hot foods.

SNAP benefits cannot be used to buy nonfood items, such as pet
foods, soaps, paper products, and household supplies.
Since passage of the Food Stamp Act in 1964, Members of Congress
have proposed changes to the list of eligible items on SNAP, including
proposals that would make SNAP similar to the WIC program. The few
waivers that have been requested from USDA were denied, and there are
currently no waivers in place to allow state and/or local governments
to impose restrictions.
Some argue that outright restrictions on food eligibility would
cause a number of challenges, including expanding bureaucracy or
burdening smaller stores without the technology to identify and track
products eligible for SNAP benefits. Some also argue that restrictions
would be ineffective in changing the purchasing patterns of
participants since SNAP recipients are generally expected to purchase
30 percent of their monthly food with their own money and that there is
no guarantee restricting the use of SNAP would affect total food
purchases, other than substituting one form of payment (cash) for
another (SNAP benefits).
In contrast, others contend that SNAP should assist in purchasing
nutritious food. To enhance program integrity and sustainability, some
have argued that Federal dollars should focus on improving the health
of the recipient. They argue that restricting item eligibility--for
items such as sodas or candy--provides an assurance that recipients are
purchasing items that improve their overall nutrition. Some argue that
limiting eligibility of some food items also gives greater assurance to
the general public that tax dollars are being used to improve the food
security of SNAP recipients.
USDA recently assessed the feasibility of collecting data on SNAP
purchases at the point of sale and has provided a detailed summary of
the food items that are being purchased. USDA concluded that item-level
transaction data can currently be collected from 80 percent of all EBT
redemptions from the retailers that use integrated electronic cash
register (IECR) systems, but not from stores with less sophisticated
systems. FNS concluded that it would need additional legal authority to
require stores to collect and submit transaction level data.\126\
---------------------------------------------------------------------------
\126\USDA FNS Nutrition Assistance Program Report. Feasibility
Study of Capturing Supplemental Nutrition Assistance Program (SNAP)
Purchases at the Point of Sale. November 2016. http://www.fns.usda.gov/
snap/feasibility-study-capturing-supplemental-nutrition-assistance-
program-snap-purchases-point-sale.
---------------------------------------------------------------------------
USDA also recently analyzed point-of-sale transaction data
collected for calendar year 2011 from a leading grocery retailer
``whose stores would be classified as grocery stores, supermarkets, and
combination food and drug stores.'' USDA found many non-staple items
(e.g., sweetened beverages and prepared desserts) among the top items
purchased by SNAP households, as summarized in the following
table.\127\
---------------------------------------------------------------------------
\127\USDA FNS Nutrition Assistance Program Report. Foods Typically
Purchased by Supplemental Nutrition Assistance Program Households.
November 2016. http://www.fns.usda.gov/snap/foods-typically-purchased-
supplemental-nutrition-assistance-program-snap-households.

SNAP Household Expenditures by Summary Category
------------------------------------------------------------------------
SNAP Household Expenditures
Summary Category ----------------------------------------------
Rank % of Expenditures
------------------------------------------------------------------------
Meat, Poultry and Seafood 1 19.19%
Sweetened Beverages 2 9.25%
Vegetables 3 7.19%
Frozen Prepared Foods 4 6.92%
Prepared Desserts 5 6.90%
High Fat Dairy/Cheese 6 6.50%
Bread and Crackers 7 5.39%
Fruits 8 4.68%
Milk 9 3.54%
Salty Snacks 10 3.43%
Prepared Foods 11 3.07%
Cereal 12 2.84%
Condiments and Seasoning 13 2.65%
Fats and Oils 14 2.36%
Candy 15 2.10%
------------------------------------------------------------------------
Source: USDA FNS Nutrition Assistance Program Report. Foods Typically
Purchased by Supplemental Nutrition Assistance Program Households.
November 2016. http://www.fns.usda.gov/snap/foods-typically-purchased-
supplemental-nutrition-assistance-program-snap-households.

USDA's report will undoubtedly reignite the discussion on food
eligibility within SNAP and ways in which SNAP can incentivize
healthier eating. As noted above, incentives partnered with nutrition
education can lead to healthier eating patterns in low-income
individuals.
Appendix A: Hearings and Witnesses
Past, Present, and Future of SNAP (http://agriculture.house.gov/
calendar/eventsingle.aspx?EventID=2430)
Full Committee: February 25, 2015
Mr. Douglas Besharov, Professor, School of Public Policy,
University of Maryland, College Park, MD

Mr. Robert Greenstein, Founder and President, Center on
Budget and Policy Priorities, Washington, D.C.
SNAP Recipient Characteristics and Dynamics (http://
agriculture.house.gov/calendar/eventsingle.aspx?EventID=2429)
Subcommittee: February 26, 2015
Ms. Karen Cunnyngham, Senior Researcher, Mathematica Policy
Research, Washington, D.C.

Dr. Gregory Mills, Senior Fellow, Urban Institute,
Washington, D.C.

Mr. Stephen Tordella, President, Decision Demographics,
Washington, D.C.

Dr. James P. Ziliak, Founding Director, Center for Poverty
Research, University of Kentucky, Lexington, KY
The World of Nutrition and the Role of the Charitable Sector (http://
agriculture.house.gov/calendar/eventsingle.aspx?EventID=2418)
Full Committee: April 15, 2015
Ms. Kate Maehr, CEO, Greater Chicago Food Depository,
Chicago, IL

Ms. Keleigh Green-Patton, South Holland, IL

Mr. Dustin Kunz, Salesforce Administrator and Research
Project Manager, Texas Hunger Initiative, Waco, TX

Ms. Lynda Taylor Ender, AGE Director, The Senior Source,
Dallas, TX

Mr. Jonathan Webb, Director of Foundations and Community
Outreach, Feed the Children, Edmond, OK
The World of Nutrition, Government Duplication and Unmet Needs (http://
agriculture.house.gov/calendar/eventsingle.aspx?EventID=2413)
Subcommittee: May 20, 2015
Ms. Kay Brown, Director, Education, Workforce, and Income
Security, U.S. Government Accountability Office, Washington,
D.C.

Ms. Angela Rachidi, Research Fellow, American Enterprise
Institute, Washington, D.C.

Mr. Joe Nader, Exec[ut]tive Chef, Levy Restaurants and the
Detroit Lions, and volunteer chef for Share Our Strength's
Cooking Matters, Detroit, MI

Ms. Sherri Tussler, Executive Director, Hunger Task Force,
Milwaukee, WI
The Means to Climbing the Economic Ladder (http://
agriculture.house.gov/calendar/eventsingle.aspx?EventID=2410)
Full Committee: June 10, 2015
Mr. Patrick Raglow, Executive Director, Catholic Charities
of the Archdiocese of Oklahoma City, Oklahoma City, OK

Mr. Leon Samuels, Executive Director, STRIVE DC, Washington,
D.C.

Dr. Elisabeth D. Babcock, President and CEO, Crittenton
Women's Union, Boston, MA

Mr. Grant Collins, Senior Vice President, Fedcap
Rehabilitation Services, Inc., New York, NY
How Our Welfare System Can Discourage Work (http://
agriculture.house.gov/calendar/eventsingle.aspx?EventID=2407)
Joint Nutrition (Agriculture) and Human Resources (Ways and Means)
Subcommittees: June 25, 2015
Dr. Casey Mulligan, Professor, Department of Economics,
University of Chicago, Chicago IL

Dr. Eugene Steuerle, Senior Fellow, Urban Institute,
Washington, D.C.

Dr. Olivia Golden, Executive Director, Center for Law and
Social Policy, Washington, D.C.

Ms. Chanel McCorkle, Candidate, America Works, Baltimore, MD
(accompanied by Marsha Netus, Director of Operations)

Mr. Erik Randolph, Senior Fellow, Illinois Policy Institute,
Chicago, IL
Developing and Using Evidence-Based Solutions (http://
agriculture.house.gov/calendar/eventsingle.aspx?EventID=2402)
Subcommittee: July 15, 2015
Mr. Jon Baron, Vice President for Evidence-Based Policy,
Laura and John Arnold Foundation, Washington, D.C.

Mr. Jim Weill, President, Food Research and Action Center,
Washington, D.C.

Dr. James Sullivan, the Rev. Thomas J. McDonagh, C.S.C.
Associate Professor of Economics, University of Notre Dame and
Founder of the Wilson Sheehan Lab for Economic Opportunity,
South Bend, IN

Mr. Jeremy Everett, Director, Texas Hunger Initiative, Waco,
TX
Breaking the Cycle (http://agriculture.house.gov/calendar/
eventsingle.aspx?Event
ID=2970)
Subcommittee: October 27, 2015
Dr. Caroline Ratcliffe, Senior Fellow, The Urban Institute,
Washington, D.C.

Ms. Ruth Riley, Former WNBA Athlete and Olympic Gold
Medalist, Granger, IN

Dr. Eduardo Ochoa, Jr., Department of Pediatrics, University
of Arkansas for Medical Sciences, on behalf of Children's
HealthWatch, Little Rock, AR

Dr. Ron Haskins, Senior Fellow, Economic Studies, The
Brookings Institution, Washington, D.C.
The National Commission on Hunger (http://agriculture.house.gov/
calendar/eventsingle.aspx?EventID=3014)
Full Committee: November 18, 2015
Mr. Robert Doar, Co-Chair of the National Commission on
Hunger, Morgridge Fellow in Poverty Studies, American
Enterprise Institute, Washington, D.C.

Ms. Mariana Chilton, Co-Chair of the National Commission on
Hunger, Associate Professor and Director of the Center for
Hunger Free Communities, Drexel University, Philadelphia, PA
Addressing Special Populations (http://agriculture.house.gov/calendar/
eventsingle.
aspx?EventID=3074)
Subcommittee: January 12, 2016
Ms. Abby Leibman, President and CEO, MAZON: A Jewish
Response to Hunger, Los Angeles, CA

Ms. Erika Tebbens, former military spouse, Ballston Spa, NY

Mr. Vinsen Faris, Executive Director, Meals-on-Wheels of
Johnson and Ellis Counties in North Central Texas, Cleburne, TX

Mr. Eric Schneidewind, President-Elect, AARP, Washington,
D.C.
Examining State Options (http://agriculture.house.gov/calendar/
eventsingle.
aspx?EventID=3165)
Full Committee: March 2, 2016
Ms. Stephanie Muth, Deputy Executive Commissioner for the
Office of Social Services, Texas Health and Human Services
Commission, Austin, TX

Ms. Stacy Dean, Vice President for Food Assistance Policy,
Center for Budget and Policy Priorities, Washington, D.C.

Ms. Karen Cunnyngham, Senior Researcher, Mathematica Policy
Research, Washington, D.C.
The Retailer Perspective (http://agriculture.house.gov/calendar/
eventsingle.
aspx?EventID=3334)
Full Committee: May 12, 2016
Ms. Kathy Hanna, Senior Director Enterprise Payments & Store
Support, The Kroger Co., Cincinnati, OH

Mr. Jimmy Wright, Owner, Wright's Market, Opelika, AL

Mr. Doug Beech, Counsel, Casey's General Stores, Ankeny, IA

Mr. Carl Martincich, VP of Human Resources and Risk
Management, Love's Travel Stops and Country Stores, Oklahoma
City, OK
Evaluating Effectiveness and Outcomes in Nutrition Education (http://
agriculture.house.gov/calendar/eventsingle.aspx?EventID=3433)
Full Committee: June 22, 2016
Dr. Kimberlydawn Wisdom, Senior Vice President, Community
Health & Equity, Henry Ford Health System, Detroit, MI

Ms. Susan Foerster, Founding Member, Association of SNAP
Nutrition Education Administrators, Carmichael, CA

Dr. Shreela Sharma, Professor of Epidemiology at the
University of Texas, Co-Founder of Brighter Bites, Houston, TX

Dr. Jo Britt-Rankin, Associate Dean & Extension Professor,
Extension Committee on Organization & Policy, Columbia, MO
Evaluating Error Rates and Anti-Fraud Measures to Enhance Program
Integrity (http://agriculture.house.gov/calendar/
eventsingle.aspx?EventID=3463)
Full Committee: July 6, 2016
Ms. Jessica Shahin, SNAP Associate Administrator, Food and
Nutrition Service, USDA, Alexandria, VA

Ms. Kay Brown, Director, Education, Workforce, & Income
Security, U.S. Government Accountability Office, Washington,
D.C.

Mr. Dave Yost, Auditor of State, Columbus, OH
Improving Innovation and Success in Employment and Training Programs
(http://agriculture.house.gov/calendar/
eventsingle.aspx?EventID=3511)
Subcommittee: September 13, 2016
Mr. David Stillman, Assistant Secretary, Economic Services
Administration, Department of Social and Health Services,
Olympia, WA

Mr. Pete Weber, Founder, Fresno Bridge Academy, Fresno, CA
(accompanied by Kim McCoy Wade, CalFresh Branch Chief,
Department of Social Services, Sacramento, CA)

Mr. Jon Anderson, Deputy Division Director, Office of Family
Independence, Division of Family and Children Services,
Atlanta, GA
Opportunities for Improving Access to Food (http://
agriculture.house.gov/calendar/eventsingle.aspx?EventID=3564)
Full Committee: November 16, 2016
Mr. Eric French, Director of Grocery, Amazon, Seattle, WA

Mr. Gunnar Lovelace, Founder and Co-CEO, Thrive Market,
Marina del Ray, CA

Mr. Mike Beal, Chief Operating Officer, Balls Food Stores,
Kansas City, KS

Ms. Pamela Hess, Executive Director, Arcadia Center for
Sustainable Food and Agriculture, Alexandria, VA

Ms. Melinda Newport, Director, WIC/Child Nutrition,
Department of Health, Chickasaw Nation, Ada, OK
Appendix B: Description of Federal Nutrition Programs
Below is a list of federally-funded nutrition assistance programs
(**) denotes programs within the jurisdiction of the House Committee on
Agriculture:\128\
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\128\Randy Aussenburg, Kirsten Colello. Congressional Research
Service. Domestic Food Assistance: Summary of Programs. February 17,
2016. https://www.fas.org/sgp/crs/misc/R42353.pdf.
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Supplemental Nutrition Assistance Program**
Provides benefits (through the use of EBT cards) that supplement
the food purchasing power of low-income recipients. Benefits vary by
household size, income, and expenses (like shelter and medical costs)
and averaged $194 per person per month in FY 2017. Administered by USDA
FNS.
Food Distribution Program on Indian Reservations (FDPIR)**
Indian Tribal Organizations (ITOs) and some state agencies
administer a food distribution program on Indian reservations and in
other Native American communities, with eligibility rules similar to
SNAP. USDA purchases and ships FDPIR foods to the ITOs and state
agencies based on orders from a list of available foods. These
administering agencies store and distribute the food, determine
applicant eligibility, and provide nutrition education to recipients.
Administered by USDA FNS.
The Emergency Food Assistance Program (TEFAP)**
Provides food commodities (and cash support for distribution costs)
through states to local emergency feeding organizations (e.g., food
banks/pantries, soup kitchens) serving the low-income population.
Administered by USDA FNS.
Community Food Projects**
Competitive grants to nonprofit organizations for programs that
improve access to locally-produced food for low-income households.
Eligibility for grants will vary according to request for applications.
Administered by USDA FNS.
Commodity Supplemental Food Program (CSFP)**
Provides supplemental monthly food packages to primarily low-income
elderly persons in projects located in 47 states, the District of
Columbia, and two Indian Tribal Organizations (ITOs). Administered by
USDA FNS.
Senior Farmers' Market Nutrition Program (SFMNP)**
Provides grants to participating states to offer vouchers/coupons
to low-income seniors that may be used in farmers' markets, roadside
stands, and other approved venues to purchase fresh produce. It is
administered by state agencies, such as the Department of Agriculture
or Department of Aging. The Federal SFMNP benefit level, whether a
household or individual, may not be less than $20 or no more than $50
per each farmers' market calendar year. This operates separately from
SNAP. Administered by USDA FNS.
Fresh Fruit and Vegetable Program (FFVP)
Provides grants to schools to purchase fresh fruit and vegetable
snacks to be provided during the school day. The Committee authorizes
funding for FFVP; the House Committee on Education and the Workforce
authorizes the program generally. Administered by USDA FNS.
Special Supplemental Nutrition Program for Women, Infants, and Children
(WIC)
Provides supplemental, nutrient-rich foods; nutrition education and
counseling; and breastfeeding promotion and support to low-income
pregnant, post-partum, or breastfeeding women, infants, and children.
WIC benefits are redeemable for a list of nutrient-rich foods specific
to the participant's eligibility category and medical needs (for
example, foods specifically recommended for an anemic pregnant woman).
These foods are specified in USDA FNS regulations, although state
agencies may further specify. Administered by USDA FNS.
WIC Farmers Market Nutrition Program
Provides grants to participating states to offer vouchers/coupons/
EBT to WIC participants that may be used in farmers' markets, roadside
stands, and other approved venues to purchase fresh produce.
Administered by USDA FNS.
School Breakfast Program (SBP)
Provides Federal cash assistance for elementary and secondary
schools that provide breakfast to school children. Federal subsidies
currently range from about 30 to $2.00 per meal (depending on the type
of meal/snack and the income of the recipient, with subsidies higher in
Alaska and Hawaii). Total amount of assistance is based on the number
of free, reduced-price, and paid lunches served. Administered by USDA
FNS.
National School Lunch Program (NSLP)
Provides Federal assistance, in the form of cash and commodities,
to elementary and secondary schools that provide lunch to school
children. Federal subsidies currently range from about 30 to $3.00 per
meal (depending on the type of meal/snack and the income of the
recipient, with subsidies higher in Alaska and Hawaii). Total amount of
assistance is based on the number of free, reduced-price, and paid
lunches served. Administered by USDA FNS.
Summer Food Service Program (SFSP)
Provides Federal cash assistance and some commodity foods to local
public and private nonprofit ``service institutions'' running summer
youth programs, camps, or other recreation sites that serve low-income
children during their summer break or during lengthy school-year
breaks. Sites may be schools, camps, community centers, and other
organizations. Sponsors receive per-meal/snack subsidies as well as
assistance with operating costs. Administered by USDA FNS.
Special Milk Program
Provides public or nonprofit schools or child care institutions
that do not participate in other Federal meal programs with a per \1/2\
pint reimbursement for part of the cost of milk served to children/
students. Administered by USDA FNS.
Child and Adult Care Food Program (CACFP)
Provides cash subsidies to participating child care centers, family
day care homes, afterschool programs, and non-residential adult-care
centers for the meals and snacks they serve to children, the elderly,
and chronically disabled persons. In child care centers and non-
residential adult-care settings, per-meal/snack subsidy payments are
the same as those for school meals and child care centers. Family day
care homes are reimbursed according to a tiered system. Federal
subsidies currently range from about 25 to $2.80 (depending on the
type of meal/snack and the income of the recipient, with higher
subsidies in Alaska and Hawaii). Administered by USDA FNS.
Congregate Nutrition Program
Provides meals to seniors in settings such as senior centers,
schools, and adult day care centers. Offers social services such as
nutrition education and screening, nutrition assessment, and counseling
at meals sites. Provides seniors with opportunities for social
engagement and volunteerism. Administered by Health and Human Services.
Home Delivered Nutrition Program
Provides meals to seniors who are homebound. Offers services such
as nutrition screening and education, nutrition assessment, and
counseling. Administered by Health and Human Services.
Grants to Native Americans: Supportive and Nutrition Services
Provides for the delivery of supportive and nutrition services
comparable to services provided in the Home Delivered Nutrition Program
(e.g., congregate and home-delivered meals) to older Native Americans.
Administered by Health and Human Services.
Nutrition Services Incentive Program (NSIP)
Provides funds to states, territories, and Indian Tribal
Organizations to purchase food or to cover the costs of food
commodities provided by USDA for the congregate and home-delivered
nutrition served during the prior year. Most states choose to receive
their share of funds in cash, rather than commodities. Administered by
Health and Human Services.
Appendix C: Glossary
Aid to Families with Dependent Children (AFDC): established by the
Social Security Act of 1935 as a grant program to enable states to
provide cash welfare payments for families with needy children who had
been deprived of parental support or care because their father or
mother was absent from the home, incapacitated, deceased, or
unemployed.
American Recovery and Reinvestment Act of 2009 (ARRA): legislation
based largely on proposals made by President Obama, ARRA was intended
to provide a stimulus to the U.S. economy in the wake of the economic
downturn. ARRA included Federal tax relief, expansion of unemployment
benefits and other social welfare provisions and domestic spending in
education, health care, and infrastructure, including the energy
sector.
Beneficiary Earnings Exchange Record (BEER): a batch exchange that
provides earnings data to states. Since its inception in 1988, the BEER
system has been reporting wage information from the Social Security
Administration.
Children's Health Insurance Program (CHIP): provides health
coverage to eligible children, through both Medicaid and separate CHIP
programs. CHIP is administered by states according to Federal
requirements. The program is funded jointly by states and the Federal
Government.
Electronic Benefit Transfer (EBT): an electronic system that allows
state welfare departments to issue benefits via a magnetically encoded
payment card used in the United States.
Expanded Food and Nutrition Education Program (EFNEP): a nutrition
education program implemented by the Cooperative Extension Service
since 1969. EFNEP has assisted limited resource families and youth in
acquiring the knowledge, skills, and changed behaviors necessary for
nutritionally sound diets.
Family and Social Services Administration (FSSA): an agency created
to develop, finance and compassionately administer programs to provide
healthcare and other social services to the citizens of Indiana in need
in order to enable them to achieve healthy, self-sufficient and
productive lives.
Food and Nutrition Service (FNS): an agency within USDA working to
end hunger and obesity through the administration of Federal nutrition
assistance programs including WIC, SNAP, and school meals. In
partnership with state and tribal governments, FNS programs serve one
in four Americans during the course of a year.
General Assistance (GA): a state-run safety net of last resort for
those who are very poor and do not qualify for other public assistance.
Thirty states have General Assistance programs, which generally serve
very poor individuals who do not have minor children, are not disabled
enough to qualify for the Supplemental Security Income program and are
not elderly.
Healthy, Hunger-Free Kids Act of 2010 (HHFK): authorizes funding
and sets policy for USDA's core child nutrition programs: the National
School Lunch Program, the School Breakfast Program, the Special
Supplemental Nutrition Program for Women, Infants and Children, the
Summer Food Service Program, and the Child and Adult Care Food Program.
Individualized Family Support Plan (IFSP): a written plan
identifying the specific concerns and priorities of a family related to
enhancing their child's development and the resources to provide early
intervention services to children with disabilities age's birth through
2 years or special education and related services to children with
disabilities ages 3 through 5.
Maintenance of Effort (MOE) funds: generally refers to the funds
spent by a state to meet a TANF requirement that a state spend at least
a specified amount of state funds for benefits and services for needy
households each year. These funds may be spent within or outside of the
state's TANF cash assistance program.
Medicaid: a joint Federal and state program that helps with medical
costs for some people with limited income and resources. Medicaid also
offers benefits not normally covered by Medicare, like nursing home
care and personal care services.
National Directory of New Hires (NDNH): a database established
pursuant to the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996. The primary purpose of the NDNH is to
assist state child support agencies in locating parents and enforcing
child support orders; however, Congress has authorized specific state
and Federal agencies to receive information from the NDNH for
authorized purposes.
Older Americans Act (OAA): originally enacted in 1965, OAA is
legislation that supports a range of home and community-based services,
such as meals-on-wheels and other nutrition programs, in-home services,
transportation, legal services, elder abuse prevention and caregivers
support. These programs help seniors stay as independent as possible in
their homes and communities.
Old-Age, Survivors and Disability Insurance Program (OASDI): the
official name for Social Security in the United States. OASDI is a
comprehensive Federal benefits program that provides benefits to
retirees, disabled people, and their survivors.
Public Assistance Reporting Information System (PARIS): a data
matching service matching recipients of public assistance to check if
they receive duplicate benefits in two or more states. PARIS matches
help identify improper payments and minimize fraud and abuse.
Social Security Administration (SSA): an independent agency of the
Federal Government that administers Social Security, a social insurance
program consisting of retirement, disability, and survivors' benefits.
The U.S. Social Security program is the largest such system in the
world and is also the biggest expenditure in the Federal budget. One in
seven Americans receive a Social Security benefit and more than 90
percent of all American workers are in jobs covered by Social Security.
Supplemental Security Income (SSI): a Federal income supplement
program funded by general tax revenues (not Social Security taxes). It
is designed to help aged, blind, and disabled people, who have little
or no income, and it provides cash to meet basic needs for food,
clothing, and shelter.
Temporary Assistance for Needy Families (TANF): a block grant
program created in the 1996 welfare reform (to replace AFDC, a program
that had provided cash welfare benefits to needy households) designed
to help needy families achieve self-sufficiency. States receive block
grants to design and operate programs that accomplish one of the
purposes of the TANF program. The four purposes of the TANF program are
to:

Provide assistance to needy families so that children can be
cared for in their own homes.

Reduce the dependency of needy parents by promoting job
preparation, work and marriage.

Prevent and reduce the incidence of out-of-wedlock
pregnancies.

Encourage the formation and maintenance of two-parent
families.

U.S. Department of Agriculture (USDA): a cabinet-level department
that provides leadership on food, agriculture, natural resources, rural
development, nutrition, and related issues based on public policy, the
best available science, and effective management.
U.S. Department of Health and Human Services (HHS): a cabinet-level
department of the Federal Government with the goal of protecting the
health of all Americans and providing essential human services.
U.S. Government Accountability Office (GAO): an independent,
nonpartisan agency that works for Congress. Often called the
``Congressional watchdog,'' GAO investigates how the Federal Government
spends taxpayer dollars.
Workforce Innovation and Opportunity Act (WIOA): legislation
designed to strengthen and improve the nation's public workforce system
and help get Americans, including youth and those with significant
barriers to employment, into high-quality jobs and careers and help
employers hire and retain skilled workers.

``We want it to work for the participants. We want it to work
for the taxpayer, and that . . . the purpose of this multi-year
review . . . to get it right, to try to figure out what the
right policies are, how we can make these things work.''
Chairman K. Michael Conaway, The World of Nutrition Aid and the Role of
Charitable Sector.

``I have also personally experienced the stigma of being from
a low-income family. Childhood hunger and food insecurity
crosses many demographics and socioeconomic areas. It is urban,
suburb[an], and rural. Hunger is the face of many Americans.''
Joseph Nader, Ford Field, Government Duplication and Unmet Needs.

``One thing military families should never have to worry
about is having enough food.''
Erika Tebbens, former military spouse, Addressing Special Populations.

``Poverty is incredibly complex, and people are poor for a
myriad of reasons, but access to quality health care, access to
quality education, access to housing. all have a direct impact
on outcomes, in terms of utilization of the SNAP program.''
Jeremy Everett, Texas Hunger Initiative, Developing and Using Evidence-
Based Solutions.

``Investment by Federal nutrition programs in targeted foods
of high nutritional quality, and educational support to assist
families in using those optimally, is critical to reducing food
insecurity, as well as, avoiding obesity, diabetes and other
costly chronic diseases that compromise quality of life.''
Melinda Newport, Chickasaw Nation, Opportunities for Improving Access
to Food.

``Every day the SNAP program and food banks work in tandem.''
Kate Maehr, Greater Chicago Food Depository, The World of Nutrition and
the Role of the Charitable Sector.

``The day we don't need food banks is the day we end hunger
in America.''
Sherrie Tussler, Hunger Task Force, The World of Nutrition, Government
Duplication, and Unmet Needs.

``I prefer to see SNAP . . . not so much [as] a program, but
a path-
way . . . that works in a functional way to . . . lift people
out of poverty, to achieve greater opportunity, [and] to
provide a means for up[ward] mobility.''
Congressman Glenn Thompson, Examining State Options .

``Many people call SNAP a safety net, but for me it was like
a trampoline--bouncing my family back into work and a brighter
future.''
Keleigh Green-Patton, Former SNAP Recipient, Role of the Charitable
Sector.
______

Submitted Letter by Hon. James P. McGovern, a Representative in
Congress from Massachusetts
February 14, 2017

Hon. K. Michael Conaway,
Chairman,
House Committee on Agriculture,
Washington, D.C.

Dear Chairman Conaway:

In the 114th Congress, the House Agriculture Committee held 18
hearings on the ``Past, Present and Future of SNAP.'' In more than 30
hours of testimony from over 60 experts from across the country, these
extensive and instructive hearings resulted in 830 pages of official
hearing record from which the Committee compiled a 66 page report,
released in December.
I applaud your commitment to creating this comprehensive body of
evidence on SNAP but as the summary report was completed without input
from the Minority Members, I am writing to emphasize some of the most
powerful testimony given before the Committee that I believe should
help guide policy decisions in the upcoming farm bill:

SNAP Benefits Should Not Be Cut:

Nearly 50 million Americans, including working families, veterans,
seniors and the disabled, struggle to put food on the table. SNAP is a
vital tool to help struggling Americans get back on their feet and
participation has steadily declined as economic conditions have
improved because of its entitlement structure.

``. . . the notion that charity helps to support the
Government programs is an important concept and it is an
important partnership, but it is the Government programs that
provide the kind of consistent, stable, and baseline support
that these families need, and that charity alone could never be
responsive enough.''
Abby Leibman, [MAZON], January 12, 2016.

``. . . I am arguing that food stamps are a crucial part of
what I call the work support system, and a lot of people work
because they can, not just with their own wages, which are
often low, but because they get these other benefits, up to
around $30,000 or so, they can make their family better off
because of food stamps, Medicaid, childcare, and so forth. So
the government programs that help them are essential. That is
the main point of my testimony.''
Dr. Ron Haskins, The Brookings Institution, October 27, 2015.

``We recommend that Congress refrain from making any further
benefit cuts, and avoid making any structural changes that
would weaken SNAP's ability to respond to increased needs due
to economic changes. We recommend that you resist expanded work
requirements, particularly on workers 50 plus, who typically
take longer to find new permanent employment after being
unemployed.''
Eric Schneidewind, AARP, January 12, 2016.

``I talked on a number of occasions to Erskine Bowles, to
Alan Simpson, to people involved in Domenici-Rivlin, and to the
Senators of both parties of the Gang of Six, and they made a
specific determination that deficit reduction should not
increase poverty or hardship. And they weren't saying that
there were no improvements that could be made in these
programs, but they were saying that they did not think reducing
benefits in these programs was an appropriate source of deficit
reduction.''
Robert Greenstein, Center on Budget Policies and Priorities, February,
25, 2015.

The SNAP Benefit is Inadequate:

On average, SNAP households receive about $255 a month. The average
SNAP benefit per person is about $126 per month, which works out to
just $1.40 per person, per meal.

``I know everybody is on different sides of this issue
politically, but people can't parent well and raise happy,
healthy children who are ready to learn, and you can't work
well if you are hungry, if you are wondering where your next
meal is coming from, or if you had to spend your lunch money
taking a cab because you were late for work that morning. It is
super frustrating to me that this fundamental thing that is the
sort of basis of all human health is even a debate.''
Pamela Hess, Arcadia Center for Sustainable Food and Agriculture,
November 16, 2016.

``Your concern for program duplication should be balanced
with the knowledge that the Federal nutrition programs do not
meet the need. Funding for these programs is wholly inadequate,
and the evidence of this is the billions of dollars that
private-sector plows into buoying their shortfalls. Food banks,
soup kitchens, homeless shelters, and food pantries feed
millions of hungry Americans shorted by these programs. And no
matter how reputable, food banks are a scourge on our nation's
reputation. We should put them out of business because the
grocery store is where food comes from and the most dignified
way to get it is to buy it with your wages. The day we no
longer need food banks is the day that we end hunger.''
Sherrie Tussler, Milwaukee Hunger Task Force, May 20, 2015.

``But I will tell you that if we can keep the Federal
nutrition programs strong, then the dollars that we get from
private donations can actually help us support those innovative
efforts. But right now so many of us are having to buy
additional food to ensure that people have food to eat as food
programs such as SNAP goes through cuts.''
Kate Maehr, Chicago Food Depository, April 15, 2015.

``So the Thrifty Food Plan . . . the basis for which the SNAP
benefit--just assumes a very meager diet, and heroic
assumptions about how much time families have to cook, shop,
and really extreme assumptions about what they are buying,
relative to the rest of America. A more realistic food plan,
including a low cost food plan, would just make high--more
nutritious, healthy diets, put them within reach of families on
this program.''
Stacy Dean, Center on Budget Policies and Priorities, March 2, 2016.

SNAP Does Not Discourage Work:

About 30 percent of SNAP households have earnings from wages,
salaries or self-employment. Of those not working the majority are
children, elderly, disabled or were caring for children or disabled
family members in their home.

``Somehow we have determined that punishing people with
hunger will motivate them towards work. Hunger doesn't
motivate. It dulls and it makes people sick.''
Sherrie Tussler, Milwaukee Food Bank, May 20, 2015.

``The conclusion of a team of leading researchers who
examined all of the research in the field is that SNAP does not
pose significant work disincentives, and its effect on the
amount that people work is small . . . There also was testimony
before the Senate Finance Committee a year or . . . so ago from
one of the nation's leading conservative economists, Robert
Hall, who is at Stanford and at the Hoover Institution, and he
said the data do not seem to support the view that the social
safety net is discouraging labor for SNAP.''
Robert Greenstein, Center on Budget Policies and Priorities, February
25, 2015.

``. . . the research bears out that families that have jobs
that have unpredictable work hours, or that are seasonal
workers, have major income fluctuations, and those income
fluctuations are not necessarily accommodated in the SNAP
program, so people may lose their SNAP benefits before they
have stabilized their income, and are more likely to report
hunger.''
Mariana Chilton, The National Commission on Hunger, November 18, 2015.

Eliminating Work Waivers Hampers State Flexibility and Increases
Hunger:

Current law mandates that adults between the ages of 18-50, who are
able to work, are limited to 3 months of SNAP out of every 3 years.
States can choose to waive this limit and have done so during times of
high unemployment.

``I think it is reasonable to have some adjustment during a
recession in Federal work requirements. I am not sure I would
suspend them, but I would give people a longer time to find a
job, for example, would be a reasonable approach.''
Ron Haskins, The Brookings Institution, October 27, 2015.

``Yes, in California, we are anticipating the end of the
waiver in parts of the state in about eighteen months, and we
are engaged in a lot of planning on that because we do think
the rule would be very harsh--harshly felt by families. And it
is very complicated, frankly, to administer and administer
accurately. No, we do not have enough jobs and enough job
training and enough job slots.''
Kim McCoy Wade, CalFresh Branch Chief, September 13, 2016.

Creating Innovative, Evidence-Based Programs and Supporting Good
Case management is an Investment:

Case management that helps connect those in need with tailored
services to move out of poverty can be successful. However, high
quality, effective case management for those who need it, requires a
well-funded multi-year commitment to families and individuals.

``. . . you can't expect programs to be built on evidence of
effectiveness if there is no evidence. The most innovative
ideas for social programs frequently come from states or local
providers. But state and local agencies and private service
providers often lack the resources to put these ideas into
practice. Thus, we need funds to encourage providers to
experiment with new, promising ways to help those in need, and
to build strong evidence for innovative programs.''
James Sullivan, The University of Notre Dame, July 15, 2015.

``Our efforts at the Texas Hunger Initiative demonstrate
informed engagement, and are building a foundation for
evidence-based solutions. We believe that allocating resources
to the Hunger Free Communities line in the farm bill will
expand the capacity of informed engagement in public and
private partnerships, resulting in greater local coordination,
strengthened social networks for low-income Americans. And when
public and private partnerships are carefully informed by
research and evaluation, stronger networks are likely formed
between clients and local organizations, thus building a
foundation for increased social capital for low-income
families. We believe that this has the potential to reduce the
need for long-term Federal assistance.''
Jeremy Everett, Texas Hunger Initiative, July 15, 2015.

``The families that we work with have a 44 percent earned
income gain within the first year, and their tax payments go up
by 35 percent. We know, from a return on investment analysis,
that the investments we are making in these families are cost
effective for the public dollar, and decrease subsidies, and
increase tax payments. You are right in saying that we have to
expect these interventions to prove their worth, and we have to
work with families in a way that is going to be able to create
that public value for the interventions that we have.''
Elisabeth Babock, Crittenton Women's Union, June 10, 2015.

``So the complexity of the interplay between these issues
means that Congress needs to take a good hard look at securing
the level of benefits at a rate that provides people with
financial stability, and is a realistic safety net that allows
them to get security and then move off of benefits. For those
for whom gainful employment is no longer an option because they
are either disabled or they are too senior to work, then we
need to think about systems and how those play into other kinds
of supports that allow people to live with dignity as they age,
and they can provide themselves and their families with the
kind of support that they need.''
Abby Leibman, [MAZON], January 12, 2016.

Programs that Provide an Economic Ladder Require Adequate Funding:

Block granted programs provide only flat funding and are not
responsive to economic changes. Since 2000, federally funded block
grants that pay for critical work supports like housing, job training,
maternal and child health and childcare have eroded by 37 percent.

``Families don't just come with one issue. And when a child
is sick, we see that there are a lot of things that are going
on. It is not just about food, it is also about housing, it is
also about income . . . We have to think about other things
like childcare supports . . . because if you have more moms who
are working at low-wage jobs, if you don't have the childcare
to help that backstop, it is really not going to be very
helpful for that mom. So there are a lot of interlocking needs
that we need to address.''
Dr. Eduardo Ochoa, Jr., Arkansas Children's Hospital for Children's
HealthWatch, October 27, 2015.

``So I could not recommend more highly the utilization of
resources to address transportation issues. After housing,
transportation is really the second highest cost center to a
struggling family living in poverty or living on low wages. And
it is really critically important that we consider those
challenges.''
David Stillman, Washington State Department of Social and Health
Services, September 13, 2016.

``Particularly, in the rural communities, transportation is
really, really critical because the availability of jobs is
constrained. As to child care, it is the single funding issue
that we struggle with the most. It is a real problem.''
Pete Weber, Fresno Bridge Academy, September 13, 2016.

As this testimony reflects and you have stated, ``SNAP is essential
in protecting the most vulnerable citizens during tough times. For many
it is a vital lifeline to keeping food on the table.''
We look forward to working with you to incorporate these expert
findings into policy in the 115th Congress.
Sincerely,

Hon. James P. McGovern,
Ranking Minority Member,
Subcommittee on Nutrition,
House Committee on Agriculture.

THE NEXT FARM BILL

(COMMODITY POLICY--PART 2)

----------

TUESDAY, APRIL 4, 2017

House of Representatives,
Subcommittee on General Farm Commodities and Risk
Management,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Eric A.
``Rick'' Crawford [Chairman of the Subcommittee] presiding.
Members present: Representatives Crawford, Lucas, Austin
Scott of Georgia, Allen, Bost, Abraham, Bacon, Dunn, Arrington,
Conaway (ex officio), Nolan, Bustos, Blunt Rochester, David
Scott of Georgia, Maloney, Plaskett, Lawson, O'Halleran, and
Peterson (ex officio).
Staff present: Bart Fischer, Callie McAdams, Matthew S.
Schertz, Stephanie Addison, Trevor White, Anne Simmons, Matthew
MacKenzie, Mike Stranz, Faisal Siddiqui, John Konya, and Nicole
Scott.

OPENING STATEMENT OF HON. ERIC A. ``RICK'' CRAWFORD, A
REPRESENTATIVE IN CONGRESS FROM ARKANSAS

The Chairman. This hearing of the Subcommittee on General
Farm Commodities and Risk Management entitled, The Next Farm
Bill: Commodity Policy--Part 2, will come to order.
Good morning and welcome to today's hearing. This hearing
is a continuation of the series we have been holding over the
past month in preparation for the next farm bill. Over the
course of the next several months, we will be working to
improve upon the 2014 Farm Bill and ensure that the needs of
not only American farmers and ranchers are met, but that
consumers will continue to benefit from sound and stable farm
policy.
Last week we heard from producers of corn, soybeans, wheat,
barley, and sorghum about what is and is not working in the
2014 Farm Bill for those crops. This week we will have the
opportunity to hear of the perspective of the cotton, rice,
peanut, canola, and sugar industries.
As Members of this Committee are aware, these hearings come
at a period of time when the farm bill is being tested, and
that is exactly the period of time by which they should be
judged. Commodity prices are in the tank across the board and
have been for several years. Net farm income has fallen 50
percent in 4 years, the steepest decline since the Great
Depression. It is times like these when getting farm policy
right is critical for farmers and ranchers. As then-Chairman
Lucas was fond of saying, farm bills are not written for the
good times. They are written for the bad times, as we are
experiencing now.
Last week we heard the message that the farm safety net
largely was working as intended and the framework should be
left alone. That said, witnesses pointed out additional tweaks,
like improving the yields used to calculate ARC guarantees,
would be needed to provide a functioning safety net.
While we will hear about what is and is not working, we
will also have the opportunity to hear from a crop that was
left out of the commodity title in the last farm bill
altogether, and that is cotton. We will hear about the effects
that this lack of policy has had on the cotton industry and the
ripple effect across other crops and rural communities. While
Committee leadership at the time warned this could happen, this
provides yet another real world example of why we need sensible
farm policies in place for all major commodities.
I am glad to see that we have such an outstanding set of
panelists here today. Thank you to each one of you for taking
the time out of your busy schedules and away from your
operations to join us. Your commitment to improving farm policy
for all of your fellow producers does not go unnoticed by the
Members of this Subcommittee.
[The prepared statement of Mr. Crawford follows:]

Prepared Statement of Hon. Eric A. ``Rick'' Crawford, a Representative
in Congress from Arkansas
Good morning and welcome to today's hearing. This hearing is a
continuation of the series we have been holding over the past month in
preparation for the next farm bill. Over the course of the next several
months, we will be working to improve upon the 2014 Farm Bill and
ensure the needs of not only American farmers and ranchers are being
met, but that consumers will continue to benefit from sound and stable
farm policy.
Last week we heard from producers of corn, soybeans, wheat, barley,
and sorghum about what is and is not working in the 2014 Farm Bill for
those crops. This week we will have the opportunity to hear the
perspective of the cotton, rice, peanut, canola, and sugar industries.
As Members of this Committee are aware, these hearings come at a
period of time when the farm bill is being tested, and that is exactly
the period of time by which they should be judged. Commodity prices are
in the tank across the board and have been for several years. Net farm
income has fallen 50% in 4 years, the steepest decline since the Great
Depression. It is times like these when getting farm policy right is
critical for farmers and ranchers. As then-Chairman Lucas was fond of
saying, farm bills are not written for the good times. They are written
for the bad times like we are experiencing now.
Last week we heard the message that the farm safety net largely was
working as intended and the framework should be left alone. That said,
witnesses pointed out additional tweaks--like improving the yields used
to calculate ARC guarantees--would be needed to provide a functioning
safety net.
While we will hear about what is and is not working, we will also
have the opportunity to hear from a crop that was left out of the
commodity title in the last farm bill altogether--and that is cotton.
We will hear about the effects that this lack of policy has had on the
cotton industry and the ripple effect across other crops and rural
communities. While Committee leadership at the time warned this could
happen, this provides yet another real world example of why we need
sensible farm policies in place for all major commodities.
I am glad to see that we have such an outstanding set of panelists
here today. Thank you to each one of you for taking the time out of
your busy schedules and away from your operations to join us. Your
commitment to improving farm policy for all of your fellow producers
does not go unnoticed by the Members of this Subcommittee.
With that, I yield to the Ranking Member, Mr. Nolan, for any
opening comments he would like to make.

The Chairman. With that, I would like to yield to the
Ranking Member, my friend Mr. Nolan from Minnesota, for any
opening comments he would like to make.

OPENING STATEMENT OF HON. RICHARD M. NOLAN, A REPRESENTATIVE IN
CONGRESS FROM MINNESOTA

Mr. Nolan. Thank you very much, Chairman Crawford, and
Members of the Subcommittee, for holding this second hearing
with respect to commodity policy in the next farm bill. And
thank you to the great panel of witnesses that we have here
today, and I can't tell you how glad we are that you are here,
and we are anxious to hear from you.
There is an old saying in this town that if you don't show
up to make your case, why one of two things can happen. One is
nobody knows you exist. Worse yet, they know you exist and
think you don't care. That is the last thing we want, because
the other old saying in this town is that if you are not at the
table, you might be on the menu, and we don't want that as
well.
So we are about to hear from all of you, including Mr. Rob
Rynning from Kennedy, Minnesota. Welcome, Rob. Good to see you
here, and welcome to the Subcommittee.
Well, it is abundantly clear from all the numbers and
studies that we have seen that economic times in America's farm
country are tough, and they are getting tougher. Commodity
prices and farm income are down. Debts and cash rents are going
up, and loans are hard to come by, and 2017 promises to be more
of the same, and we can't have that.
It is also clear that we need a farm safety net that works
for all farmers, regardless of which commodities they produce.
While we may not grow cotton in Minnesota, we grow a lot of
corn and a lot of wheat and sunflower seeds and barley, and of
course, canola, which we are going to hear about, I hope. But
we know that when one commodity operates under a policy that
doesn't work, then it affects and is felt in all other crops in
all of the other regions.
This hearing serves as an opportunity for us to learn more
about the unique concerns of each commodity producer for their
particular crop, and hopefully today's testimony can bring us
closer to consensus on what our commodity programs ought to
look like in the next farm bill. Because the fact of the matter
is that we need to do everything we can to put a stop to these
boom and bust cycles that threaten our farmers, threaten our
rural communities, threaten our rural businesses, and the many
good paying jobs they support all across rural America.
So with that said, I am looking forward to hearing from
today's witnesses. Once again, I want to thank Chairman
Crawford for holding this important hearing. Mr. Chairman, I
yield back the remainder of my time.
The Chairman. I thank the gentleman, and I would like to
recognize our full Committee Chairman, Chairman Conaway, for
any opening comments he would like to make.

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

Mr. Conaway. Well thank you, Mr. Chairman. Mr. Nolan has
the market cornered on old sayings around here.
The 2018 Farm Bill is going to be on us rapidly. What I
would ask each of you, of the witnesses and their policy arms
to get your good ideas in front of the Committee sooner rather
than later. You probably have until the fourth quarter, so we
need whatever ideas you have legislatively in the mix soon so
that we will be able to pull those in.
With that, I am looking forward to the testimony and
looking forward to working with each of y'all's groups on
crafting that 2018 Farm Bill. With that, Mr. Chairman, I yield
back.
The Chairman. I thank the Chairman. I would also like to
recognize the Ranking Member of the full Committee for any
comments he would like to make at this time.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Well thank you, Mr. Chairman, and thank you
for having the hearing, and I thank the witnesses for being
here.
I would like to welcome Mr. Rynning, who is from my
district, from Hallock, Kittson County. It is not the end of
the world, but you can see it from there. He has done a great
job of not only representing canola, but other crops in our
area, and he was one of those that was instrumental in getting
a processing plant up in Hallock for canola.
We have our challenges as we work towards the next farm
bill, and I am for one of those, even though we don't grow
cotton, I am for getting a fix for cotton, and I am also
interested in some other areas as well in terms of seeing what
we can do to make sure that the system works going into the
future.
So thank you for being here. I am looking forward to your
testimony, and I yield back.
The Chairman. Thank you, Mr. Peterson. The chair would
request that other Members submit their opening statements for
the record so the witnesses may begin their testimony, and to
ensure that there is ample time for questions.
I would like to welcome our witnesses to the table. First,
Mr. Ronnie Lee, Chairman, National Cotton Council, Bronwood,
Georgia; Mr. Blake Gerard, Chairman, USA Rice Farmers Board of
Directors, Cape Girardeau, Missouri; the Honorable Tim McMillan
on behalf of the Southern Peanut Farmers Federation, Enigma,
Georgia; Mr. Rob Rynning, President, U.S. Canola Association,
Kennedy, Minnesota, also on behalf of the National Sunflower
Association; and Mr. Jack Roney, Director of Economics and
Policy Analysis, American Sugar Alliance, Arlington, Virginia.
One thing I would like to point to your attention,
gentlemen, I believe all of you have been here before, but if
you will notice the lights in front of you, it is just like a
traffic light. When it is green, feel free, keep your foot on
the gas. When it turns yellow, get ready to step on it, and
when it turns red, slam on the brakes so we can get everybody
in, in a timely fashion. I appreciate that.
I would like to first yield to Mr. Austin Scott to
introduce our first witness.
Mr. Austin Scott of Georgia. I thank you, Mr. Chairman. I
want to welcome Mr. Ronnie Lee, Chairman of the National Cotton
Council, from Bronwood, Georgia. He is a great farmer, but his
real claim to fame is his brother-in-law is a great turkey call
maker, and maybe over the Easter break we can go chase some of
those overgrown chickens. Thank you.
The Chairman. Thank you, Mr. Scott, and Mr. Lee, you are
recognized for 5 minutes.

STATEMENT OF RONNIE LEE, CHAIRMAN, NATIONAL COTTON COUNCIL,
BRONWOOD, GA

Mr. Lee. Chairman Crawford, Ranking Member Nolan,
Subcommittee Members, thank you for the opportunity to testify
on the policy needs of the U.S. cotton industry. My name is
Ronnie Lee. My family and I raise cotton, corn, peanuts, small
grains, pecans, and cattle in southwest Georgia, and I own and
operate a cotton gin and warehouse operation.
Implementation of the 2014 Farm bill coincided with a time
of significant changes in the global cotton market. Shortly
after the bill was enacted, cotton prices went down a steep
decline, the result of policy changes and challenges, a build
up of global stock, lower demand, and reduced exports. Slumping
cotton demand is largely the result of tremendous increases in
polyester use. Capacity is contributing to artificially low
polyester prices in key Asian markets such as China.
This is the global market U.S. cotton must compete against
since 75 percent of raw fiber production is exported, with
another 15 or 20 percent exported as cotton textile products.
Market volatility and mounting economic pressures underscore
the critical importance of an improved safety net for cotton
farmers. Cotton is the only crop that does not have a long-term
price or revenue protection in the farm bill. Current ARC PLC
policies in the farm bill are designed to help producers to
stand for long periods of price decline and depressed market
conditions. While these policies will generally perform well
for producers like myself, on our other crops, I remain
completely vulnerable to the instability of the cotton market.
The current farm bill introduced fundamental changes in the
cotton policy with the STAX crop insurance policy as a core
component of the cotton safety net. The move to STAX was done
in order to resolve a longstanding WTO case brought by Brazil.
Unfortunately, the changing economic landscape and lower market
prices reduced the effectiveness of STAX as a means of
providing support for cotton producers.
For over a year, the National Cotton Council has been
working with Congress to get cottonseed designated as a covered
commodity and eligible for ARC and PLC programs. We strongly
believe a cottonseed policy is needed now to help provide
support to our producers as a bridge until a new farm bill is
enacted. Part of this process will need to convert generic
base, which is a historic cotton base, back to cottonseed or
other covered commodities. The establishment of generic base
was intended as a short-term measure, given the circumstances
of the 2014 Farm Bill development, not a long-term policy.
In the next farm bill, for Congress to be able to address
the shortcomings in the cotton policy and other areas of the
budget and other areas of need, we strongly oppose any attempt
to reduce the budget. Given the dramatic decline in farm bill
spending, coupled with significant downturn in farm income and
generally weak commodity prices, a greater investment in these
critical policies for rural America should be in order.
For U.S. textile mills, after a decade of sharp decline,
cotton consumption has stabilized since 2008. The stability and
expected future growth can be attributed to the continued
benefits of the Economic Adjustment Assistance Program, by
allowing U.S. mills to make new investments necessary to remain
competitive. Continued funding of the program supports a
manufacturing base that supports U.S. jobs. The National Cotton
Council strongly supports additional investment in MAP and FMD
trade promotion programs, the highly successful public-private
partnerships that help leverage the industry funds to open and
expand export markets.
For the past 3 years, cotton producers have struggled with
low prices and high production costs, resulting in financial
hardship. It is imperative that the next farm bill bring cotton
back to title I so that producers are able to access the same
complete set of risk management tools available to other crops.
We look forward to working with Congress and other
organizations to pass a farm bill that effectively addresses
the needs of all producers of all commodities in all regions of
the country. Thank you. I would be pleased to respond to
questions.
[The prepared statement of Mr. Lee follows:]

Prepared Statement of Ronnie Lee, Chairman, National Cotton Council,
Bronwood, GA
Introduction
Chairman Crawford, Ranking Member Nolan, and Members of the
Subcommittee, thank you for the opportunity to provide this testimony
regarding the current farm bill and the policy needs of the U.S. cotton
industry in the next farm bill.
My name is Ronnie Lee, and along with my three sons, we raise
cotton, corn, peanuts, small grains, hay, pecans, and cattle in
southwest Georgia. We also own and operate McCleskey Cotton Company, a
ginning and warehousing operation, along with part ownership in a
cottonseed crushing and marketing company.
I serve as Chairman of the National Cotton Council (NCC). NCC is
the central organization of the United States cotton industry. Its
members include producers, ginners, merchants, cooperatives,
warehouses, textile manufacturers and cottonseed processors and
merchandisers. Farms and businesses directly involved in the
production, distribution, and processing of cotton employ more than
125,000 workers and produce direct business revenue of more than $21
billion. Annual cotton production is valued at more than $5.5 billion
at the farm gate. Accounting for the ripple effect of cotton through
the broader economy, direct and indirect employment surpasses 280,000
workers with economic activity of almost $100 billion.
In addition to cotton fiber, cottonseed products are used for
livestock feed, and cottonseed oil is used as an ingredient in food
products as well as being a premium cooking oil.
Current Industry Conditions
As you know, the current economic situation for much of production
agriculture is bleak, including for U.S. cotton farmers. The passage of
the 2014 Farm Bill coincided with significant changes in the global
cotton market. Shortly after the bill was approved, cotton prices began
a significant decline, the result of a build-up of global cotton
stocks, especially in China, decreased demand, and reduced exports.
This led, in 2015, to the lowest U.S. cotton acreage in over 30 years.
While cotton prices and acreage have increased from the lows
experienced in 2015, producers are still struggling with prices at
levels not adequate to cover all production costs. According to USDA
data in 2016, 19 percent of cotton farms are considered either highly
or extremely highly leveraged.
To understand the challenges facing cotton farmers, it is important
to review the dynamics at work in global cotton demand. USDA estimates
world mill use at 112 million bales for the current 2016 marketing
year. However, even with very modest growth, world cotton demand
remains almost 12 million bales below the peak demand observed in 2006.
Slumping demand is largely the result of the tremendous increase in
polyester use. During the past decade when cotton mill use fell by 12
million bales, polyester's production capacity, primarily located in
China, increased by 145 million bales. Excess production capacity, in
many cases fueled by government support, is contributing to polyester
prices in Asian markets of approximately 50 per pound. While consumers
continue to express their preference for cotton products, the
tremendous increase in low-priced polyester production has created
extraordinary hurdles for increasing cotton demand.
I highlight these issues because of the critical influence of
international markets and manmade fiber on the financial conditions of
U.S. cotton farmers. Approximately 75% of U.S. raw cotton production is
exported, with another 15-20% exported as cotton yarn, fabric of
another textile product. Policies that directly affect international
production, consumption and trade have a direct bearing on U.S. market
prices.
For 2017, USDA is estimating 12.2 million acres planted to cotton,
a 21% increase from 2016. This increase reflects several factors,
including the availability of seeds with new herbicide tolerant traits,
increased water supplies in some regions, and declines in the expected
returns of competing crops.
Cotton Policy and the Farm Bill
While cotton acres across the U.S. are expected to recover, the
lack of eligibility for the same price and revenue policies as other
crops remains a major concern. As you know, these title I commodity
policies in the farm bill are designed to help producers withstand
prolonged periods of price declines and depressed market conditions.
While the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)
policies have generally performed well for producers like myself of
other crops, I remain vulnerable to further instability in cotton
markets.
Under the current farm bill, cotton producers can purchase the
Stacked Income Protection Plan (STAX) crop insurance policy. In
addition, the marketing loan program was modified so that the loan rate
can adjust lower based on average market prices of the prior 2 years.
Cotton is the only program crop that does not have any long-term price
or revenue protection policy in the 2014 Farm Bill.
Cotton policy in the 2014 Farm Bill was enacted largely in response
to a World Trade Organization (WTO) trade challenge brought by Brazil
against certain components of U.S. farm policy and select cotton-
specific policies. In an effort to avoid further political controversy
and trade retaliation, Congress provided STAX as the core safety net
for cotton. Unfortunately, STAX has proved inadequate for U.S. cotton
growers.
For more than a year now, NCC has been working with Congress and
the previous Administration to try to get cottonseed designated as a
covered commodity and eligible for the ARC/PLC programs in the 2014
Farm Bill. Cottonseed remains an important co-product of cotton
production, along with the cotton fiber. Support can be provided for
cottonseed without running afoul of the agreement with Brazil that
settled the WTO case and without violating U.S. commitments under the
WTO. We strongly believe we need a cottonseed policy in place to help
provide support to our producers as a bridge until the new farm bill is
enacted, hopefully before the expiration of the current bill in 2018.
While we will continue our short-term efforts related to
cottonseed, NCC is also beginning internal discussions on the policy
objectives for cotton in the next farm bill. We know that a meaningful
safety net for cotton must be included in title I of the farm bill.
Better protection in times of depressed markets can take on several
forms, and our industry will continue to pursue the best avenue to
provide growers adequate protection that is consistent with both our
international obligations and the needs of our industry.
Farm Bill Budget Resources
In order for Congress to be able to address the current
shortcomings in U.S. cotton policy and to shore up other areas of need
in farm policy, we strongly oppose any attempts to reduce the budget
for the next farm bill. Further, we urge the Committee to seek any
opportunities to increase the Federal investment in farm policies that
ensures the U.S. consumer continues to have the safest, most affordable
and secure supply of food and fiber in the world. In the January 2017
Congressional Budget Office baseline projection, the cost of the
current farm bill is expected to be more than $100 billion less than
estimated when the bill was enacted in 2014. Given this dramatic
decline in farm bill spending, coupled with the significant downturn in
farm income and generally weak commodity prices, a greater investment
in these critical policies for all of rural America should be in order.
Last month, NCC joined 16 other organizations on a letter to the
House and Senate Budget and Appropriations Committees stressing the
critical need for the Agriculture Committees to have additional budget
resources in order to craft a new farm bill. The additional resources
are needed to help address the significant holes in the safety net for
cotton and other commodities, while maintaining other programs designed
to respond to the significant downturn in commodity prices and farm
revenue.
Marketing Loan Program
In addition, our industry relies heavily on a properly functioning
marketing loan program that helps ensure orderly marketing and flow of
cotton to the market. Maintaining the marketing loan policy, with some
minor adjustments, is also a priority.
Crop Insurance
A strong crop insurance program is also critical since in
agriculture, one thing is for certain, crop losses will occur in some
part of the U.S. each year. Annual losses incurred by farmers clearly
demonstrate the need for crop insurance protection and the public-
private partnership of program delivery. Farmers, their lenders, input
suppliers and other stakeholders agree that crop insurance protection
should remain a viable, affordable tool for managing risk.
In 2016, 96% of cotton acres were covered by either multi-peril
``buy-up'' insurance or catastrophic coverage. 88% of these acres were
covered by multi-peril insurance. The STAX policy was purchased on over
2.5 million acres covering 26% of total insured acres. Participation in
STAX has not been as extensive as initially projected, largely because
of extremely low prices, which render the revenue assurance of STAX
less beneficial relative to the costs of production.
For this reason, it is imperative that cotton producers have access
to the same complement of risk management policies and tools as other
producers, including commodity policies in title I, along with crop
insurance.
Federal crop insurance provides an effective risk management tool
to farmers and ranchers of all sizes when they are facing losses beyond
their control, reduces taxpayer risk exposure, makes hedging possible
to help mitigate market volatility, and provides lenders with greater
certainty that loans made to producers will be repaid. The public-
private partnership of program delivery works very well, allowing for
timely and outstanding service to producers when they need it the most
and providing much-needed jobs across rural America.
While the overall crop insurance program is working well and should
be defended, there are a few areas that can be improved. NCC is
currently working with the Risk Management Agency (RMA) to improve
quality loss provisions that have proved inadequate for many producers
in the Southeast region who suffered through extensive rains during the
2015 and 2016 harvest seasons. RMA has been a good partner in
identifying and pursuing improvements to this feature of the crop
insurance product. We remain hopeful that an improved quality loss
provision will be available for cotton crop insurance policies for the
2018 crop. Particularly important in the Southwest region is the
ability to insure Enterprise Units by practice, which is permitted in
the 2014 Farm Bill. In our view, RMA has not implemented this provision
in the manner intended by Congress and should be reconsidered by USDA,
and if necessary further clarified in the next farm bill.
Payment Limits and Program Eligibility
Our industry is opposed to any further tightening of payment limits
and eligibility requirements, as we believe these policies are already
too burdensome and restrictive in light of the size and scale of
production agriculture necessary to be competitive and viable in
today's global market. In addition, we believe the current definition
of `family member' that is used for actively engaged provisions the
farm bill should be broadened to ensure extended family members are not
forced out of the family farm simply because they do not fit within the
current, unnecessarily restrictive definition for `family member'. We
hope to work with the Committee to address this problematic provision
in the next farm bill.
Extra Long Staple Cotton Policies
There are important policy considerations for Extra Long Staple
(ELS) or Pima cotton as well. The industry is evaluating the potential
for an increase in the loan rate for the ELS loan program in order to
better reflect the relative market value of Pima cotton. Since this is
a non-recourse loan without marketing loan provisions, there should be
little, if any, additional government cost or exposure. Also, the ELS
Cotton Competitiveness Program is not currently functioning as intended
given the recent shift in the countries that are major producers,
importers and exporters of ELS cotton. For the intended objectives of
this program to be met, USDA needs to take steps to update the key
price data being used. If USDA continues to resist this administrative
adjustment, then we will seek to make the modifications in the next
farm bill.
Conservation Policies
Conservation programs continue to be extremely popular across the
Cotton Belt. Specifically, the Environmental Quality Incentives Program
and the Conservation Stewardship Program are both heavily accessed. I
commend the Committee for streamlining conservation programs in the
2014 Farm Bill. This will make them easier for the Natural Resources
Conservation Service (NRCS) to administer, but more importantly easier
for producers like myself to utilize. These programs have become
integral parts of many producer's operations and achieve the goal of
improving and protecting the environment while also improving our
farming operations.
One area that can be improved is exempting NRCS from requiring
producers participating in USDA cost-share programs to obtain and keep
up to date a System for Award Management (SAM) number and a Duns and
Bradstreet (D-U-N-S) number. The SAM number in particular is burdensome
because of the yearly renewal requirement. The D-U-N-S number can also
be complicated if the number is arbitrarily changed without the
producer's knowledge. Many producers, including some in my area, have
had payments extensively delayed after they had completed the project
because of this paperwork requirement. In addition, many producers may
not realize that while obtaining these numbers is a burdensome, timely
process, they can obtain these numbers for free, yet inadvertently
agree to pay companies who contact them directly hundreds of dollars to
obtain the numbers. The SAM system and D-U-N-S requirement were never
intended for conservation contracts, and it is our hope that this
oversight can be corrected in the next farm bill.
Textiles and Economic Adjustment Assistance Program
After a decade of experiencing a precipitous decline in the amount
of cotton used by U.S. textile mills, U.S. mill consumption has
stabilized since 2008 due to ongoing assistance provided in the farm
bill.
The recent years of stability and expected future growth can be
attributed to the continued benefits of the Economic Adjustment
Assistance Program (EAAP), first authorized in the 2008 Farm Bill.
Recipients must agree to invest the proceeds in equipment and
manufacturing plants, including construction of new facilities as well
as modernization and expansion of existing facilities. EAAP funds have
allowed investments in new equipment and new technology, thus allowing
companies to reduce costs, increase efficiency and become more
competitive. By allowing U.S. textile mills to make the new investments
necessary to remain competitive, the program supports a manufacturing
base that supports jobs in the United States.
Trade Promotion Programs
Given the tremendous reliance by our industry on exports of raw
cotton fiber and yarn, it is essential that the U.S. agriculture
industry have a strong, well-funded public-private partnership to help
leverage private resources to expand export markets and grow demand for
U.S. agriculture products. A central part of this effort is USDA's
Market Access Program (MAP) and Foreign Market Development (FMD)
program. Even though the U.S. continues to be heavily outspent by other
major agricultural producing and exporting countries, MAP and FMD
investments have been flat for more than a decade. MAP and FMD have
resulted in a $2.1 billion increase per year in cash farm income since
2002. Agricultural exports in 2014 accounted for $340 billion in
economic output and supported 1.1 million jobs. For this reason, we
believe it is justified for the new farm bill to invest additional
funds in these programs.
The value of U.S. cotton fiber exports exceeds $5 billion annually,
along with an additional $3 billion in exports of value-added cotton
textile products. Independent studies found that for each dollar spent
by organizations like Cotton Council International that partner with
USDA to expand and promote exports, there is a $35 return on
investment. In direct monetary and in-kind investments, the U.S. cotton
industry invests over $2 for every $1 of MAP funds utilized for export
promotion activities. These programs work, and in response our industry
stakeholders are investing in their businesses and creating jobs.
Federal Check-off Programs
The U.S. cotton industry, like many other commodities, has a
national commodity research and promotion program (check-off program)
to allow the industry's stakeholders to combine resources for the
benefit of the industry as a whole. The Cotton Research and Promotion
Act of 1966 was the first legislation of its kind. It enabled upland
cotton producers and importers of cotton textile products, after
passing a referendum, to join together to begin addressing competing
fibers and re-establishing markets for cotton. Today, every bale of
cotton produced and the cotton content of imported cotton products is
assessed and those dollars fund a very successful research and
promotion program. A recent third-party economic assessment of this
program indicated returns to producers and the government of over $7.00
for every $1 contributed over the life of the program. The return on
investment is even higher for importers. The Cotton Board's members are
appointed by the Secretary of Agriculture to administer and oversee the
operation of the program on behalf of all stakeholders. The program
itself has significant built-in safeguards to protect this investment.
In addition, the Department of Agriculture oversees almost every aspect
of the program's operation. These are carefully managed, productive
programs that generate positive return for U.S. cotton producers and
importers of cotton products at no cost to taxpayers. These types of
check-off programs should continue and should not be hamstrung by
unnecessary legislative or regulatory provisions that do not contribute
meaningfully to transparency but would weaken their effectiveness.
Conclusion
In closing, for the past 3 years, U.S. cotton producers have
struggled with low cotton prices, high production costs and the
resulting financial hardships. While current cotton futures market
prices have increased from year-ago levels, many producers continue to
face economic challenges. The projected increase in cotton acreage is
largely the result of weaker prices of competing crops and improved
expectations for water in some regions that were experiencing severe
drought conditions. Therefore, it is imperative that the next farm bill
bring cotton back into the title I commodity policy so that cotton is
able to access the same full complement of risk management tools as
other crops.
NCC looks forward to working with the Committee and all commodity
and farm organizations to develop and pass a new farm bill that
effectively addresses the needs of all commodities and all producers in
all regions of the country.
Thank you for this opportunity, and I would be pleased to respond
to any questions.

The Chairman. Thank you, Mr. Lee.
I am now pleased to welcome Mr. Blake Gerard, Chairman, USA
Rice Farmers Board of Directors, from Cape Girardeau, Missouri.
Mr. Gerard, you are recognized for 5 minutes.

STATEMENT OF BLAKE GERARD, CHAIRMAN, BOARD OF
DIRECTORS, USA RICE FARMERS, CAPE GIARARDEAU, MO; ON BEHALF OF
USA RICE FEDERATION

Mr. Gerard. Thank you. Chairman Crawford, Ranking Member
Nolan, and Members of the Subcommittee, thank you for holding
this important hearing on commodity policies. My name is Blake
Gerard, and I am a fourth generation family farmer, and grow
more than 2,000 acres of rice and soybeans in southern Illinois
in Congressman Bost's district. I am the Chairman of the USA
Rice Farmers Board of Directors, and the USA Rice Government
Affairs Committee. I am honored to offer my testimony on behalf
of the USA Rice Federation.
Rice is grown on 3 to 4 million acres across eight states.
The industry as a whole provides jobs and income for more than
128,000 people, 31,000 of those directly in farming. While a
small commodity by acreage, we pack a punch, contributing $34
billion annually to the economy, with the farming sector
accounting for $5.6 billion alone.
USDA's most recent forecast for 2017 prices put us at a 10
year low and a 36 percent decline since the 2014 Farm Bill
passed. While a variety of factors have influenced this
downturn, the actions of major exporting countries and their
governments are the most significant. In recent years, we have
seen a significant increase in imports of foreign rice, with
imports coming primarily from countries that are known to
violate their WTO obligations.
Operating costs for rice exceed every other crops covered
by the commodity title, projected by USDA to be nearly $1,000
per acre in 2018. Because of specialized infrastructure, field
equipment, and soil types needed for rice, it is difficult to
economically justify a shift from year to year, so we rice
farmers are in it for the long haul. We intend to ride out the
storm, but we cannot do so without the safety net that the PLC
program provides.
It is safe to say that one of the reasons the majority of
rice farming families, and myself, are still in business today
is the farm bill safety net, specifically PLC. Ninety-nine
percent of long grain acreage and 94 percent of medium grain
farms selected PLC. It has provided counter-cyclical assistance
when needed the most.
While we feel that PLC was working the way Congress
intended, we have recommendations which we believe can make it
more effective for rice farmers. We recommend that you consider
revisions that would accelerate the delivery. PLC assistance is
triggered based on the previous marketing year average, which
is calculated and published by USDA more than 12 months after
we have harvested our crop. The bills for our input costs don't
wait 12 months before coming due. When farmers go to the bank
to renew operating lines of credit, it is nearly impossible to
predict a year in advance what assistance they may receive.
This seriously impacts our ability to forecast a cash flow
sufficient to obtain operating financing.
California's rice market has fallen at a more rapid rate
than the rest of the country, but they have not received the
much needed assistance that PLC could provide. We appreciate
inclusion of the multiplier for Temperate Japonica rice to take
into account the higher than average cost of production in
California. The multiplier currently used to calculate the
reference price does not reflect the full cost of production,
and therefore needs to be increased.
The statute and regulations that define actively engaged in
farming for the purpose of program eligibility also remain
problematic for rice farmers. These regulations impose an
arbitrary cap of three managers per operation, regardless of
the size or complexity. USDA's final rule did not protect
entities from maintaining family farm status following the
death of a lineal family member, such a parent or grandparent,
which has resulted in the disqualification of true family
members who have an active role in the operation's survival. We
request that this Committee revise the statute to provide an
exemption within those regulations to protect farm families
against unforeseen linkage breaks in their operating structure.
Additionally, a $125,000 payment limit seemed like a
farfetched problem when the prices were high in 2013 and 2014.
Unfortunately, as market conditions continue to deteriorate,
growers are receiving larger payments and many are close to or
at payment limits. It seems wrong to maintain policy that
provides full assistance to producers when they experience some
losses, but only partial assistance when they really are hit
the hardest.
Mr. Chairman, farmers face more risk than any other
business. We are dependent on global markets that are often
distorted, weather, disease, and any number of other factors
could cause our crops to fail and us to go bankrupt. When
threats are made to cut funding of policy for the farm safety
net, the existence of the full-time family farmer is put into
jeopardy. Without a strong domestic support structure, only a
small number of truly consolidated operations could survive. I
am here to ask this Committee's consideration in not only
maintaining our commodity title programs, but strengthening it
using our recommendations as you work to reauthorize this
important legislation in 2018.
Thank you, and I will be happy to respond to questions.
[The prepared statement of Mr. Gerard follows:]

Prepared Statement of Blake Gerard, Chairman, Board of Directors, USA
Rice Farmers, Cape Giarardeau, MO; on Behalf of USA Rice Federation
Introduction
Chairman Crawford, Ranking Member Nolan, and Members of the
Subcommittee, thank you for holding this important hearing to examine
the farm safety net. I am honored to have the opportunity to offer
testimony on behalf of the USA Rice Federation, the global advocate for
the U.S. rice industry.
My name is Blake Gerard. I'm a fourth-generation farmer and grow
more than 2,000 acres of rice and soybeans on my family's operation in
southern Illinois. I serve as the Chairman of the USA Rice Farmers
Board of Directors, Chairman of the USA Rice Government Affairs
Committee, and as an active member of other state and national
industry-related boards and committees. I am honored to be here today
representing U.S. rice farmers.
Rice planting is currently underway on my farm and throughout the
rice growing regions in the U.S. and nearly completed in the
southernmost regions of Louisiana and Texas. The U.S. rice industry is
a multibillion dollar industry that provides jobs and income for not
only producers and processors of rice, but for all involved in the
value chain. Much of this economic activity occurs in the rural areas
of the Sacramento Valley in California, the Gulf Coast region of
Louisiana and Texas, up and down the Mississippi River Basin starting
in Illinois, down the Bootheel of Missouri, through the Grand Prairie
of Arkansas and in the Mississippi Delta region. All combined, these
areas plant rice on 3 to 4 million acres on an annual basis.
The U.S. rice industry is unique in its ability to produce all
types of rice, from long grain, medium grain, and short grain, to
aromatic and specialty varieties. Last year, rice farmers produced a
rice crop directly generating $5.6 billion that was reinvested in local
economies. This production and subsequent sales of rice generated $34
billion in total value added to the U.S. economy from rice production,
milling, and selected end users. The industry provides jobs and income
to more than 128,000 people within the U.S. labor force.
Today, about 81 percent of all the rice that is consumed in the
U.S. is produced here at home. And, despite significant trade barriers
to exports, the U.S. remains the largest non-Asian exporter of rice and
within the top five largest exporters worldwide. On average, about 50
percent of the annual rice crop is exported as either rough or milled
rice. The top U.S. export markets for rice include Mexico, Canada,
Japan, and throughout Central America and the Middle East. Of the rice
produced by our fa[r]mers that remains in the domestic market, 53
percent is bound for direct food use, 16 percent is dedicated to
processed foods, 15 percent is used to produce beer, 14 percent is for
pet food, and the balance is used for industrial purposes.
Beyond the substantial economic and nutritional benefits of rice is
the environmental dividend from winter-flooded rice fields that provide
critical habitat for migratory waterfowl and other wetland-dependent
species. All of the major rice-production areas in the U.S. host
important waterfowl activity during winter months. Without rice
farming, wetland habitats in the U.S. would be vastly reduced. A loss
of this magnitude would have a disastrous effect on waterfowl, shore
birds, and a host of other wetland-dependent species. In the Delta
region of Arkansas, Mississippi, Missouri, and Louisiana, at least 70
wildlife species rely on rice fields for habitat. In California, rice
fields provide unparalleled habitat for 230 species of wildlife, and
provide wintering habitat for some seven million ducks and geese that
winter each year in the Pacific Flyway. So critical is this habitat to
the flyway that experts estimate we would lose more than one million
ducks if California rice acres were cut in half. Rice production areas
in Texas correspond with the bird migration corridor known as the
Central Flyway, providing important habitat to hundreds of bird species
that rely on these artificial wetlands during their migratory journey.
The cost of replacing existing rice habitat with managed natural
wetlands would be more than $3.5 billion.
State of the Rice Industry
Recent analysis conducted by Texas A&M's Agricultural and Food
Policy Center concluded that on average, each rice farmer in the U.S.
generates more than $1 million of economic activity in his or her local
economy on an annual basis. While rice farming and the associated
production and processing industries continue to act as economic
drivers in rural communities, many of our growers have been struggling
with rice prices at or below the cost of production for the last 3
years. As commodity prices continue to sink, the certainty of remaining
in business for many growers is also sinking. Farmers rely on good
years to help support them through the bad years. This is especially
challenging for young and beginning farmers, who have not yet had an
opportunity to build reserves.
When the current farm bill was enacted in early 2014, U.S. rice
prices across all grain lengths averaged $16.30 per hundredweight. The
USDA's most recent forecast for the 2016/17 prices show an average
price of $10.50 per hundredweight--a 10 year low for the industry, and
an overall decrease of 36 percent. Even more extreme, California's
Temperate Japonica rice was averaging $21.60 per hundredweight for the
2014/15 marketing year, and is now forecast at $13.60 per
hundredweight--a 37 percent decline in just 2 years. In addition to the
low prices we are witnessing, the rice industry has been severely
impacted by natural disasters. Over the last 4 years, our national
average yields have taken a significant hit and decreased annually due
to extreme flooding or drought throughout the rice-growing regions. The
U.S. rice industry is clearly not in a great place due to factors far
outside of our control. Weather events will continue to impact our
yields and other major rice producing countries, many of which do not
abide by World Trade Organization (WTO) rules, will continue to
overproduce and artificially depress world market prices for rice. A
robust safety net is necessary to protect American farmers from not
only extreme weather events but also multiple year price declines.
Trade and Export Factors Influencing U.S. Markets
The industry heavily relies on exports. Approximately 50 percent of
our annual crop is exported to more than 120 countries around the
globe, accounting for ten percent of global rice trade. These exports
are critical to rice farmers, millers, and merchants. The volatility of
the global rice export market makes it difficult to project sales
beyond several months and the levels of U.S. rice exports have been
inconsistent over the last decade, adding to the uncertainty in our
markets. We are also seeing a consistent increase of imported foreign
rice, growing from five percent to nearly 20 percent over the last 2
decades, putting domestic growers at even more of a disadvantage. These
growing imports are mostly originating from our global trade
competitors that are frequently in violation of their WTO obligations.
According to a 2015 study on the global competitiveness of the U.S.
rice industry by the U.S. International Trade Commission (USITC), rice
is considered the most government-interfered with crop in the world.
U.S. farmers simply cannot compete with foreign government treasuries,
like that of India, Thailand, and Vietnam. Producers in these and other
countries overproduce as a result of the lucrative subsidies they are
provided that encourage them to plant rice even when the market tells
them otherwise, distorting the world market price. Thankfully, last
year the U.S. Trade Representative finally initiated two cases against
China at the WTO, both involving rice. We appreciate this Committee's
recognition of these WTO violations and for holding several
Congressional hearings to bring the issue to the forefront. We are
confident that the U.S. has a strong case and will win. While these WTO
cases take some time to run their course, we are already seeing other
bad actors take note of the case against China. Two weeks ago, India,
another notorious violator of WTO commitments, requested ``observer
status'' on the case out of concern that the U.S. will soon challenge
their illegal subsidies. It is critical that the U.S. Government
continue to go after the bad actors that put American rice growers at
an unfair disadvantage and threaten our livelihood.
The USITC report lays out these problems in great detail. The key
conclusions are well known to our industry and my fellow producers. It
outlined the pervasive extent of foreign government involvement in
global rice markets and the high levels of foreign tariffs that keep
U.S. rice from competing in those markets. USITC analysts concluded
that U.S. rice production would be 1.3 million metric tons (mmt) higher
in the absence of global tariffs. Removing foreign tariffs not only
leads to higher production in the U.S. but would also increase U.S.
exports by slightly more than 1.3 mmt or approximately 25 percent.
Please keep in mind that U.S. import duties on rice are essentially
zero.
Examples of Export Challenges
The U.S. rice industry continues to face a number of challenges in
exporting our safe, nutritious, and cost-effective crop. Several
examples include:

No access to the Cuban market.

With the appropriate statutory changes, the U.S. could
regain 30 percent of the Cuban rice business within 2
years. That is an estimated 135,000 metric tons of new
demand. We anticipate the U.S. share of the market would
exceed 50 percent within 5 years, and it could reach 75
percent or more within 10 years with full commercial
relations. That is equal to somewhere between $40 and $60
million worth of new demand from Cuba within those first 2
years of lifted sanctions. We are thankful for the efforts
of Chairman Crawford along with a number of other Members
of the House Committee on Agriculture that sponsored a bill
to remove private financing barriers for agricultural
commodities with Cuba.

No access to the Chinese market.

The USDA and the Chinese Government have been in
negotiations for nearly a decade on a phytosanitary
agreement. Finally, in the fall of 2015 they finalized the
text with industry support. The Chinese Government has
refused to finalize the deal and we need your support to
urge the Chinese to sign the protocol and allow us access
to this important new market.

Irregular/non-transparent tenders for rice to be shipped to
Iraq.

The U.S. State Department worked with the Iraqi
Government to sign a Memorandum of Understanding that
supports regular U.S.-specific tenders for rice. While we
have seen some positive movement, this large export market
remains inconsistent and intergovernmental corruption in
Iraq often acts a barrier to selling our rice. Iraq at one
time was the largest market for U.S.-grown rice but in
recent years has been sourcing much of its rice from
Thailand--one of the leading, cheating competitors of the
U.S. in terms of rice exports.

Lack of meaningful, quality access to Japan.

While the Trans-Pacific Partnership (TPP) trade deal
would have provided some new access for U.S.-grown rice to
Japan, the real gains were unclear and volume remained
below what we felt was fair. The industry sought a higher
volume tariff rate quota (TRQ) for U.S.-grown rice going
into Japan. We support a bilateral trade deal with Japan
that revisits the TRQ level for U.S.-grown rice and
provides the additional assurances we need on quality of
access.

Little to no access to the European Union (EU) and the
United Kingdom (UK).

The U.S. rice market was effectively destroyed because
of EU biotechnology policies beginning in 2006 and the
market never recorded beyond a small quantity shipped
largely to the UK under an existing trade concession. EU
duties applied on U.S. rice outside the concession are high
but unfortunately they provide favorable trade concessions
for our global competitors. USA Rice is seeking substantive
market access gains in Europe. That is why we support a
U.S.-UK bilateral trade deal once the UK has formally
exited the EU in 2018 and why we support returning to talks
surrounding the Transatlantic Trade and Investment
Partnership.
U.S. International Food Aid Programs
In addition to trade and export challenges, USDA and the U.S.
Agency for International Development (USAID) international food aid
programs continue to be a target for cuts and statutory revisions by
Congress, the Administration, and others. These international food aid
programs have long been a critical component to our diplomatic success.
They are supported by farmers, shippers, processors, mills, and
humanitarian organizations long known for saving lives in the face of
daunting emergency situations and preventing crisis through effective
monitoring and response. The programs have an extensive history of
measurable successes reducing hunger and malnutrition while also
supporting education, democracy, and agricultural development in
vulnerable populations throughout the world. This year in particular,
our food system is projected to face unprecedented demand, especially
in nations across Sub-Saharan Africa and the Middle East.
Rice is one of the primary commodities utilized by a number of
these programs, whether it is by direct aid or through monetization.
Unfortunately, the Administration's recent budget proposal threatens to
reduce or even eliminate that already small market for U.S. rice
farmers through cuts in funding. The U.S. rice industry has invested a
lot of time and capital into developing fortified rice and rice
products recently approved for use in food aid that are aimed at
reducing global hunger and malnutrition, particularly in women and
children. Despite only serving as a one to five percent share of all
rice exports. It is important to the industry that we continue to play
a strong role in providing our nation's agricultural bounty to those in
need by fully funding the USDA's Food for Progress and McGovern-Dole
Food for Education programs and USAID's Food for Peace program.
Export Marketing and Development Programs Are Worth the Investment
Trade and exports are not self-sustaining without regular,
strategic marketing of our products. The majority of U.S. agricultural
products are promoted globally through the USDA's Market Access Program
(MAP) and Foreign Market Development (FMD) program that provide annual
allocations to commodity organizations through an extensive
application/request process. These programs are vital to both growth
and new opportunities for our agricultural exports and have a long
track record of measurable success throughout their lifespan.
USA Rice is able to not only effectively utilize our annual
allocation, but we contribute $7 in private industry funds for every $1
in Federal funding through MAP and FMD, making them true economic
drivers. Unfortunately, funding for these programs through the farm
bill has remained flat for a number of years and the rate of increase
for our exports are increasing has declined. Without additional funding
the programs will become less effective and eventually suffer. We would
like to see a significant increase, potentially doubling funding for
these programs to help grow agricultural exports amid this turbulent
trade atmosphere. We believe providing additional resources will help
to elevate commodity prices, thus offsetting the costs of the commodity
title.
Increasing Costs for Production
According to USDA's Economic Research Service, the 2018 crop year
is forecast to have some of the highest production costs on record--
nearly $1,000 per acre for rice. Our operating costs plus labor exceed
every other crop covered by the commodity title. To put that into
perspective, the production costs forecast for 2018, including labor,
are: $679 per acre for corn; $479 per acre for soybeans; $312 per acre
for wheat; and $317 per acre for sorghum. Folks may question why rice
farmers do not typically choose to grow something else, and the answer
is multiple fold. Weather, water availability, and soil type all play a
role in whether it is agronomical to grow rice in a region. But, most
importantly, it is economics. The initial investments for rice farmers
including equipment, infrastructure for irrigation, conservation
measures that have been installed, etc., are so specialized that it is
difficult to economically justify a shift from year to year.
According to USDA's February Agricultural Prices Report, the Prices
Received to Prices Paid ratio in January for food grains, including
rice, was at 62.9 percent, down 15 percent from a year ago. With rising
input costs and decreasing rice prices, our reserves, if we have them,
are going to continue to dwindle for the foreseeable future.
Price Loss Coverage and Other Safety Net Policies
It is safe to say that the reason I am still in business today is
because of the safety net provided by the 2014 Farm Bill and,
specifically, Price Loss Coverage (PLC). When prices were as high as
they were during the last farm bill's development, USA Rice advocated
for a safety net to protect us during multi-year price declines (i.e.,
PLC) instead of shallow losses. We appreciate this Committee's
recognition that the farm safety net is not one-size-fits-all and for
including PLC, which, by and large, is working as intended. It is this
Committee's foresight and work on our behalf that has helped to
safeguard much of America's rice industry.
The 2014 Farm Bill allowed growers to choose between PLC and the
Agriculture Risk Coverage (ARC) within title I. While a small number of
rice farmers elected to use ARC, the vast majority enrolled in PLC. In
total, 99 percent of long grain rice farms and 94 percent of medium
grain rice farms selected PLC as their safety net of choice.
Rice is unique in that it has different market prices for southern-
grown long grain and medium grain rice types and California's Temperate
Japonica-type rice. Since the current farm bill has been in place, a
small number of insubstantial ARC payments have been made to rice
farmers in select counties. PLC has been the primary safety net for
rice farmers. Long grain rice prices settled below the reference price
after the 2014 and 2015 crop years and growers received the much needed
assistance. Southern medium grain rice growers only received support
through PLC for the 2015 crop year.
USA Rice appreciates this Committee recognizing a higher than
average cost of production for California's Temperate Japonica rice by
designating it a separate multiplier for the PLC reference price.
Unfortunately, the multiplier that was used to calculate the Temperate
Japonica reference price is not sufficient in capturing the full cost
of production. California's rice market has fallen at a more rapid rate
than the rest of the country while under a drought situation, causing
additional challenges without receiving any assistance under PLC.
While, overall, we feel that PLC is working the way Congress
intended, the reference price for Temperate Japonica needs to be
increased to reflect the higher than average cost of production,
incorporating the unique needs of the growing region. USA Rice is
working with the California Rice Commission to develop a more accurate
accounting of the operating cost for Temperate Japonica using on-farm
data so that we can provide the most current and accurate
recommendation to this Committee in advance of the farm bill's
reauthorization.
We acknowledge the political and budgetary considerations at play
in writing the last farm bill, and the subsequent need to shift
assistance timing for commodity title benefits until the crop year is
fully completed. If triggered, USDA issues PLC assistance to long and
medium grain rice growers in the South in November based upon the
previous crop year's Market Year Average price. For Temperate Japonica
rice growers in California, PLC assistance is issued in February based
on the Market Year Average price for 2 crop years prior.
There are multiple problems created at the farm level as a result
of this delay. The bills for our input costs ahead of planting season
do not wait until a year after the crop is harvested before coming due.
When farmers go to the bank after harvest, it is nearly impossible to
predict a year and a half in advance what kind of assistance they may
qualify for--making it impossible to accurately predict cash flow. That
has a big negative impact on the ability of farmers to access capital
through financing.
We request that this Committee look into mechanisms to accelerate
at least a portion of the PLC assistance which growers are anticipated
to receive. I believe that the assistance will be more effective if
producers can start utilizing it sooner during the year. More
importantly, bankers would be more apt to approve our annual operating
loans if the PLC assistance is advanced or accelerated.
Actively Engaged in Farming
Actively Engaged in Farming regulations brought forth a lot of
confusion and disruption throughout farm country following the
publication of USDA's proposed and final rule in 2015. The industry
requested a grace period to allow for growers to meet with their
attorneys and actively work to restructure the way they managed their
operations. These regulations were burdensome and costly for the
affected operations, primarily in the mid-South where rice is most
produced. There are, unfortunately, no safeguards in the USDA's final
rule that protect entities from maintaining ``family farm'' status
following the death or retirement of a lineal family member, such as a
parent or grandparent. It was not the intent of Congress to force
family farms out of eligibility as a result of family transitions. As a
son, a grandson, and a father, I can truly attest to the importance of
estate planning activities to ensure the continued operation and
viability of a family's farm. We are requesting that this Committee
revise the statute to provide an exemption or safeguard to protect
hardworking farm families against unforeseen linkage breaks in their
operating structure.
In addition, the regulations should not include a cap on active
personal farm managers. Invoking an arbitrary limit of one to three
farm managers completely ignores the diversity and unique needs of
farming operations across different crops and regions. Southern family
farming operations are often larger than three individuals, and are
most affected by this limit. While a family operation can have as many
farm managers as required to manage the complexity and scope of the
operation, it is irrational to then limit the number of eligible farm
managers in similar operations that involve non-lineal family members,
friends, or neighbors. The diverse sizes and scopes of farming
operations across the nation require different types of expertise and
numbers of individuals to adequately manage such operations. A limit
ignores economies of scale, the increasing need to achieve efficiencies
in agricultural production, and the complexity of such operations.
Adjusted Gross Income and Payment Limitations Should Be Eliminated
USA Rice opposes additional eligibility requirements based on a
producer's adjusted gross income (AGI). In fact, we firmly believe that
this AGI limit should not exist at all. Farmers need to build up
reserves in good times in order to weather bad times. But, an AGI test
that excludes farmers from the farm bill in a given year due to the AGI
of the farmer in previous years turns this fact of life on its head.
Additionally, a $125,000 payment limit seemed like a farfetched
problem when the 2014 Farm Bill was written and prices were higher.
Unfortunately, in current market conditions, many growers are at or
close to the payment limits. If a farmer is limited at $125,000 and his
losses are $200,000 across his operation, there is a serious problem
with the effectiveness of the safety net. It seems counterintuitive to
maintain policy that provides full assistance to producers when they
experience some losses but only partial assistance to those that are
hit the hardest and experience deep losses.
Crop Insurance Needs Improvement
Crop insurance has not been as valuable a risk management tool for
rice as it has been for other crops and areas. Rice farms are 100
percent irrigated, and on average, our yields are very consistent. Our
financial problems occur with higher production costs due to irrigation
or as the result of a weather event in the fall that disrupts our
harvest and affects the quality of our crops.
Revenue Protection policies work well when prices are high and were
increasingly utilized by rice farmers through 2014, but have faced
challenges and diminished sales in recent years. Revenue-based
insurance uses averages from the Rough Rice Futures Contract in the
fall to set the expected price used to calculate revenue.
Unfortunately, because rice is a thinly traded commodity in the futures
market, in 2015 there was not an adequate amount of activity for RMA to
determine an expected price. Therefore, revenue policies were not
available for that year and producers were forced to use Yield
Protection coverage, which did not provide adequate protection.
Though rice yields do not tend to be as variable as other crops due
to our irrigation practices, crop insurance rates remain high relative
to other crops. For example, a 75 percent Revenue Protection policy for
corn in Floyd County, Iowa on a slightly above average Actual
Production History would cost the farmer $9 per acre--that is $1.70 out
of pocket for every $100 in coverage. The same policy on rice in
Richland Parish, Louisiana would cost $23 per acre--that is $4.87 for
$100 in coverage. So in this example, the rice insurance is nearly
three times as high as the corn insurance--and this is reflective of
the cost across the rice belt. With the price guarantee of $10.30 per
hundredweight of rice this year, it is easy to see why standard Revenue
Protection insurance is not as useful of a tool as we had hoped it
would be for rice farmers.
The 2014 Farm Bill created a county-wide insurance-based policy
called Supplemental Coverage Option (SCO) that we had hoped, coupled
with PLC in the commodity title, would provide a complementary set of
risk management tools for our growers. However, after the product was
rated by USDA's Risk Management Agency (RMA), in most counties it was
economically infeasible to purchase for most producers.
USA Rice spent several years working with consultants to develop an
insurance product that would provide coverage for drastic changes in
margins based on rising input costs. This product was finally approved
in 2015. However, in the course of its development it was merged with a
product designed to cover margins in other crops, and the resulting
changes did not meet the needs of the rice industry. Participation in
the Margin Protection insurance product have been very low, with the
number of policies sold in the single digits last year. For all of our
investment and efforts, the product is simply not functioning as an
adequate risk management tool. However, this does not mean the concept
is without merit. Because of our investments in the initial product
structure and the need to cover our margins as input costs rise in the
future, we would be very supportive of this Committee looking into ways
to revise Margin Protection to be more affordable and to better fit the
needs of rice farmers.
Finally, we have made attempts to improve crop insurance for rice
farmers through the promotion of a downed rice policy that indemnifies
producers for increased harvest costs associated with late-season
storms that lay the rice down. This policy has been fairly successful
in certain areas but problems with the overall range of the policy
persist. As an industry, we plan to continue to work to improve crop
insurance coverage and options for rice farmers and will continue to
utilize basic coverage options to, at least partially, insure our crop
in the event of catastrophic losses due to weather.
Farm Policy Is Necessary for National Security
Our nation's strong farm safety net would not be what it is without
all of the pillars that make up farm policy. Agriculture is not a
partisan issue. We divide ourselves by region and sector but not by
political beliefs. Fortunately, the commodity title and other titles
make sure that each of our different sectors and regions have something
that works. Without the certainty of this legislation, our already
high-risk career would take on a new level of risk.
While some of the factors affecting the farm economy are within the
control of the farmers themselves, most of them are not. Illegal and
over-subsidizing of rice production by our foreign competitors, phony
sanitary and phytosanitary barriers, lack of private financing options,
etc., all play into the need and justifications for strong farm policy
to protect our basic agricultural infrastructure.
The average U.S. farmer faces more and different risks than any
other business we could point to. We are affected by global futures and
cash markets, weather, pests and disease, and any number of other
factors that could cause our crop to fail and our farms to go bankrupt.
We are at the mercy of our bankers who have to be able to justify
giving us our annual operating loans and determine if the lenders can
absorb the unique risks associated with farming. The business of
agriculture is high stakes. Most farmers borrow more money in 1 year
than the average family borrows in an entire lifetime.
When threats are made to cut or eliminate funding and policy for
the farm safety net, the very existence of the full-time family farmer
is put in jeopardy. Without a strong and predictable safety net, only a
small number of truly consolidated operations would survive. These
would not be the competitive family enterprises we know today.
Please keep in mind that if it were up to us as farmers, we would
prefer to prosper solely on the great prices our crops bring at the
market. Unfortunately, commodity markets are not always kind, and
agricultural markets are distorted by our foreign competitors. The
simple fact is that right now our crops are not bringing enough at the
market to pay our loans and buy our supplies for next year without the
assistance provided by the farm bill.
I am here to ask for this Committee's consideration in not only
maintaining our commodity title policies, but strengthening them by
using our recommendations as you prepare to reauthorize the farm bill.
I want to again thank you, Chairman Crawford, Ranking Member Nolan,
and the Members of the Subcommittee for inviting me here today to
provide insight on behalf of the U.S. rice industry.

The Chairman. Thank you, sir. I appreciate that.
I want to yield to the gentleman from Georgia, Mr. Austin
Scott, to introduce our next witness.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. We
have Mr. Tim McMillan representing the Southern Peanut Farmers
Federation from Enigma, Georgia, and if you don't know where
Enigma, Georgia is, that is in Berrien County, Georgia, and if
you don't know where that is, we are capable of governing
ourselves.
The Chairman. I thank the gentleman, and Mr. Tim McMillan,
you are recognized for 5 minutes.

STATEMENT OF HON. TIMOTHY E. McMILLAN, CO-FOUNDER AND CO-OWNER,
SOUTHERN GRACE FARMS, ENIGMA, GA; ON BEHALF OF SOUTHERN PEANUT
FARMERS FEDERATION

Mr. McMillan. Good morning, Chairman Crawford, Ranking
Member Nolan, and Members of the Subcommittee. I am Tim
McMillan, and I am a seventh generation family farmer from
Berrien County, Georgia. That is on the other end, Congressman
Peterson, of the world. I am testifying today on behalf of the
Southern Peanut Farmers Federation, the largest peanut grower
organization in the United States.
I want to be clear today that the peanut provisions of the
2014 Farm Bill have provided a safety net for peanut producers.
If the Price Loss Program had not been in place, I am afraid
many farmers in the Southeast would no longer exist because of
the downturn in the farm economy which has plagued us the past
3 years.
The Federation supports maintaining the current PLC program
in the 2014 Farm Bill, including these key provisions: the
current reference price for peanuts, a separate payment limit
as established in the 2002 Farm Bill, and storage and handling
provisions.
The 2014 Farm Bill was drafted during a period of high
prices. When we compare average prices in 2011 through 2012
through 2016 prices, we see a 39 percent decline in peanut
prices. The USDA has projected the net farm income from 2013
through 2017 to decline by 49.6 percent. I see the real impact
of these numbers in the faces of my neighbors, my customers,
and I hear it in discussions with lenders and our suppliers.
The peanut Price Loss Coverage Program has worked, but
peanuts are not sufficient to carry an entire farming
operation. Corn and cotton prices have been depressed, and with
the lack of a cotton PLC program, more pressure has been placed
on growers to plant peanuts by lenders and others. Peanut
growers know that a rotation is critical for their cropping
system. However, during this period of severely depressed farm
economy, many farmers modified their crop rotations in order to
survive. As a result, U.S. peanut yield has declined by
approximately 13 percent.
Although the increased peanut acreage has impacted yields
and the cost of production, peanut acreage during the life of
the 2014 Farm Bill is not out of line. During the life of the
2014 Farm Bill, average planted acres were only 16 percent more
than the average acres planted during the years 2002 through
2013.
What about the demand for peanuts? Demand has kept pace
with the supply of peanuts. U.S. per capita peanut consumption
increased 12 percent from 2012 to 2016. Domestic demand and
export demand have grown significantly in the last few years.
The number of peanuts used for peanut butter has grown 64.4
percent since 2002, and ten percent since 2014.
When we take a closer look at USDA's Foreign Agricultural
Services export data, comparing the average exports of peanuts
and peanut butter during the 2008 Farm Bill relative to the
2014 Farm Bill, we also see strong growth. Peanut exports
increased by approximately 71 percent.
What about the supply of peanuts in the U.S.? In the
current market, demand exceeds supply. Given this economic
situation, early contract prices for the 2017 crop have been
reported in $475 to $550 per ton range. In addition, peanuts
have not seen significant forfeitures at USDA. Marketplace
indicators suggest there is not an oversupply of peanuts.
According to the National Center for Peanut Competitiveness,
the peanut program in the 2014 Farm Bill has not led to
excessive peanut acreage.
What about the impact of generic acres on peanuts? Generic-
based acres are available to any covered commodity in 2014 Farm
Bill. The Committee wisely established a program allowing
growers to keep these base acres. Without these base acres, the
current struggling farm economy would be much worse.
In conclusion, the Federation supports the peanut
provisions in the 2014 Farm Bill, and appreciates the
opportunity to work with you as we move forward with the next
farm bill. Thank you for allowing me to testify today.
[The prepared statement of Mr. McMillan follows:]

Prepared Statement of Hon. Timothy E. McMillan, Co-Founder and Co-
Owner, Southern Grace Farms, Enigma, GA; on Behalf of Southern Peanut
Farmers Federation
Good morning, Chairman Crawford, Ranking Member Nolan, and Members
of the Subcommittee. My name is Tim McMillan and I am a seventh-
generation family farmer from Berrien County, Georgia. Our farm is a
typical diversified row crop farm with peanuts, cotton, cows, timber
and some specialty crops. It is an honor for me to be here today before
this Committee.
I am testifying today on behalf of the Southern Peanut Farmers
Federation (Federation), the largest peanut grower organization in the
United States. The Federation is comprised of the Alabama Peanut
Producers Association, the Florida Peanut Producers Association, the
Georgia Peanut Commission and the Mississippi Peanut Growers
Association.
I want to thank this Committee for what you have meant to peanut
farm families and communities across the Peanut Belt for many years.
You have provided a program that pushed our industry to market our
products more efficiently in the domestic and export markets. You
encouraged our industry to move from a supply-management program to a
market program in the 2002 Farm Bill. Finally, the Price Loss Coverage
(PLC) program has assured growers that a safety net program was
available when farm economies struggled.
I want to be clear today that the peanut provisions of the 2014
Farm Bill have worked as a safety net for peanut producers. If the PLC
program had not been in place, I am afraid many farms in the Southeast
would no longer exist because of the downturn in the farm economy which
has plagued us the past 3 years. In addition, this bill continues to
assure consumers a safe, affordable food supply.
The Federation supports maintaining the current PLC program in the
2014 Farm Bill including these key provisions:

Current Reference Price for Peanuts.

Separate Peanut Payment Limit (as established in the 2002
Farm Bill).

Storage and Handling Provisions.

The 2014 Farm Bill was drafted during a period of high prices. When
we compare average prices in 2011-2012 to 2016 prices, we see a 39%
decline in peanut prices. Corn, soybeans, wheat and cotton all saw
significant drops in prices when comparing the years that the 2014 Farm
Bill was developed to 2016 prices.
The U.S. Department of Agriculture projected 2017 net farm income
in the U.S. to be $62.3 billion which translates to a 49.6% decline in
net farm income since 2013. I see the real impact of these numbers in
the faces of my neighbors and hear it in discussions with lenders and
our suppliers.
The peanut Price Loss Coverage (PLC) program has worked but peanuts
are not sufficient to carry an entire farming operation. Corn and
cotton prices have been depressed and with the lack of a cotton PLC
program, more pressure has been placed on growers to plant peanuts by
lenders and others. For many growers, the only option to survive was to
plant more peanut acreage.
Peanut growers know that rotation is critical for their cropping
systems. However, during this period of a severely depressed farm
economy, many farmers modified their crop rotations in order to
survive.

U.S. peanut yield has declined by approximately 13%.

Georgia's peanut yield has declined by 14%.

Southeast average yield has declined by 11%.

Research has shown that with reduced rotation, not only will peanut
yields drop but chemical costs increase. The cost of weed control
continues to rise as resistant pigweed becomes more widespread, and
some of our fungicides are becoming less effective as pathogens mutate
and adapt. According to the University of Georgia's National Center for
Peanut Competitiveness (NCPC), we have seen a downward trend in peanut
yields since 2012.
According to the NCPC, these increased costs of production could
make the current reference price ineffective.
Although the increased peanut acreage has impacted yields and cost
of production, peanut acreage during the life of the 2014 Farm Bill is
not out of line.

Prior to the 2002 Farm bill, U.S. peanut acreage exceeded
1.6 million acres for several years, in the early 1990's, and
exceeded 2 million acres in 1991.

After we changed the peanut program in the 2002 Farm Bill
from a supply management program to a market oriented program,
U.S. peanut acreage has exceeded 1.6 million acres.

Planted acreage of 1.6 million acres is not a new phenome.

Average planted acres during the life of the 2014 Farm Bill
is only approximately 16% more than the average acres planted
during the years 2002-2013.
What About the Demand for Peanuts?
It is very important to this discussion to note that demand has
kept pace with the supply of peanuts. First, I want to address domestic
demand. According to USDA and U.S. Department of Commerce data, U.S.
per capita peanut consumption has grown from 6.6 pounds per capita in
2012 to 7.4 pounds per capita in 2016--a 12% increase.
The peanut industry took two major steps to encourage demand.
First, the Peanut Institute was created to fund research on the
nutrition aspects of peanuts. Second, peanut growers voted to create
the National Peanut Board (NPB) through a national check-off program
overseen by USDA. As a result of these efforts, consumers in the U.S.
and in other countries are increasingly recognizing that:

Peanuts are heart healthy, fight obesity, reduce the risk of
Type 2 diabetes plus have key micronutrients.

Peanuts by means of Ready to Use Therapeutic Food (RUTF) are
also a widely-used tool to fight severe malnutrition in
children around the world.

Domestic demand and export demand have grown significantly in the
last few years. Utilizing USDA's National Agricultural Statistical
Service's (NASS) Peanut Stocks and Processing reports and comparing the
first 6 months of the 2016-17 marketing year to a comparable time
period for previous marketing years:

The number of peanuts used for peanut butter has grown 64.4%
since 2002 and 10% since 2014.

Total shelled peanut use has increased approximately 47%
since 2002 and 11% since 2014.

When we take a closer look at USDA's Foreign Agricultural Service's
(FAS) export data, comparing the average exports of peanuts and peanut
butter during the 2008 Farm Bill relative to the 2014 Farm Bill, we
also see strong growth.

Peanut exports increased by approximately 71%.

Peanut butter exports have grown by 52%.
What About the Supply of Peanuts in the U.S.?
Peanut shellers speak openly about the tight supply of peanuts.
Today's peanut prices do not support the concept that the 2014 Farm
Bill is causing excessive peanut acreage planting.
As peanut growers entered the 2016 crop year, USDA had published
incorrect inventory numbers. Based on the incorrect numbers, the peanut
industry assumed that supply significantly exceeded demand which had a
negative effect on peanut prices received by farmers, ranging from a
$355/ton (loan rate) to approximately $380/ton.

Based on the reduced prices, the Southeast, the largest
region of peanut production in the U.S., reduced peanut
planting by approximately 11%.

Once USDA corrected the mistake during the growing season, contract
prices for the uncontracted 2016 crop and any unsold 2015 crop in the
loan increased significantly to the $450/ton range. Recently, any
uncontracted 2016 crop peanuts have seen contracts increase even more.
As one major sheller stated in their newsletter ``This will continue to
support 2016 crop values as the market is forced to ration supply of
quality tons.'' As of today, demand exceeds supply. Given this economic
situation, early contract prices for the 2017 crop have been reported
in the $475-$550/ton.

Peanut shellers are still offering higher 2017 crop contract
prices which encourage peanut acreage.

Shellers would not be offering these types of contracts
unless signals from manufacturers and exporters clearly
indicate that they need more peanuts for the marketplace.

These actions are not being driven by the 2014 Farm Bill but
instead by the markets and the rules of supply and demand.

The shellers' actions indicate that the program has not
created an excess supply of peanuts in the marketplace.

Peanuts have not seen significant forfeitures at USDA. For the 2015
peanut crop year, the latest data available to the NCPC, approximately
62 tons were forfeited. This translates into approximately .0021% of
the total 2015 peanut crop being forfeited. USDA sold those tons at an
average price of $363.67/ton which was above the loan rate of $355/ton
translating into a profit for the government and no cost to the
taxpayer. To date, according to the NCPC, there have been no peanut
loan forfeitures from the 2016 peanut crop.
From the evidence we see in the marketplace, there is not an
oversupply of peanuts. According to the NCPC, ``The peanut program in
the 2014 Farm Bill has not led to excessive peanut acreage.''
What About the Impact of Generic Acres on Peanuts?
As you are aware, the cotton industry opted for the STAX program in
the 2014 Farm Bill while cotton producers maintained their generic base
acres. These generic base acres are available to any covered commodity
in the 2014 Farm Bill. This Committee wisely established a program
allowing growers to keep these base acres. Without these base acres,
the current struggling farm economy would be much worse.
The United States Department of Agriculture's (USDA) Farm Service
Agency (FSA) February 2017 data examined the allocation of generic base
acres and updated the program payments for covered commodities planted
on these generic base acres.

For the 2014 crop year, only approximately 58% of the
generic base acres were allocated to a covered commodity.

Approximately 7.4 million generic base acres were not
utilized by cotton farmers for the 2014 crop year.

Approximately 32% of the generic base acres assigned to
soybeans.

26% of the generic base acres assigned to wheat.

19% of the generic base acres assigned to corn.

13% of the generic base acres assigned to grain sorghum.

Only 7% of the generic base acres assigned to peanuts.

Less than 53% of the 2014 peanut certified acres had generic
acres attributed.

Were there significant changes in these planting ratios for the
2015 crop year? The answer is no.

Approximately 61% of the generic base acres were allocated
to a covered commodity.

Approximately 7 million generic base acres were not utilized
by cotton farmers.

Approximately 90% of the generic base acres were assigned to
soybeans, wheat, corn and grain sorghum.

Only 8.7% of the generic base acres assigned to peanuts.

Approximately 57% of the 2015 peanut certified acres had
generic acres attributed.

Based on USDA deadlines for the 2016 crop year, it is assumed that
the 2016 ratios will not differ significantly from the 2015 data. With
the generic base acres attributed to the covered commodities of the
2014 Farm Bill, these commodities did receive payments.

For the 2014 crop, the total payments for the covered
commodities on generic acres were almost $149 million.

For the 2015 crop, the attributed generic base acres
generated approximately $444 million in payments for the
covered commodities.

Almost a threefold increase in generic base acres payments
to cotton producers from the 2014 crop year to the 2015 crop
year.

Given the depressed commodity prices, the 2016 crop year
payments to be received in October 2017 are assumed to be
similar to the 2015 crop year payments.

For the 2014 crop, only 27% of all ARC-PLC peanut payments was
derived from generic base acres attributed to peanuts. For the 2015
crop year, approximately 33% of the total payments derived from generic
base acres attributed to peanuts.
While these payments were attributed to peanuts, in reality, the
payments were received by cotton producers who are also peanut
producers. Thus, any scoring in terms of the cost of the peanut program
should take into account the generic acre impact. As I stated earlier,
cotton was not a covered commodity in the ARC-PLC programs. Generic
acres, as part of the safety net, allowed cotton producers, who also
grew other commodities like peanuts, corn, soybeans, wheat and rice, to
participate in some limited manner and stay on the farm. For many
farmers, generic base actually made it possible to keep planting cotton
on our farms in order to maintain some level of crop rotation. Without
this generic acre program, many farmers across the U.S. would have had
their farm income, the safety net reduced dramatically. This program
has worked at a time when prices were low.
The Federation supports the National Cotton Council's request for
USDA to approve a cottonseed program for cotton producers.
Peanut Growers Support Viable Risk Management Tools
The Federation supports the risk management provisions of the 2014
Farm Bill. Congress approved a peanut revenue insurance program in the
2014 Farm Bill. This was a product of the peanut industry working with
USDA's Risk Management Agency and crop insurers to develop a tool that
worked for producers. Growers are participating in this program.
In conclusion, the Federation supports the peanut provisions in the
2014 Farm Bill and appreciates the opportunity to work with you as we
move forward with the next farm bill.
Thank you for allowing me to testify today.

The Chairman. Thank you, Mr. McMillan.
I would like to recognize Mr. Peterson, the full Committee
Ranking Member, for the introduction of our next witness.
Mr. Peterson. Well I kind of introduced him before, but Rob
Rynning is one of my constituents. He does a great job, not
only as a farmer, but spending a lot of his time representing
people in our part of the world at meetings like this, and so I
personally appreciate his involvement and efforts, and I don't
know how he gets time to farm, but other than that, welcome to
the Committee.
Mr. Rynning. My brother wonders the same thing at times.
The Chairman. Mr. Rynning, you are recognized for 5
minutes.

STATEMENT OF ROBERT RYNNING, PRESIDENT, U.S. CANOLA
ASSOCIATION, KENNEDY, MN; ON BEHALF OF NATIONAL SUNFLOWER
ASSOCIATION

Mr. Rynning. Thank you, Mr. Chairman.
On behalf of the U.S. Canola and National Sunflower
Associations, I want to thank the Chairman and Ranking Member,
as well as the Committee for the invitation to appear before
you today. I am Robert Rynning, President of the U.S. Canola
Association. My brother, nephew, and I farm in the very
northwest corner of Minnesota, just a few miles south of the
Canadian line, growing canola, barley, wheat, and soybeans.
Because minor oilseed producers grow a number of crops in
rotation on their farms, I want to note the common areas of
agreement between USCA and NSA have with groups affiliated with
the statement attached to my testimony. We also signed a letter
to the Senate Budget and Appropriations Committee with 15 other
farm groups, outlining in detail a need for additional
resources to write the next farm bill.
The U.S. has planted an average of 1.7 million acres of
canola and 1.7 million acres of sunflowers over the past 5
years. The majority of U.S. canola production is in the
Northern Plains, however, winter canola varieties have been
successfully introduced into the Southern Great Plains, and
this region has the potential to become another major U.S.
production area. Another winter canola production region can
also be found in the mid-southern states, with much of this
acreage being double cropped with soybeans. The Pacific
Northwest also grows both winter and spring canola varieties.
The U.S. produced a record 3 billion pounds of canola seed last
year, but we will still need to import 68 percent of our
expected canola oil consumption and 75 percent of our expected
canola meal consumption this year.
The majority of the 2.5 billion pounds of sunflower seed
the U.S. produces annually are grown from the Dakotas to the
Panhandle of Texas. There are two types of sunflowers grown.
Oil sunflowers comprise 80 percent of the production and are
grown for high quality cooking oil, or sold as bird food. The
remainder is confection seed, which is used in the snack food
and bakery markets. Confections receive a premium over oil,
causing the season average price of all sunflowers to be higher
than other minor oilseeds. Seventy-five percent of the U.S.
sunflower oil is consumed domestically, with the remainder
exported to Canada, Mexico, and Japan. Confections are very
reliant on exports, since \1/2\ of our confection production is
exported, mainly to Spain, Mexico, Canada, and the Middle East.
USCA and NSA support continuing the ARC and PLC programs
with support payments tied to historical crops bases, and the
ability to choose between programs by crop. We also encourage
the use of RMA yields first, rather than NASS yields when
computing our county yields.
In the 2014 Farm Bill signup, 97 percent of canola-based
acres were entered into PLC program. Sunflower-based signup was
more diverse with 56 percent into PLC and 43 percent into ARC
county. Prices for both crops have fallen 40 percent from their
peak, and both have received payments in the 2014 Farm Bill,
although sunflower payments have been less, due to confection
seed premiums, which increase all sunflower season price.
However, for the 2016 crop, confection premiums have declined
considerably, and payments for PLC and ARC county are expected
to increase.
Although annual planted acres appear stable for canola and
sunflowers, there is real concern that core acreage will not be
sufficient in the future to sustain infrastructure for those
alternative crops. Many producers in the Northern Plains who
plant canola and sunflowers have also begun planting soybeans
and corn. Per acre cost of seeding canola is $50 more and
sunflowers $20 more than soybeans this spring, and soybean
acres will increase this year as farmers strive to reduce the
overall input costs. Sunflower producers in the prairie pothole
region also have the added burden of potential blackbird
depredation that can lose a substantial portion of their crop
in the fall if large migratory flocks infest their fields.
Beyond the healthy oil both these crops supply, as well as
the high quality canola meal used to supplement dairy herd
ration, canola and sunflowers also provide needed quality
habitat for honeybees as well as wild pollinators. Honeybees
support $15 billion of agriculture production in the U.S.
through pollinator services, but a major decline in honeybee
health has put these benefits at risk. Bee health decline has
been linked to several factors, including the lack of suitable
habitat due to increased agricultural monocultures, and
declining wild spaces. Canola and sunflowers provide ideal
habitat and forage for honeybees when they are not being used
for pollinator services, and are preferred hive sites by
beekeepers. Canola fields bloom a month or longer under ideal
weather, providing bees with a good source of nectar and
pollen. Sunflowers bloom in late summer, providing habitat and
forage in a time when fewer plants are blossoming. Maintaining
the acreage of cropland planted annually to these two crops is
essential to contribute viably to the honeybee industry, and an
increase of just 2 to 3 million acres across the U.S. would
have an immediate positive impact on honeybee health. USCA and
NSA support the creation of pollinator incentive, include
canola and sunflowers in cropping rotations to provide habitat
for honeybees and wild pollinators. We are uncertain whether
this initiative would be in the commodity title or conservation
title, but are willing to work with the Committee to develop
such an initiative.
Thank you, Mr. Chairman, for your time and attention. I
will be happy to answer any questions the Committee may have.
[The prepared statement of Mr. Rynning follows:]

Prepared Statement of Robert Rynning, President, U.S. Canola
Association, Kennedy, MN; on Behalf of National Sunflower Association
On behalf of the U.S. Canola Association and the National Sunflower
Association, I want to thank the Chairman and Ranking Member, as well
as the Committee, for this opportunity to represent the views of U.S.
canola and sunflower growers. I am Robert Rynning, President of the
U.S. Canola Association. I operate with my brother a fifth generation
family farm in northwest Minnesota near Kennedy, growing canola,
barley, wheat, and soybeans.
Because farmers grow canola and sunflowers in agronomic rotations
with a number of other crops on their farms, I want to note the common
areas of agreement USCA and NSA have with the groups affiliated with
the statement attached to my testimony.* Another area of agreement is
the need for additional resources to write the next farm bill as
outlined in the March 15 letter to the Senate Budget and Appropriations
Committees that USCA and NSA signed along with 15 other farm
organizations.
---------------------------------------------------------------------------
*Editor's note: the document referred to is entitled Attachment,
and follows the prepared statement of Mr. Moore (located on p. 799),
published in the March 28, 2017, The Next Farm Bill: Commodity Policy--
Part 1, General Farm Commodities and Risk Management Subcommittee
hearing. For purposes of this publication it is not reprinted here.
---------------------------------------------------------------------------
Regarding canola and sunflowers specifically, the U.S. has planted
an average of 3.4 million acres of these alternative rotational crops--
1.7 million each--the last 5 years.
While the Northern Plains account for the majority of U.S. canola
production, winter canola varieties have been successfully introduced
in the Southern Great Plains and this region has the potential to
become another major U.S. production area. Winter canola production can
also be found in the mid-southern states, and much of this acreage
supports double cropping of soybeans or other spring-seeded crops. A
fourth production area is in the Pacific Northwest, which produces both
winter and spring canola varieties. In 2016, the U.S. produced a record
3 billion pounds of canola seed, but for the coming year, the U.S. will
still need to import 68 percent of our expected canola oil consumption;
and 75 percent of our expected canola meal consumption.
The majority of U.S. sunflowers are produced in the region
stretching from the Dakotas to the panhandle of Texas, producing about
2.5 billion pounds of sunflower seed annually. Of the two types of
sunflower seed produced, oil-type sunflowers represent approximately 80
percent of production, which is crushed for high quality cooking oil or
sold as bird food. The remainder of production is confection seed and
is used in the snack food and bakery markets. Confection seed types
receive a premium over oil-type which causes the season average price
of all sunflower seed to exceed that of other minor oilseeds. Seventy-
five percent of U.S. sunflower oil is consumed domestically with the
remainder exported to Canada, Mexico and Japan. Exports are extremely
important to confection sunflower seed producers as seed and kernel
exports represent approximately \1/2\ of the U.S. confection sunflower
industry's production. The main markets for confection seed and kernel
are Spain, Mexico, Canada and Middle East region.
USCA and NSA support the continuation of the ARC and PLC programs,
with support payments tied to historical crop bases and the ability to
choose between the programs by crop. We also encourage the use of RMA
yields first rather than NASS yields when computing ARC-CO yields. In
the 2014 Farm Bill sign-up, 97 percent of canola base acres were
entered into the PLC program. Sunflower base sign-up was more diverse
with 56 percent entered into PLC and 43 percent ARC-CO. Prices for both
canola and sunflowers have fallen 40 percent from their peak and both
crops have received payments from the 2014 Farm Bill, although
sunflower payments have been less due to the confection-type's price
premiums, which increase the all sunflower season average price.
However, for the 2016 crop, confection premiums declined considerably
and payments for PLC and ARC-CO are expected to increase.
Although annual planted acres appear stable for canola and
sunflowers, there is real concern that core acreage will not continue
to be planted at levels high enough in the future to sustain the seed
and processing infrastructure for these alternative crops. Many
producers in the Northern Plains who plant canola and sunflowers have
also begun planting soybeans as well as corn. The per acre cost of
seeding canola is $50 more (and sunflowers $20 more) than soybeans this
spring, and soybean acres will increase this year as farmers strive to
reduce overall input costs. Sunflower producers in the prairie pothole
region also have the added burden of potential black bird depredation,
and can lose a substantial portion of their crop in the fall if large
migratory flocks infest their fields.
Beyond the healthy oil both these crops supply as well as the high
quality canola meal used to supplement dairy herd rations; canola and
sunflowers also provide needed quality habitat for honey bees as well
as wild pollinators.
Honey bees support $15 billion of agricultural production in the
U.S. through pollination services, but a major decline in honey bee
health in recent years has put these benefits at risk. This decline in
bee health has been linked to a variety of factors, including the lack
of suitable habitat due to increased agricultural monocultures and
declining wild spaces. Canola and sunflowers provide ideal habitat and
forage for honey bees when they are not being used for pollination
services; and are preferred hive sites by beekeepers. Canola fields
bloom for relatively long periods; some fields can provide bees with a
good source of nectar for a month or longer under ideal weather
conditions. Sunflowers bloom in late summer, providing habitat and
forage at a time when fewer plants are blossoming. Maintaining the
acreage of cropland planted annually to these two crops is essential to
the continued viability of the honey bee industry; and increasing the
acreage by just 2-3 million acres across the U.S. would have an
immediate positive impact on honey bee health.
The USCA and the NSA support the creation of an incentive to
include canola and/or sunflowers in cropping rotations to provide
habitat for honey bees and wild pollinators. We are uncertain whether
this incentive should be in the commodity title or the conservation
title, but are willing to work with the Committee to develop such an
incentive.
Thank you Mr. Chairman for your time and attention. I will be happy
to answer questions the Committee may have for me.

The Chairman. Thank you, Mr. Rynning.
I now recognize Mr. Jack Roney, Director of Economics and
Policy Analysis, American Sugar Alliance. You are recognized
for 5 minutes.

STATEMENT OF JACK RONEY, DIRECTOR OF ECONOMICS AND POLICY
ANALYSIS, AMERICAN SUGAR ALLIANCE,
ARLINGTON, VA

Mr. Roney. Thank you, Mr. Chairman, Mr. Nolan, Members of
the Committee. I am Jack Roney, Economist for the American
Sugar Alliance.
The ASA is the national coalition of sugarbeet and
sugarcane growers, processors, and refiners. The U.S. sugar
producing industry generates 142,000 jobs in 22 states, and $20
billion per year in economic activity.
I would like to summarize my written testimony today by
describing why we have a sugar policy and how it is working.
The U.S. is the world's fifth largest sugar producer, and
among the world's most efficient. If we are so efficient then,
why do we need a U.S. sugar policy? The answer is in the
tremendous distortion in the so-called world sugar market.
This chart tracks the world average costs of producing
sugar over the past 3 decades. The cost has averaged 19 per
pound over those years. If I added the world average sugar
prices to this chart, what would you expect? Certainly, we
would expect prices to average above the cost of production,
high enough to keep producers in business. But here is the
reality. The so-called world price, the red line, is averaged
just 13, almost always well below production costs. The 28
year average production cost is nearly 50 percent higher than
the average price. With prices so far below cost, how can any
sugar producers survive? The answer is in the domestic markets,
where most sugar is produced and sold. Governments maintain
much higher prices than the world price so that their farmers
can stay in business. Only about \1/4\ of sugar is sold at the
world dump price. The remaining \3/4\ is sold at much higher
levels in the countries where the sugar is produced. Foreign
governments subsidize their producers so generously, they tend
to overproduce. To boost their prices in their domestic
markets, these governments export their surpluses. That shifts
their domestic surplus problem onto the world market.
Absent subsidies for inefficient foreign producers, the
world price would rise to reflect the cost of producing sugar.
That is why we support the resolution introduced recently by
Congressman Yoho of the Agriculture Committee. This zero for
zero approach says that the U.S. will eliminate its sugar
policy when foreign countries eliminate theirs. We are ready,
willing, and able to compete on a level playing field, free of
government intervention.
But to give up U.S. sugar policy without any concessions
from foreign subsidizers would be economic suicide for American
sugar farmers. Unilateral disarmament is the antithesis of free
trade, sending good American jobs to countries still
subsidizing.
American sugar policy is working well for American
consumers and taxpayers. American consumers prices for sugar
are among the lowest in the world, the red bar on this chart.
Global average retail sugar prices, the green bar, are 20
percent higher than U.S. prices. Developed country retail
prices, the yellow bar, are almost 30 percent higher than U.S.
prices. American consumers get a great deal on sugar that is
high quality, safe, reliable, and responsibly produced.
American taxpayers get a great deal, too. As instructed by
Congress, U.S. sugar policy has run at zero cost to taxpayers
for 14 of the past 15 years, and is projected to remain zero
cost. The only exception was 2013, when massive volumes of
subsidized and dumped sugar from Mexico depressed our market
and made it impossible for some producers to repay their
operating loans. USDA projects zero costs for sugar policy over
the next 10 years. The CBO projects some possible costs several
years from now, but this is based on the assumption that Mexico
is allowed to resume dumping.
Mexican dumping poses the greatest challenge to sustaining
a no cost sugar policy. After Mexico's dumping in 2013, the
U.S. ITC unanimously found that Mexico had injured the U.S.
industry. The Department of Commerce calculated subsidy and
dumping margins that totaled more than 80 percent. Rather than
imposing those huge duties, the Mexican and U.S. Governments
negotiated suspension agreements in late 2014. These were
intended to allow continued sugar trade without Mexican
dumping. But the suspension agreements have not been
successful, and American producers are still hurting. The two
governments are negotiating improvements. We support these
efforts, but if they are not successful, we support the
imposition of duties on subsidized dumped Mexican sugar.
The American sugar producers have had to endure flat
pricing for their sugar for most of the past 3 decades. In real
terms corrected for inflation, prices are down 43 percent since
1985. We have lost more than \1/2\ of our beet and cane mills,
57 closures in all. The most recent casualties of Mexican
dumping has driven Hawaii out of sugarcane after nearly 2
centuries of high yielding production, and a Wyoming beet mill
will close permanently later this year. The remaining sugar
producers will have a chance to survive only if: first, the
U.S. can implement an adequate response to Mexican dumping; and
second, the next farm bill contains a sugar policy that
provides a strong economic safety net.
Thank you for your attention and your support for American
sugarbeet and sugarcane farmers.
[The prepared statement of Mr. Roney follows:]

Prepared Statement of Jack Roney, Director of Economics and Policy
Analysis, American Sugar Alliance, Arlington, VA
U.S. Sugar Policy: Why We Have It and How It's Working
Summary
The American Sugar Alliance (ASA) is the national coalition of
sugarbeet and sugarcane growers, processors, and refiners. The U.S.
sugar-producing industry generates 142,000 jobs in 22 states and $20
billion in annual economic activity.\1\
---------------------------------------------------------------------------
\1\LMC International, The Economic Importance of the Sugar Industry
to the U.S. Economy--Jobs and Revenues, Oxford, England, August 2011.
---------------------------------------------------------------------------
American sugar policy is working well for American consumers, food
manufacturers, and taxpayers. It can provide an adequate economic
safety net for American sugar producers, as long as there is an
effective response to Mexican subsidizing and dumping.
The U.S. International Trade Commission, in 2014 and 2015, voted
unanimously that the Mexican Government and sugar industry had injured
the U.S. sugar industry. The U.S. Department of Commerce calculated
subsidy and dumping margins totaling more than 80%. Rather than
imposing those duties, the U.S. and Mexican Governments negotiated
Suspension Agreements (SAs) to resume duty-free trade, but eliminate
harmful dumping.
These SAs have proven ineffective. The dumping continues and U.S.
refined sugar prices are hovering near loan-forfeiture levels. Hawaii
has ceased cane sugar production and a beet factory in Wyoming is about
to close. Many other American sugar producers are financially
vulnerable.
We are encouraging the U.S. and Mexican Governments to correct the
shortcomings of the SAs or, failing that, to impose the subsidy and
dumping duties.
As long as an adequate response to foreign subsidies and dumping
exists, U.S. sugar policy can function effectively.
Background
The U.S. sugar industry is a major player in the world sugar
market. The United States is the world's fifth largest sugar-producing
country and is among the most efficient.
The U.S. is the 20th lowest cost among the 95 largest sugar-
producing nations. Most of these are developing countries with far
lower government-imposed costs for worker, consumer, and environmental
protections. U.S. beet sugar producers, mostly in northern-tier states,
are the lowest-cost beet producers in the world.\2\
---------------------------------------------------------------------------
\2\LMC International, Sugar & HFCS Production Costs: Global
Benchmarking, Oxford, England, August 2011.
---------------------------------------------------------------------------
The United States is also the world's fourth largest sugar-
consuming country and the third largest sugar importer. We provide
guaranteed, essentially duty-free, access to 41 countries. This makes
the U.S. one of the world's most open markets to foreign sugar. The
amount of duty-free access is determined under the World Trade
Organization and other trade agreements to which the United States is a
party.
American food manufacturers and consumers depend on a reliable,
dynamic, geographically-dispersed domestic sugar-producing industry to
provide safe, high-quality, responsibly-produced sugar at a reasonable
price. Despite a well-designed sugar policy in the 2014 Farm Bill, the
low prices caused by Mexican subsidizing and dumping threaten the
economic viability of American sugar producers.
Justification for U.S. Sugar Policy
Since U.S. sugar producers are among the lowest cost in the world,
one might ask why the industry requires a sugar policy at all. The
answer is found in the distorted, dump nature of the world sugar
market.
Foreign governments subsidize their producers so egregiously that
many of these countries produce far more sugar than their markets
demand. Rather than store these surpluses, or close mills and lose
jobs, as the United States has done, these countries dump their
subsidized sugar onto the world market for whatever price it will
bring. This subsidized dumping threatens further harm to American
farmers.
As a result of these dumped surpluses, the so-called ``world
price'' for sugar has been rendered essentially meaningless. Rarely in
the past few decades has the world price reflected the actual cost of
producing sugar--a minimal criterion for a meaningful market price.
The world price is so depressed by subsidies and dumping that, over
the past 28 years, the world average cost of producing sugar has
averaged nearly 50% more than the world price (Figure 1).\3\
---------------------------------------------------------------------------
\3\LMC International, World Sugar Prices vs. Costs of Production,
Oxford, England, March 2017.
---------------------------------------------------------------------------
One European market expert noted: ``The world market price is a
`dump'
price . . . (it) should never be used as a yardstick to measure what
benefits or costs may accrue from free trade in sugar.''\4\
---------------------------------------------------------------------------
\4\Patrick Chatenay, Government Support and the Brazilian Sugar
Industry, Canterbury, England, April 2013.
---------------------------------------------------------------------------
And researchers at Texas A&M University's Agricultural Policy
Center wrote: ``Policymakers in the United States have long recognized
that the world sugar market is heavily distorted by foreign subsidies
and market manipulations and have provided U.S. sugar farmers with some
form of safety net for more than 200 years. Major exporters of sugar do
not respond to the signals of the world market but rather to the
policies of their governments that enable them to export sugar below
their costs of production and their own domestic prices.''\5\
---------------------------------------------------------------------------
\5\Dr. Joe Outlaw and Dr. James Richardson, Analysis of the
Coalition for Sugar Reform Amendments to U.S. Sugar Policy: Potential
Effect on Policy and Industry, Agricultural Policy Center, Texas A&M
University, May 2016.
---------------------------------------------------------------------------
But how can a world sugar industry exist if the price received for
the product is just a fraction of the cost of producing it? The answer
is twofold:

1. Only about 20-25% of the sugar produced each year is actually
traded at the so-called ``world price.''

2. The other 75-80% of sugar is consumed in the countries where it
is produced, at prices considerably higher than the world
price, and higher than production costs.

The International Sugar Organization (ISO) surveyed 78 countries to
learn actual wholesale prices--the price producers in those countries
receive for their sugar. The ISO documents that, globally, actual
wholesale refined sugar prices have averaged 46% higher than the world
price over the past decade. Prices in developed countries have been
nearly double the world dump market price--averaging 94% higher (Figure
2).\6\
---------------------------------------------------------------------------
\6\International Sugar Organization, Domestic Sugar Prices--a
Survey, MECAS (15)06, May 2015.
---------------------------------------------------------------------------
This, then, explains how we can have a vast world sugar industry:
Governments shield their producers from the world dump market sugar and
maintain prices high enough--above the dump market and above production
costs--to sustain a subsidized domestic industry and generate and
defend jobs.
Further, this explains why we require a U.S. sugar policy--even
with American sugar producers among the lowest cost, and most
responsible, in the world. Generous domestic pricing encourages over-
production in many countries, whose governments then seek to export
their surplus. Absent U.S. sugar policy, those subsidized and dumped
surpluses would wreck the U.S. market and displace efficient American
sugar farmers.
Recent exposure of the U.S. sugar market to Mexican subsidies and
dumping provides a disconcerting case in point. And Mexico is by no
means unique. Its behavior is typical of foreign sugar exporters who
subsidize their exports and shift the burden of their surpluses from
their domestic markets onto the world market.
Damage from Mexican Subsidized Dumping
When the NAFTA went into effect in 1994, the Mexican sugar industry
was struggling financially and an occasional exporter of small volumes
of sugar. In 2001, the Mexican Government expropriated \1/2\ of all its
country's sugar mills, rather than allowing them to go out of business.
With government help, Mexican sugarcane plantings exploded--up about
60% since NAFTA was signed--though Mexican sugar demand was flat or
declining (Figure 3).
Mexico became one of the world's largest sugar exporters, with the
group of Mexican Government mills by far the country's leading sugar
producer and exporter. Virtually all those exports have been aimed at
the U.S. market--which opened fully to Mexican sugar in 2008 under
NAFTA rules.
Though the Mexican Government recently officially divested itself
of its mills, the government remains closely involved in the Mexican
sugar industry. In addition to government ownership, Mexican growers
and processors have benefitted from Federal and state cash infusions,
debt restructuring and forgiveness, government grant programs to
finance inventory, exports, and inputs, and a cane-grower payment
system that effectively subsidizes exports.\7\
---------------------------------------------------------------------------
\7\https://sugaralliance.org/mexican-export-subsidies-injuring-u-s-
sugar-producers/4990.
---------------------------------------------------------------------------
In 2013, Mexican sugar production soared to an all-time high, a
stunning 38% higher than the previous year's production. Yet, despite
the huge domestic market surplus, Mexico was able to sustain sugar
prices higher than in the U.S. How did they manage to balance their
market? By dumping their subsidized surplus on the U.S. market. Mexico
doubled its exports to the U.S., shipping about 1 million more tons
than the U.S. market could bear (Figure 4). Mexican exports to the U.S.
in 2013 and 2014, at 2 million tons each year, were about 250 times
greater than their pre-NAFTA levels.
The subsidized and dumped Mexican surpluses collapsed the U.S.
sugar market and caused the first government cost for U.S. sugar policy
in a dozen years, as American farmers struggled to repay loans they
normally repay fully, principal plus interest.
The U.S. sugar industry filed antidumping and countervailing duty
cases against Mexico in 2014, and won. The ITC ruled unanimously that
Mexico had injured the U.S. sugar industry and the Department of
Commerce calculated subsidy margins of 6-44% and dumping margins of 41-
42% (Figure 5).\8\
---------------------------------------------------------------------------
\8\U.S. Department of Commerce https://www.usitc.gov/publications/
701_731/pub4577.pdf.
---------------------------------------------------------------------------
U.S. producer prices plummeted by more than \1/2\ from 2010 to
early 2014, recovered somewhat in late 2014, and have fallen by a
fourth since then. Mexican subsidized imports continue to harm the U.S.
sugar industry despite Suspension Agreements the U.S. and Mexican
Governments implemented in late 2014 with the intention of preventing
further damage. Much of American sugar production cannot survive under
current market conditions.
Unfortunately, the SAs are not working as intended. Mexico,
basically, has sent the U.S. too little raw sugar and too much refined
sugar, relative to U.S. market needs. U.S. cane refiners have been
starved for raw sugar to process and refined beet sugar prices are so
low that loan forfeitures are a serious threat.
The U.S. and Mexican Governments are working on modifications to
the SAs and the U.S. Government will need to impose duties on Mexican
sugar if the two sides cannot reach a resolution. American sugar
producers are committed to working with our government to find a
negotiated solution but it will taking a willing Mexican Government and
industry to correct the flaws in the SAs.
How U.S. Sugar Policy Is Working
U.S. sugar policy has had the same structure since the 2008 Farm
Bill and, with the exception of the effect of Mexican dumping in 2013,
has been a successful policy.

American consumers and food manufacturers continue to have
access to high-quality, safe, affordable, responsibly-produced
sugar supplies.

American taxpayers benefit from a policy than has run at
zero cost in all but 1 of the past 14 years and is projected to
remain zero cost for years to come if the Mexican dumping
problem is resolved.

American sugar farmers have retained an economic safety net
that has helped many, though not all, to survive an extended
period of low prices and the catastrophic effects of Mexican
dumping.

American Consumer Benefits. With U.S. wholesale prices at or below
world average levels, one would expect American consumer prices, too,
to be low. They are. World average retail sugar prices are 20% higher
than U.S. prices; developed-country prices are 29% higher (Figure 6).
With a stable U.S. sugar policy and industry, American consumers get a
great deal on high-quality, safe, responsibly-produced sugar.
American Taxpayer Benefits. Farm bills have long instructed the
USDA to operate sugar policy at no cost to taxpayers by avoiding sugar
loan forfeitures. Sugar policy requires USDA to administer U.S. sugar
policy to ensure sugar processors can repay their operating loans at
principal plus interest.
USDA has consistently met this no-cost requirement, except in 2013
when Mexico dumped subsidized sugar into the U.S. market. USDA took
action, as directed by law, to minimize loan forfeitures, taxpayer
costs, and long-term harm to American sugar producers.
With Suspension Agreements in effect the CBO projects zero cost as
long as the agreements are in place, with modest costs in the unlikely
event the SAs, and/or duties, are terminated in 5 years and Mexican
dumping resumes. USDA and FAPRI project zero cost over the next 10
years (Figure 7).
Sugar policy opponents, led by major sugar-containing product
manufacturers, have urged opening the U.S. market to greater quantities
of subsidized foreign sugar. But additional, unneeded sugar would
threaten USDA's ability to administer a zero-cost policy. The Texas A&M
researchers wrote:

Our analysis leads us to conclude that food manufacturers'
reforms would undermine the no cost requirement of the law,
resulting in taxpayer costs, jeopardizing the viability of U.S.
sugar farmers and processors, and leading to higher sugar costs
for consumers as domestic suppliers are lost and the volatile
world sugar market is increasingly relied upon to meet domestic
demand. Meanwhile, food manufacturers may benefit in the short
term from depressed domestic sugar prices but, in the long-run,
they would suffer from the loss of what they say they need: a
viable, healthy, and geographically diverse supply of domestic
sugar.\9\
---------------------------------------------------------------------------
\9\Outlaw and Richardson, op. cit.

Sugar Producer Safety Net. With the exception of the year of
excessive Mexican dumping, when prices fell below loan forfeiture
levels, U.S. sugar policy has provided an economic safety net for
American sugar producers. But not for all producers, and there have
been numerous casualties.
Since the loan support price was established in 1985 at 18 per
pound of raw cane sugar, the loan rate has risen only 4%, to 18.75.
General price inflation since 1985 has been 123%. Real producer prices,
corrected for inflation, have fallen 43% since the 1980s.
Producers who could not reduce production costs enough to keep pace
with falling real prices for their product have gone out of business.
We have lost 57 beet and cane operations--more than \1/2\ of all those
operating in 1985. Hawaii has ceased growing sugarcane after nearly 2
centuries of high-yielding production that was at the core of Hawaii's
economic and social development. Another beet factory, in Wyoming, is
expected to close permanently this year (Figures 8-11).
More closures would certainly have occurred over time if not for
vertical integration by beet and cane growers and investment in
biotechnology and other breeding and processing advancements.
Crop Insurance
Crop insurance is an essential risk management tool for beet
growers and is usually a requirement by their bankers. Historically,
crop insurance has served beet growers with minimal but adequate
coverage. However, this past year many beet growers were plagued by low
sugar contents in their beets that insurance needed to cover but did
not. Beet growers are assessing the problem and will work with the Risk
Management Agency (RMA) to find a solution. RMA has always worked well
with our growers and we appreciate their attention to our concerns.
Beet growers will brief the Committee in the weeks and months ahead to
achieve an effective solution.
Louisiana growers are encouraged by changes in the sugarcane policy
that will fill a significant hole in coverage in Louisiana. These
changes will be effective for the 2017/18 marketing year. Crop
insurance policies for sugarcane in Florida and Texas will need to
realize large scale improvements before most acres can expect to be
covered with adequate buy-up coverage.
U.S. Sugar Policy in the Next Farm Bill
As long as there is an adequate response to Mexican subsidizing and
dumping, U.S. sugar policy, in its current form, can continue to be
effective for American consumers, food manufacturers, taxpayers, and
sugar producers.
The response to Mexican dumping is most likely to take either of
two forms:

1. Anti-dumping and countervailing duties, as calculated by the
Department of Commerce, that would severely limit sugar
imports from Mexico; or,

2. Effective Suspension Agreements, that would permit continued
duty-free sugar imports from Mexico, but limit those
imports to the amount, and type, of sugar the U.S. market
needs, and at minimum reference prices designed to prevent
further dumping.

The U.S. and Mexican Governments are attempting to negotiate
modifications to the Suspension Agreements that have been in place
since late 2014 but that have proven ineffective. We support these
government efforts.
Zero-for-Zero
U.S. sugar producers recognize that subsidies and other market-
distorting polices must be addressed in order for the world dump market
to recover and better reflect free market principles. Therefore,
American producers have publicly pledged to give up U.S. sugar policy
when foreign producers agree to eliminate their subsidies.
The American Sugar Alliance has endorsed a Congressional resolution
introduced by a Member of the House Agriculture Committee,
Representative Ted Yoho of Florida. This ``zero-for-zero'' resolution
explicitly calls for the U.S. to surrender its sugar policy when other
major producers have done the same.\10\
---------------------------------------------------------------------------
\10\https://www.congress.gov/115/bills/hconres40/BILLS-
115hconres40ih.pdf.
---------------------------------------------------------------------------
However, to weaken or surrender sugar policy without any foreign
concessions, as some critics of U.S. sugar policy have called for,
would amount to foolish unilateral disarmament. We would be sacrificing
good American jobs in a dynamic, efficient industry in favor of foreign
jobs in the countries that continue to subsidize.
Conclusion
U.S. sugar policy is working well for American consumers, food
manufacturers, and taxpayers. U.S. sugar policy can continue to operate
at zero cost to taxpayers, and provide a genuine economic safety net
for American sugar farmers, as long as Mexican dumping on the U.S.
market does not persist.
American sugar producers will work hard for an effective 2018 Farm
Bill for all American farmers. And we strongly support U.S. Government
efforts to put an end to Mexican dumping of subsidized sugar on the
U.S. market.
Figures
Figure 1
World Raw Sugar Dump Market Price: Historically Does Not Reflect Actual
Cost of Producing Sugar
Cents Per Pound

Sources: World Price: USDA, #11 raw contract, Caribbean
ports, monthly average prices, 1970-2017.
Cost of Production: Sugar Production Cost, Global
Benchmarking Report, LMC International, Oxford, England, July
2014.
31-P.
Figure 2
World Average Wholesale Refined Sugar Price Nearly 50% Higher than
World Dump Market Price; Developed-Country Average Nearly
Double
2005-2014, /lb

Source: International Sugar Organization (ISO), Domestic
Sugar Prices--a Survey, MECAS (15)06, May 2015. A survey of 78
countries, representing 79% of world sugar consumption. U.S.
2005-14 average: 37; U.S. February 2017 price: 28.63.
\1\EU-28 and other OECD countries in ISO survey.
10.
Figure 3
Since NAFTA Began: Mexican Sugar Consumption Up 15%; U.S. Sugar Area
Down 15%, Mexican Area Up 58%
1993/94=100

Sources: USDA; CONADESUCA. North American Free Trade
Agreement (NAFTA) went into effect Jan. 1, 1994; U.S.-Mexican
free trade in sugar began Jan. 1, 2008.
Note: Since 1994, 40 U.S. sugar processing plants have
closed. In Mexico, the Mexican Government expropriated \1/2\
the sugar mills in 2001, rather than allowing them to close,
and until 2015 owned and operated \1/5\ of Mexican sugar mills.
Since 2007/08, Mexican domestic sugar demand has fallen 12%
because of increased HFCS consumption.
21-2e.
Figure 4
U.S. Sugar Imports from Mexico, 1994/95-2016/17: Unpredictable,
Excessive Volumes, 2007/08-13/14
Thousand Short Tons, Raw Value

Source: USDA, Global Agriculture Trade System (GATS) (http://
apps.fas.usda.gov/gats/default.aspx).
USDA, ERS: Table 24b-2015/16 = forecast; 2016/17 =
projection.
303.

Figure 5
U.S. Anti-Dumping (AD) and Countervailing-Duty (CVD) Cases vs. Mexican
Sugar
------------------------------------------------------------------------

------------------------------------------------------------------------
2012/13 Mexican sugar production rises by
38%; Mexican sugar exports to the
U.S. double (to 2 million tons);
U.S. sugar price collapses.
2014:
March U.S. files AD/CVD cases vs. Mexican
sugar.
May U.S. International Trade Commission
(ITC) preliminary finding, by 5-0
vote, that Mexico has injured the
U.S. sugar industry.
August U.S. Department of Commerce (DOC)
finds that Mexico has been
subsidizing and imposes preliminary
CVDs at 3-17%.
October DOC finds that Mexico has been
dumping (selling below domestic cost
of production or prices) and imposes
preliminary ADs at 40-47%.
U.S. & Mexican Governments announce
draft Suspension Agreements (SAs) to
suspend duties and resume duty-free
sugar trade, with Mexican exports to
the U.S. no longer to exceed U.S.
needs.
December U.S. & Mexican Governments sign the
SAs. Mexico may fulfill 100% of U.S.
import needs above trade
commitments; reference prices and
limit on refined share of imports
set.
2015
March ITC finds, by 6-0 vote, that the SAs
eliminate the injurious effect of
Mexican dumping on the U.S.
industry.
September DOC finds final dumping margins of 41-
42%.
October DOC finds final subsidy margins of 6-
44%. Combined final subsidy and
dumping margins total 48-84%.
ITC final finding, by 6-0 vote, that
Mexico injured U.S. sugar industry.
2016
October U.S. Court of International Trade
(CIT) denies the Imperial Sugar
appeal of the ITC determination that
SAs eliminate the injurious effect
of Mexican dumping and subsidies.
December DOC preliminarily determines in an
administrative review of the SAs,
covering 2015, that some companies
may not be in compliance with the
SAs and that not all statutory
requirements for the SAs are still
being met.
Imperial Sugar appeals the CIT
decision to the U.S. Court of
Appeals for the Federal Circuit.
------------------------------------------------------------------------

Figure 6
Developed Country Average Retail Sugar Price: 29% Higher than U.S.;
Global Average: 20% Higher than U.S.

Source: SIS International Research, Global Retail Sugar
Prices, July 2015, from Euromonitor, International Monetary
Fund; 2014 prices.
Surveyed countries represent 67% of global sugar consumption.
Developed countries include OECD member countries and Hong
Kong.
319.
Figure 7
U.S. Sugar Policy Cost: Zero Net Cost Before Mexican Subsidizing and
Dumping; Zero with the Cases/Suspension Agreements (SAs)
CBO Projections, Million Dollars

Source: USDA, 2001/2002-2014/15 (2012/13 is net cost for
2012/13-2013/14); CBO, 2015/16-2026/27, January 2017.
FAPRI = Food and Agricultural Policy Research Institute.
16.
Figure 8
U.S. Raw Sugar Loan Rate: Real Loan Rate Down by 53% Since 1985

Data Source: Bureau of Labor Statistics--CPI-U. Annual
averages, 1985-2016.
Loan rate rose 0.25 in FY 2010, 2011, and 2012.
6d.
Figure 9
U.S. Wholesale Refined Sugar Prices: Real Price Down by 43% Since 1985

Data sources: BLS--CPI-U. USDA--wholesale refined beet sugar,
Midwest markets; annual averages 1985-2016.
6f.
Figure 10
Wholesale Refined Sugar Prices and Sugar Company Closures: Flat Prices
for 3 Decades = 57 Closures from 1985 to 2016
Cents Per Pound

Source: USDA, annual average wholesale refined sugar prices,
Midwest markets, 1985-2016. More operations would have closed
had farmers not organized cooperatively to purchase independent
beet and cane processing and refining facilities. Sweetener
user access to domestic sugar would have suffered more.
31-S.
Figure 11
With Flat Sugar Prices Since 1985: More than \1/2\ of U.S. Sugar-
Producing Operations Have Shut Down

Source: American Sugar Alliance, 2017.
54o.

The Chairman. Thank you. I would like to thank the entire
panel for your succinct remarks, you were right on time. I
appreciate that.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
I would like to start with recognizing the Chairman of the
full Committee, Mr. Conaway, if you have any questions?
All right. I will recognize myself for 5 minutes.
In general to anybody that wants to respond, if low prices
persist, will ARC and PLC in their current forms be a
sufficient safety net? And I will start with you, Mr. Lee.
Mr. Lee. I think so, but with some adjustments. For cotton,
we are not there, we need to be there.
The Chairman. Right, I understand. Sure. Mr. Gerard?
Mr. Gerard. As the PLC currently stands with us, our
reference price where it is, especially if we could accelerate
payment, a portion of the payment a bit, PLC works for rice as
is, definitely.
The Chairman. Okay. Mr. McMillan?
Mr. McMillan. With peanuts we would like to keep the same
program that we have now, and that would be sufficient. But we
need some companion crops that we can grow, because with
peanuts, we have to rotate those crops. And so we need a
companion crop like cotton that would have a safety net.
The Chairman. All right. Mr. Rynning?
Mr. Rynning. Yes, I believe for both canola and sunflowers,
the current framework is very workable and is a good framework.
Both organizations are quite happy with the main framework with
some tweaking here and here.
The Chairman. Sure. Mr. Roney?
Mr. Roney. The sugarbeet and sugarcane farmers are
ineligible for ARC or PLC programs because of the fact that it
is our processor who puts the sugar under loan. What we need to
do is retain our safety net through the non-recourse loan and
we can maintain no cost operation of that program, assuming we
can resolve the Mexico dumping problem.
The Chairman. Okay, thank you.
Mr. Gerard, rice producers overwhelmingly elected into PLC,
and I have heard from many farmers in my state that in the
absence of that policy, a lot of them wouldn't be farming
today. In fact, you mentioned one of the little problems that
we have with PLC is the delay, and that may be one of the
tweaks that we look at. But can you explain why PLC was the
program of choice for rice producers?
Mr. Gerard. Yes, sir. Mr. Chairman, PLC works for rice
because the reference price is a known. It is a known number.
It is something we bank on. The timing is an issue, but beyond
that, we have something that we can take to our lender and show
that we do have a true safety net. We don't need a subsidy when
the markets go down, we can produce a profit, but when we are
much below cost of production, we need a safety net that kicks
in and PLC has worked for us.
The Chairman. Is ARC workable at all for rice, in your
opinion?
Mr. Gerard. The problem that I see is typical with general
commodities, and we are seeing it happen right now. We get into
extended periods of over production, global glut, and extended
period of low prices. If we are looking back at an average
history of average prices, an average price of $10 rice ends up
to be a zero safety net. That is the biggest problem that we
have with it.
The Chairman. Understood.
I now recognize the Ranking Member, Mr. Nolan, for 5
minutes.
Mr. Nolan. Thank you, Mr. Chairman. I just have a question.
I would like to ask if each of you would please respond. There
is a significant group here within the Congress that would like
to see the farm bill separated from the food and nutrition bill
when it comes up for consideration before Congress.
Historically, we have had a strong tradition of the producers
and the consumers joining together and making it possible for
us to pass a good bill for both the consumers and the
producers. I would be curious if each of you could just real
quickly in the remainder of my time share with the Committee
your thoughts on whether or not that is a good idea. I will
start with Mr. Lee.
Mr. Lee. Well, that is a good question. I can see both
sides, but the SNAP program, here is a positive side there for
ag and commodities. My main thought is that we have to be able
to pass a farm bill, and I don't know that we could do it
without being together. I do understand that as a grower and
where I am, that you wonder why sometimes, but I do know that
that would be difficult.
Mr. Nolan. Okay. Mr. Gerard?
Mr. Gerard. As Mr. Lee stated, the representation of
agriculture in the United States is dwindling and has been over
the years, and the ability to pass a farm bill on its own has
concerns. We just trust your judgment in how to get the final
bill completed. Thank you.
Mr. Nolan. Well now the McMillan's are big in Minnesota.
They own the world's largest private corporation, Cargill.
Mr. McMillan. I will have to check into that and see if
they are kinfolks or not.
Mr. Nolan. You might want to check into that.
Mr. McMillan. I would not be for separating the two out. I
think they should go in together. This is a national security
issue with our food, and we need to start from the farm and go
all the way to consumer with this farm bill.
Mr. Nolan. Thank you. Mr. Rynning?
Mr. Rynning. Yes, both organizations I am here to speak for
both agree that they should be kept together and that is a
smart policy approach. Personally, it is a must. This will be
the fourth farm bill I have been involved with, and I know how
critical that is to keep the two together.
Mr. Nolan. Mr. Roney?
Mr. Roney. Mr. Nolan, we feel very strongly in the sugar
industry that we have to keep those two aspects of the farm
bill together. American farmers represent, what, only about two
percent of the population now, and that coalition with the food
consumers is absolutely critical, I believe, to maintaining a
strong U.S. agricultural policy.
Mr. Nolan. Well, in the remainder of my time, I want to
thank each of you for your candor on that critically important
issue here, and then please forgive me. I will be reading the
remainder of your testimony and the questions. I have another
committee meeting at this moment, so I am going to have to
leave. But thank you for being here and thank you for your very
good and candid testimony.
I yield the balance of my time.
The Chairman. I thank the gentleman from Minnesota. I
appreciate you being here, and I recognize the distinguished
Chairman emeritus from Oklahoma, Mr. Lucas, for 5 minutes.
Mr. Lucas. At least you didn't refer to me as the old guy,
Mr. Chairman. I appreciate that.
I want to express my appreciation to the panel, not only in
your straightforward testimony today, but in the assistance in
putting the 2012, that became the 2013, that became the 2014
Farm Bill together. Those of you at the table and your
predecessors who worked in that spirit that the Committee did,
that strange concept that all commodities in all regions all
had to have a safety net together. That proved to be a bit more
of a challenge than I would have expected the last time, but at
least this time we have a framework to work through.
Mr. Lee, you and my cotton friends, you have a special set
of circumstances, and we should never forget that this pressure
that cotton was under and this Committee was under because of
the WTO case at the time the previous farm bill was put
together made us do some things that perhaps we were more
hopeful about than has panned out.
But I do believe the Committee at the time tried to provide
a parachute, so to speak, if we got into a real jam, and we had
difficulties with the previous Administration in getting that
implemented. I am more optimistic now with the changes that
face us.
But just as the panel has reinforced the point about
nutrition and production from the farm to the consumer, those
of you who are involved in your groups, let's discuss for just
a moment how important it is that all commodity groups work
together, and you have relationships and conversations, and
many of you farm a variety of things. We had difficulty last
time. Do you have the spirit or the feel when you talk to your
colleagues now that everyone understands we have to be on the
same page this time with the commodity prices generally being
\1/2\ what they were 2 years ago? Whoever would like to touch
that.
Mr. Lee. And I appreciate the comments. I understand what
you are talking about.
I am a cotton farmer, but I am also in peanuts, corn, I
grow most of the commodities. I don't grow rice and canola, but
I really feel good about where we are today; and hopefully, we
have the case behind us, and looking at a new farm bill, if we
can figure out how to get cotton to title I, I think we will
all be together. I feel that way. I may be wrong, but to get a
good farm bill, we have to be together.
Mr. Lucas. And wouldn't you say, gentlemen, that it is
important that the concept of choice be maintained? We
discussed briefly here ARC versus PLC. Everyone's crop,
everyone's farm, everyone's region is a little different, but
it is important that we have that ability to pick what is in
our best interest, and with a new farm bill, obviously I would
assume would reset the clock and everybody can make a choice
again. Isn't that a fundamentally important principle? Just
whoever cares to speak.
Mr. Rynning. Yes, that is very clear in the policy
discussions at U.S. Canola, and I have been involved somewhat
with National Barley Growers. I think that is a very critical
portion of this is maintaining the choice. And going back to
that it is a farm bill for everyone, all farmers across the
country. And we understand the purview of this Committee and
the difficulty in coming up with something that fits everyone,
and understand that.
Mr. Lucas. One last question, and again, whoever would care
to touch it.
As circumstances have changed between this crop year and
last crop year rather dramatically, most of it beyond the
control of the producer, tell me what you and your folks back
home are saying about the availability of credit to put this
next crop in or to be prepared for the coming year? Is it
getting tighter? Is it getting more complicated? Is it getting
more expensive?
Mr. Roney. I can take a crack at that. Sugar prices are
down 50 percent since 2011, and I think that bankers are
looking with great concern at our ability to maintain the
safety net. And it becomes critical, I believe, for our bankers
to see some sense that there is at least a safety net for our
farmers. It is an enormous concern, moving forward, and it is
extremely important that the commodity groups stay together on
this to sustain as strong a safety net as we can manage.
Mr. Rynning. Just a quick note. We just had our meeting
with our banker and he informed us that it is taking them
double the time to review their notes and to go through it with
farmers and explain things. And there are some that are being
refused, and yes, it is a critical period right now.
Mr. Lucas. That just adds to the importance of making
improvements in this farm bill and continuing to have a safety
net.
With that, Mr. Chairman, I yield back.
The Chairman. I thank the gentleman, and recognize the
gentleman from Georgia, Mr. Scott, for 5 minutes.
Mr. David Scott of Georgia. Thank you very much, Mr.
Chairman. I want to direct my question to two big crop issues,
cotton and peanuts. And but first, let's go to cotton, Mr. Lee.
Last year and a little beyond, we worked very feverishly
with you in terms of the cottonseed oil issue. And under the
leadership of this Committee and Chairman Conaway, we found a
fix. And I want to know if this fix is the way we need to go,
and my understanding of this fix is to designate cottonseed as
other oilseed so that it is available for both PLC and ARC. Is
that correct, so that it would be somewhat budget neutral by
using generic base acres?
Mr. Lee. Yes, sir. There are two trains of thought there, I
guess. The Cotton Council has a proposal to designate
cottonseed as other oilseed as an administrative fix is what we
talked about to start with, but now we think that we have a
plan, the Council has a plan to, through appropriations, have
an opportunity to convert generic base to cottonseed base, and
you could either convert cottonseed base or other commodities.
Mr. David Scott of Georgia. I only have 5 minutes, and I
want to get to peanuts. What I am after is Georgia is the
number two state in cotton production.
Mr. Lee. Right.
Mr. David Scott of Georgia. Second only to the great State
of Texas. What I want to know is what do you, in a short
sentence, what is it that you need us on this Committee to do
in the next farm bill to make the cotton folks happy?
Mr. Lee. Okay. We feel to get back in title I, that we have
a plan to try to get back into title I before the new farm bill
so that we can be at the table in the new farm bill and have a
baseline.
Mr. David Scott of Georgia. And to get back into title I,
what must we do, the Committee.
Mr. Lee. We need to convert generic base back to a
cottonseed base, because it was a cotton base. Now we have a
plan to convert that and have the opportunity to also convert
generic base to other commodities, too.
Mr. David Scott of Georgia. Okay.
Mr. Lee. And I am not really answering that right.
Mr. David Scott of Georgia. Well that is okay. You know
that I had an old professor to tell me one time, sometimes it
is not the right answer that matters, but it is the right
question that is asked. We will move to make sure we make it
happen.
Mr. Lee. Let me just say, we just need you to work with the
National Cotton Council and any proposal that you have to get
back into title I.
Mr. David Scott of Georgia. We will, because you all need
help, and I want to move to peanuts right quick.
Mr. McMillan, I must say at the very beginning, when the
name Enigma came up, I immediately called the line, one of the
most famous Georgia legislators that made that name, and I
believe his name was Bobby Rowan.
Mr. McMillan. That is correct, Mr. Bobby Rowan. That is
correct. He ran for governor one time.
Mr. David Scott of Georgia. Yes, he did.
Mr. McMillan. Yes, sir.
Mr. David Scott of Georgia. I served with him for 28 years
in the Georgia Legislature, 8 in the House and 20 in the
Senate.
I want to get a comment on that crop rotation situation,
and tell us as far as the peanut marketplace, what has been the
impact of the 2014 Farm Bill on the peanut industry?
Mr. McMillan. Without the 2014 Farm Bill, the peanut
provisions, I wouldn't be in business today. It has been, I
want to say a bright spot on our farm is the peanut program. It
is not a great program, it is just the best program alternative
we have, and that is part of the problem is we don't have any
alternatives in the area that I live, other than grow peanuts.
And we have been forced to plant peanuts and get out of our
rotation just to be able to try to survive.
Mr. David Scott of Georgia. Thank you. Thank you, Mr.
Chairman.
The Chairman. I thank the gentleman, and we are going to
continue with Mr. Scott in Georgia for 5 minutes.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
Mr. McMillan, I want to continue down that path. Just what
percentage of the U.S. peanut production do the growers in the
federation states represent?
Mr. McMillan. Eighty percent.
Mr. Austin Scott of Georgia. Eighty percent, and do the
shellers support your farm bill position and the buying points
support it as well?
Mr. McMillan. Yes, the Buying Points Association and the
Sheller Association is in agreement with us. In fact, I have
never seen the peanut industry so unified.
Mr. Austin Scott of Georgia. I heard what you said about
the lack of a safety net for other crops leading to potentially
more peanuts being planted than normally would be. Do you
believe that the $530 a ton reference price is the reason for
the additional acreage being planted, or do you think it is the
lack of options that are available for the farmer?
Mr. McMillan. Congressman Scott, you are on to something
there. We do not have many options, but when a farmer makes his
planting decision, he is looking at several things. He is
looking at the market, he is looking at his rotation, he is
looking at the farm program, he is looking at the cost of
production. So that farmer, he is looking at several factors
when he makes his planting decision.
Mr. Austin Scott of Georgia. He is also, in many cases,
having to negotiate with his banker on what he is going to
plant as well.
Mr. McMillan. That is correct.
Mr. Austin Scott of Georgia. Do you believe that we have
too many peanut acres in the marketplace today?
Mr. McMillan. No, we do not. The demand and supply is in
balance. We have about 800,000 tons of excess peanuts, which
really is not excess. That is just a 90 day supply that carries
us over into next year. That is healthy. That is where we need
to be for all parts of the industry. And so we do not plant
based strictly on the farm policy. It is market and the demand
and supply is in good shape right now.
Mr. Austin Scott of Georgia. Mr. Lee, Mr. Lucas talked a
little bit about STAX and the design and the implementation of
it. It was initially designed by the National Cotton Council,
but changes were made from that original design during the 2014
Farm Bill, and putting it together. Can you briefly explain
those changes that were made, and what effect they had on this
crop insurance policy?
Mr. Lee. Yes, due to the case with WTO of Brazil that had
been ongoing, the Cotton Council decided the only option we had
was crop insurance. We came up with STAX crop insurance, and to
get us a safety net for cotton. The problem was that in the
process, we had 95 percent coverage and a reference price in
the crop insurance. In the process, we wound up with 90 percent
and no reference price. We didn't have any coverage for a long
time, for a longer turn, downturn in the market. Basically, it
has not worked. We had 25 percent use of people taking STAX,
because it is just with the low market, it doesn't pay.
So that was our only option at that time, and now we have
that behind us and we need to find a way that we think we can
get cottonseed back into title I.
Mr. Austin Scott of Georgia. If I could, Mr. Lee, and I
have heard a lot of cotton growers express that they don't feel
like it is worth paying the premium for the coverage.
Mr. Lee. That is right.
Mr. Austin Scott of Georgia. Up here, many people would say
well why don't they just change and plant a different crop,
people from the metropolitan area, so just briefly, in about 30
seconds, can you explain why cotton producers don't just switch
planting to another crop, and the impacts on all of the
businesses, warehouse ginners through the area?
Mr. Lee. First of all, we have a great infrastructure. As
David said, we need a rotation, first. But we have
infrastructure. Cotton pickers are $700,000 a piece. Gins,
warehouses, it is a huge infrastructure and it has a large
ripple effect in the rural economy. We just need cotton in the
mix.
Mr. Austin Scott of Georgia. Mr. Lee, thank you. My time
has expired, but I would just like to remind the Chairman, as
you know, if you don't like being dependent on foreign oil,
wait until you are dependent on foreign sources of food.
With that, I yield the remainder of my time.
The Chairman. Amen. I recognize the gentleman from Arizona,
Mr. O'Halleran, for 5 minutes.
Mr. O'Halleran. Thank you, Mr. Chairman. Mr. Lee, I have a
couple of questions. The first one deals with the, as I read
here for the programs--I didn't read it right. ``For the
intended objectives of this program, the Cotton Competitiveness
Program, to be met, USDA needs to take steps to update the key
price data being used.'' Then you go on to state, ``If USDA
continues to resist this administrative adjustment, then we
will seek to make the modifications in the next farm bill.''
Why is there resistance for this adjustment?
You had indicated in your written testimony about the ELS
Cotton Competitiveness Program, and for the intended objectives
of this program to be met, USDA needs to take steps to update
the key price data being used. ``If USDA continues to resist
this administrative adjustment, then we will seek to make the
modifications in the next farm bill.'' What is the resistance
by the USDA on making the adjustment?
Mr. Lee. I think that is to do with the price of pima ELS
cotton and the support. The market is much higher than the up
and coming, and I don't think it is on a level playing field as
it stands, and we need to be competitive of that, and that
grade of cotton is growing in other countries as well. We need
to be competitive.
Mr. O'Halleran. You mention, though, that they are
resistant in doing that. Why are they resistant in doing that,
USDA?
Mr. Lee. Well, they don't recognize China as an exporter of
ELS cotton, and that is part of it. It is a little bit
complicated.
Mr. O'Halleran. Okay, thank you.
Mr. Lee. I am an upland grower, sir.
Mr. O'Halleran. You mentioned that returns on other crops
have decreased, and that is leading to increased cotton acres.
What crops were you referring to?
Mr. Lee. I don't know why I am having a hard time
understanding you. Say that again?
Mr. O'Halleran. You mentioned either during your testimony
or your written statement that returns on other crops have
decreased, and that is leading to increased cotton acres. What
crops were you referring to that have been decreased?
Mr. Lee. Have increased?
Mr. O'Halleran. Decreased.
Mr. Lee. We have increased peanuts and decreased corn,
soybeans, wheat. I don't really follow that question, sir.
Mr. O'Halleran. Okay.
Mr. Lee. I am sorry.
Mr. O'Halleran. No problem.
For any other witnesses, now that we are entering the
fourth year of the 2014 Farm Bill, can you describe how it has
affected the rural economy in general? Do you see any
differences as compared to the 2008 and previous farm bills?
Anybody can take that question.
Mr. Roney. Mr. O'Halleran, speaking for the sugar industry,
we have seen one profound change, and that is that Hawaii has
gone out of sugarcane production after producing sugar for
about 170 years. That was the direct result of Mexican dumping
into our market, and by the same token, all our producers are
struggling. Wholesale refined beet sugar prices are off 50
percent over the last several years, and we have a beet mill in
Wyoming that will be closing this year. Many of our younger
farmers are having trouble being able to stay afloat, being
able to get sufficient credit to stay in business.
So there is a great amount of vulnerability in our industry
for both beet and cane farmers.
Mr. O'Halleran. Thank you, and given my time, Mr. Chairman,
I would like to just make a quick statement that I am very
concerned about this farm bill as it relates to the ability of
our farmers and growers to be able to compete against dumping
and the other pricing mechanisms that other countries are
using. I yield back.
The Chairman. I thank the gentleman, and I recognize the
gentleman from Illinois for 5 minutes, Mr. Bost.
Mr. Bost. Thank you, Mr. Chairman.
My question is for Mr. Gerard, if you would. First off, let
me start, before I ask this question, because I know you are
familiar with my background and where I come from. Living just
adjacent but farming in my district, you are familiar that I
came from a trucking background, and in that trucking
background, I would have the blessing of whenever I ran the
business of having my father, my grandfather, it was truly a
family business. It was also my uncle and now my brother
actually runs that business. I was in that business for 10
years. I loved it for 8. But I didn't realize until your
testimony that each one of us try to catch up and each time we
are finding out something new if we weren't here for the
writing of the farm bill that we are under now.
Can you kind of expand, because you said something and two
of us were caught off guard. Can you expand on the concerns
that the producers are having with the actively engaged
regulations, okay, because a lot of people said all of a sudden
a member of the family dies, you lose them, now all of a sudden
the rules change. Can you expand on that, and then can you
describe how important it is that we correct this as we move
forward in the new farm bill?
Mr. Gerard. Yes, this is a very critical topic.
I will lay out an example that I can understand. It is
pretty simple. If we have, for example, two brothers that are
farming and they both have two children, then that is one big
family partnership operation. There are six people involved. In
the middle of the cropping year, in the middle of July, one of
the brothers passes away. That family, that farming operation
loses three payment limitations that moment. It adds misery to
grief at that point in time. They have structured their whole
operation revolving around this, and without intention, their
operation has lost $375,000 payment limitation. And that is an
issue. You can't plan financial planning and it is a disaster.
Mr. Bost. The next question would be then, the language
that we produce in the next farm bill should say some kind of
stipulation based on when you first applied, and then it should
cycle through based on that, correct?
Mr. Gerard. I agree with you completely. Yes, sir.
Mr. Bost. All right. That is a concern that many of us
have, like I said, when you mentioned it in your testimony,
there were three of us that were sitting here and it never
clicked that the tragedy could happen and to lose a family
member for whatever reason, and then all of a sudden those
agreements become null and void, not null and void, but really
knock you for a loop.
Mr. Gerard. Right, right.
Mr. Bost. And Mr. Chairman, I have no other questions. I
yield back.
The Chairman. The gentleman yields. I recognize the
gentlelady from Delaware, Ms. Blunt Rochester, for 5 minutes.
Ms. Blunt Rochester. Thank you, Mr. Chairman, and thank the
panel. I am torn because I have two questions, and I know it
will take up too much time, so I am just going to plant a seed,
no pun intended.
Really, what I want to ask about is young farmers and
particularly some of the challenges in terms of credit and high
land prices. But the question I am going to ask first is one I
asked last week, which applies to all commodities, and last
week I asked about one of the biggest challenges that we hear
for farmers and also the ag economy in general is about market
volatility. Did the 2014 Farm Bill, the programs that were
enacted, how did they react to price variation? Did the farm
programs and crop insurance smooth price volatility for your
commodities? That is for the whole panel.
Mr. McMillan. Representative, if it is okay, I would like
to address the young farmers.
Ms. Blunt Rochester. Okay.
Mr. McMillan. Will that be okay?
Ms. Blunt Rochester. Sure.
Mr. McMillan. Because it is very passionate, and I
appreciate that question. It is a concern we have had really
for decades getting young people back into farming, because we
don't need to lose a generation of farmers.
The reason it is so passionate for me, and one reason I am
here today, is I have a 20 year old son who is at University of
Georgia majoring in agriculture. But I am also very anxious. I
want him to come back to the farm and I am anxious about that
because equipment costs, land costs, problems we are having
with labor now. I am very concerned of whether he will be able
to make it or not. And I know if he didn't have an uncle and a
daddy that he could come back to, it would be almost
impossible. The only way that he is going to be able to make it
is by us giving him a hand up.
Ms. Blunt Rochester. Got you. Anyone else on either one of
those questions?
Mr. Rynning. Yes, it is a major factor in agriculture is
that the established generation has to help out the up coming
generation. Sometimes it just becomes too difficult, and that
is where you get back to the first question and taking out some
of the volatility is, of course, a major job of a farm bill, I
believe, anyway. ARC and crop insurance are susceptible a
little bit to a long run of lower prices, whereas PLC helps
establish a more permanent base, but they both serve their
function and serve it well.
Ms. Blunt Rochester. Thank you. Anyone else?
Mr. Roney. Congresswoman, from the point of view of the
sugar producers, the 2014 Farm Bill provided an excellent
safety net program, but we were just overwhelmed by subsidized
sugar from Mexico. Sustaining a program very much like what we
have will work and will smooth out that volatility, as long as
in another venue we can negotiate a better arrangement with
Mexico.
Ms. Blunt Rochester. Thank you.
I go back to the young farmer. I had an opportunity to have
a roundtable with farmers in our state in Delaware, and it was
one of the issues that most people really were concerned about.
And as you mentioned, Mr. McMillan, for their families, for
their future, and it is one of the reasons I am glad to be on
this Committee.
So thank you so much for your time. I yield back.
The Chairman. The gentlelady yields. I recognize the
gentleman from Florida, Mr. Dunn, for 5 minutes.
Mr. Dunn. Thank you very much, Mr. Chairman, and thank you
gentlemen for being here and helping us with this.
My first question is for Mr. McMillan. In your testimony,
you stated that Florida's largest peanut grower organization
supports the current PLC programming and supports continuing it
in the new farm bill. Now some of my producers don't have base.
They don't have generic base, or any base. And so what are the
potential solutions for them, in light of I heard you say that
the peanut farmers are all unified?
Mr. McMillan. This is not a problem for me, but it is a
problem for those peanut producers. Those peanut producers have
been growing peanuts in the past, and what I would suggest in
the next farm bill is that we look at possibly allocating them
some base, based on their past cropping history. My only
concern is about cost.
Mr. Dunn. What kind of bases do you personally have in your
farm, and how did you get those bases?
Mr. McMillan. On our farm, we have peanut base, we have
generic base----
Mr. Dunn. Do you have other bases? I don't know.
Mr. McMillan. Yes, sir, we have generic base, we have
peanut base, and we have rye and corn base.
Mr. Dunn. Okay.
Mr. McMillan. Those bases were allocated to us over
different farm bills going all the way back to 1990. I am not
sure, but the different farm bills that we have had, we have
been allocated those bases based on our cropping history.
Almost in every case that is the way it was allocated. Another
way that you can acquire base is if you buy a farm, the bases
come with that land. And then we, in 2002, did it kind of the
old-fashioned way. In 2002 we were able to buy base. We were
allowed to do that, and we were allowed to do that, and we
bought base and moved it to our farm.
Mr. Dunn. Can that still be purchased, base?
Mr. McMillan. No, sir.
Mr. Dunn. I actually didn't think it was, I just wanted to
check with you.
In the interest of time, let me ask a different question,
Mr. Roney, are foreign countries now cutting back on their
subsidies and their programs for their sugar producers?
Mr. Roney. No, sir, they are not, and thank you for asking.
There has been a sense that globally we are moving more toward
free trade, but that certainly has not been the case in the
sugar industry because of the volatility in the work sugar
market, and we had prices \1/2\ of what they are now just a
couple of years ago. Countries are getting more aggressive
about subsidizing and we have had work done that shows Brazil,
the biggest exporter in the world, is subsidizing to the tune
of $2 to $3 billion per year. Thailand, the second biggest
producer, is subsidizing for just under $2 billion a year.
India, the second biggest sugarcane producer, is subsidizing $1
to $2 billion per year, so unfortunately, it is getting worse.
We seem to be moving further from free trade in sugar than
closer to it. And that makes it all the more important that we
sustain the U.S. sugar policy's response to those foreign
subsidies.
Mr. Dunn. Thank you for that also, Mr. Roney.
Some sugar containing product manufacturers, candy, et
cetera, they claim that U.S. sugar prices are costing them jobs
and consumers would benefit if the sugar prices were lower. Do
you see that as true, and if not, can you explain that?
Mr. Roney. Certainly not, Congressman. When you look at
sugar containing product manufacturers, that is one of the
strongest sectors of the economy financially. They have grown
about 30 percent in the last 10 years or so. They have shed a
few jobs in that process, but if production is rising and they
are reducing the number of jobs, that is because of automation,
mechanization. That is all there is. If you look at a candy bar
that in 1985 cost 35, it had about 3 worth of sugar in it. If
you look at a candy bar this year that costs $1.49, it has
about 3 worth of sugar in it. First, the cost of the sugar is
minor in their overall costs for producing that product; and
second, what they are paying for that sugar has stayed
incredibly stable over the last 30 years. If we gave them the
sugar for free, I don't think you would see a candy bar go down
in the slightest.
Mr. Dunn. Thank you for that clarification.
Mr. Chairman, I yield back.
The Chairman. I thank the gentleman, and recognize the
gentleman from Florida, Mr. Lawson, for 5 minutes.
Mr. Lawson. Okay, thank you very much. My questions will
center around Cuba. Can you talk about the parts of creating
trade market with Cuba around the rice industry? Can you
elaborate on the potential increase to U.S. rice industry in
dealing with Cuba? I really have some concerns about that
because of this new market that is supposed to be opening up.
Mr. Gerard?
Mr. Gerard. Yes, sir. At one time, Cuba was our number one
export destination for U.S. grown rice. They are very close
proximity, as you well know, to the United States, and it is a
natural market for USA rice, and I believe we would see a
significant increase in demand rather rapidly if trade were
opened.
Mr. Lawson. Okay. I have a question for sugar. Mr. Roney,
sugar policy opponents have claimed that they want to modify
the sugar policy, not repeal it. What changes they are calling
for such as means testing, operating loans for sugar processors
penalize sugar farmers?
Mr. Roney. Thank you, Mr. Lawson, for that question. What
is vexing for us is that when our opponents say that they just
want to do some minor modifications to the sugar policy and not
repeal it, in fact, what they suggested would rip the safety
net out from under our producers. A study done by the
Agricultural and Food Policy Center at Texas A&M, Professor
Outlaw looked at that carefully and decided that looking just
at what the sugar policy opponents are proposing, so they would
pull out the safety net. It would put a lot of U.S. producers
out of business. And ironically, he said that would be a bad
practice for consumers in general and for these food
manufacturers, because they would have fewer sources of
domestically produced sugar for their operations. That is why
we really prefer to sustain sugar policy in its current form
and maintain a strong safety net as the policy was designed in
the last farm bill.
Mr. Lawson. Okay, and the other question I would have is in
Florida, there has been considerable amount of elaboration
between sugar and the environmental industry, especially as it
relates to the Everglades in Florida having a balance there in
terms of the importance of the water supply for south Florida.
And it always comes up in an issue, and I want to know from the
industry standpoint, how do you feel that the water management
districts in those areas have been balancing the relationship
between the sugar industry and the protection of the
Everglades?
Mr. Roney. Yes, sir, that is a difficult problem, and one
within that problem is that so many of the proponents for the
Everglades are really scapegoating sugar. There are millions of
people living around that area. There are many other
operations, ranching and so on, and vegetable operations, and
sugar tends to be scapegoated. But the sugar farmers in Florida
have really been using their best agricultural practices and
have far exceeded the goals or the targets that were given to
them to reduce phosphorus and other runoff. I am optimistic
that we can find a balance there and not have to shut down a
very efficient important sugar industry in that area that is,
in some rural areas around the Everglades, is virtually the
only job provider, and work out a balance. I think that the
sugar producers are very keen on being good stewards of the
land and maintaining clean water and clean environment, and
they are fully capable of continuing to achieve that.
Mr. Lawson. Okay, thank you. I yield back, Mr. Chairman.
The Chairman. The gentleman yields. I am pleased to
recognize the full Committee Chairman, Mr. Conaway. Did you not
want to ask any questions? Okay. Then Mr. Arrington is
recognized for 5 minutes from Texas.
Mr. Arrington. Thank you, Mr. Chairman, and thank you,
panelists. Mr. Lee, good to see you. I enjoyed speaking with
you out in my district. You guys know, and I know Mr. Lee does,
that I represent the largest cotton producing district in the
country, and west Texas and cotton are synonymous. Cotton is
king. Cotton is life. And we are in a real crisis. It is a real
disaster, and if we let it continue much longer, it will
fundamentally alter our economic landscape. And I imagine that
there are a lot of rural communities in the Cotton Belt that
are similarly situated, and so I come with grave, grave
concerns and with a sense of urgency with respect to our cotton
producers.
One of our first hearings, I asked an ag economist policy
expert could the rationale that was applied by the WTO in the
Brazilian case be applied to other commodities, and the answer
was yes, it could. My question to you is what would America be,
how would we be positioned economically and from a national
security perspective if we pulled all of the commodities out of
title I? Do you agree with me it would be an epic national
security crisis? Just yes, no?
Mr. Gerard. Yes.
Mr. Lee. Yes, sir.
Mr. Arrington. Are you all concerned that the next
commodity to be pulled out of the title I on account of WTO or
some complaint from another country, maybe Brazil, maybe India,
maybe China, that will result in your commodity being pulled
out of the safety net that protects your commodity and your
farmers from market volatility?
Mr. McMillan. Yes.
Mr. Arrington. I am very concerned, and I would like, Mr.
Lee, if you would just expound a little bit on the seriousness
of this crisis, the sense of urgency, and its effect on the
broader ecosystem in the Cotton Belt.
Mr. Lee. Well, cotton was singled out, as you say, and we
started a long time ago and we gave up different programs along
the way. But then in 2014 we gave it all up, I guess, for STAX.
But I am right there with you. I have been in your area.
but you only have cotton, basically. We do have other crops,
and so therefore, peanuts for one, corn, if any one of those
are singled out, it would be tough, really, really tough.
Mr. Arrington. Mr. Lee, I want to implore of my
colleagues----
Mr. Lee. We wouldn't survive at all.
Mr. Arrington. I want to implore my colleagues, please help
us get cotton back in the farm bill. Please help us get cotton
back as a title I covered commodity. It is the only commodity
that is not in the farm bill, and we are sucking air. Ag is
sick. The farmer is in the hospital. Cotton is in the ICU.
Help. And I don't know how much time we have.
So let's talk about China. I appreciate Mr. O'Halleran's
perspective and thoughts and comments about market manipulation
by countries. It is my understanding that China is the number
one cotton producing nation in the world. Is that correct?
Mr. Lee. I think India is now.
Mr. Arrington. Okay. Well they are one and two.
Mr. Lee. China is right up there with them.
Mr. Arrington. Okay, well they are top two. It is my
understanding also that China is designated as a developing
nation, according to the World Trade Organization, which allows
them to subsidize their cotton farmers, much like we support
our farmers, maybe even more so, but is that true?
Mr. Lee. That is right. They are subsidizing their growers
of twice the price of polyester for the cotton, and as I said
earlier, we are having to compete with China and India on the
polyester or manmade fibers.
Mr. Arrington. Mr. McMillan, my understanding also, because
I represent peanut growers and we have had a mass migration of
cotton farmers to the peanut production side, and that has a
negative effect on the price and so my question to you is has
there been a ripple effect and an adverse impact on the peanut
growers on account of cotton being taken out of the farm bill?
Mr. McMillan. There is no doubt we need a companion crop
with peanuts, and cotton is something that we grow very well
with peanuts for rotation. But right now, the peanut demand and
supply is in balance right where we should be, so we have
probably had some increase in acreage of peanuts because of
cotton, and anytime supply dictates price. But right now with
peanuts, we are in a good situation.
Mr. Arrington. I yield back, Mr. Chairman. Thank you.
The Chairman. The gentleman yields. I recognize the
gentleman from Georgia, Mr. Allen, for 5 minutes.
Mr. Allen. Thank you, Mr. Chairman, and thank you,
distinguished panel, for coming and talking about, I guess, all
this depressing news that we are dealing with as far as
commodity prices and that sort of thing.
I believe we can all agree that trade and expanding markets
are vitally important to the agriculture industry and our
products, and we have already touched on the issues in China.
My shirt is made of cotton, which probably most everybody in
here is wearing a shirt made of cotton, and it probably came
from somewhere near China or Asia. We are the big consumer as
far as textiles are concerned. We also make the best cotton in
the world. The cotton which is mentioned, I don't know about
the cotton in India, but I know the cotton in China is not as
good as our cotton.
So with that in mind, as far as our trade policies are
concerned, Mr. Lee, when we talk about agricultural trade
issues and competition from foreign producers, what are the
most challenging issues that U.S. cotton producers face
globally? In other words, we have the best cotton. We buy most
of the shirts. It looks like we could figure that out and say,
``Okay, we have an industry over here that we have to protect.
How can we do that?''
Mr. Lee. Well, one thing that we have been doing is the
program that is public-private that we have helped support the
domestic mills, and then so they can add mills or add
equipment, increase capacity, create jobs, and we need to
continue to do that.
As far as the cotton side, as I said earlier, we are
exporting 75 percent of the cotton, 15, 20 percent of the
textiles. We need to continue to really be focused on the
export markets. Our largest market for----
Mr. Allen. Right. As far as the--because we have the next
farm bill coming up, cotton is not protected in this farm bill,
and you mentioned the cottonseed issue in your testimony. Can
we get to the next farm bill without some help here, or I mean,
we had the commodity folks in here and they said, ``The good
news is we don't think prices are going down, but the bad news
is we don't think prices are going up.'' How do we get cotton
to the next farm bill?
Mr. Lee. Well first of all, the Council's program or plan
is a good plan to get there. My first comment I want to make in
what you just said though is that if we wait until the next
farm bill, us to grow cotton, we won't get it, any kind of
support until the fall of 2020. If we don't get something to
bridge us to get to the table as a farm bill----
Mr. Allen. Bottom line, something has to be done.
Mr. Lee. We won't have anything.
Mr. Allen. Okay, immediately. Okay, and as far as peanuts,
Mr. McMillan, you had mentioned in your testimony that you use
the PLC program versus the ARC program. Why did you choose the
PLC program for participation versus the ARC program?
Mr. McMillan. I tried to study both of those programs
before I signed up, and the reason I chose PLC program is
because I was familiar with it. It was very similar to the 2008
Farm Bill. And then we had our land-grant universities who are
doing research and trying to figure out what would be best for
Georgia farmers, and they were leaning us towards PLC for
peanuts.
Mr. Allen. And do you believe that the success of PLC, for
peanut producers, that we are okay there as far as the future
is concerned with folks going to that program?
Mr. McMillan. Yes, sir, the PLC program is what we need for
peanuts.
Mr. Allen. Okay. All right, well my time has expired. I
yield back. Thank you so much.
The Chairman. The gentleman yields back. I recognize the
full Committee Chairman, Mr. Conaway.
Mr. Conaway. Well I thank you, Mr. Chairman. Again,
gentlemen, thank you for being here today. I appreciate it. You
have all highlighted just a couple of things we have to get
done in the next farm bill. Communication is a big deal,
obviously, and so help us understand the impact that these last
3 or 4 years have had on you in respect to the 2014 Farm Bill
was done, things were good enough in agriculture that people
actually asked do we really need a safety net for production
agriculture, because prices are never going to go down. Well
here we are, 2017, 2018 is not anticipated any better. Can you
share with us better ways we currently have been saying it, the
impact it has, and why we need a farm bill, why you need these
programs, and telling your own story since the American
consumer enjoys the safest, most abundant, and affordable food
and fiber supply in the world. While producers are obviously in
favor of a farm bill, SNAP folks are in favor of a farm bill,
why wouldn't anybody who eats in America be in favor of a farm
bill that delivers in that deal? They go to the grocery store,
they get a deal and they don't know it, and they certainly
don't know why they are getting a deal on their food. And
restaurants are the same way. And so help us understand the
impact, the differences between the 2014 back drop and the 2018
Farm Bill is, and why it is so important that we have this farm
bill.
So any thoughts you have in making that happen, please
start doing that. I want to deputize each one of you to be a
part of the messaging system that tries to convince that
monster group out there of those of us who like eat why it is
in our best advantage to keeping you guys in business. Any
thoughts you have on how we distinguish between what was going
on in 2014 versus 2018 that would help us in our communications
with our constituents back home as to why this program does, in
fact, work? Anybody on the panel, and then think about that
moving forward as you do your jobs.
Mr. Lee. I will start by saying that we have the best story
to tell, but we are not able to get it out there? Consumers
just don't get it. The subsidies that we get pass through us to
the consumer to have cheap food and cheap fiber, and that is a
hard message to get out there. But that is the way I see it.
Mr. Gerard. In our case, the PLC program is working for
rice the way it was designed. I mentioned a few tweaks we can
do, but in defense of this, all of these commodities simply
cannot compete with foreign government subsidies, and there are
producers all over the world that are producing for a subsidy.
They are overproducing as a result of these lucrative
subsidies. There is encouragement to plant crops when the
market tells them otherwise. That distorts the world price of
commodities and results in costing the American taxpayer money.
Mr. McMillan. The PLC program is also working very well for
peanuts, and it is what is really keeping us in our part of the
world in business right now. But to answer your question about
the farm bills, it not only affects the farmers and keeps them
in business, but it keeps your car dealers in town, your
restaurants in town. It goes out into the rest of that
community. These farm bills are so important, and without those
safety nets, I don't think we can stay in business.
Mr. Rynning. As you alluded, at one time we thought well
there was the new paradigm. We don't have to worry about these
things, right? A lot of growers felt the same way, do we need
this anymore, and the growers themselves have, of course, seen
the light blaringly in the last 2 years, 3 years, and the
trouble is getting that across to the general public as to how
essential these things are. And there are still organizations
and groups of people that are saying no, it is not needed
anymore, and I definitely strongly disagree with them and will
do everything I can to get that word out.
Mr. Roney. Mr. Chairman, I have had the privilege of
working for American farmers in this town for 40 years, and I
have been incredibly proud of that. And I have been discouraged
at times to see how much the society in general takes
agriculture for granted, that we have a wonderful, safe, cheap
food supply, and they don't realize what it takes to produce
that, how proud we are that we are efficient by world
standards, all American farmers, while adhering to some of the
highest standards in the world for defending workers and
consumers and the environment. And so I would hate to see
consumers get a rude awakening if we gave up our agricultural
policies, let our farmers go out of business, and became more
dependent on foreign food. It would be less dependable. It
would be lower in quality. It would be in all likelihood less
safe, and I am sure we would have more volatile pricing than we
have now.
You are absolutely right. We do have a major message. It
has been a battle. I have been witnessing it for decades, but
to get across to the American people how good we are at what we
do in American agriculture, and how important it is that we
have the ability to stay in business and not be put out of
business by foreign subsidized producers.
Mr. Conaway. Well if the Chairman would indulge a couple
more seconds, thank you again. Ronnie has a great story to
tell. He just had to tell it over and over and over and over to
you. He is sick of telling it. And then you get to tell it a
couple more times to make sure that you get your point across.
Something that I discovered recently from Bart Fischer, my
economist. If you divided the economic ladder in this country
into \1/5\, the top 20 percent of the economic ladder, those
folks spend more on food, think about that. They spend more on
food than the bottom 20 percent makes. As we look at the 2018
Farm Bill, what I am decidedly uninterested in is arbitrarily
capriciously raising the cost of food to the bottom 20 percent.
The top 50 percent, they don't care what food costs. You can
add a couple thousand bucks a year to their food bill and they
are not going to notice it, but that bottom 50 percent will, in
fact, notice it. You can like the current farm policy or you
can hate the current farm policy, but it delivers the most
affordable food supply of anybody, any other developed nation
in the world.
And so as we craft these policies and look at the impact it
is going to have, the family I am going to have in the front of
my mind is a single mom struggling to make ends meet. Her food
budget is where she flexes. Her car payment doesn't change and
her rent payment doesn't change, but her food budget is where
she flexes. If something unexpected comes up in the middle of
the month, it comes out of her food budget. I am not interested
in making her life any tougher by simply raising the cost of
food. And so that is going to be the fight we are going to
have. I need to have you at the table fighting, because you
have the best story to tell, and frankly, you are the best
people to tell it. But the American consumer gets a deal, a
really good deal when they go to a restaurant or when they go
to the grocery store. That bottom 25 percent spends 35 percent
of their disposable income on food. We are not going to raise
the cost of food just because we can. You shouldn't do that,
and so as we start this path together, I need you guys, all of
you, the commodities who are at the table today, the ones last
week, and folks who weren't at the table, do the family fight,
do all the arm wrestling we need to do before we get there. But
once this thing starts forward, you have to go shoulder to
shoulder with us to make it happen.
I thank the indulgence of the Chairman. With that, I yield
back.
The Chairman. I thank the Chairman, and I would just like
to add, there are some recurring themes here, and I don't know
if it was Mr. Lee that pointed this out, but it has come up
before and it is important to note that farmers are essentially
pass-through entities, and the real beneficiary, as the
Chairman indicated, is the American consumer. And so weaving
that into your story can go an awful long way to help people
recognize the value proposition of why we do what we do here
from the standpoint of farm policy.
I would also like to say that we can only control what we
do here in the United States. We can't control what other
countries do, and so our policy is a response to what is going
on in the global marketplace. I dare say there is not a Member
in this body that would love to get, and you would probably
feel the same way, that you would love to get to a point when
we don't have to debate farm policy because it is not necessary
anymore. But we can only control what we do, and it is a direct
response to what is going on in the rest of the world. As most
of you have indicated, whether it be sugar or whether it is
cotton in China and India, whether it is the Cuban marketplace,
as Mr. Lawson indicated. Our job here is to create a response
to the circumstances that are dictated to us in the global
marketplace. And at some point in time, maybe we will get to a
point where we don't have to have these conversations anymore.
But until that time, I appreciate the fact that you have taken
your time to come here and share your story with us and be
partners with us in doing the best we can to make sure that we
do continue to enjoy the safest and most abundant and most
affordable food supply on the planet.
Thank you all for being here. Under the Rules of the
Committee, the record of today's hearing will remain open for
10 calendar days to receive additional material and
supplementary written responses from the witnesses to any
question posed by a Member.
This hearing of the Subcommittee on General Farm
Commodities and Risk Management is adjourned.
[Whereupon, at 11:42 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Dwight Stansel, President, Florida Peanut
Federation
April 14, 2017

Chairman Crawford:

The Florida Peanut Federation (FPF) is pleased to submit these
comments, to be included as a part of the record for your Subcommittee
hearing last week, on behalf of our 150+ members.
Our peanut industry here in North Central Florida grew out of the
decisions by the government, starting in 1996, to unravel the
agriculture commodity supply control mechanisms of the previous 60+
years. After 2002, when peanut quota was purchased by the government
from existing quota holders for $.55/lb., at a cost of $1.3 billion, a
large number of farmers who held no government allocated crop bases on
their farms, begin to grow peanuts for the world market. Many of these
farmers were young and getting into agriculture production for the
first time. They were encouraged by the provisions of the 2002 Farm
Bill to make the investments to start up a brand new industry in their
area.
Our farmers witnessed three distinct market cycles from 2002-2014,
in which the free market worked exactly as it should with the growers
around the nation responding to supply and demand factors. In 2014,
with the generic base provisions of the new farm bill going into
effect, the peanut market was immediately distorted. With the cotton
market at a level below the cost of production and no safety net under
the growers, the cotton farmers of the SE immediately began to shift
their generic base acres into peanuts and we quickly experienced record
production and carry-out levels in the peanut market as those farmers
were guaranteed a profit in peanuts through the PLC payments, though
the world market dipped way below production cost levels. As a result,
our new, young, non-base growers that had started up pursuant to the
2002 Farm Bill, were now left out in the cold, a market below cost of
production and no government safety net under them.
Mr. Chairman, I encourage you and your Members, when writing the
provisions of title I, to restore the market based provisions of the
2002 Farm Bill so that these young farmers, who responded to the call
of Congress then, may continue to grow for a healthy and vibrant world
market.
The FPF supports many of the provisions of the peanut title of the
2014 Farm Bill. The title provides for the orderly marketing of the
nation's peanut crop. Three key components of the title are necessary
for its continued success. They are:

1. A marketing loan of $355 per ton. This allows the producer up to
9 months after harvest to market his crop.

2. Storage and handling fees paid by CCC for forfeited peanuts. This
companion piece to the marketing loan ensures that the
grower will not be under duress as the loan approaches
maturity.

3. Separate payment limits. Peanuts are a unique crop requiring
specialized machinery. The other predominant southern crop,
cotton, also requires specialized machinery. The high
capital outlay for production and harvesting these crops
makes the separate payment limit essential to providing a
sound safety net for the average producer.

Mr. Chairman and Members of the Committee, while the FPF recognizes
the value of the existing peanut title as mentioned above, we feel that
we must acknowledge one significant flaw. The financial safety net for
peanuts is not for all peanut producers. As was stated in our opening
comments, many peanut producers were not growing peanuts prior to the
2002 Farm Bill. South Carolina, East Georgia, Mississippi and North
Central Florida each grew a limited number of peanut acres. Peanut base
was created from the 1997-2001 production records.
As such, these regions are significantly under based. Peanut base
today does not come close to representing the peanut acres being
produced.
We ask and encourage the Committee to allocate peanut base to the
producers in these areas through a base update of existing base using a
5 year average of acres grown in crop years 2011-2015. Alternatively,
we would ask that a reference price be available to all producers based
on their current acres planted.
An equitable safety net for all seems the best way to encourage
young farmers to enter into agriculture production and to ensure that
the nation has an adequate supply of peanuts at a fair, market based
price.
Mr. Chairman, we appreciate the difficulty you have before you in
writing title I of the 2018 Farm Bill, and look forward to the
opportunity to discuss our proposal in greater detail.

Dwight Stansel,
President, Florida Peanut Federation.
______

Submitted Questions
Response Submitted by Ronnie Lee, Chairman, National Cotton Council
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Question. The Agriculture Department announced to Members of
Congress last year that cottonseed will not be added to the list of
crops eligible for support payments under the Agriculture Risk Coverage
and Price Loss Coverage programs. There are scholars in agriculture
policy with concerns that such a move could reignite a trade dispute
with Brazil, which was settled in 2014. What is your response to them?
Answer. The Brazil cotton dispute focused on policies that have
been either reformed or repealed. That dispute has been resolved and is
no longer pending. Moreover, the analysis by the WTO dispute panel and
Appellate Body concerning the U.S. as a cotton fiber producer and
exporter were based on circumstances unique to the global market during
the specific period of time under consideration. Those circumstances
have changed significantly, and even the outcome of a challenge against
the same policies could be different if brought today. Of course,
again, those policies have been either reformed or repealed.
Nonetheless, any future WTO challenge against U.S. domestic
support, whether for cotton fiber, cottonseed or one of the other
current covered commodities, would proceed as a fact-based analysis of
the specific policy and market circumstances affecting that commodity
at the time the challenge is filed.
There is no reason to expect that cottonseed's eligibility as a
covered commodity would justify a WTO challenge any more than another
covered commodity. In fact, the U.S. exports on average less than 10
percent of annual cottonseed production and cottonseed is not heavily
traded? in the global market. Most U.S. cottonseed is consumed
domestically, so it is realistic that there would not be reason or
cause for significant concern by other countries from a global trade
and market perspective.
Response Submitted by Blake Gerard, Chairman, Board of Directors, USA
Rice Farmers, Cape Giarardeau, MO; on behalf of USA Rice
Federation
Questions Submitted by Hon. Ralph Lee Abraham, a Representative in
Congress from Louisiana
Question 1. Mr. Gerard, Do you believe that crop insurance is the
cornerstone of the farm safety net?
Answer. Congressman Abraham--While USA Rice is supportive of the
role that crop insurance plays within the farm safety net, for rice it
is not the cornerstone. The commodity title, specifically, Price Loss
Coverage, is the cornerstone of our safety net because of its ability
to provide certainty over multiple years for farmers. The program helps
protect us from multi-year price declines and will continue to offer
assistance, if needed, throughout the life of the farm bill.
Historically, crop insurance has not offered adequate coverage for rice
farmers as it does for other crops and other growing regions because of
our predictable yields. We would like to continue to work with this
Subcommittee to make improvements to crop insurance programs for rice
farmers as we approach the next farm bill.

Question 2. Mr. Gerard, you mentioned in your written and verbal
testimonies that USA Rice supports accelerating the timing that growers
receive assistance. Could you further elaborate on why this would be
helpful for rice farmers in particular?
Answer. Congressman Abraham--Currently, if triggered, we receive
assistance through PLC in November for the prior crop year. For
example, in November of 2016 we received PLC assistance for losses
during the 2015 crop year, more than a year delayed. This delay makes
it virtually impossible to predict my cash flow and makes accessing
capital through my banker even more difficult. While we won't argue
that the assistance we receive is effective, we think it would be more
effective if we were able to access it sooner in the year to assist us
in getting our bills paid on time. Anything the Subcommittee could do
to accelerate the timing on at least a portion of our assistance would
be much appreciated.

Question 3. Mr. Gerard, you mentioned in your written testimony
that you believe AGI limits shouldn't exist at all when it comes to
qualifying for title I programs, why is that?
Answer. Congressman Abraham--We are firm believers that what some
folks consider a ``high'' adjusted gross income should not act as a
limitation or barrier to receiving title I assistance when growers
experience losses. A limit ignores economies of scale, the increasing
need to achieve efficiencies in agricultural production, and the
complexity of such operations. I firmly believe that larger than
average farms shouldn't be punished for being profitable because at the
end of the day, they're economic drivers in their small communities and
if they fail, so do the communities. We ask that these arbitrary limits
are not lowered even further or that the Subcommittee work to remove
them all together.
Response Submitted by Robert Rynning, President, U.S. Canola
Association; on behalf of National Sunflower Association
Question Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Question. With approx. 25 percent of U.S. sunflower production
going into export markets, which are important in the Caribbean region,
what concerns do you have with the changes to our Administration's
attitude toward international trade agreements?
Answer. The majority of U.S. sunflowers are produced in the region
stretching from the Dakotas to the Panhandle of Texas, producing about
2.5 billion pounds of sunflower seed annually. Seventy-five percent of
U.S. sunflower oil is consumed domestically with the remainder exported
to Canada, Mexico and Japan. Exports are extremely important to
confection sunflower seed producers as seed and kernel exports
represent approximately \1/2\ of the U.S. confection sunflower
industry's production. The main markets for confection seed and kernel
are Spain, Mexico, Canada and Middle East region. Due to the volume of
sunflowers grown in the U.S. for export, continued market access and
Free Trade Agreements (FTA) are vital for maintaining and growing U.S.
exports markets. With limited ability to grow domestic markets
sunflowers like other commodities rely on building new markets to
sustain their industry. The National Sunflower Association supports
maintaining our current FTA and stands ready to assist both Congress
and the Administration in negotiating future trade deals.

THE NEXT FARM BILL

(CREDIT PROGRAMS)

----------

TUESDAY, APRIL 4, 2017

House of Representatives,
Subcommittee on Commodity Exchanges, Energy, and Credit,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:39 p.m., in
Room 1300 of the Longworth House Office Building, Hon. Austin
Scott of Georgia [Chairman of the Subcommittee] presiding.
Members present: Representatives Austin Scott of Georgia,
Davis, Comer, Marshall, Faso, Conaway (ex officio), David Scott
of Georgia, Kuster, Plaskett, and Soto.
Staff present: Caleb Crosswhite, John Weber, Josh Maxwell,
Stephanie Addison, Anne Simmons, Lisa Shelton, Matthew
MacKenzie, John Konya, and Carly Reedholm.

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

The Chairman. Good afternoon. This hearing of the
Subcommittee on Commodity Exchanges, Energy, and Credit
entitled, The Next Farm Bill: Credit Programs, will come to
order.
I know my colleague, David Scott, will be joining us in
just a minute, so I am going to go ahead with my opening
statement and then I will turn it over to David for his.
Good afternoon, and welcome to today's Subcommittee
hearing.
Over the last several weeks, the Agriculture Committee has
held a series of hearings in preparation for crafting the next
farm bill. Through this, the Committee has examined the overall
farm economy, reviewed the safety and soundness of the Farm
Credit System, and heard from a broad constituency on nearly
all aspects of the farm bill.
These hearings have shown that producers nationwide have
been experiencing a steady decline in net farm income over the
past 4 years. Due to the current state of the rural economy,
access to credit is even more essential to keeping farmers and
ranchers producing a safe, affordable, and abundant supply of
food and fiber for America and the rest of the world.
Thankfully, we have a network of commercial and community
banks, USDA loan programs, and the Farm Credit System that each
play a crucial role in providing that access.
In addition to providing access to credit, we must ensure
that the agricultural credit policies currently in place are
working and providing the liquidity producers need to meet day-
to-day operating expenses.
Given the downturn in the farm economy and the erosion of
cash reserves, securing credit has been a challenge for many,
but especially for producers just getting their start. These
younger farmers have not been farming long enough to build up
reserves for the lean times that inevitably come in production
agriculture. The Agricultural Act of 2014 included several
provisions to provide opportunities for young, beginning, and
socially disadvantaged farmers, including permanent
authorization of a microloan program and cooperative lending
pilots to meet the needs of smaller projects. For these
producers, the Farm Service Agency is the lender of first
opportunity and has targeted funding for meeting their credit
needs.
More generally, the farm bill authorizes direct and
guaranteed loans through FSA that enable farmers and ranchers
to gain or continue financing despite volatile commodity
markets. The last farm bill eliminated term limits on
guaranteed operating loans, which has given FSA and lenders the
certainty they need to work together to graduate participants
to commercial lending institutions.
However, many farmers and ranchers have been unable to
access credit through traditional loans, and FSA loan requests
have increased dramatically. According to USDA, as of September
2, 2016, FSA had a backlog of 1,900 approved but unfunded
loans, projecting a 30 percent shortfall of funds for the end
of the fiscal year.
As we approach farm bill deliberations, we need to
prioritize access to credit. Along with a strong farm safety
net, including crop insurance, credit availability is a tool we
cannot afford to lose, and modern farming requires modern
financing. I look forward to a great discussion on the program
changes necessary to keep pace with the needs of producers of
all sizes.
I thank each of our witnesses for being here today, and I
look forward to hearing your testimony.
[The prepared statement of Mr. Austin Scott of Georgia
follows:]

Prepared Statement of Hon. Austin Scott, a Representative in Congress
from Georgia
Good afternoon, and welcome to today's Subcommittee hearing.
Over the past several weeks, the Agriculture Committee has held a
series of hearings in preparation for crafting the next farm bill.
Through this, the Committee has examined the overall farm economy,
reviewed the safety and soundness of the Farm Credit System, and heard
from a broad constituency on nearly all aspects of the farm bill.
These hearings have shown that producers nationwide have been
experiencing a steady decline in net farm income over the past 4 years.
Due to the current state of the rural economy, access to credit is even
more essential to keeping farmers and ranchers producing a safe,
affordable, and abundant supply of food and fiber for America and the
rest of the world.
Thankfully we have a network of commercial and community banks,
USDA loan programs, and the Farm Credit System that each play a crucial
role in providing that access.
In addition to providing access to credit, we must ensure that the
agricultural credit policies currently in place are working and
providing the liquidity producers need to meet day-to-day operating
expenses.
Given the downturn in the farm economy and the erosion of cash
reserves, securing credit has been a challenge for many, but especially
for producers just getting their start. These younger farmers have not
been farming long enough to build up reserves for the lean times that
inevitably come in production agriculture. The Agricultural Act of 2014
included several provisions to provide opportunities for young,
beginning, and socially disadvantaged farmers, including permanent
authorization of a microloan program and cooperative lending pilots to
meet the needs of smaller projects. For these producers, the Farm
Service Agency (FSA) is a lender of first opportunity and has targeted
funding for meeting their credit needs.
More generally, the farm bill authorizes direct and guaranteed
loans through FSA that enable farmers and ranchers to gain or continue
financing despite volatile commodity markets. The last farm bill
eliminated term limits on guaranteed operating loans, which has given
FSA and lenders the certainty they need to work together to graduate
participants to commercial lending institutions.
However, many farmers and ranchers have been unable to access
credit through traditional loans, and FSA loan requests have increased
dramatically. According to USDA, as of September 2, 2016, FSA had a
backlog of 1,900 approved but unfunded loans, projecting a 30%
shortfall of funds for the end of the fiscal year.
As we approach farm bill deliberations, we need to prioritize
access to credit. Along with a strong farm safety net--including crop
insurance--credit availability is a tool we cannot afford to lose.
Modern farming requires modern financing. I look forward to a great
discussion on the program changes necessary to keep pace with the needs
of producers of all sizes.
I thank each of our witnesses for being here today, and I look
forward to hearing your testimony. I will now yield to the Ranking
Member for any remarks he wishes to make.

The Chairman. I will now yield to my friend, and the
Ranking Member, Mr. David Scott, for any remarks he wishes to
make.

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

Mr. David Scott of Georgia. Thank you, Mr. Chairman. I echo
everything that you said. This is a very critical hearing, as
we approach the farm bill and make sure we have access to
credit where we need it. And so I want to thank this panel of
expert witnesses here today. I am pleased to be here to talk
about the various issues that we have, in some cases taken far
too lightly, and that is adequate credit for our farmers.
When times are good, as they were when we wrote the last
farm bill, agriculture credit is an assumption, something taken
for granted. But farmers are earning a living from the
marketplace, and they simply do not need to leverage themselves
as much as they otherwise would.
To tell you the truth, farmers are struggling and they need
help. They are struggling under low prices, high inventories.
We had a hearing here a few days ago where we talked about the
amount of money it takes to invest in producing 1 acre of corn
at $680, but the only money they could get back from producing
that cost of $680 was $635. They are losing like $50 and $60
per acre every time they plant. That has to change.
Input costs are increasing. Land prices are not decreasing.
And with the future of trade unclear at this time, the credit
picture for farmers, and this is especially true for beginning
farmers, African American farmers, it is not what it should be.
And I am very concerned about the scarcity of young farmers. As
I keep mentioning, the average age of our farmers is going up
now, it is at 60 years of age, and we have young people wanting
to get into farming but they don't have the capital. I mean
just to get in, an acre of land costs you on an average about
$5,000 or $6,000, and just to get a tractor, a decent one, I
mean you have to pay $80,000 or $90,000. It takes money. Access
to capital is the biggest challenge beginning farmers face when
looking to start their own operation.
And I want to single out Farm Credit and AgSouth for the
great job that they are doing, and have been doing, for they
have been pioneers on getting out in front and addressing this
national crisis of helping beginning farmers with the financial
wherewithal to keep our American economy strong, and especially
where it counts the most; in agriculture, the food we eat, the
clothes we wear, the energy we have, all is agriculture. And
when we have this soaring age of average producers,
manufacturers in agriculture in the 60 and 50 range, we would
be not doing our duty if we do not bring attention to the
necessity of making sure that our beginning farmers have that
credit that they need.
So, Chairman, I look forward to this hearing, and I want to
thank you very much for having it.
The Chairman. Thank you, Congressman Scott.
The chair would request that other Members submit their
opening statements for the record so the witnesses may begin
their testimony, and to ensure that there is ample time for
questions.
Our first witness is Mr. Douglas Thiessen, CEO, Alabama Ag
Credit, Montgomery, Alabama, on behalf of the Farm Credit
System. Our next presenter will be Mr. Timothy Buzby, President
and Chief Executive Officer, Federal Agricultural Mortgage
Corporation, Washington, D.C. Then Mr. Nathan Franzen,
President Ag Division, First Dakota National Bank, Yankton,
South Dakota, on behalf of the American Bankers Association.
Mr. Steve Handke, President and CEO of the Union State Bank of
Everest, Everest, Kansas, on behalf of the Independent
Community Bankers of America. Mr. Scott Marlow, Executive
Director of the Rural Advancement Foundation International--
USA, Pittsboro, North Carolina, on behalf of the National
Sustainable Agriculture Coalition.
Gentlemen, before we start, the stop light in front of you,
green means go, yellow means slow, and red means stop.
Mr. Thiessen, please begin when you are ready.

STATEMENT OF DOUGLAS THIESSEN, CHIEF EXECUTIVE
OFFICER, ALABAMA AG CREDIT, MONTGOMERY, AL; ON
BEHALF OF FARM CREDIT SYSTEM

Mr. Thiessen. Mr. Chairman, Ranking Member Scott, and
Members of the Subcommittee, thank you for allowing me to
testify here today.
I will make one correction. Actually, my last name is
Thiessen, and it is okay. But I am Doug Thiessen, I am the CEO
of Alabama Ag Credit, headquartered in Montgomery, Alabama.
Alabama Ag Credit makes loans for farmers and ranchers in
the lower 40 counties of Alabama. We are a cooperative, owned
and governed by our 3,600 customer-owners, and have offices in
Demopolis, Dothan, Enterprise, Montgomery, Monroeville,
Opelika, Selma, Spanish Fort, and Tuscaloosa.
Alabama Ag Credit is part of the nationwide Farm Credit
System. Farm Credit's mission is to support rural communities
and agriculture with reliable, consistent credit and financial
services today and tomorrow.
Since the full Agriculture Committee just last week held an
oversight hearing on Farm Credit, my testimony today will focus
on the coming farm bill, especially the credit title.
Last month, the House Agriculture Committee heard testimony
from Federal Reserve Bank of Kansas City economist, Nathan
Kauffman, who described the outlook for the U.S. farm economy
as subdued, with producers realizing a modest increase in
financial stress over the past year, and we agree with that.
Commodity prices have fallen, while the cost of raising crops
has remained high. Many rural crop farmers found profits
elusive the past 3 years, and are projecting barely break-even
or losses for the 2017 crop year. Cotton farmers are even
harder hit, with many now facing multiple years of losses.
Forecasters see little chance of a quick commodity price
rebound, barring unexpected changes in commodity demand,
supply, or both.
Fortunately, the industry balance sheet was mostly strong
entering this cycle, after several years of profitable
agricultural production. While we have seen debt-to-asset
ratios increase slightly in the past 3 years, they remain
nearly even with the 30 year average, and far below the levels
seen in the mid-1980s. The trend, however, is concerning.
The current cycle in agriculture makes this Committee's
work on the next farm bill crucial. We need a strong farm bill
to provide a safety net against sustained market downturns. We
pledge our support for this Committee's efforts to pass a
strong farm bill next year.
We strongly support maintaining and improving the Federal
Crop Insurance Program, along with the Agricultural Risk
Coverage and Price Loss Coverage programs. These are the heart
of a strong farm bill.
Farm Credit believes crop insurance must provide more
coverage options for specialty crops, while continuing to serve
its traditional commodities constituency. Without the risk
protections provided by crop insurance, agricultural lenders
would have to tighten underwriting standards, making it harder
for farmers to plant crops and replace capital assets. Economic
growth would slow, rural communities would suffer.
Robust export markets are vital to a strong economy.
Thirteen percent of the U.S. corn crop, 50 percent of the
soybean crop, ten percent of cattle produced are shipped
overseas. American farmers and ranchers are the most efficient
in the world, and will lead the effort to feed a planet of nine
billion people by the year 2050.
As the farming economy continues to soften, programs like
Farm Service Agency guaranteed and direct lending programs will
continue to be important tools for producers, particularly
those that are young and beginning.
Like others in the agricultural community, Farm Credit
institutions are observing an increase in the costs associated
with agricultural production. It is important that FSA direct
and guaranteed loan programs have appropriate loan limits. That
is why Farm Credit supports Representative Mike Bost's
legislation that would increase the FSA guaranteed loan limit
to $2\1/2\ million.
We recognize increasing the loan limits could have the
unintended consequence of having fewer producers served by
programs because the current level of funding does not reflect
the actual costs associated with production. To that end, we
are also supporting the increase of the level of funding for
both FSA guaranteed and direct loans.
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, port
facilities all need major investments.
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, secure power for rural America.
The scope of investment is staggering, and that is why Farm
Credit helped organize the Rebuild Rural coalition of more than
200 organizations. And all of these organizations are
emphatically behind the rebuilding of rural America.
While we don't necessarily have specific proposals, we are
prepared to work with the Committee and our partners in the
community banking sector to find ways all of us can contribute.
Thank you again for allowing us to testify here today, and
I would be happy to answer any of your questions.
[The prepared statement of Mr. Thiessen follows:]

Prepared Statement of Douglas Thiessen, Chief Executive Officer,
Alabama Ag Credit, Montgomery, AL; on Behalf of Farm Credit System
Mr. Chairman, Ranking Member Scott, and Members of the
Subcommittee. Thank you for allowing me to testify today on behalf of
the Farm Credit System. My name is Doug Thiessen, and I am CEO of
Alabama Ag Credit, headquartered in Montgomery, Alabama.
Alabama Ag Credit makes loans for farmers and ranchers in 40
counties in southern Alabama. We are a cooperative, owned and governed
by our 3,600 customer-owners, and have offices in Demopolis, Dothan,
Enterprise, Montgomery, Monroeville, Opelika, Selma, Spanish Fort and
Tuscaloosa.
Since the full Agriculture Committee just last week held an
oversight hearing on Farm Credit, I will only briefly describe Farm
Credit. My testimony today will focus on the coming farm bill,
especially the credit title.
In particular, I'll talk about the importance of a robust farm
safety net, the immediate need to expand our export markets, and the
challenges many farmers have in securing an adequate workforce. I will
also discuss specific credit title topics including the need to
modernize FSA loan limits and the challenges rural communities face as
they look to rebuilding their infrastructure.
Alabama Ag Credit is part of the nationwide Farm Credit System.
Farm Credit's mission is to support rural communities and agriculture
with reliable, consistent credit and financial services, today and
tomorrow.
Farm Credit is a nationwide network of 77 borrower-owned lending
institutions that share a critical mission assigned to them by
Congress. These independent, privately owned institutions include four
wholesale banks and 73 direct lending local associations, all of which
are cooperatively owned by their customers: farmers, ranchers, farmer-
owned cooperatives and other agribusinesses, rural utilities and others
in rural America.
We have a specific mission, assigned to us by Congress more than
100 years ago, to ensure that farmers and rural communities have a
reliable, consistent source of financing irrespective of cycles in the
economy or vagaries of the financial markets. Hundred of thousands of
farmers around the nation put together a farm operating plan this year
knowing that Farm Credit has the financial strength and strong desire
to finance that plan and to help them succeed.
There is no Federal funding in Farm Credit. Instead, the four Farm
Credit System banks together own the Federal Farm Credit Banks Funding
Corporation that markets to the investing public the debt securities
that fund the lending operations of all Farm Credit institutions.
Diversification of lending portfolios is a source of Farm Credit's
financial strength. Through diversification of our lending--by
geography, industry, and loan size--Farm Credit manages risk and
provides a buffer against the cyclical nature of the industries we
serve.
Farm Credit makes extraordinary efforts to support young,
beginning, and small (YBS) farmers and ranchers. Each year, the Farm
Credit Administration compiles data on Farm Credit YBS lending and
reports it to Congress. Based on reports from the Federal Farm Credit
Banks Funding Corporation and the Farm Credit Administration:

Farm Credit made more than 64,000 loans to young producers
(under age 36) in 2016 for a total of $9.3 billion. Those are
actual new loans originated in 2016. When Farm Credit first
began reporting this specific information in 2001, new loan
levels were at 33,000 loans to young producers for $3.1
billion.

Farm Credit made more than 81,000 loans to beginning
producers (10 years or less experience) for $12.7 billion in
2016. This is double the number and triple the dollar amount of
beginning farmer loans made in 2001 when Farm Credit made
37,000 loans for $4.2 billion to beginning farmers.

Farm Credit institutions made more than 155,000 loans to
small producers (less than $250,000 in annual sales) for $12.2
billion in 2016, a substantial increase from the 114,000 loans
for $7.6 billion made in 2001.

To put Farm Credit's lending to small farmers and ranchers into
perspective, at year-end 2016 Farm Credit had more than one million
loans of all kinds outstanding, and slightly more than 500,000 of those
loans outstanding were to small farmers and ranchers.
The numbers above cannot be combined. A single loan to a 25 year
old rancher in her third year of ranching with annual sales of $100,000
could be counted in the young, beginning, and small categories. We
report this way for two reasons: our regulator requires it and, more
importantly, it is the most accurate portrayal of who we serve.
Farm Credit institutions go beyond just providing loans to YBS
farmers, in many cases offering special incentives, education, and
other support to these producers. Farm Credit organizations nationwide
provide training and host seminars on topics such as intergenerational
transfer of family farms, risk management techniques, and establishing
and maintaining effective business plans.
We engage across the spectrum with those entering agriculture,
whether they are focused on conventional, organic, sustainable, local
food-related operations, direct-to-retail, or other emerging business
models.
As I mentioned earlier, Farm Credit is a customer-owned
cooperative. The net income we generate can be used in only two ways:
retained within a Farm Credit institution as capital to build financial
strength that ensures continued lending, OR passed to customer-owners
by way of cooperative dividends, which effectively lowers the cost of
borrowing for our customers. For 2016, Alabama Ag Credit returned \1/2\
of its earnings to our customers. That was $7.8 million we returned to
customers this spring and was tremendous boost to the local economy. We
retained the other \1/2\ to strengthen the organization and ensure we
can continue meeting the needs of Alabama farm families.
Farm Credit's mission is as vital today as it's ever been. Farm
Credit supports rural communities and agriculture with reliable,
consistent credit and financial services, today and tomorrow. Farm
Credit's mission is to help these areas grow and thrive by financing
critical infrastructure and communication services and providing
farmers and agribusinesses with the capital they need to make their
businesses successful. Because a steady flow of credit means more jobs
and economic growth, Farm Credit is also helping ensure the vibrancy of
communities throughout rural America.
Farm Credit's mission extends well beyond the farmgate. Our mission
includes financing for farmer-owned cooperatives and other
agribusinesses that farmers depend on to succeed. Farm Credit has
financed over $5 billion in exports of U.S. agricultural products. We
make more than $7 billion in loans for families to buy homes in very
rural areas.
Rural infrastructure is also a critical part of Farm Credit's
mission. Farm Credit finances more than $27 billion in rural
infrastructure, including rural electric co-ops, rural water systems,
and rural telecommunications and broadband providers. These loans
improve the quality of life in our rural communities, providing clean
drinking water, broadband for our schools, and reliable energy for
rural families and businesses.
Last month, this Committee heard testimony from Federal Reserve
Bank of Kansas City economist Nathan Kauffman, who described the
outlook for the U.S. farm economy as ``subdued,'' with producers
realizing a modest increase in financial stress over the past year. We
agree.
Commodity prices have fallen while the cost of raising crops has
remained high. Many row crop farmers found profits elusive the past 3
years and are projecting barely break-even or losses for the 2017 crop
year. Cotton farmers are even harder hit, with many now facing multiple
years of losses. Forecasters see little chance of a quick commodity
price rebound barring unexpected changes in commodity demand, supply,
or both.
Fortunately, the industry balance sheet was mostly strong entering
this cycle after several years of favorable profits in agriculture.
While we have seen debt-to-asset ratios increase slightly in the past 3
years, they remain nearly even with the 30 year average and far below
the levels seen in the mid-1980s. The trend, however, is concerning.
Depending on geography and land type, the impact of the downturn on
farmland values has been mixed. As farmland values rose sharply in the
past decade, particularly in areas that produce cash grains, farmers
and lenders both became increasingly conservative in leveraging real
estate assets. Farmers bought increasingly high-cost ground but largely
were using cash generated from higher commodity prices and borrowing
less on a percentage basis. For the most part, Farm Credit lenders and
commercial banks were unwilling to loan much more than 50 to 60 percent
of farmland values in areas where prices had jumped most aggressively.
Some even put hard caps on the dollar amount loaned per acre.
Crop input prices, including cash rent, have not yet fallen in step
with commodity price declines, squeezing profitability at the
individual farm level. While we anticipate adjustments will come, it
remains difficult to accurately predict timing. Perhaps the best news
for farmers is that interest rates remain historically low, another key
difference compared to the downturn in the 1980s. While forecasters
predict slightly rising rates over the coming months, those small
increases start from an extremely low level. Debt costs are expected to
remain low by historical standards.
Similar to the producers we serve, Farm Credit built financial
strength in anticipation of this challenging economic cycle. We have
been fulfilling our mission for more than 100 years and have deep
experience in the inevitable cycles of agriculture. Like most in
agriculture, we could not predict with accuracy when this cycle would
begin or end. But we knew it was coming, and our institutions prepared
for it. We built capital. We loaned conservatively. Today, Farm Credit
is financially the strongest it has ever been and is prepared to use
that strength to support our customers and fulfill our mission.
We continue to see modest loan growth in both our agricultural and
rural infrastructure loan portfolios. The credit quality of our loan
portfolio remains high as our members continue to meet their
obligations. Credit quality in Farm Credit loan portfolios hit all-time
highs during the years of high commodity prices but has now fallen back
in line with historical averages. While we anticipate some
deterioration in our loan quality as this cycle continues, we are
committed to working with our customers.
Our philosophy on credit today is this: we know our customers well,
understand and respond to their needs, and work cooperatively with them
to analyze and structure our transactions to give them the best chance
to succeed.
We have been working for some time to help our customer-owners plan
for the current environment. Many of our institutions, including my
own, have allocated more resources specifically to work with producers
most impacted by lower commodity prices. We are proactively reaching
out and helping our customers understand their financial position so
they can work through business plans and make good decisions that,
hopefully, lead to the most positive outcome for them. We are
restructuring debt to spread out payments and are providing other loan
structuring options when necessary and appropriate. We are working to
make sure that our members have the best information to help them
manage costs and strengthen their risk-bearing capacity.
As price forecasts stay low, most producers' only option is to very
closely manage the cost structure of their operations. We are seeing
many producers eliminate non-essential expenses, scale back expansion
plans, and delay new equipment purchases. This is also a time when
supporting key tools such as crop insurance, the current farm bill, the
renewable fuels standard, and promoting strong export markets has never
been more important to maintaining the viability of the industry.
Passage of a strong farm bill next year is essential.
Farm Credit is committed to remaining reliable and supportive of
rural communities and agriculture, just as we have for the last 100
years. That means we are staying abreast of industry cycles,
identifying risks, and consulting with our customers about them. We
know we must be patient and allow time for adjustments, while
potentially exploring enhanced controls on terms, collateral, and
conditions as appropriate. We continue to have a positive long-term
outlook for U.S. agriculture, with the knowledge that Farm Credit's
financial strength and expertise position us well to support our
customer-owners through industry cycles.
We understand that being dependable does not mean that we can save
every operation. It does not mean that we are able to ignore good
credit judgment or make credit decisions that are not constructive for
the customer-owner or us as a lender. It does not mean that we will
undertake undue risk or make all of the adjustments. We and our
customer-owners will both need to make adjustments--and we are working
hard to take those steps together.
Farm Credit is fortunate that our independent Federal regulator,
the Farm Credit Administration (FCA), has deep knowledge of agriculture
and considerable experience in the inevitable business cycles our
members face. Their ability to look holistically at a customer's
operation and understand an individual customer's risk-bearing capacity
and equity position will, in many cases, determine whether we can
continue with that customer. If the FCA is overly restrictive in its
approach, it might tie our hands as we work to help members through
this cycle. We are optimistic about the FCA's continued good judgment.
U.S. Farmers and Ranchers Need a Strong Farm Bill
The current cycle in agriculture makes this Committee's work on the
next farm bill crucial. We need a strong farm bill to provide a safety
net against sustained market downturns. We pledge our support for this
Committee's efforts to pass a strong farm bill next year.
We strongly support maintaining and improving the Federal Crop
Insurance Program along with Agricultural Risk Coverage and Price Loss
Coverage programs. These are the heart of a strong farm bill.
Congress created the crop insurance system through the Federal Crop
Insurance Corporation (FCIC) to promote the economic stability of
agriculture. A successful public-private partnership, crop insurance is
federally regulated and delivered by the private sector to help farmers
maintain the country's safe, affordable food supply. Crop insurance is
food insurance.
Crop insurance protects farmers and ranchers against financial
losses caused by natural disasters (hail, drought, freezes, floods,
fire, insects, disease and wildlife) and market disruptions resulting
in lower prices for agricultural products. In 2015, USDA's 1.2 million
Federal crop insurance policies covered 120 different crops grown on
approximately 300 million acres with an insured value of more than $102
billion.
A viable Federal Crop Insurance Program is vital to the flow of
credit to farmers and ranchers, particularly young and beginning
farmers and ranchers who typically have less collateral and equity.
Given the trend in recent years of lower prices for commodities and
declining farmer net income, it is critical for policy makers to
maintain a strong farm policy that includes affordable crop insurance.
Participation by producers of all types--small and large--is vital
to the safety and actuarial soundness of the crop insurance program.
Impairments to the program, such as shrinking the risk pool, could make
crop insurance unavailable or unaffordable to producers.
Farm Credit believes crop insurance must provide more coverage
options for specialty crops, while continuing to serve its traditional
commodities constituency.
Without the risk protections provided by crop insurance,
agricultural lenders would have to tighten underwriting standards. The
consequence of tighter credit would make it harder for farmers to plant
crops and replace capital assets. Economic growth would slow, and rural
communities would suffer.
Export Markets Are Vital
Robust export markets are vital to a strong farm economy. Thirteen
percent of the U.S. corn crop, nearly 50 percent of the soybean crop,
ten percent of the cattle produced in the U.S. Are shipped overseas.
American farmers and ranchers are the most efficient in the world and
will lead the effort to feed a planet of nine billion people by the
year 2050.
We strongly encourage continued efforts to open markets for U.S.
farm products. Our producers can compete with any in the world but
trade barriers in other countries often tilt the playing field against
them. Farm Credit works hard to support our farmers by financing more
than $5 billion in exports of U.S. agricultural products. Our private
export financing for U.S. exports often competes against financing
programs backed by foreign governments. The primary U.S. Government
export financing program, GSM-102, has been handcuffed by World Trade
Organization rulings, putting U.S. farmers at a disadvantage in some
markets.
U.S. Farms Need a Stable Workforce
Farming in America is a growth industry and a world-class example
of something America does better than anyone else. The many
agricultural products we produce, harvest and process comprise one of
the few sectors of our economy in which the U.S. has a trade surplus
with the rest of the world.
However, the economic health of food and fiber producers, and the
rural communities in which they live, is threatened by the lack of a
reliable, stable and legal workforce. Our farmers face growing
shortages of legally authorized and experienced workers each year. Jobs
in agriculture are physically demanding, conducted in all seasons and
are often transitory. This shortage of labor negatively impacts our
economic competitiveness, local economies, and jobs. Reforms are
necessary to address the agricultural labor shortage.
A common misconception is that agriculture is a low wage paying
industry. However, according to the U.S. Department of Agriculture,
wages for U.S. fieldworkers rose 36 percent over the past decade
through the conclusion of last year's harvest in October, compared with
27 percent wage increases for non-farm employees. Not only is
agriculture competitive with other industries in terms of wages, many
U.S. jobs are created for each farmworker hired, and those U.S. jobs
tend to be year-round 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.
Many of those American jobs will be lost if access to agriculture's
current workforce is jeopardized without providing a mechanism for
future legal workers. The economic health of many rural economies is
largely dependent on a strong agriculture sector. Yet the loss of the
foreign-born workforce in rural communities will have the same economic
impact on those communities as factories closing and moving to other
countries.
Farm Credit strongly supports legislative and regulatory proposals
to create a workable agricultural guest worker program which assures
both seasonal and year-round reliable sources of agricultural workers
to support the needs of all of agriculture, and that provides a means
by which experienced farm workers can remain on the farm.
Farm Service Agency Lending
As the farm economy continues to soften, programs like Farm Service
Agency (FSA) guaranteed and direct lending programs will continue to be
important tools for producers, particularly those who are young and
beginning. The FSA guaranteed loan programs provide Farm Credit
institutions additional flexibility to help customers survive a
potentially extended economic downturn. Farm Credit participation in
FSA's guaranteed loan program totals $5.1 billion and represents about
\1/3\ of outstanding FSA guarantees.
In addition, like others in the agriculture community, Farm Credit
institutions are observing an increase in the costs associated with
agriculture production. The cost of land, equipment and inputs have all
increased in the past several years. As producers look to begin
agricultural businesses, grow existing businesses or simply sustain
their current operations through this downturn, it is important that
FSA direct and guarantee loan programs have appropriate loan limits.
That is why Farm Credit supports Rep. Mike Bost's BALE Act, H.R. 831,
which among other things, would increase the FSA guaranteed loan limit
to $2.5 million. This update to the current FSA loan limits reflects
the increased cost of agriculture and will allow Farm Credit and other
lenders to better partner with USDA to provide needed credit to
producers.
Finally, Farm Credit recognizes that increasing the loan limits
could have the unintended consequence of having fewer producers served
because by these programs because the current level of funding does not
reflect the actual costs associated with agriculture production and the
need for larger loan limits. To that end, we also support increasing
the level of funding for both FSA guaranteed and direct loans.
Rebuilding Rural Infrastructure
American agriculture truly feeds the world and creates millions of
jobs for U.S. workers. 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 if we are to continue efficiently getting our agricultural
products to market. For example, \1/4\ 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
are in need of 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. The Federal
Government must continue to play an important role in providing
funding. Moreover, Federal investments should increase, but Federal
resources likely cannot fill the need entirely. Creative solutions for
raising a portion of the funds necessary to close the rural
infrastructure gap include combining pair Federal investments, state
and local government investments and private sources of capital hold
promise.
That is why Farm Credit helped organize the Rebuild Rural coalition
of more than 200 organizations representing agricultural producers,
rural businesses, rural communities and rural families to advocate for
aggressive efforts to meet the unique infrastructure needs of rural
communities and agriculture. We have asked President Trump to
specifically address rural infrastructure needs as part of his
Administration's comprehensive infrastructure renewal efforts. We have
been very encouraged by our coalition's discussions with White House
and USDA officials who seem to understand rural needs are indicate a
willingness to seek creative solutions to the infrastructure problems
in rural communities.
We look forward to working with the Administration, this Committee,
and others in Congress as the infrastructure initiative takes shape
over the next few months.
Rural infrastructure is a critical part of Farm Credit's mission.
Our institutions finance more than $27 billion in rural infrastructure,
including rural electric co-ops, rural water systems, and rural
telecommunications and broadband providers. These loans improve the
quality of life in our rural communities, providing clean drinking
water, broadband for our schools, and reliable energy for rural
families and businesses.
Farm Credit has also partnered with community banks and USDA
Community Facilities program to finance needed improvements to vital
infrastructure projects, including walk-in health clinics, critical
access hospitals, and senior care facilities in rural towns. These
projects are just examples of how Farm Credit can do more to support
rural communities.
Farm Credit's unique cooperative structure means that the customer-
owners who sit on our board of directors are living, working, and
raising their families in rural communities. They are deeply invested
in the success of those communities and are interested in finding more
ways for Farm Credit to contribute to that success.
Farm Credit reverses the normal flow of capital, raising money in
urban financial centers and bringing it to rural communities. We
believe we can play an even bigger role in rural development,
revitalizing rural infrastructure, strengthening the rural economy, and
creating good jobs for rural families. While we don't necessarily have
specific proposals at this point, we are prepared to work with the
Committee and our partners in the community banking sector to find ways
that all of us can contribute more to the vitality and success of our
rural communities.
Thank you again for allowing us to testify here today. We look
forward to working with the Committee on the farm bill and I would be
pleased to answer any questions Subcommittee Members might have.

The Chairman. Thank you, Mr. Thiessen.
Mr. Buzby.

STATEMENT OF TIMOTHY L. BUZBY, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, FEDERAL AGRICULTURAL MORTGAGE CORPORATION, WASHINGTON,
D.C.

Mr. Buzby. Chairman Scott, Ranking Member Scott, and
distinguished Members of the Subcommittee, thank you for your
invitation to appear today to testify on behalf of the Federal
Agricultural Mortgage Corporation, commonly known as Farmer
Mac.
My name is Tim Buzby, and I am the President and CEO of
Farmer Mac. You have already seen my written testimony, so I
would like to take this time to provide you with a summary of
the testimony, and of Farmer Mac in general.
In response to the financial crisis that gripped
agriculture and farm lenders in the 1980s, this Committee and
Congress created Farmer Mac as a new source of liquidity and
long-term credit for agricultural lenders so that they may
provide your constituents with low interest rates on favorable
terms, tailored to meet their financing needs and keep pace
with farming's capital-intensive environment.
Farmer Mac's role as the secondary market for rural
America: We work closely with lenders of all sizes, including
commercial and community banks, Farm Credit System
institutions, and rural utility cooperative lenders, to offer
more financial choices to their rural customers. Since Farmer
Mac's creation in 1988, we have helped fund loans to over
76,000 rural borrowers in all 50 states, which has resulted in
more than $43 billion of investments in rural America.
These indicators of mission fulfillment have been achieved
while Farmer Mac has also demonstrated strong financial
performance, and safe and sound operations. We consistently
exceed all applicable regulatory capital requirements, and are
well capitalized with more than $600 million in core capital,
and a Tier 1 capital ratio of 12.7 percent as of December 31.
Our low historic credit losses, which equate to about one basis
point per year, demonstrates our longstanding focus on sound
underwriting and high credit quality. Truly, Congress' vision
of creating a vibrant secondary market that benefits rural
America has been realized.
I understand that the Subcommittee is interested in
discussing ways to improve access to credit for agricultural
and rural communities. Farmer Mac was created by Congress to do
exactly that.
We have remained steadfast in seeking to fulfill this
important mission, however, as stated in my written testimony,
some policies related to the rural finance have not kept pace
with the way agricultural production and operations have
evolved over time, including several provisions of Farmer Mac's
charter. For example, the 1,000 Acre Rule is having a limiting
effect on the liquidity, capital, and risk management tools
that Farmer Mac can provide directly to rural lenders, and
indirectly to America's farmers and ranchers.
Under our charter, we are limited in the amount of the loan
that we can purchase or guarantee if the land securing the loan
is more than 1,000 acres. We have heard from many customers who
believe that this restriction is counterintuitive and
inconsistent with Farmer Mac's mission of increasing the
availability of credit, because it limits the amount of loans
for larger operations that generally have a significant need
for capital, while smaller operations with generally lower
capital needs have no statutory loan limit.
For the reasons described in more detail in my written
testimony, we believe that the elimination of the 1,000 Acre
Rule would better reflect current farm ownership sizes and the
capital needs of agricultural producers. We request Congress
alleviate the adverse effects of this restriction by removing
this specific provision in our charter, which will help all
types of lenders who request Farmer Mac to purchase or
guarantee farm and ranch loans.
Farmer Mac will continue to provide a stable source of
liquidity, capital, and risk management tools to help rural
lenders meet the evolving and varied financing needs of their
customers and your constituents, both in periods of prosperity
and in market downturns. With a diverse array of lending
products and capital sources, we will remain resolute today and
always in our commitment to bringing new, low-cost capital to
the agricultural and rural communities that we are honored to
serve.
Thank you for this opportunity. I would be happy to answer
any questions you may have.
[The prepared statement of Mr. Buzby follows:]

Prepared Statement of Timothy L. Buzby, President and Chief Executive
Officer, Federal Agricultural Mortgage Corporation, Washington, D.C.
Introduction
Chairman Scott, Ranking Member Scott, and distinguished Members of
the Subcommittee, thank you for your invitation to appear today to
testify on behalf of the Federal Agricultural Mortgage Corporation,
which is commonly known as ``Farmer Mac.'' My name is Tim Buzby, and I
am the President and Chief Executive Officer of Farmer Mac. I
appreciate the opportunity to appear before your Subcommittee today to
provide some input on the next farm bill.
Farmer Mac
Farmer Mac's position at the intersection of Main Street and Wall
Street allows us to provide a unique perspective about the current
environment for agricultural credit and what might be beneficial to the
secondary market in ensuring a vibrant credit environment. Congress has
charged Farmer Mac with the mission of providing a secondary market for
a variety of loans made to borrowers in rural America, including
mortgage loans secured by agricultural real estate, loans made to rural
utility cooperatives, and certain loans guaranteed by the U.S.
Department of Agriculture (USDA). This secondary market increases the
availability of long-term credit at stable interest rates to America's
rural communities, including farmers, ranchers, rural residents, and
rural utility cooperatives, and provides those borrowers with the
benefits of capital markets pricing and product innovation. In Farmer
Mac's role as the secondary market for rural America, we work closely
with lenders of all sizes, including commercial and community banks,
Farm Credit System institutions, credit unions, rural utility
cooperative lenders, and insurance companies to offer more financial
choices to their rural customers.
For nearly thirty years, Farmer Mac has played a vital role in
financing rural America by helping America's rural lenders meet the
evolving needs of their customers, bringing the financial strength,
flexibility, and innovation of the secondary market for agriculture
right to their customers' farms and ranches. Since Farmer Mac's
creation in 1988, over 1,400 lenders across the nation have used Farmer
Mac's programs and solutions to increase liquidity and lending capacity
while better managing capital, interest rate risk, and credit risk.
This translates into Farmer Mac having helped fund loans to over 76,000
rural borrowers in all 50 states for more than $43 billion of
investments in rural America since 1988. By working with such a vast
network of rural lenders, Farmer Mac introduces more competition, more
types of loan products, and efficient funding into the marketplace,
which helps your rural constituents receive low interest rates on
favorable terms tailored to meet their financing needs and keep pace
with today's capital-intensive environment. Farmer Mac has also been
successful in encouraging the inclusion of loans for small farms and
family farmers in the agricultural mortgage secondary market. In 2016,
46% of loans in the Farm & Ranch line of business were to small farms
(less than $350,000 in annual gross farm income) and 96% of loans in
the Farm & Ranch and USDA Guarantees lines of business were to family
farming operations. The two figures below provide more information
about Farmer Mac's growing importance in financing rural America.
Farmer Mac's New Business Volume for the Last 3 Years (2014-2016) by
Line of Business and Customer Type

Farmer Mac's Total Outstanding Business Volume by Line of Business

Farmer Mac grew out of the financial crisis that gripped
agriculture and farm lenders during the mid-1980s. As this Committee
and Congress contemplated solutions to this crisis, it became clear
that the rural credit market would benefit from a new source of
liquidity and long-term credit that could help provide new risk
management tools to lenders and the necessary capital and liquidity
demanded by the producers of agricultural commodities and products.
That vision and the related solution resulted in the creation of Farmer
Mac.
The agricultural credit conditions in the 1980s that led to the
creation of Farmer Mac are somewhat different compared to current
conditions, but they are similar in many ways. Currently, many
producers in several sectors of the agricultural economy have seen
significant declines in income and experienced other challenges for the
past few years. The existence of a strong, vibrant secondary market
continues to be essential because it can still be difficult to attract
capital to invest in rural America like it was when Farmer Mac was
created. Simply put, rates of return in rural communities are generally
not as high as in urban areas, so obtaining capital to meet the lending
needs of rural America can be challenging and is often more expensive.
Congress has always responded to the unique challenges faced by rural
America, which has resulted in tremendous improvements in the lives of
your constituents and Americans in general. Rural Americans provide the
food and fiber that all Americans and much of the world relies upon.
The legislative initiatives that your predecessors on the Agriculture
Committee supported to increase the availability of credit in rural
America, such as the Farm Credit Act, the Rural Electrification Act,
and the creation of Farmer Mac, were designed to ensure that we as a
nation can grow and prosper. As times and business practices change, so
can some of these programs to better reflect the current realities of
rural finance and the needs of rural borrowers.
Proposals That Could Enhance Farmer Mac's Financing of Rural America
U.S. agriculture represents one of the greatest success stories in
America's modern history. In the span of only 50 years, the United
States has more than doubled its total agricultural production while
substantially increasing efficiency. The share of disposable income
spent on food in the country is only about 9.8%--a number that the
world at large strives toward. This has been achieved while the share
of the population directly involved in agriculture has shrunk to such
historically low numbers that each commercial scale farm is responsible
for feeding over 200 people. However, although actual agricultural
production and operations have evolved over time, some policies related
to rural finance enacted through legislation, including several
provisions of Farmer Mac's charter, have not kept up with the changing
landscape.
``1,000 Acre Rule''
On a near daily basis, Farmer Mac receives requests from lenders of
all types to either purchase or provide credit protection for
agricultural mortgage loans secured by parcels of land larger than
1,000 acres. Unfortunately, we must reject many of those requests
because our charter limits our activities related to those loans unless
the loan amount is equal to or less than $12.6 million (an amount that
is adjusted annually for inflation). We have heard from many customers
who believe that this ``1,000 acre rule'' is counterintuitive and
inconsistent with Farmer Mac's mission of increasing the availability
of credit in rural America because it limits the amount of loans for
larger operations that generally have a significant need for capital,
while smaller operations with generally lower capital needs have no
statutory loan limit.
The legislative history of Farmer Mac's charter does not explain
the policy reason for this limitation on Farmer Mac's authority to
offer the benefits of a secondary market to the lenders and borrowers
on loans secured by more than 1,000 acres. However, whatever the
original purpose of the limitation was, the most likely reasons for the
1,000 acre rule's inclusion in Farmer Mac's charter no longer apply to
the same degree as when Farmer Mac was created and therefore should be
removed for the following reasons:

If the 1,000 acre rule was originally designed as a means of
mitigating risk to ensure the safety and soundness of a start-
up operation, Farmer Mac now has a demonstrated track record of
sustained strong financial performance, sound underwriting, a
diversified portfolio, and minimal credit losses that argue
against the need for the limitation. Indeed, Farmer Mac is
well-positioned to manage the risks associated with higher loan
limits for larger operations, with a Tier 1 capital ratio of
12.7% as of December 31, 2016.

If the original intent of the 1,000 acre rule was to limit
the benefits of Farmer Mac's programs available to large farms
owned by passive investors outside of rural America, the rule
is now preventing benefits from flowing to many large
operations owned and operated by individuals and families.
Outside and passive investors have not come to dominate
agricultural production as once feared, as family farms
continue to dominate farm production. Family farms currently
make up approximately 97% of all farms, 90% of land operated,
and 85% of the value of agricultural production, so most of the
tracts of agricultural real estate of more than 1,000 acres are
owned by families.

If the original intent of the 1,000 acre rule was to limit
the benefits of Farmer Mac's programs available to very large
operations, the limitation is now also preventing benefits from
flowing to even mid-size operations because the acreage limit
was not indexed to increase over time to reflect changes in the
agricultural economy and production practices. When Congress
created Farmer Mac, \1/2\ of agricultural production occurred
on farms with 589 acres or less. Today, based on USDA's most
recent Agricultural Census in 2012, the midpoint cropland farm
size has increased to 1,200 acres, meaning that more than \1/2\
of agricultural production takes place in operations that could
be adversely affected by the 1,000 acre rule. Elimination of
this limitation in Farmer Mac's charter would better reflect
current farm ownership sizes and the capital needs of
agricultural producers.

The 1,000 acre rule constraint on Farmer Mac's activities is having
a detrimental effect on the liquidity, capital, and risk management
tools that Farmer Mac can provide directly to rural lenders and the
pricing and product benefits that Farmer Mac can provide indirectly to
America's farmers and ranchers. This negative effect applies not only
to Farmer Mac's loan purchase and credit protection products, but also
to its institutional credit products designed to provide efficient,
low-cost wholesale funding advances to rural lenders. Therefore, the
elimination of the 1,000 acre rule would also increase the eligible
collateral that would facilitate these wholesale funding advances.
Congress can alleviate the negative effects of the antiquated 1,000
acre rule by eliminating this limitation in Farmer Mac's charter
altogether. This would allow Farmer Mac's board of directors to set
overall loan limits without regard to acreage as a part of the
company's overall risk management, subject to appropriate oversight by
Farmer Mac's independent safety and soundness regulator--the Farm
Credit Administration.
Eligible Borrowers
Another simple proposed change to Farmer Mac's charter that would
reflect the evolution and current realities of agricultural lending and
better serve the needs of rural borrowers is to expand the definition
of the borrowers who are eligible to have their loans participate in
Farmer Mac's programs. Under Farmer Mac's charter, the company's
secondary market activities related to Farm & Ranch loans are limited
to the obligations of individuals or private corporations or
partnerships. This limited definition of the eligible borrowers for
qualified loans does not contemplate other borrowing and land ownership
vehicles that have become much more common over time, including family
trusts and other business entities and family farming ownership
structures such as limited liability companies. In particular, the
family trust structure has become a much more common way to own
agricultural land and to borrow money secured by that land. Including
trusts and other business entities as eligible borrowers for loans
included in Farmer Mac's Farm & Ranch line of business would simply
recognize the reality that these types of ownership vehicles are
widely-used structures now, unlike in 1988 when Farmer Mac was created,
and would increase Farmer Mac's ability to serve America's farmers and
ranchers.
USDA Guaranteed Loans
Congress revised Farmer Mac's charter in 1990 to authorize Farmer
Mac to purchase the guaranteed portions of loans guaranteed by the
Secretary of Agriculture under the Consolidated Farm and Rural
Development Act (the ``ConAct''). The business permitted by this
expanded operating authority is known as Farmer Mac's USDA Guarantees
line of business, which offers lenders ready access to competitive
funding rates available in the capital markets. Lenders can in turn
pass those benefits on to borrowers in the form of longer-term rates,
lower rates, or both.
At the time of the creation of Farmer Mac's USDA Guarantees line of
business, it appears that Congress used the ConAct as a proxy for all
the USDA guarantee programs that could benefit rural America and did
not envision rural-related loans that USDA might one day guarantee
under authority other than the ConAct. Since 1990, USDA has continued
to expand the programs it offers to qualified rural borrowers through
various programs. However, with Farmer Mac's limited authorities to
purchase only the guaranteed portions of loans guaranteed under the
ConAct--primarily Farm Service Agency (FSA) loans, Community Facility
(CF) loans, and Business & Industry (B&I) loans--Farmer Mac has been
unable to provide liquidity to lenders making loans under new and other
longstanding non-ConAct USDA programs that benefit rural America. Many
rural lenders want to make additional USDA guaranteed loans but need a
secondary market for the liquidity it provides. USDA could expand
service, lending, and liquidity to rural America through Farmer Mac's
secondary market if Congress amended Farmer Mac's charter to authorize
the purchase or securitization of the portion of any loan guaranteed by
USDA. This expanded authorization would include USDA's guarantee
programs related to agricultural exports, rural housing, rural
utilities, and renewable energy, all of which have the potential to
benefit rural America. As with the other two proposed charter updates
described above, all types of lenders who use Farmer Mac would both
benefit from these proposed changes.
Crop Insurance
As the Committee begins its preparation for the next farm bill, I
would also like to point out the importance of Federal crop insurance
programs to the agricultural lending community and express Farmer Mac's
strong support for this essential part of the safety net for
agriculture. Crop insurance has become the cornerstone of farmers' risk
management activities, allowing a very capital intensive industry to
make production decisions that include considerable external risk from
weather and market vagaries, and achieve the remarkable efficiency and
productivity noted earlier. Some key points about the Federal crop
insurance programs:

Crop insurance has undergone a modernization and scaling
that parallels production agriculture with total program
liability that has grown from about 1.1 million policies with
$840 million in premium and $12.8 billion in liability in 1990
to over 2.2 million policies with $9.3 billion in premium and
over $100 billion in liability in 2016.

Crop insurance programs now cover virtually all the
commercially important acreage of major row crops, and there
are now nearly 200 total different crop policies.

Farmers' use of crop insurance has moved dramatically toward
higher coverage level elections and toward revenue products,
further signaling the successful design and deployment of the
programs.

The effects of crop insurance are profound both for insured
producers and for those beyond the farmgate. For example, in 2012 the
eastern Corn Belt experienced a historic drought, and crop insurance
worked as intended, largely filling in the deepest gaps and preventing
widespread financial disasters while allowing affected farmers to
continue in production in future years. Additionally, there were no ad
hoc disaster payments that year, and very minor spillover effect to
lenders and other capital providers. In the absence of crop insurance,
it is safe to say that the financial malaise in the drought stricken
areas likely would have been of historic proportions. Clearly, lenders
rely indirectly, but very importantly, on the coverage provided to
their borrowers and would be less able to provide financing in the
absence of these critical programs.
In terms of possible designs of safety nets, those studying crop
insurance note several positive features including the direct
countercyclicality of insurance--it pays when revenues are low and not
when revenues are higher thus directly reducing financial risk.
Furthermore, farmers have a direct stake or deductible in the program
and are induced to continue to improve efficiency and make best
management practices along the way while customizing their coverages
and unit designs for their own circumstances. Crop insurance coverage
also allows meaningful marketing and advance pricing decisions to be
made, thereby improving related management practices as well. Finally,
and perhaps most importantly, modern crop insurance programs allow
farmers to make efficient use of debt, and allow lenders to more
confidently lend to an industry in which one of the key risks is
related to weather risk outside of the control of the managers.
Social benefits have also been noted related to crop insurance,
including the fact that lower risk production systems likely reduce the
cost of food to consumers. Crop insurance also has appropriate
classification in the World Trade Organization (WTO) support
classification system, and most importantly, has preferred attributes
relative to ad hoc disaster programs which it has largely offset. A
final critical point is that crop insurance naturally ``scales''
relatively easily. As farm sizes have continued to grow, and as the
costs of production and capital intensity of agriculture have
increased, crop insurance remains proportional to the risks covered by
its very design. In this regard, it is a mechanism that is naturally
indexed to the changing scale and intensity of agricultural production
units, a desirable feature of any program that is intended to continue
to serve the agricultural sector as it evolves further toward ever
increasing scale and efficiency.
Conclusion
I want to thank you for this opportunity. Farmer Mac serves as an
essential bridge between investment capital and main street rural
America, and we are honored to collaborate with our customers in
helping to build stronger rural communities. Throughout the inevitable
agricultural economic cycles, Farmer Mac remains resolute in our
commitment to provide financial tools to extend the type of flexible,
low-cost financing that is necessary to help allow rural America to
adapt, grow, and flourish. Our commitment to our mission has never been
stronger or more important at this time when significant portions of
the agricultural economy continue to face challenges. Because Farmer
Mac does not depend on funding from taxpayers, Farmer Mac's secondary
market is one of the few resources that can be brought to bear to help
increase the availability of credit in rural America without running up
against Federal budget restraints. By updating our charter to recognize
the ever-evolving financing mechanisms that facilitate modern farming,
we will be better able to bring the power of the secondary market to
our customers and your constituents.

The Chairman. Thank you, Mr. Buzby.
Mr. Franzen.

STATEMENT OF NATHAN E. FRANZEN, PRESIDENT, AG
DIVISION, FIRST DAKOTA NATIONAL BANK, YANKTON, SD; ON BEHALF OF
AMERICAN BANKERS ASSOCIATION

Mr. Franzen. Chairman Scott, Ranking Member Scott, and
Members of the Subcommittee, my name is Nate Franzen, I am
President of the Agribusiness Division at First Dakota National
Bank in Yankton, South Dakota. We are a family-owned and
locally controlled community bank, with $890 million in
agricultural loans. We have 19 branches, six loan production
offices, and employ 375 people in South Dakota and Nebraska.
I appreciate the opportunity to present the views of the
ABA on credit issues in the upcoming farm bill. The topic of
today's hearing is very timely. While farm and ranch incomes
over the past 5 years have been some of the best in history,
there is no question that the agricultural economy is slowing.
As a matter of fact, approximately 50 percent of my ag clients
lost money this year, compared to 40 percent a year ago.
Despite this, the banking industry is well positioned to
meet the needs of U.S. farmer and ranchers. Interest rates
continue to be near record lows, and banks have the people,
capital, and liquidity to help America's farmers and ranchers
manage through any turbulence in the economy. Importantly, with
the farm bill in place, farmers, ranchers, and their bankers
have certainty from Washington about future ag policy.
In 2015, farm banks, defined as any bank with more than
15\1/2\ percent of their loans made to farmers or ranchers,
increased ag lending eight percent, and now provide over $100
billion in total farm loans. Small farmers rely particularly on
banks for funding. Farm banks hold $48 billion in small loans,
and $11\1/2\ billion of that is micro-small farm loans.
Farm banks are healthy and continue to be forward-looking,
growing capital and increasing reserves. This provides
flexibility to serve our nation's farmers, and manage risks
associated with any downturn in the agricultural sector.
First Dakota National Bank was the first preferred lender
in the country, so we have a long history with Farm Service
Agency loan programs. Additionally, we have two very unique
programs for our farmers. The first is our Beginning Farmer and
Rancher Program. It is a 1 year financial education program
that sharpens our producers' skills. The second is our Keep
Farmers Farming Program, which deals with the challenges
producers face, including transition planning and best business
practices, and both areas are extremely important to enhance
the legacy of today's family farms. I am very proud of these
programs.
I would like to thank Congress, especially the Agriculture
Committees, for repealing borrower term limits on USDA FSA
guaranteed loans in the last farm bill. Banks worked closely
with the USDA to make additional credit available by utilizing
the Guaranteed Farm Loan Programs.
On the subject of USDA farm loan programs, I believe that
Congress needs to consider reforms to the programs;
specifically, to raise the cap on these loans due to the rising
costs of agriculture, along with modernizing the programs. The
USDA FSA loans have allowed farmers to continue to access
credit from banks like mine as they grow, ensuring credit
access for farmers across the country. This is why the ABA has
endorsed Representative Bost's BALE Act which provides a
pathway for increasing the limit on FSA loans.
It should be noted that with any increase in loan limits,
there needs to be an increase in funding for the loan programs.
When funding is not available for these programs, it hurts
farmers and ranchers the most as they often rely on the loan
programs to run their operations.
Another area of concern is the need for more technology and
staff, especially at FSA. With loan officers retiring, and more
and more retiring in the future, there needs to be a workforce
trained and ready to step in. It is disheartening when an FSA
loan officer retires as we lose valuable knowledge and
experience. This hurts even more in challenging economic times
in rural America. FSA needs the ability to hire good staff.
Additionally, there needs to be major updates to technology at
USDA. Currently, we have to call a loan officer to ask
questions on rates and terms on loans, which could be done
online instead. This is slowing down the loan-making process,
and adding more work to everyone.
Finally, I need to discuss the importance of Farmer Mac to
my bank. We use Farmer Mac as a way to mitigate risk in our
portfolio, while helping farmers, especially beginning farmers,
get credit. ABA believes that the 1,000 Acre Rule should be
eliminated on Farmer Mac loans. Banks like mine are proud of
the work we do to support our nation's farmers and ranchers.
The agricultural community is a critical part of our economy,
and America's banks remain committed to serve it through good
times and bad.
Thank you, and I would be happy to answer any questions.
[The prepared statement of Mr. Franzen follows:]

Prepared Statement of Nathan E. Franzen, President, Ag Division, First
Dakota National Bank, Yankton, SD; on Behalf of American Bankers
Association
Chairman Scott, Ranking Member Scott, and Members of the
Subcommittee, my name is Nate Franzen, and I am the President of Agri-
Business at First Dakota National Bank in Yankton, South Dakota. First
Dakota National Bank is a family owned and locally controlled community
bank with $1.5 billion in assets and $890 million in agricultural
lending. We have 375 employees and have 19 branch locations and six
loan production offices serving South Dakota and Nebraska.
First Dakota National Bank was the first bank to become a Farm
Service Agency Preferred Lender in March of 1999 and has been involved
in guaranteed and direct loans ever since. But there are two unique
agricultural programs that bring me great pride due to their success.
The first is our Beginning Farmer and Rancher program. This program was
established in 2012 and provides a 1 year educational experience for
young and beginning farmers and ranchers. Throughout this yearlong
educational program we expose our beginning farmer and rancher
participants to leading educators and industry leaders. We do this with
one goal in mind: educating and sharpening the skills of our beginning
farmers and ranchers to increase their odds of future viability and
success. The second program was established in 2013. It is a consulting
department within our agriculture division called Keep Farmers Farming.
Its intent is to help our farms and ranches deal with the most
important challenges they face. These challenges include strategic
planning, estate planning, transition planning, best business
practices, as well as marketing and risk management. We are making a
real difference in our Ag industry by helping our farms and ranches
enhance their performance and plan for transition and legacy. These two
programs will help bring young and beginning farmers and ranchers back
to their family operations and keep our family farms and ranches viable
for generations to come.
I am also a past Chairman of the American Bankers Association's
Agricultural and Rural Bankers Committee. I appreciate the opportunity
to present the views of rural bankers on credit issues in the upcoming
farm bill.
The American Bankers Association is the voice of the nation's $16
trillion banking industry, which is composed of small, midsize,
regional and large banks that together employ more than two million
people, safeguard $12 trillion in deposits and extend nearly $8
trillion in loans. ABA is uniquely qualified to comment on agricultural
credit issues as banks have provided credit to agriculture since the
founding of our country. Over 5,000 banks--over 82% of all banks--
reported agricultural loans on their books at year end 2015 with a
total outstanding portfolio of over $171 billion.
The topic of today's hearing is very timely. There have been many
successes within the 2014 Farm Bill that have directly affected
agricultural lenders. However, the agricultural landscaped has changed
considerably since the passage of the last farm bill. Agricultural
lenders have often been the first group to feel the effects of the
changing agricultural landscape, and the role that public policy has
played in shaping that landscape.
The agricultural economy has been slowing, with farm sector
profitability expected to decline further in 2017 for the fourth
consecutive decline. However, farm and ranch incomes for the past 5
years have been some of the best in history. With the 2014 Farm Bill in
place, farmers, ranchers, and their bankers achieved a level of
certainty from Washington about future agricultural policy. Interest
rates continue to be at or near record lows, and the banking industry
has the people, capital and liquidity to help American farmers and
ranchers sustain through any turbulence in the agricultural economy.
Banks continue to be one of the first places that farmers and
ranchers turn when looking for agricultural loans. Our agricultural
credit portfolio is very diverse--we finance large and small farms,
urban farmers, beginning farmers, women farmers and minority farmers.
To bankers, agricultural lending is good business and we make credit
available to all who can demonstrate they have a sound business plan
and the ability to repay.
In 2015, farm banks--banks with more than 15.5% of their loans made
to farmers or ranchers--increased agricultural lending 7.9 percent to
meet these rising credit needs of farmers and ranchers, and now provide
over $100 billion in total farm loans. Farm banks are an essential
resource for small farmers, holding $48 billion in small farm loans,
with $11.5 billion in micro-small farm loans (loans with origination
values less than $100,000). These farm banks are healthy and well
capitalized and stand ready to meet the credit demands of our nation's
farmers large and small.
In addition to our commitment to farmers and ranchers, thousands of
farm dependent businesses--food processors, retailers, transportation
companies, storage facilities, manufacturers, etc.--receive financing
from the banking industry as well. Agriculture is a vital industry to
our country, and financing it is an essential business for many banks,
mine included.
Banks work closely with the USDA's Farm Service Agency (FSA) to
make additional credit available by utilizing the Guaranteed Farm Loan
Programs. The repeal of borrower limits on USDA's Farm Service Agency
guaranteed loans has allowed farmers to continue to access credit from
banks like mine as they grow, ensuring credit access for farmers across
the country.
Entities like Farmer Mac provide another avenue for banks to
increase credit availability. By purchasing loans from banks, Farmer
Mac allows banks to lower interest rates for their customers and
provide better loan products. With the agricultural economy potentially
going through some stressful times in the near future, Farmer Mac will
need legislative changes. ABA believes the most needed change is the
removal of the current 1,000 acre limitation.
We remain concerned with certain areas of the agricultural credit
market. In particular, we are worried that the Farm Credit System--a
government sponsored entity--has veered away from its intended mission
and now represents an unwarranted risk to taxpayers. The Farm Credit
System was founded in 1916 to ensure that young, beginning, and small
farmers and ranchers had access to credit. It has since grown into a
$320 billion behemoth offering complex financial services. To put this
in perspective, if the Farm Credit System were a bank it would be the
seventh largest in the United States, and larger than 99.9% of the
banks in the country.
Our nation's farmers and ranchers are a critical resource to our
economy. Ensuring that they continue to have access to adequate credit
to thrive is essential for the well-being of our whole nation.
America's banks remain well equipped to serve the borrowing needs of
farmers of all sizes.
In my testimony today I would like to elaborate on the following
points:

b Banks are a primary source of credit to farmers and ranchers in the
United States;

b The 2014 Farm Bill can be considered a success for its protection
of crop insurance, the Conservation Reserve Program (CRP), and
the removal of term limits on FSA Guaranteed Loan Programs;

b The next farm bill will require some changes to FSA loan programs
including higher lending limits, enhancements in technology,
and addressing the rapid retirement rates of FSA staff.
Additionally, changes will need to be put forward on commodity
programs and data collection;

b Farmer Mac is a valuable partner for lenders and the farm bill will
need to be a vehicle to improve Farmer Mac; [and]

b The Farm Credit System has become large and unfocused. It should
refocus its mission on helping farmers and ranchers in need of
subsidized credit.
I. Banks Are a Primary Source of Credit to Farmers and Ranchers in the
U.S.
For my bank and for many of our members, agricultural lending is a
significant component of their business activities. ABA has studied and
reported on the performance of ``farm banks'' for decades and, we are
pleased to report that the performance of these highly specialized
agricultural lending banks continues to be strong. ABA defines a farm
bank as one with more than 15.65 percent farm or ranch loans (to all
loans).
At the end of 2016, there were 1,912 banks that met this
definition. Farm lending posted solid growth during 2016. Total farm
loans at farm banks increased by 5.3 percent to $103.4 billion in 2016
up from $98.3 billion in 2015. Approximately $1 in every $3 lent by a
farm bank is an agricultural loan.
Farm Banks Exhibit Strong Local Growth
$ Billions

Source: Federal Deposit Insurance Corporation & American
Bankers Association Analysis.

Farm real estate loans grew at a faster rate than farm production
loans. Outstanding farm real estate loans grew at a pace of 9.2
percent, or $4.5 billion, to a total of $54.0 billion. Farm production
loans rose by 1.3 percent, or $641 million, to $49.4 billion. Farm
banks are a major source of credit to small farmers--holding more than
$48.4 billion in small farm loans (origination value less than
$500,000) with $11.5 billion in micro-small farm loans (origination
value less than $100,000) at the end of 2016. The number of outstanding
small farm loans at farm banks totaled 766,762 with the vast majority--
over 495,600 loans--with origination values less than $100,000. Farm
banks are healthy and well capitalized and stand ready to meet the
credit demands of our nation's farmers large and small.
Farm Banks Increase High-Quality Capital
$ Billions

Source: Federal Deposit Insurance Corporation & American
Bankers Association Analysis.

Equity capital--often thought of as the strongest form of capital--
at farm banks increased 3.7 percent to $48.4 billion in 2016. Since the
end of 2007, farm banks have added $20.9 billion in equity capital,
building strong high-quality capital reserves. These capital reserves
will enable farm banks flexibility as the agricultural sector adjusts
to lower commodity prices--allowing bankers to work with and serve the
needs of our nation's famers--and will also act as a buffer, proving
insulation from the risks associated with any downturn in the
agricultural sector.
One area of concern for farm bankers and their customers has been
the rapid appreciation in farmland values in some areas of the country.
The run up in farmland values has not been a credit driven event. Farm
banks are actively managing the risks associated with agricultural
lending and underwriting standards on farm real estate loans are very
conservative. The key consideration in underwriting any loan is the
ability of the customer to repay regardless of the collateral position
in the loan. To further manage risk, we regularly stress test our loan
portfolios to judge repayment capacity under different scenarios.
After several years of large increases in farmland values, the
consensus view among bankers I know is that the increase in cropland
values has slowed. USDA estimates of lower commodity prices for the
third consecutive year in 2016 seem to have modestly cooled off the
demand for farm real estate. We watch the farm real estate market very
closely, as do my customers. In recent years, over \4/5\ of the
agriculture sector's asset values were held in real estate. USDA
estimates a 1.2 percent decline in the value of farm real estate in
2016.
II. The Agricultural Act of 2014 Had Many Successful Components
One success of the 2014 Farm Bill was the continued support of crop
insurance programs. Agricultural lenders use crop insurance as a
guarantee to help secure financing for operating credit. With crop
insurance, a lender has the ability to provide support based on
individual producers' proven crop yields. This allows lenders to tailor
a loan to a producer's operation and allow for year-to-year adjustments
within that operation. Without crop insurance acting as a safety net,
producers would be in a much more challenging financial situation in
the event of disaster. Crop insurance has allowed lenders to provide
the best possible terms for operating loans because it helps to lower
the risk for the lender. ABA has been a long-time supporter of crop
insurance programs and would like to see the programs expanded to help
as many producers as possible.
Another success of the 2014 Farm Bill was the continuation of the
Conservation Reserve Program (CRP). CRP is vital in rural areas as it
provides another use for land that may be otherwise unsuitable for
farming. From a lender perspective, CRP is another tool in the toolbox
for landowners to use when they are trying to diversify their holdings.
Additionally, CRP can provide a steady stream of income for producers,
especially older producers.
I would like to thank Congress, especially the Agricultural
Committees, for repealing borrower term limits on USDA Farm Service
Agency guaranteed loans in the 2014 Farm Bill. Term limits restricted
farmer access to capital, and with the expansion of the farm economy
over the past 10 years, there are some farmers who are not able to
obtain credit from banks like mine without a guaranty from USDA. The
USDA's Farm Service Agency guaranteed loan program has been a
remarkable success. Today, nearly $12 billion in farm and ranch loans
are made by private sector lenders like my bank and are guaranteed by
the USDA. There are nearly 43,000 loans outstanding--of course some
farmers have more than one guaranteed loan, so this number is not to be
confused with the number of individual farmers and ranchers, but the
numbers of individuals accessing credit under this program is very
significant.
This program has grown over the past 5 years, with less than $9
billion outstanding at the close of FY08 to nearly $12 billion today.
The loans made by banks like mine under this program are modest in
size. The average outstanding guaranteed real estate loan is $439,000
and the average outstanding guaranteed non real estate secured loan is
$250,000. Clearly, we are reaching customers who have modest-sized
operations, who are in the process of starting their farm or ranch
operation, or who are recovering from some sort of financial set-back.
Despite the fact that these customers do not have either the earnings
or collateral to qualify for conventional credit, losses in the program
have been extremely small. Over the last 5 fiscal years losses have
ranged from a high of 0.6% in FY10 to a low of 0.3% in FY13. These are
extremely low losses--especially for customers who are perceived to be
a higher risk than other customers, hence the need for the USDA credit
enhancement. Bankers who utilize the guaranteed farm loan programs
offered by USDA know what they are doing and work very closely with
their farm and ranch customers to properly service these loans. The
Farm Service Agency deserves a great deal of credit for administering
such a successful public/private partnership. We urge you to continue
to support this very worthwhile program.
III. Changes Needed in the Next Farm Bill from a Banker's Perspective
I want to reiterate that the 2014 Farm Bill was very successful
from a lender's perspective. However, there are some substantial
changes that need to be considered as Congress starts working on the
next farm bill.
The most important change that should be made to the next farm bill
is an increase to the current loan limit of $1.399 million on FSA
Guaranteed Loans. The formula for indexing the programs has not kept up
with the increasing costs of agriculture. It is much more costly for a
young, beginning or small farmer to get into agriculture, and the
guaranteed loan programs need to reflect that reality. ABA has endorsed
H.R. 831, the Beginning Agriculturist Lifetime Employment Act of 2017
(BALE Act), introduced by Representative Mike Bost. This legislation
would increase the cap on GFOs and GOLs to $3.5 million. We believe
this increase is necessary for lenders to be able to help as many
producers as possible going forward. The BALE Act would also increase
the size of Direct Operating Loans and Direct Ownership Loans from
$300,000 to $600,000. This legislation is an important first step to
modernizing FSA loan programs.
With any increase to Guaranteed Loan Programs, there will need to
be an increase in funding for the programs. It is vital that the
necessary funds are appropriated for the programs because there has
been a shortage of funds for the past 3 years. These programs continue
to create a great public-private partnership between lenders and USDA,
and future funding should reflect the strength of programs.
Another step in modernizing loan programs would be upgrading and
improving technology. This would create a more efficient and responsive
USDA. As I mentioned before, ABA is very involved in FSA Guaranteed
Loan Programs, but the lack of basic upgrades to technology has greatly
delayed the industry's ability to process loans at an efficient rate.
Without simple updates, such as better functioning websites to check on
loan balances, we are creating unnecessary work for FSA staff. As we
have learned in the banking industry, updating technology can create
greater efficiency across an organization, which ultimately benefits
our customers.
Along with the changes to the loan programs and upgrades to
technology, there needs to be serious consideration for increasing
staff levels at FSA. As veteran staff retires, there isn't enough new
staff being trained to take over their loan portfolios. This is
creating a knowledge gap within FSA loan programs and is making it much
harder to turn around loans in a timely fashion. When it comes to
financing agriculture, especially operating loans, loans need to be
made as quickly as possible so farmers can get back into the field. As
the Agriculture Committee is aware, windows for planting or harvesting
can close very quickly and our loan programs need to keep pace.
I believe FSA should consider bringing back their interest
assistance program. This program helps to buy down the cost of interest
for young and beginning farmers, which is timely considering the rising
interest environment we are entering. In the past, the program allowed
FSA to buy down as much as four percent of all guaranteed operating
loans. If this program were to be reinstated, ABA suggests that the
program would be no more than two percent, would be eligible for only
beginning and young farmers, and would be eligible for all FSA
guaranteed loan programs.
Another issue that should be further examined by the Agriculture
Committee is the National Environmental Policy Act (NEPA) regulations
that have been put in place for Confined Animal Feeding Operations
(CAFO) for FSA loan programs. I fully understand why the regulations
have been put in place, but there needs to be serious examination on
potential changes to the regulations. Additionally, I have found that
the regulations can vary from state to state and county to county,
making it very difficult to properly put together the loan. The
Agriculture Committee should consider offering changes to the NEPA
regulations on CAFOs so lenders can better serve this constituency into
the future.
When the 2014 Farm Bill was written and approved, commodity prices
were considerably higher than after implementation of the programs. As
you are aware, the 2014 Farm Bill required that the producer make a
one-time election between Agriculture Risk Coverage (ARC) and Price
Loss Control (PLC). This became problematic because while producers
were making the election in July 2013, corn futures were over $7 per
bushel, with wheat futures being over $9 per bushel. Now, corn is less
than $4 per bushel, and wheat is $4.50 per bushel. This dramatic drop
in prices could not be foreseen by any producers.
Coupled with the drop in prices, the decision to use county yields
instead of state yields should have provided assistance to the
individuals most in need when yields were low, but this was often not
the case. Instead, due to the variability in National Agriculture
Statistics Service (NASS) data, two fields on each side of a county
line, may have drastically different payments, with my customers seeing
the difference as high as $90 per acre. Additionally, from a lender's
point of view, NASS data has not been as accurate as data from the Risk
Management Agency (RMA), which led to problems on yield calculations.
While crop prices and a one-time program election were both issues,
the timing of payments greatly affected lenders. Payments could not be
calculated until the final county yield was determined and the
marketing year was complete. This means producers do not receive their
payments during the same year in which they planted their crops, and
lenders had to deal with the fallout of this timing issue. For example,
we are currently completing renewals for our farm customers. We look at
their financial progress for 2016 and set their operating lines for
2017. However, we cannot calculate 2016 payments until October of 2017.
From a lender perspective, this has caused a real problem with our
regulators, as we cannot use a payment that may be received a year
later in the profits calculation for this year. Lastly, we should not
be making educated guesses on what payment may be received. Instead,
there should be certainty within the programs to allow for an accurate
calculation.
IV. Farmer Mac Is a Valued Partner for the Banking Industry
Farmer Mac is a valuable tool in the toolbox for agricultural
bankers because it provides another avenue for banks to increase credit
availability. By purchasing loans from banks, Farmer Mac allows banks
to lower interest rates for their customers and provide better loan
products. With the agricultural economy potentially going through some
stressful times in the near future, Farmer Mac will need legislative
changes. ABA believes the most needed change is the removal of the
current 1,000 acre limitation. The 1,000 acre limitation was put in
place in the 1987 Farm Credit Act and has become outdated with the
increasing size and scope of modern agriculture.
ABA also believes there should be a serious discussion about Farmer
Mac being able to buy all guaranteed loans from USDA. This flexibility
would encourage more banks to be involved in guaranteed loan programs
across USDA. It should be noted, that these proposals would not only
benefit banks, but also the Farm Credit System, who is our biggest
competitor. ABA believes that we need to do everything in our power to
help finance all of agriculture, and we are all in this together.
V. The Farm Credit System Is a Large Government-Sponsored-Enterprise
That Primarily Serves Large Borrowers at the Expense of
Taxpayers
I mentioned earlier in my testimony that the market for
agricultural credit is very competitive. I compete with several other
banks in my service area, finance companies from all of the major farm
equipment manufacturers, several international banks, credit unions,
life insurance companies and finance companies owned by seed and other
supply companies, to name a few. The most troublesome competitor I face
is the taxpayer-backed and tax-advantaged Federal Farm Credit System
(FCS). The FCS was chartered by Congress in 1916 as a borrower-owned
cooperative farm lender at a time when banks did not have the legal
authority to make long-term farm real estate loans. Over the ensuing
100 years the FCS has received numerous charter enhancements, and has
ventured into areas that are not appropriate for a farmer-owned farm
lending business.
Today the FCS is a large and complex financial services business
with $320 billion in assets. If it were a bank, it would be the seventh
largest bank in the United States. It is tax-advantaged and enjoyed a
combined local, state, and Federal tax rate in 2015 of only 4.0 percent
(a significant decrease from the effective tax rate of 4.5 percent in
2014). The tax advantages enjoyed by the FCS in 2015 were worth $1.296
billion or 28% of the Farm Credit System's net income in 2015.\1\
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\1\Federal Farm Credit Banks Funding Corporation; 2015 Annual
Information Statement of the Farm Credit System; March 7, 2016. Page F-
3.
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The Farm Credit System Is a Government-Sponsored-Enterprise
In spite of their size, profitability, and tax advantages the Farm
Credit System presents the same kind of potential threat to the
American taxpayer as Fannie Mae and Freddie Mac. As a government
sponsored enterprise (GSE) like Fannie Mae and Freddie Mac, the
American taxpayer is the ultimate back stop should the Farm Credit
System develop financial problems. This reality was formalized in 2013
when the Farm Credit System Insurance Corporation (FCSIC) arranged a
$10 billion line of credit ``with the Federal Financing Bank, a Federal
instrumentality subject to the supervision and direction of the U.S.
Treasury--to which the Federal Financing Bank would advance funds to
the [Farm Credit System] Insurance Corporation. Under its existing
statutory authority, the [Farm Credit System] Insurance Corporation
will use these funds to provide assistance to the System Banks in
exigent market circumstances which threaten the Banks' ability to pay
maturing debt obligations. The agreement provides for advances of up to
$10 billion and terminates on September 30, 2014, unless otherwise
extended.''\2\
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\2\Federal Farm Credit Banks Funding Corporation; 2013 Annual
Information Statement of the Farm Credit System; February 28, 2014,
page 23.
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We believe the farmers who own stock of the Farm Credit System--and
the American taxpayers who back it--deserve a better understanding of
what transpires between the Farm Credit System and the U.S. Treasury,
but very little information is available to the public. Unlike the
housing GSEs which are subject to reform efforts to lessen the
taxpayer's exposure, the Farm Credit System seems to be increasing its
dependence upon the U.S. Treasury.
Congress created the Farm Credit System as a public option for farm
finance when farmers were having trouble getting the credit they needed
from non-government sources. The conditions that led to the creation of
the Farm Credit System nearly 100 years ago no longer exist, and yet we
continue to have a government-assisted, tax-advantaged farm lender
providing credit to customers who would be able to easily borrow from
taxpaying institutions like mine. In fact, the heavily subsidized
credit that FCS lends goes to those who need it least. Despite
amendments to the Farm Credit Act of 1980 requiring each FCS lender to
have a program for furnishing credit to young, beginning and small
farmers and ranchers (YBS), the share of new YBS loans to total new FCS
loans continues to be dismal--even as the assets of the System have
expanded enormously. Loans to small farmers have steadily dropped over
the past several years, with small farm loans declining from a high of
30 percent of total new loan volume in 2003\3\ to just 14.1 percent in
2015. Clearly, those who would benefit the most from the highly
subsidized credit made available by the FCS are not receiving the
benefits that Congress intended them to receive.
---------------------------------------------------------------------------
\3\``FCA's Annual Report on the Farm Credit System's Young,
Beginning, and Small Farmer Mission Performance: 2013 Results''. Office
of Regulatory Policy, June 12, 2014 Board Meeting.
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Conclusion
The banking industry is well positioned to meet the needs of U.S.
farmers and ranchers. U.S. agriculture has begun to adjust to lower
commodity prices after enjoying one of the longest periods of financial
prosperity in history. USDA projected that at year-end 2016, farm and
ranch solvency ratios--debt-to-asset and debt-to-equity ratios--would
rise to 13.23 and 15.25 percent, respectively. Even as these measures
have increased, each remains low relative to historical levels. During
the past few years, while farmers experiences unprecedented high
commodity prices and rising farm profits, farmers used their excess
cash profits to retire debt and to acquire additional equipment and
land. As a result, farmers and ranchers today have the capacity to tap
their equity should there be a decline in farm profitability resulting
in diminished cash flows. While no farmer or rancher wants to take on
additional debt, the strength of the U.S. farm and ranch balance sheet
gives producers options to do so if the need arises.
The banking industry remains cautious as it looks forward to the
next farm bill. There is a very real concern that declining commodity
prices will negatively affect the farm economy and make credit
situations tighter. This is why the banking industry will continue to
be involved in the farm bill process and will offer assistance to
Congress as it writes the next farm bill. With the changes that have
been outlined earlier, the banking industry will continue to help
producers be strong into the future. Bankers still see great
opportunities in agriculture and they will stand with their partners in
agriculture to develop the best farm bill for all.
Thank you for the opportunity to express the views of the American
Bankers Association. I would be happy to answer any questions that you
may have.

The Chairman. Thank you, Mr. Franzen.
Steve, at risk of mispronouncing your last name, we will
just go with Steve, since I missed two of the last three.

STATEMENT OF STEVEN J. HANDKE, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, UNION STATE BANK OF EVEREST; AT-LARGE DIRECTOR,
INDEPENDENT COMMUNITY BANKERS OF AMERICA, EVEREST, KS

Mr. Handke. That will work, Mr. Chairman. Thank you.
Well, Mr. Chairman, I am Steve Handke. I am President and
Chief Executive Officer of the Union State Bank in Everest,
Kansas. I am also Vice Chairman of the ICBA's Agricultural
Rural America Committee.
Union State Bank of Everest was chartered 116 years ago,
still operates out of our main office in Everest, Kansas, a
community of 300 people. We manage over $300 million in assets,
and serve seven Kansas and Missouri communities. We focus on
lending to corn and soybean production because our communities
are solely dependent upon agriculture.
Our nation's 5,800 community banks are vital to agriculture
as they make a majority of all the farm loans from the banking
sector. They also provide approximately 40 percent of all the
small business loans. USDA guaranteed farm and Rural
Development loans are very important to our bank and our
community.
We have heard some say that we are only one normal harvest
away from dire conditions in the farm economy. USDA calculates
that ten percent of farmers are highly leveraged. Farm real
estate debt is projected to peak at $240 billion, which is a
historic high.
Community banks have been especially successful at lending
to farmers at these historic low interest rates; however, the
decline in farm income has stressed the abilities of borrowers
to cash flow. Here is what our ag bankers from around the
United States that serve on the ICBA's Ag Committee have to
say. Most producers are feeling financial stress. Some
producers are diverse enough to still be profitable. Many
problems have been the result of low commodity prices, high
rental rates, living expenses, farm machinery, and health care.
Reducing expenses needs to be a focus, but it is difficult.
Some costs are negotiated years in advance. Competition for the
farmland makes it hard to reduce the land rental rates.
Many farmers have strong equity but not enough working
capital and positive cash flow. Some have decided to exit
farming, and the demand for debt restructuring or rebalancing
of the balance sheets will increase. Bankers are concerned
regulators may overreact, classifying loans with negative cash
flows despite strong equity in farmland.
Our recommendations on the USDA credit programs are as
follows. First, provide adequate funding. USDA guaranteed loan
programs seem to run out of money. There needs to be more
flexibility in USDA programs to allow the transfer of funds
within USDA for these programs. Second, raise the loan cap
volumes. The dollar amounts of these loans or the low volume
caps should increase significantly. The guaranteed loan
programs have only minimal cost, so any volume limit should be
on the high side and not risk of hitting the caps. Third, raise
the loan limits. The $1.4 million current limit should be
raised to between $2.5 and $3.5 million. This would help
bankers restructure loans and work with more borrowers with
little, if any, Federal cost. Next, minimize loan origination
fees which can discourage use. Next, minimize the paperwork
requirements, a problem often cited by our bankers. Next,
remove the USDA's recently imposed requirement to have an
environmental assessment within the past 12 months prior to
refinancing a livestock facility. Provide uniformity when
financing loans across state lines, as USDA requirements are
often different from state to state. Increase USDA staffing
levels to lessen approval times. Allow banks to choose which
USDA FSA office to work with to ensure a timely loan approval
process. Better software solutions that provide better
integration as applications move between the bank and USDA.
One way to help us prevent the next ag crisis would be to
alleviate the Farm Credit crunch. Regulators classify farm
loans if a farmer misses an occasional payment, even if the
farmer has strong equity. Many farmers are cash-poor but land-
rich. USDA loans of 90 percent guarantees reduce the amount of
loans classifications by 90 percent. This 90 percent reduction
ensures the bank has time to work with producers without
regulators bringing on `enforcement action' against the bank.
Under the current regulatory environment, if 40 percent of our
capital becomes classified with cash flow loans that are loans
that do not cash-flow even though farmers have strong equity
and assets, we will be pushed under enforcement actions.
In conclusion, yes, we need a strong farm safety net and a
strong crop insurance program, both vital to producers and
lenders. We also need a very robust USDA Guaranteed Loan
Program which can keep thousands of farmers farming into the
stressful times ahead.
Thank you. We look forward to working with you.
[The prepared statement of Mr. Handke follows:]

Prepared Statement of Steven J. Handke, President and Chief Executive
Officer, Union State Bank of Everest; At-Large Director, Independent
Community Bankers of America, Everest, KS
Introduction
Mr. Chairman and Members of the Subcommittee thank you very much
for the opportunity to testify today on a topic of great interest to
thousands of community banks serving rural America and the banking
industry in general.
My name is Steve Handke and I serve as the President and CEO of the
Union State Bank of Everest, in Everest, Kansas. I am testifying today
on behalf of the Independent Community Bankers of America (ICBA).\1\
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\1\About ICBA
The Independent Community Bankers of America', the
nation's voice for more than 5,800 community banks of all sizes and
charter types, is dedicated exclusively to representing the interests
of the community banking industry and its membership through effective
advocacy, best-in-class education and high-quality products and
services. With 52,000 locations nationwide, community banks employ
760,000 Americans, hold $4.7 trillion in assets, $3.7 trillion in
deposits, and $3.2 trillion in loans to consumers, small businesses,
and the agricultural community. For more information, visit ICBA's
website at www.icba.org.
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Union State Bank of Everest
The Union State Bank of Everest was chartered 116 years ago in 1901
and still operates out of the main office in Everest, a small community
of 300 people. Today the bank manages over $300 million in total assets
and operates in the fertile agricultural counties of five northeast
Kansas communities and two northwest Missouri communities. Fifty
percent of our loans are to farmers, primarily corn and soybean
producers, although the communities we serve are almost entirely
agricultural dependent.
Our bank provides an array of services to the seven communities we
serve to satisfy their banking and credit related needs. Our bank is
staffed by wonderful employees who work tirelessly to assist the
communities we do business in. We live and work with the citizens in
these communities and we do whatever we can to enhance their financial
livelihoods and quality of life. We know our customers on a first name
basis and we strive to build relationships through the individualized,
hands-on service we provide to our customers and borrowers. I have been
privileged to be one of four bank Presidents to serve over 20 years as
the bank's CEO and my family has farmed near Everest for four
generations.
The Role of Rural Community Banks
On a broader scale, community banks play an important role in the
nation's economy. There are approximately 5,800 community banks in the
U.S. Thousands of community banks are in small, rural, and even remote
communities. Community banks provide approximately \1/2\ of all
agricultural credit from the banking sector. Community banks under $1
billion in assets extend approximately 56 percent of non-real estate
loans to the farm sector and 62 percent of the real estate credit.
Community banks also provide approximately 40 percent of all small
business loans even though they hold only ten percent of banking
industry assets. Therefore, I believe it is important the authors of
the next farm bill keep in mind the important role that community banks
play in agricultural finance and keeping our rural communities healthy
and vibrant.
Focus of Testimony
Our testimony touches on the interaction between the current state
of the farm economy from a community banker perspective and the
necessity of USDA credit programs. My testimony explains how we can
help prevent or alleviate a potential farm credit crunch from
developing over the next couple of years if continued low commodity
prices persist.
Some observers of the ag credit markets have said recently we are
only one normal harvest away from dire conditions in the farm economy.
Last year we may have dodged a bullet. In 2016 we had a convergence of
two important factors that prevented the worsening farm financial
situation from escalating more than it did. These factors were a very
bountiful harvest in many crop producing areas of the U.S. and
significant farm program payments. It is possible that one or both of
these factors will not occur this year.
The Current Credit Situation in Rural America
USDA's February farm income forecasts, relative to 2016 levels,
projects farm sector profitability measures for 2017 to range from
nearly flat to declining. Net cash farm income, one measure of
profitability, is forecast at $93.5 billion, up 1.8 percent compared to
the 2016 forecast. Net farm income, a broader measure of profitability
because it includes noncash values such as inventory flows and economic
depreciation, is forecast at $62.3 billion for 2017, down 8.7 percent
compared to 2016.
Net Farm Income and Net Cash Farm Income, 2000-2017F
$ Billions, Nominal

Note: F = forecast.
Source: USDA, Economic Research Service, Farm Income Wealth
and Statistics.
Data as of February 7, 2017.

USDA has also calculated that ten percent of farmers are highly or
extremely leveraged. Farm real estate debt in 2017 is expected to reach
a historic high of $240.7 billion in nominal terms. An additional
contributing factor to the increase in farm real estate debt is
increasing use of real estate as collateral to secure non-real estate
borrowing. Farm non-real estate debt is expected to continue to
increase in 2017. Real debt levels are approaching where they were
prior to the 1980s farm financial crisis.
Farm Sector Solvency Ratios, 1970-2017F
Percent

Note: F = forecast; data for 2016 and 2017 are forecasts.
Source: USDA, Economic Research Service, Farm Income Wealth
and Statistics.
Data as of February 7, 2017.

USDA notes debt is predicted to grow and the value of farm assets
is anticipated to decline, leading to an increase in the farm sector
debt-to-asset ratio and debt-to-equity ratios. Such trends reflect a
modest increase in farm financial risk exposure from 2015. The 2017
debt/asset and debt/equity ratios, if realized, would be the highest
since 2002. Liquidity ratios have weakened over the past several years
and working capital has diminished. The 2017 debt service ratio, which
measures the share of production available for debt payments, at 0.28
is at its highest since 2002. The times interest earned ratio, which
measures the farm sector's ability to meet interest payments out of
current net farm income, at 4.4 is at its lowest since 2002.
Community Bank Perspective
Over the last several years, community banks have been able to
serve their farm borrowers by providing ample credit at near
historically low interest rates. However, the decline in farm income
has placed stress on the ability of farm borrowers to cash flow. Higher
expected interest rates may add to this stress. ICBA conducted a survey
of its Agriculture--Rural America Subcommittee which consists of over
25 bankers from all farm regions of the U.S. Following are some of the
findings in response to questions.
Some community banks have as high as eighty percent, possibly more,
of their loans made solely to farmer or ranchers. However, in rural
communities such as Everest, where my bank is located, the entire
community is dependent on agriculture. In these communities all of the
banks' lending is entirely related to agriculture.
When asked what the level of financial stress is within their
portfolios, in many cases bankers stated that 75 to 100 percent of
their producers were feeling financial stress due to low farm prices.
In some cases the percentage was much smaller, around ten percent, and
was dependent on which commodities were produced as some producers are
diverse enough to still be profitable.
Other causes of financial stress included high rental rates, living
expenses that are too high relative to farm income, too great of an
investment in farm machinery, and other factors such as weather.
Healthcare can be a major living expense impacting producers.
When asked if producers could strengthen their financial situation
by lowering their expenses, including family living expenses, some
bankers indicated this may be possible, although producers have already
tightened their financial belts in many cases. Producers are having a
hard time trying to reduce input costs such as fertilizer expenses or
renegotiating rental rates due to the willingness of other farmers to
pay the higher rental rates. Producers are trying to reduce expenses on
seed, chemical and fuel costs through pre-payments or changing vendors.
Even with these possible reductions, their ability to cash flow will be
difficult. Some producers have already locked in expenses for several
years into the future.
As producers have moved from expansion mode to survival mode there
will be greater demand for debt restructuring such as through extending
loan maturities. Many farmers with tight cash flows are using up
working capital and are expected to borrow more in the future. Bankers
also report an increase in credit demand from producers who are being
told by the Farm Credit System (FCS) to look elsewhere for credit.
Due to financial stress and the projected farm financial
deterioration over the next couple of years, some farmers have made the
decision to exit farming. They have decided to exit due to the expected
difficulty of being profitable in the current environment. Most farmers
still have adequate to strong equity; however, their working capital
and cash-flows are not sufficient to continue operating. While some
producers have sufficient capital to withstand losses over the next
couple of years, other producers will sell assets like land to remain
viable. However, we expect bank regulators will challenge banks who are
trying to work with producers if they are projected to have negative
cash flows for the next several years despite having a strong equity
position. This is where USDA guaranteed loan programs could have a
tremendously positive impact as explained below.
Community ag banks would report that many of their farm borrowers
are at best breaking even if borrowers have low debt including low
carryover debt or have a diversity of commodities including commodities
that have a degree of profitability. In the worst position would be
young, beginning and small farmers particularly if they have high debt
levels or if they have little to no backing from their extended family
or their parent's farm assets.
These are the farmers that would be most at risk of having to exit
production agriculture. However, if low farm prices continue over the
next couple of years we are likely to witness a larger exodus of
farmers from agriculture, including larger farmers and ranchers.
USDA Credit Programs
Many banks are using the USDA guaranteed farm loan programs and
Farmer Mac to help borrowers restructure debt to get their annual cash
needs down. There was much less interest in these programs 3 to 4 years
ago at a time when you wrote the last farm bill. However, things have
changed for the worse and these types of programs will have a much
greater demand in the years ahead.
Provide Adequate Funding--One issue that seems to regularly occur
is that the programs often tend to run out of funding. There needs to
be enough flexibility in USDA programs to allow the transfer of funds
within USDA to these programs in the event they temporarily run out of
funding. Additionally, the authorization for the dollar amount for
various loan categories needs to be raised significantly. Some
programs, such as the guaranteed operating loan program, are self
funding and therefore have no costs. Why should the dollar volume
related to these loans be limited?
Bankers report often having loans approved that cannot get funding
from USDA. This causes additional stress upon borrowers. Bankers stress
that time can be of the essence for many producers who are not able to
simply wait for Congress to act by authorizing and appropriating
additional funding.
Raise Loan Limits--It is extremely important that Congress raise
the lending limits for the USDA guaranteed farm operating and ownership
(real estate) programs from the current $1.4 million loan limit to $2.5
million or greater to reflect the higher cost levels of modern day
agriculture. There is not a cost for guaranteed farm operating loan
program as this program is self-funding based on the origination fee.
There is only a very slight cost to the guaranteed farm ownership
program. Therefore, Congress could accommodate billions of dollars in
additional credit to farm borrowers with only a minimal cost to the
Federal Government, ensuring the survival of thousands of family
farmers.
Legislation (H.R. 5733) was introduced in the previous Congress by
Congressman Bost to raise the loan limits on guaranteed farm loans to
$2.5 million to $3.5 million. Our survey showed strong support for
these higher loan levels indexed to an inflation adjustment. For some
banks serving producers with higher production costs, a $2.5 million
loan is their average loan size. The higher loan limits would help
producers cope with the higher cost of land, machinery, and other
costs. Bankers state the current $1.4 million loan limit is simply too
low and it often prevents banks from restructuring loans or causes many
farmers to not qualify for guaranteed loans.
The direct loan programs are also a valuable financing tool for
many farmers and ranchers, especially younger ones that are buying
land. These programs assist the ability of farmers to cash flow and
have attractive interest rates benefiting producers over the life of
their operation. The programs can help young farmers in either getting
started in farming or in transitioning a family farm to the next
generation.
If direct loan limits are increased, these programs need to ensure
that direct financing from USDA is leveraged with bank financing to
ensure larger direct loans don't detract from financing already being
provided by banks. Also, since these programs have a `credit-elsewhere'
test this requirement should be tight enough to ensure producers don't
shop for credit denials, for example, from money center banks that are
not making small farm loans anyway. In addition, many borrowers
apparently do not pursue direct loans due to the amount of paperwork
they have to fill out. Paperwork requirements should be examined.
Additional funding would need to be appropriated to ensure such
expansion doesn't undermine existing guaranteed lending.
Other Recommendations for USDA Credit Programs
Bankers in our survey made a number of recommendations to improve
USDA credit programs. Some of these suggestions include:

Minimize origination fees as they can discourage use of the
programs;

Minimize paperwork requirements--a need cited by many
bankers;

Remove the USDA's recently imposed requirement that
producers have an environmental assessment within the past 12
months prior to financing a livestock facility;

Provide lenders flexibility when financing USDA loans across
state lines as the requirements often differ, making use of the
programs much more difficult in these instances;

Important to increase USDA staffing levels to providing more
lending staff which will decrease approval times for direct and
guaranteed loans;

To free up USDA staff, reduce taxpayer expense, and reduce
wait times for farmers, crop reporting needs to be done through
private crop insurance agents instead of requiring double
reporting through agents and USDA personnel;

Allow banks to choose which USDA-FSA office to work with to
help ensure a timely loan approval process and minimize any
loan approval issues in certain counties; [and]

Improve requirements for loss settlements in the case of
borrower liquidation.
Farmer Mac Recommendations
We are aware that Farmer Mac has three technical changes they would
like to make to their charter. One change deals with the eligibility of
farms organized as family trusts; a second change deals with Farmer
Mac's ability to purchase the guaranteed portion of USDA guaranteed
loans not under the ConAct of 1972; and the third provision would
remove an arbitrary loan limit for loans of less than 1,000 acres.
Based on our understanding of these provisions, we believe community
banks would be supportive of these changes. We would be happy to
discuss these changes further with the Committee.
One Way To Help Prevent a Farm Credit Crisis
We have heard from bankers that regulators are now very closely
scrutinizing bankers' ag loan portfolios during examinations. Since
stressful times in agriculture may persist for several years, it is
important regulators not over react and put unnecessary pressures on ag
lenders. Ag lending is often cyclical in nature with good times
followed by bad times and good farm lenders know how to weather the
normal ups and downs of agricultural markets. As has been said, many of
the best loans are made in difficult times.
For example, regulators typically require banks to keep a list of
farmers who didn't make all scheduled payments on their loans,
regardless of the amount of their equity. If regulators see the
farmers' names a second time in a subsequent exam, they will tend to
classify the loan. If the volume of these loans reaches forty percent
of bank capital, then the bank will be placed under a so-called
`enforcement action.' My bank has $30 million (10%) capital. If we have
$12 million in classified farm loans, we would be subject to an
enforcement action. These loans could be classified even if the
producer has a huge amount of equity as can often be the case.
Producers can often be land rich and cash poor. Yet, their loans could
be classified if the producer has missed an occasional payment.
I read recently where the Federal Reserve Bank of Kansas City said
thirty percent of farmers cannot make all of their payments. It would
not take many farm loans, at approximately $1 million in size or
greater, for a bank's classified loans to reach forty percent of their
capital.
A solution to this potential dilemma for the bank is to make these
loans as USDA guaranteed loans. With a $1 million loan, a ninety
percent USDA guarantee would reduce the amount of a loan classified by
the regulator from $1 million to $100,000--a ninety percent reduction
in the amount that counts against the bank's capital.
Banks fear that regulators may over-react to the downturn in
commodity prices and begin classifying loans. Having a much expanded,
robust and well-financed guaranteed loan program could remove pressures
on banks to withhold financing from many farm customers, thus
significantly helping to avoid a farm credit crunch.
This Subcommittee and other Congressional committees may want to
conduct a hearing with banking regulators to discuss how they will deal
with stress in the farm economy to be sure they have the insight they
need to deal with future agricultural credit issues.
Conclusion
Congress has the power to help avoid a farm credit crisis. Yes, we
need a strong farm safety net for commodities and we need a strong crop
insurance program--both vital to producers and lenders. But we now need
to also elevate the status of USDA guaranteed lending programs in the
next farm bill. Things have changed in the farming sector and not for
the better. We need to stop thinking about USDA guaranteed lending
programs as a less important add-on to the farm bill and begin thinking
about it as a major tool, along with commodity programs and crop
insurance, to keeping thousands and thousands of farmers in business in
what may be severely stressful times ahead.
Thank you for holding this hearing. ICBA and the community banking
industry looks forward to working with you in writing the next farm
bill.

The Chairman. Thank you, Mr. Handke.
Mr. Marlow.

STATEMENT OF W. SCOTT MARLOW, EXECUTIVE DIRECTOR, RURAL
ADVANCEMENT FOUNDATION INTERNATIONAL--USA, PITTSBORO, NC; ON
BEHALF OF NATIONAL
SUSTAINABLE AGRICULTURE COALITION

Mr. Marlow. Good afternoon. Thank you for the opportunity
to testify today.
My name is Scott Marlow, and I am here on behalf of the
Rural Advancement Foundation International, the National
Sustainable Agriculture Coalition, and our partners across the
country who work one-on-one with farmers in crisis to help them
stay on the farm and in their homes.
Based in Pittsboro, North Carolina, RAFI works from the
very local to international levels on policies and markets that
promote sustainable, socially just family farms. But today, I
am representing our Farm Advocacy Program which provides in-
depth financial counseling to 100 farmers per year facing
financial crisis. RAFI staff members have had the privilege of
serving diverse farms ranging in size from 2 acres to 20,000
acres since the 1980s.
Past witnesses have explained why the current situation
differs from the farm crisis of the 1980s. While we may not
have reached the upheaval of the 1980s, I assure you that the
fact that it was worse then is cold comfort to the many farm
families who are struggling to make ends meet now.
We at RAFI are seeing a different picture. We are seeing a
significant increase in calls this winter, along with an
increase in both the severity and the level of frustration of
those calls, especially from commodity farmers who have been
turned down for their operating loans.
My first point to you is that the numbers about farm income
and foreclosure rates represent families that are struggling to
stay afloat, to care for their land, and to find a way to bring
their kids back to the farm. We know the toll financial stress
takes on farm families. Increased rates of substance abuse,
depression, divorce, and suicide are all tied closely to the
availability of credit. As you deliberate the next farm bill, I
urge you to remember the families behind the numbers, and the
devastating impact on rural America that the financial crisis
leaves.
In times of financial duress, USDA loans take on added
importance, and three things must be true for these loan
programs to be effective. There must be sufficient funding to
meet the current and projected demand, there must be enough
people to administer these programs, and those people must
administer the programs well.
Right now, we are working with 15 farm families whose loans
have been approved but are waiting on funding. A farm does not
wait on politics. The seed does not wait, and the weeds and the
bugs do not wait. And I cannot stress enough how critically
important it is that credit programs are administered in a
timely way, and that USDA farm loan programs have access to the
funds they need and when they are needed.
Some lenders have urged you to increase FSA loan limits
across the board. We urge you to resist that idea. And in
recent years there have been excess demand for FSA financing at
the current loan caps, and the average loan size for both
direct and guaranteed loans is far below the current loan cap.
Across the country, FSA offices are woefully understaffed.
In one district in North Carolina, just three loan officers are
servicing 280 existing loans, and approximately 85 new loan
applications across 14 counties. It doesn't matter how much
loan funding is made available if FSA doesn't have the capacity
to administer these loans in a timely and effective way.
We work with many caring and skilled people within USDA,
and are proud to partner with both FSA and Farm Credit, but we
must also acknowledge the powerful role that FSA lending
offices play in determining the success or failure of a farm,
and the responsibility that role entails. It is critical that
Congress and the Administration make clear that the abuse or
discrimination in the administration of Federal programs will
not be tolerated.
With low commodity prices, farmers will struggle with loan
feasibility, and there are several steps Congress can take to
extend loan feasibility in USDA loan programs, including
funding the Interest Assist Program for guaranteed loans, and
extending the loan term limits. But the greatest benefit that
farmers can receive to address loan feasibility is a profit.
For many mid-scale farmers that means connecting to consumers
or markets in new ways, and brining a greater share of the food
dollar back to the farm. For instance, between 2007 and 2012, a
time of record high commodity prices, farms that sold into
direct markets had a significantly higher survivability rate
than those who did not, at all scale levels. The bankers before
you will no doubt confirm the importance of a diversified
portfolio to weather these difficult times, and to allow our
rural communities to thrive, farmers must also have a
diversified portfolio. Farm families have the creativity and
drive to bring entrepreneurship onto the farm, if only we
invest in them.
It is also important to understand the interconnection of
credit programs with other USDA programs. Crop insurance is
absolutely key to lending but doesn't cover all crops, and
rarely covers income from high value, direct, or specialty
markets. USDA grants, like the Value-Added Producer Grant
Program, reduce the borrowing burden on the enterprise and
increase lender comfort with the investment, leveraging private
capital. Conservation programs create assured income or assets
that can be borrowed against, while improving soil health. But
these programs must be funded and they must work together to
encourage entrepreneurship.
In our experience, many of the issues that you will
consider in the next farm bill boil down to the fact that most
production agriculture in our country today does not provide
enough of a return on investment to pay for production costs,
living expenses, and still invest in the future of the farm.
For farmers to bring their sons or daughters back to the farm,
for them to care for their farmland, and provide the food and
fiber we need for a growing population, they must have the
opportunity to develop innovative enterprises. And as you
consider the many different programs and titles in the upcoming
farm bill, I encourage you to look closely at how they interact
with access to agricultural credit, and the ability of farmers
to stay in business and develop new innovative enterprises. And
with the help of other innovative programs, USDA credit
programs can once again fuel agricultural entrepreneurship that
will be the lifeline for our future agricultural economy.
That concludes my opening statement, and thank you very
much.
[The prepared statement of Mr. Marlow follows:]

Prepared Statement of W. Scott Marlow, Executive Director, Rural
Advancement Foundation International--USA, Pittsboro, NC; on Behalf of
National Sustainable Agriculture Coalition
Agricultural Credit: Setting the Stage for the Next Farm Bill
Subcommittee Chairman Scott, Ranking Member Scott and Members of
the Subcommittee, thank you for the opportunity to testify regarding
the state of agricultural lending and the importance of farm credit
programs to our nation's farmers and rural communities. My name is
Scott Marlow, and I am here today on behalf of the Rural Advancement
Foundation International (RAFI), our partners in the National
Sustainable Agriculture Coalition, and our partners across the country
who work one-on-one with farmers in crisis to help them stay on the
farm and in their homes.
About RAFI
RAFI is a nonprofit organization based in Pittsboro, North
Carolina. We work from the very local to the international level on
policies, markets and communities that promote sustainable, socially
just family farms. But for this afternoon, I am representing our Farm
Advocacy Program, which provides in-depth financial counseling to
farmers in financial crisis, and assistance for individual farm
families to help them navigate the complex world of agricultural
lending regulations, lending institutions and Federal programs. RAFI
staff members have responded to farmers' calls since the Farm Crisis of
the 1980's, and have had the privilege of serving farms ranging in size
from 2 acres to 20,000 acres, representing the full diversity of
agriculture in our home state of North Carolina and across the
southeastern United States. In addition, approximately 40 percent of
our cases each year focus specifically on planning for the great
challenge of bringing the next generation back to the farm. We are also
privileged to be a part of a network of farm advocates from across the
country, connected through Farm Aid and their 1-800 Farm-Aid crisis
hotline, that provide similar services to farmers in need.
In our work with individual farm families, it has become clear that
for mid-scale farms to thrive, they need to access markets and products
that allow them to increase their return on investment by bringing more
of the food dollar back to the farm, and connecting to consumers in new
ways. To us this is a core strategy for addressing farm survival,
especially in these times of low commodity prices. To that end, RAFI
also provides technical assistance and funding to farmers to spur
entrepreneurship in order to respond to or develop new markets. Our
programs foster creativity and entrepreneurship within rural
communities rather than adopting prescriptive solutions. In other
words, we work from the understanding that farmers and rural folks are
innovative, smart and entrepreneurial and their creativity is a
critical asset in solving the complex problems before us.
While Not the 1980s, Farmers Are Still in Crisis
I am here today to talk to you about the credit needs of those farm
families who are currently in or headed into crisis, as well as the
unique credit needs of farmers who are creating new or alternative
enterprises to ensure the viability of their farm into the future.
Several who have testified before me, both today and in previous
hearings, have talked about the projections for farm income in the near
future. Though I won't take the time here to repeat these underlying
assumptions, it is important to note that net farm income for 2017 is
expected to be down another 8.7 percent from 2016--a drop of 50 percent
since the high water mark in 2013.
While median farm household income is projected to increase
slightly over the next 2 years, median household income from farming is
expected to drop from a net loss of $765 in 2015, a net loss of $1,328
in 2016, to a net loss of $1,437 in 2017. Once again, it will become
even more important in the future that farm families continue to work
off the farm to subsidize their farming habit.
Past witnesses to the Committee have taken great lengths to explain
why the current situation differs from the farm crisis of the 1980's
that so many in the farm sector lived through. While we may not have
reached the great upheaval of the 80's farm crisis, I assure you that
the fact that it was worse then, is cold comfort to the many farm
families who are struggling to make ends meet.
We at RAFI are seeing a different picture. Our calls are up,
especially from commodity farmers who have been turned down for their
operating loans. The severity and sense of frustration of those calls
have increased. Our partners at Farm Aid are seeing a significant
increase in calls this winter, with a 27 percent increase year to date
over the same time period and an increase in the severity of the calls.
No matter how we measure the severity of the need, whether the number
of farmers or the level of crisis of the call, this year is
significantly worse than last year.
My first point to you is that these numbers represent families that
are struggling to stay afloat, to care for their land and their
families, and to find a way to bring their kids back to the farm. Their
hope is that they can show their kids that, rather than leaving the
farm for a better life, that farming is the better life. With the
current income projections, we know the toll financial stress takes on
farm families. While each community and farm is different, we know that
this type of farm economic downturn is accompanied by an equivalent
increase in rates of substance abuse, depression, divorce and suicide--
all tied closely to the availability of credit. Recent studies show
stunning increases in suicide and other ``deaths of despair'' in rural
communities since the early 2000s. As you continue to hear reports
about farm income and foreclosure rates, I urge you to remember the
families of the farms behind the numbers, and the devastating impact on
Rural America that the financial crisis leaves.
Improving FSA Loan Programs
We have seen repeatedly that in times of financial duress, USDA
Direct and Guaranteed loans take on added importance, both in their
continued existence, and in how they are implemented. Three things must
be true for these loan programs to be effective. First, there must be
sufficient funding in the programs to meet the current and projected
demand. Second, there must be enough people to administer these
programs at the county level. And, finally, those people must
administer the programs well. Two of the three, sufficient funding and
sufficient staffing, are up to Congress. Both are inadequate at this
time and will fall further short if changes are not made.
Timely Funding: Right now, we are working with 15 farm families
whose loans have been approved, but are waiting on funding. In fact,
farm loan programs have run out of funding repeatedly in recent years,
leaving farm families waiting on loans and being forced to take steps
to be able to farm during the delay--like credit card debt or delaying
paying other bills--that significantly harm the feasibility of their
loans over time. A farm does not wait on politics. The seed does not
wait, and the weeds and the bugs do not wait. When a loan is delayed,
the family cannot farm in a timely way, or is forced to find funding
through alternate means like high-interest credit cards that will only
exacerbate their financial situation. I cannot stress enough how
critically important it is to farmers that credit programs are
administrated in a timely way, and that USDA farm loan programs have
the flexibility to access the funds they need when they are needed.
Loan Limits: Some lenders have urged you to increase FSA loan
limits across the board as you consider the next farm bill. We strongly
urge you to resist that idea. Any policy changes proposed relating to
the appropriate cap on Federal loan amounts should be measured against
current program usage and demand, historical funding levels, and
performance targets with respect to lending to beginning farmers and
other under-served customers.
The loan limits on Direct Farm Ownership Loans, for example, have
not been adjusted since 2008, while farmland real estate values have
increased by 40 percent over that same time. Taken together with the
fact that FSA has not obligated all of the available funding for these
loans in recent years, Congress should seriously consider increasing
these limits to provide new and beginning farmers a better chance to
get started in areas with high real estate values.
However, for all other FSA loan programs, there has been excess
demand at the current statutory loan caps in recent years. Demand for
loan funding was especially high in 2016, and required an additional
emergency appropriation to address the significant backlog of farmers
seeking FSA financing to cover year-end operating expenses. We don't
expect 2017 to be any different from last year, and FSA faces a real
threat of running out of loan funding again this year unless Congress
provides additional funding. The only loan program that did not expend
all of the appropriated funds in FY16 was Direct Farm Ownership loans.
In addition to the excess demand for FSA financing at the current
loan caps, the average loan size for both direct and guaranteed loans
is far below the current statutory loan cap. In other words, demand is
quite high for loans far below the current caps and that is unlikely to
change.
These trends illustrate how important FSA financing is for small
and mid-sized family farms, beginning farmers, minority farmers, and
others who are not well served by commercial credit. If loan caps are
increased across the board in the next farm bill in order to
accommodate the needs of the largest farms--those with the best chance
to find private sources of credit and capital--family scale farms,
including beginning and socially disadvantaged farmers, will ultimately
feel the brunt of the impact and face fiercer competition for a limited
pool of Federal loan funding. Those borrowers deserve to be the focus
of your concern.
Additionally, statutory target rates for beginning and socially
disadvantaged farmers are currently not being met across all loan
programs--with guaranteed lenders performing the most poorly. While FSA
direct loan programs have met their statutory targets for beginning
farmers in recent years, private lenders receiving guaranteed loan
funding have been unable to meet their statutory targets since the
target participation rates were put in place by Congress in 1992. This
strongly suggests that any increases to guaranteed loan limits will
benefit the largest operations at the expense of family scale and
beginning operations, who face a much more difficult time securing
financing in the commercial credit market. Any increase to guaranteed
loan limits will mean that private lenders will only be further away
from meeting their targets.
In order to extend scarce funds, USDA lending does and should
leverage lending from private banks, acting as risk mitigation for
private loans, rather than providing the entire loan package. To
increase the loan limits would ultimately reduce the number of farmers
served with limited loan funds. In addition, we are very concerned that
increased limits would encourage beginning farmer investment in very
large single-use facilities that leave them over-leveraged and
dependent on single markets, placing all of their family's assets at
risk as collateral.
FSA Capacity: Across the country, Farm Service Agency offices are
woefully understaffed. In one FSA district office in North Carolina,
just three loan officers are servicing 280 existing loans and
approximately 85 new loan applications across 14 counties. Our
understanding is that this is not unusual across the system. The
programs that county staff are administering are more complicated and
the loan applications more difficult now than they were just a decade
ago, especially with the growing interest from diverse farmers who are
walking into the doors of FSA for the first time. FSA staffing has not
kept pace with the tremendous growth in demand for FSA loan financing.
Since 2008, FSA's total loan volume has increased by 30 percent, while
staffing capacity has remained relatively flat. What's more concerning
is the estimated 40 percent of current FSA loan officers who are
nearing retirement in the next several years. It doesn't matter how
much funding is made available for FSA loans if FSA doesn't have the
capacity to administer these loans in a timely and effective way.
We work with many caring and skilled people within USDA, from the
counties up. They deserve our support. But we must also acknowledge the
powerful role that lending officers play in determining the success or
failure of a farm, and the responsibility that this role entails. It is
critical that Congress, along with the Administration, make clear that
abuse or discrimination in the administration of Federal programs will
not be tolerated, and to maintain clear processes for such abuse, if
and when it happens, to be redressed with accountability for the
action. I wish that such redress was unnecessary at this time, but that
is not our experience out in the field.
Addressing Loan Feasibility
With low commodity prices, farmers will struggle with loan
feasibility. There is just not enough of a return on investment to pay
back the loan. One of the tools that USDA loan officers could use to
increase marginal loan feasibility is the Interest Assist program. In
this program, the loan officer can buy down the interest rate of a
guaranteed loan by three percent if the reduced costs make the loan
feasible. The program exists, and funding this program is a cost
effective way to extend loan feasibility. I urge you to speak with your
colleagues on the Appropriations Committee about funding this important
tool.
With long-term low prices and widespread natural disasters, we must
also extend the term limits on both direct and guaranteed loans, not
just guaranteed loans. Statute and regulations already require that
farmers seek credit from private sources before receiving FSA loans and
assuring that they will return to private credit as soon as plausible.
In this farm financial environment, there is simply not enough profit
to expect that farmers devastated by natural disasters or market
upheaval would have the ability to recover sufficiently in the time
allotted for direct loans. I urge you to make adjustments in the new
farm bill.
In addition to the eroding farm financial condition, changes in
commodity programs in the 2014 Farm Bill had the unintended consequence
of making it more difficult for lenders to include Federal commodity
payments in income projections, further eroding loan feasibility
calculations. ARC and PLC payments cannot be counted on in income
projections because they are calculated after the season based on
overall market prices, and lenders do not have the ability to predict
these payments.
Similarly, the availability of crop insurance is inextricably
linked to the ability to secure credit, and can create a real barrier
to accessing credit when crops or enterprises have either ineffective
crop insurance policies or no policy at all, as is the case for many of
the farmers we work with in the southeast and is true in other regions
as well. And while conservation programs help farmers build soil
health, they can also create guaranteed cash flow and bring assets that
can become part of loan feasibility or collateral. I therefore urge you
to maintain and increase funding in the new farm bill for the farm bill
conservation programs.
The greatest benefit that farmers can receive to address loan
feasibility is a profit. Our current credit and risk management
programs primarily support large-scale commodity and livestock
operations, all of which at this point are not realizing a significant
return on investment. And as long as credit is targeted solely to these
areas, then farmers will not be able to generate enough income to bring
the next generation back to the farm. In essence, if we only lend the
way we've lent, then farmers will continue to be stuck in enterprises
that do not bring enough profit back to the farm to support the next
generation. What we desperately need are programs that mitigate risk
for entrepreneurial activities that allow farmers to tap into new
markets and generate more profit. It will be these value-added
enterprises that will become the cash flow that farmers so desperately
need to support the other parts of their enterprise.
In this way, every issue that you will consider in the next farm
bill is affected in some way by the ability of farmers to access credit
to make a profit. Credit programs are inextricably linked to bringing
the next generation back to the land, farmland preservation,
conservation, and national security. In our experience, these issues
often boil down to the fact that most of production agriculture in our
country today does not provide enough of a return on investment to pay
for production costs, living expenses and still invest in the future of
that farm--whether it is bringing back the next generation or investing
in the health of the soil. For farmers to bring their sons or daughters
back to the farm, for them to care for their farmland and provide the
food and fiber we need for a growing population and with a dwindling
natural resource base, they must have the opportunity to develop
enterprises that bring more of the food dollar back to the farm--and
that opportunity requires credit.
The loss of farms, especially mid-scale farms of the middle, is not
new. A running joke in my line of work is that if things keep going the
way they are going, then one guy is going to farm the whole country and
his wife will still have to work in town to buy groceries. And I beg
the forgiveness of the Committee for the gender stereotype, especially
considering that a vital and growing portion of farmers are women.
Early in my career, longer ago than I care to admit, I walked a farm in
Northampton County, North Carolina with a farmer who was a good bit
older than the average age of farmers back then. He described to me the
11 families that in his youth made a living from the land that he now
farmed by himself. Some of those 11 families lived in the poverty and
exploitation of sharecropping. Others did not. But the land that
supported 11 families now barely supported one, and there was not
enough net income from the farm to bring his son back until the farmer
retired. That story always brings to my mind Isaiah, chapter 5, verse
8: ``Woe to those who join house to house, who add field to field,
until there is no more room, and you are made to dwell alone in the
midst of the land.''
In difficult times, it is important to look at the bright spots,
and we see many. Bringing more of the food dollar back to the farm
means connecting to new markets with new products in new ways. The
bankers before you will no doubt confirm the importance of a
diversified portfolio. To weather these difficult times, and to allow
our rural communities to thrive, farmers must also have a diversified
portfolio. Farm families have the creativity and drive to bring
entrepreneurship onto the farm, if we invest in them. Part of that
investment is loans to enterprises that a few years ago might have
sounded a little crazy. It is also understanding the interconnection of
credit programs with other USDA programs. Crop insurance is absolutely
key to lending, but doesn't cover all crops, and only rarely covers
income from direct or specialty markets. USDA grants, like the Value-
Added Producer Grant (VAPG) program, reduce the borrowing burden on the
enterprise and increase lender comfort with the investment, leveraging
private capital. VAPG is a stellar program that increases market
returns for farmers and deserves increased direct farm bill support in
the new farm bill. Conservation programs create assured income or
assets that can be borrowed against while improving soil health. But
these programs must be funded, and must work together to encourage
entrepreneurship.
The only way that we as a nation are going to move the needle on
beginning farmers, land transition, and farm viability is to find a way
to add more value to the farm. And in order to do that, aspiring farm
entrepreneurs must have access to credit programs that encourage,
rather than discourage, value-added agriculture, diversification,
entrepreneurship, and innovation.
I know that much of the testimony you have heard has been dire,
including mine, and I would like to end with a hopeful story. Last week
I spoke with Neil Moye in eastern North Carolina. Years ago, his family
realized that their turkeys and hogs and row crops would not bring in
enough income for them to bring their son back into the operation.
Their answer, which I am sure would give all of you pause, was to build
a dairy. With the help of a Value-Added Producer Grant, they were able
to borrow the money to build a bottling plant. Their son has now
returned to the farm and the milk from their Simply Natural Creamery is
sold through their farm store and through over 150 stores in their
area. Last September, Hurricane Matthew brought devastation to much of
eastern North Carolina, and many of their friends were concerned about
how the Moyes weathered the storm. They struggled, but not in the way
you would expect. For over a week they worked 24 hours a day because
their milk was the only milk available to their community, and the
communities around them, and was the only milk on the grocery store
shelves.
At a time when farm income is low, and projected to remain low into
the near future, I encourage you to invest in the hard work and
entrepreneurship of our farm and rural families. As you consider the
many different programs and titles in the upcoming farm bill, I
encourage you to look closely at how they interact with farm credit,
and the ability of farmers to stay in business and develop new,
entrepreneurial enterprises to address an environment of low commodity
prices. With the help of other innovative programs, USDA credit
programs can once again fuel agricultural entrepreneurship that will be
the lifeline for our future agricultural economy.
Mr. Chairman and Ranking Member, that concludes my opening
statement and I am happy to answer any follow up questions you might
have now or later for the record.

The Chairman. Thank you, gentlemen.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
I know Congressman Scott had to leave to chair another
meeting, but plans to come back.
Gentlemen, all of you spoke about timeliness at the USDA.
It would be very helpful if you would encourage your Senators
to go ahead and have the vote so that our Secretary of
Agriculture could be seated prior to the Easter break. And if
you could help with that, I would be very thankful, and I think
it would be in your best interests. I don't think there are any
questions about the votes, the votes are there, it is just a
matter of delays that are, quite honestly, from other things, I
guess. Obviously, the management of the agency depends upon
having a leader at the agency. I think you will be happy with
Governor Perdue. I think you will find him to be a good, honest
man and hard worker, that understands the issues, both from a
banking standpoint and from a production agricultural
standpoint.
You mentioned the 1,000 Acre Rule, Mr. Buzby, and then
others mentioned it: 1,000 acres in Tift County may cost $4
million, but 1,000 acres in Iowa would cost significantly more
than that. Even in the State of Georgia, county by county it
would vary greatly depending on which county you were in. Where
did the 1,000 Acre Rule come from? Are there financial caps as
well tied to the 1,000 acres, and if so, what are those caps?
Mr. Buzby. My written testimony outlays some possible
theories as to why the 1,000 Acre Rule was put in place. We are
not exactly sure what it was. And the way it is written is if a
farm is greater than 1,000 acres, the amount of loan that could
be made on that farm is capped at $12.6 million currently.
Using Ranking Member Scott's math of $6,000 an acre at 1,000
acres, all of a sudden you are at $6 million, and as you get to
a 2,000 acre farm, 3,000 acre farm, and beyond, pretty quickly
that $12.6 million gets eclipsed.
If you think about the typical size of farms, when Farmer
Mac was created more than 25 years ago the average size of a
farm was roughly 600 acres in the United States. In 2012, that
number was 1,200 acres. Pretty quickly you have more than \1/2\
of the farms in the country that may be ineligible for the
Farmer Mac program.
If you also move to other commodities, not typical row
crops, but you look at almond orchards, vineyards, and other
areas where the value per acre is many multiples of that pretty
quickly there are a number of customers that we are unable to
serve.
One of the big concerns is for small lending institutions,
whether it be a community bank or another financial
institution, as farms grow and they outgrow their bank, those
institutions look to Farmer Mac for assistance, and when we are
unable to help, sometimes those customers end up going
elsewhere.
The Chairman. Mr. Thiessen, from your testimony I gathered,
obvious support for the farm safety net, crop insurance, and
exports, I am very concerned about trade agreements and
potential retaliation, infrastructure, all are important to the
farmers. Farmer Mac is also extremely important to the farmers
in Alabama. This morning we heard from folks about the need for
a fix to the cotton program. After the 2014 Farm Bill, the STAX
Program fell short for many producers. From your perspective as
a lender, how dire is the need for an adequate safety net for
cotton producers?
Mr. Thiessen. Being that my board is comprised mainly of
producers and farmers and ranchers from across the territory,
my last board meeting, one of my board members used the word
dire himself, and he is a cotton farmer. I would simply say
over the last 3 or 4 years, they have gone through most of the
equity that they had built, the profits, the liquidity that
they had, and today you are looking at a very serious situation
in Alabama, as well as elsewhere.
The Chairman. I know many of the cotton producers that I
have talked with don't feel like it is even purchasing the
product.
In your testimony, most of you described the need to
increase both guaranteed and direct loans. For you, Mr.
Franzen, how has the shortage of funds within the Guaranteed
Loan Program affected your lending ability? Do you believe that
one is more valuable than the other? How do you use direct
loans as a lender?
Mr. Franzen. Yes, as I mentioned, we were the first
preferred lender with FSA in March of 1999, and we use that
program very heavily. It is very important to us to manage our
risk through downturns in the ag cycles, and to keep farmers of
all sizes and all ages financed.
It is hard to say which is more important, the limits or
the funding. They go hand in hand. We need to have adequate
funding for the guarantee programs. As a couple of others
mentioned, when funding isn't available, the loans are approved
but sit and wait and can't be closed. And so those farmers know
they have a loan coming, but they just don't know when. And
that is real problematic, as you can imagine.
The loan limit issue is an issue as well though. And I can
speak to several young and beginning farmers in our area that
we serve that will get up against those limits, and it limits
our ability to keep them funded as they are trying to build
that valuable core equity and liquidity in the early years of
their agricultural career. I would say both the increase in
limits and assurance that funding is in place is vital.
The Chairman. Thank you for that. I know from a timing
standpoint the loan has to come before the planting season. And
again, it would be very helpful if we could get them.
Mr. Handke. Mr. Chairman, could I add onto that?
The Chairman. Yes, sir, briefly.
Mr. Handke. We would just encourage Congress to set those
boundaries high for funding. Hopefully, the Appropriations
committees will take your lead. But what we are saying is
please don't make us as bankers make those hard choices on who
would win--who would get the funding that they would need to
continue farming, particularly as these programs have very
minimal costs. Very little expense to the government for
guaranteed loan programs, but they give us vast amounts more of
time and resources to work with farmers, and it is going to
take three, four crops, and the current regulatory environment
will not allow us to do that.
The Chairman. I made notes of your comments about the
enforcement actions. And certainly, whichever area you are in,
if that commodity that is one of the keys to your banking
success is the loser that year, then obviously that could lead
to that enforcement action. I made notes of that from your
testimony.
Gentlemen, thank you. I apologize for going beyond.
Ms. Kuster from New Hampshire, 5 minutes.
Ms. Kuster. Thank you very much, Mr. Scott. The prerogative
of the chair. Thank you, and thank you to all of you for being
with us today.
I am from New Hampshire and represent smaller farmers in
New England, and we have had a great deal of discussion about
access to credit as a critical tool for farmers in New England.
For most of the producers, the startup costs of acquiring the
land, the machinery, the animals can reach, in our world, over
$1 million. I know for parts of the Midwest and West that is a
lowball number. But credit programs offered through USDA have
helped many of our farmers accomplish their dreams, so I want
to continue to work with you to have a successful program.
We have been particularly concerned about what is happening
to our dairy industry. We have talked about this in other
hearings, but the Margin Protection Program was not successful,
we had a drought, we have had issues with Canada and New
Zealand and Europe. And in any event, since the beginning of
2016, 19 dairy farms went out of commercial dairy operation.
And just to give you a sense, that is out of a total of 120, so
this has been a real problem for us with our dairy farmers.
My question for the whole panel, whoever wants to jump in.
Dairy producers are struggling with low prices. What I am
wondering is that we now know that dairy will have high
beginning stocks and higher than expected milk production in
2017. Can you speak to what stress you are seeing in the dairy
industry, if any of you have experience with that?
Mr. Franzen. Certainly. In our part of the world in central
South Dakota and the center of the Midwest we are seeing an
expansion of dairies. We have a situation where we have very
good access to dairy-quality feed, and so that is attracting
some dairies. We understand some of the stress you are talking
about.
Ms. Kuster. Maybe we could just get the feed a little
closer to New England?
Mr. Franzen. There you go. There you go. That has been
helpful for us, and it is why we have seen some dairies migrate
to us. It is trying to be more efficient in access, lower their
cost of feed. But at least prices have stabilized recently, and
we are hoping that stays the case, but you raise valid points,
valid concerns.
Ms. Kuster. Anyone else, any thoughts with your experience?
Mr. Marlow. We are also seeing a great deal of stress in
the dairy industry, and we work with more of the mid-scale
farms that are a bit smaller than what was referenced before.
What we are seeing is dairy is one of the places where being
able to move into value-added markets is extremely important.
Ms. Kuster. Yes.
Mr. Marlow. The ability to move into either on-farm
bottling, cheese-making, other ways of getting into local
markets. And we see that as being absolutely a deal breaker in
terms of dairies in our area, that if they are not able to do
that, they really are not being competitive over time. A lot of
USDA programs are extraordinarily important for their ability
to do that; things like the reference before to the Value-Added
Producer Grants, or other grants, are critically important, as
well as looking at crop insurance and other types of ways of
having risk mitigation for higher-value markets.
Ms. Kuster. We have seen that as well, the value-added, we
have one dairy, a young woman with unbelievable pudding, but
also cheeses, yogurts, et cetera.
One more question. Farm income is projected in 2017 to be
\1/2\ of what it was in 2013. We are seeing increasing farm
debt, decreasing liquidity, and farm debt-to-assets level
climbing. Are farmers going to have access to the credit they
need to get a crop in the ground for this upcoming season?
Mr. Handke. I might respond to that. There was an
interesting presentation from Dr. Boehlje from Purdue. Those
numbers are actually masked somewhat by the fact that we had
some once in a lifetime crops in the U.S. last year, plus there
was a higher level than expected government payments, neither
of which are likely this year. It could be worse than that.
Also, looking at net farm incomes, you are pulling in a lot
of the smaller farms that have significant off-farm income
sources. In the larger production section of agriculture they
would probably be worse.
Ms. Kuster. Well, that is a cheerful outlook.
Anyone else?
Mr. Franzen. Yes. Unfortunately, I tend to agree. We are
right at a real interesting point in much of agriculture across
the country. If we wouldn't have had the bumper yields that
many of us have referred to, it would have been much worse. I
mentioned 50 percent of our clients lost money this past year,
and the outlook, I am a cup-half-full guy so I am hoping prices
rally a little bit and give us some margin, but really
realistic outlook doesn't give us much hope for that. We are in
a sustained period of tight margins, and every program is going
to be real important and be real necessary.
Ms. Kuster. Well, we certainly appreciate your advice,
going forward, and we will all try to abide by, first, do no
harm, as we move forward with the farm bill.
So thank you.
The Chairman. Mr. Comer.
Mr. Comer. Thank you, Mr. Chairman. And I want to thank you
all for not only being here, but for what you do. I am a farmer
from Kentucky. I was a director of a community bank for 12
years, so I worked with a lot of family farmers in our area to
help them obtain financing. I am a customer of Farm Credit
Services. I owe them a lot of money, so hopefully I am in
decent standing with them. And then when I was getting started
in farming I got an FSA loan. I appreciate all that you do. I
know it is a challenging endeavor to help farmers get access to
credit, because farming doesn't have your typical business
model and your typical predictable cash flow projections like
most industries. I appreciate what you are doing.
I have a few questions. Mr. Marlow, when funds for FSA
loans run out, which that happens a lot, what other options do
producers face? Are there any short-term financing options?
Mr. Marlow. What we see very frequently is people moving to
either delaying the paying of other bills, that can be
healthcare bills, household bills. We see moving to credit card
debt, which can be extraordinarily destructive.
Mr. Comer. Yes.
Mr. Marlow. One of the things that we are very concerned
about is that as those gaps can go weeks or months, that the
steps that families have to take in between to be able to farm
in the meantime, because the season doesn't wait, that really
damages their ability to come back and have the loan
feasibility, because they are driving up credit card debt,
other forms of debt, other forms of unsecured debt. That delay
can be quite disastrous.
Mr. Comer. Yes. Mr. Handke, did I pronounce that right? I
am from a small town, I pronounce everything wrong.
Mr. Handke. You did very well, yes.
Mr. Comer. All right. Agriculture, as I mentioned earlier,
is different from every other industry, however, regulators
don't often see it through the same lens. Within our
jurisdiction, what steps can this Committee make to encourage
regulatory flexibility to allow lenders to work with farmers on
restructures through these rough times, with commodity prices
where they are?
Mr. Handke. Well, you bring up a very good point. And
because of the difficulties in the commercial banking sector in
2009 and 2010, the regulators are very nervous about being
called on the carpet for this impending ag credit issue. But
they are using the same tools they used for commercial credit,
which they are now applying to ag, and they are two different
business models.
Mr. Comer. Right.
Mr. Handke. Commercial real estate is a different asset
class than a farm. But what that also means is that if they
classify these not on equity, but on cash flow, then banks are
going to rapidly accumulate volumes of classified assets. Now,
regulators think in terms of your next exam. That is 18 months,
maybe a year. They want something done. Farmers work their way
out of these problems in, like I said, over two to three crops.
There is a discourse between the time that we need to either
have to exit a substandard loan, or rehabilitate, and we may
not have that chance. And there is only one tool on my desk
right now to accomplish that, and that is USDA guaranteed
loans.
I started my banking career around the time of the 1985
Farm Bill, in about 1984, and if it had not been for the
guaranteed farm program our bank may not have survived. I
wouldn't be sitting here today, because it immediately reduces
that classified asset by 90 percent, and then we get the time
to work with those producers through crop two, crop three.
Mr. Comer. Right. Real quickly, this question will be for
anyone on the panel. Are there any regulations that we can undo
to make it easier for farmers, especially beginning farmers, to
have access to credit? Specifically regulations like Dodd-
Frank, would that make a difference, the repeal of Dodd-Frank,
would that make a difference in access to credit? Anyone?
Mr. Franzen. Certainly, the regulatory burden has been a
challenge for banks. To speak to a couple of specifics, one of
the challenges we have out in the rural landscape is just rural
housing loans. Dodd-Frank has really made it challenging for us
to lend a family money for their home out of town, out in the
country, for a couple of reasons. Certainly, one of them is
finding a qualified appraisal can be very, very challenging.
And then the other is, as residential lending regulations have
been incorporated into Dodd-Frank, they have been written for
W-2 earners; folks that bring home a wage. They have not been
written very well for self-employed businesspeople like farmers
and ranchers. And so that has been an extreme challenge for us.
The other one that is worthy of noting are the challenges
that USDA has today with the NEPA regulations, the NEPA rules,
that has really slowed down the process of getting a loan
closed. And if we have a young farmer that is trying to put up
a finishing barn for swine, for example, or any other type of
animal feeding facility that qualifies, has really slowed that
process down, and makes it very challenging to get those loans
in place and funded.
Mr. Comer. Okay.
Thank you, Mr. Chairman.
The Chairman. Ms. Plaskett, I apologize, 5 minutes.
Ms. Plaskett. No problem. Thank you so much, Mr. Chairman.
And thank you, gentlemen, for coming and testifying this
afternoon, and presenting your views on Farm Credit policy as
we consider the next farm bill.
I was reading through some of the written testimony, and,
Mr. Thiessen, is it, Thiessen?
Mr. Thiessen. Thiessen.
Ms. Plaskett. Thiessen. I was really interested in the
discussion you have about the Farm Credit's mission in rural
infrastructure, and that the Farm Credit finances more than $27
billion in rural infrastructure, including rural electrical co-
ops, water systems, rural telecommunications, broadband.
This is a question really for any of the witnesses. I have
heard also a bit about the Rebuild Rural effort. Can you
describe to me the role that Farm Credit and the banks can play
in this investment in our rural infrastructure?
Mr. Thiessen. Well, and I will start, the infrastructure
authorities that lie within Farm Credit, primarily lie within
an organization called CoBank, and to the extent in my
institution, headquartered in Montgomery, Alabama, if I ever
see that there are needs in rural communities, I can
immediately contact my sister institution and they are very
quick to respond. In essence, we are all in this together,
trying to help support rural communities.
But they do have authorities that help them with rural
water infrastructure.
Ms. Plaskett. Right.
Mr. Thiessen. Like you said, rural utilities, broadband----
Ms. Plaskett. Which do you find the most that people are
requesting? What areas do you find the most need in some of
these rural communities?
Mr. Thiessen. Well, I am going to give you one particular
answer, but I will actually tell you I will research that with
CoBank and get you a specific answer.
Ms. Plaskett. Okay.
Mr. Thiessen. In my world, with the farmers that I help and
the rural people that I help, you do hear a lot of the
connectivity, broadband. I have farmers that can literally sit
in Montgomery and turn their irrigation systems on 4 hours
away, and monitor how effective that that is. On rural
infrastructure, we have been asked before about water treatment
facilities, but we will get you further information from
CoBank.
Ms. Plaskett. Got it. Okay, great. Thank you.
And the discussion also about water, antiquated water
systems in some areas, those can lead to really disastrous
consequences for communities. Some of our communities are
struggling to update water infrastructure, and you talked a bit
about the Farm Credit's role in providing financing for this
type of infrastructure. In the Virgin Islands where I live, one
of the islands, St. Croix, is primarily flat and has a lot of
agriculture, and it is really trying to dispense water
throughout the island. But on the island of St. Thomas, we also
have a lot of tiered farming, and farmers that are farming
actually in the hills and in the mountains, and trying to
create water systems there can be really difficult for them. Do
any of you have any suggestions or ways that you see that some
of the Farm Credit funding can be supportive of that?
Mr. Thiessen. Well, I guess that one is to me too.
Ms. Plaskett. It is me and you here.
Mr. Thiessen. Absolutely. And I tell you, I am going to
have to probably defer to that one as well to my sister
institution. Again, they have the expertise, the CEO testified
in here last week about those very ideas. To the extent, in
areas like what you are talking about, always get people to
band together you will always find much greater successes in
some of those outcomes.
Ms. Plaskett. And that is the one thing that we are really
looking at right now is in terms of cooperatives.
But, Mr. Franzen, I know you want to say something.
Mr. Franzen. Yes, Congresswoman, just a comment from a
banking industry perspective. Financing infrastructure is
challenging, it is low-rate terms and usually long-term fixed
rates required to make them feasible, and so in the banking
industry, they become challenging to underwrite. But one of the
ways we could make enhancements to allow us to take a more
active role is through Rural Development guarantees, and then
making sure that those guarantees are saleable to Farmer Mac,
that would give the banking industry the ability to also
participate at a greater level.
At our bank, we have done a little infrastructure
financing, but it is always through bonded projects so they
have to have a bond associated with it.
Ms. Plaskett. Got it. May I ask, when you bring this up
about the banking, I know that there has been a new accounting
rule on banks. FASB has one, particularly, in effect of
community banks in rural areas. They released new accounting
standards that require community lenders to look forward,
foreseeable future, and consider all losses that may happen to
a loan in question, and to book those losses. Have you seen
this, and do you have an opinion on how this may affect some of
our rural farmers?
Mr. Franzen. Yes, it is probably too soon to have a strong
opinion on that. We have----
Ms. Plaskett. But we can, we are Members of Congress, we
always have an opinion. I don't know why you don't have one.
Even for something that we don't know anything about. But you
haven't been able to determine anything as yet?
Mr. Franzen. We have had to, on a few loans, look forward
with that FASB ruling, but again, it hasn't had a significant
impact at this point for our bank.
Ms. Plaskett. Thank you so much, Mr. Chairman, for your
indulgence.
The Chairman. Thank you, ma'am.
Mr. Marshall.
Mr. Marshall. Yes. Thank you, Mr. Chairman.
My first question for Mr. Handke. I see your tie is yellow,
and was wondering, when purple and orange are together, which
team do you root for?
Mr. Handke. I am a seasonal fan.
Mr. Marshall. Very----
Mr. Handke. Purple in the fall and gold in the basketball
season.
Mr. Marshall. Okay. All right. Well, hang in there with me.
I will stick with you, Mr. Handke. Certainly, the
conditions for agriculture in my community of Great Bend look
pretty tough, and it is getting worse the further west I get.
You are more north central Kansas. I assume that is wheat and
some soybeans probably. You say you are a harvest away from a
dire condition. How is this coming harvest looking for you
guys?
Mr. Handke. Well, we have decent moisture right now, but
this downturn has basically been precipitated by commodity
prices, so I don't think there is, again, I like to quote Dr.
Boehlje because he has said agriculture is characterized by
sudden spikes and earnings, and then long periods of resource
reallocation. There is no reason to believe we are not in a
long period of resource allocation to adjust to lower ethanol
fuel exports. We are in a long period of readjusting the
balance sheets. And farmers, they like to store wealth in their
balance sheet, on their land particularly, so being able to use
these USDA guarantees to solve these cash-flow problems, that
is going to be so important. But, we manage until our next
regulatory report.
Mr. Marshall. Yes, the bigger problem I am hearing back
home is more their operating loans----
Mr. Handke. Yes.
Mr. Marshall.--and I shouldn't ask a question that I don't
know the answer, but do the operating loans, do they ever work
with the Farm Credit. the FSA and that stuff, or do they never
react to each other? Mr. Franzen?
Mr. Franzen. Yes. For operating loans, you input a
guarantee on an operating loan as well, guaranteed loans apply
to both farm ownership, real estate, or operating.
Mr. Marshall. Okay. Sorry, I didn't know that. I am going
to stick with you, Mr. Franzen. I am really intrigued with some
of your young farmers programs you have going on. And
certainly, if I have learned anything on this journey, that
farming is a very much a business, a small business. All the
problems that any small business owner has, farmers have those
as well. Health care is \1/6\ of their cost, and on and on and
on.
Tell me a little bit more about your program, what is
working, what is not working, what can we do to empower you?
Mr. Franzen. Yes, well, I appreciate the question. And it
has been a real rewarding program for us. What we really try to
do is just increase the financial literacy of young farmers out
there so that they can be as proactive as possible when they
deal with these cycles that come in agriculture. And those of
us that have been in agriculture a while know that they come on
a regular basis, these cycles. And so we work very closely with
that.
Actually, the second program I talked about, our Keep
Farmers Farming Program, came right out of our Beginning Farmer
Program, and it was trying to match up the generations, and
help them work through transition effectively so that their
farm can stay in the family from generation to generation. And
we were very worried, and still are, as the average age of
farmers rises, which was talked about earlier, how do we make
sure that we get those farms transitioned to the next
generation as effectively as possible so that we don't lose
more farms just because of lack of planning and lack of
understanding of the tools that they have.
Mr. Marshall. Okay. I am going to stick with you, Mr.
Franzen. You mentioned something about working with FSA and the
number of upgrades and interaction. When we had the big prairie
fires very recently in Kansas, 600,000 acre, 5,000 cattle, tens
of millions of dollars of loss, one of the problems is that
just the number of FSA workers aren't as many as they used to
be, and it has really slowed down the process, are they ready
and willing? What type of problems are you encountering with
the FSA?
Mr. Franzen. Yes. About the time the last farm bill was
written, we had the devastating blizzard in South Dakota that
is somewhat comparable to the fires that you just experienced,
and thank goodness for the Livestock Indemnity Program that FSA
has to offer. But you are right, staffing is a big concern and
that is why we mentioned it in our testimony. With so many FSA
employees now eligible for retirement, and especially in maybe
a tougher economic cycle time, we are worried about retirees
continuing at a heavy pace and not having the staffing levels
behind it. And that is going to create some challenges if the
funding isn't in place and a big priority made on it.
Mr. Marshall. I am going to jump in, a quick question to
Mr. Handke. You made a nice list of to-do, things we could do
to improve them, I think was your testimony.
Mr. Handke. Yes.
Mr. Marshall. Is that something new, have you presented
those types of problems before to this type of committee, is it
getting worse, is it getting better? And I have used all my
time, sorry. Do you want to go ahead and answer?
Mr. Handke. I think this list is a recommendation from the
bankers that serve on our committee, so it is difficult to get
at an historical perspective, but looking forward, these are
the things we would like to see addressed in this new farm bill
with the ag credit title issue.
Mr. Marshall. Thank you.
I yield back.
The Chairman. Mr. Soto, for 5 minutes.
Mr. Soto. Thank you, Mr. Chairman.
And now for the other side of the country. I represent the
central Florida area, and we are predominantly a citrus and
cattle-producing area. Citrus has been taking a huge hit, as
many of you may know about. We are down 70 percent production
over the last 10 years.
And so my first question was what kind of lending programs
do we have in place or can we put in place to encourage
replanting and to have our citrus growers hang on as we grapple
with this greening issue?
Mr. Thiessen. Well, and I will jump in. Not living that far
away, we have Farm Credits that are down there that have
explained the greening issue that you do have. I will actually
find that information out for you and provide that back to the
Committee, since that is not something that I particularly deal
with, but because we are connected with Farm Credit down there,
I promise you there are issues or resolutions to many of those
problems.
It is not just yours, to the extent we have other issues,
whether it be in Alabama or all across the country, we all have
ways with which we are trying to deal with credit, get cash
flows down during these times, even in the situation you have
described, lengthen out terms, use equity, get working capital
back in peoples' hands. Those are things that we are doing
everywhere, and I am sure we are doing them down there too.
Mr. Soto. Well, it would be great to have some feedback on
some things you would like to see in our farm bill.
Now, on the cattle lending, how is cattle ranch lending
going so far nationwide, and are there any tweaks we should be
making?
Mr. Franzen. In the cattle business, I would make a couple
of comments. We have a strong cattle influence in our part of
the country. Cattle feeding, the finishers of cattle have had a
tough couple of years. Matter of fact, I mentioned the losses
in our portfolio, some of the most substantial are in the
cattle feeding business. Fortunately, the first quarter of this
year is looking a little brighter, so hopefully they can start
to have some opportunity again, but they have some big holes to
dig out of because of the challenges the last 2 years.
The cow/calf industry on the other side was----
Mr. Soto. Which is what we do best.
Mr. Franzen. Which is what you do. I have a client that
sells a lot of bulls down to Florida, so I have some
familiarity. It was very strong a year ago, and is now rapidly
falling off in prices as well. Calf crops this year are coming
in close to \1/2\ the value of a year ago, so there is some
significant strain coming in on that business as well.
Mr. Soto. This is more a question, and this is one we asked
to another group the other day. With profits being very
limited, is it more of a supply or demand problem, or a little
bit of both that we are experiencing?
Mr. Franzen. I will give my opinion, and I am sure others
will too. It is primarily a supply problem, in my opinion. And
if you look at the data demand for ag products around the globe
is still strong, but we have had bumper crops in most sectors
of agriculture and we are swimming in supply. And so it is
always agriculture's challenge, right, the yields we talked
about saved us. Well, they saved us this year in some years,
but they compounded the supply problem that is really the root
cause of the longer-term issue we are dealing with here.
Somebody else needs the drought, other than an American farmer,
hopefully, and we will fix that. But that is the only way.
Mr. Thiessen. If I may, all of that makes absolute sense.
That is one of the reasons that we encourage you, working with
the Administration, to deal with export markets, open up more
global markets so we can have an impact on demand then as well.
Mr. Marlow. And what we are seeing in terms of the other
side of the demand is a very rapidly growing demand for
specialty meats coming out of, and we are hearing constantly
from small and mid-scale farmers who are cattle farmers that
their access to slaughter and access to processing is a huge
problem, they are having to transport animals a very long way
in order to get access to slaughter, but are able to get into
much higher-value markets, growing markets, either both
wholesale and direct retail, especially in areas like where you
have that proximity to larger-scale markets.
Mr. Buzby. As Farm Credit does, Farmer Mac lends all around
the country, and just in this brief hearing we have heard about
cattle, we have heard about cotton, dairy, corn, soybeans,
citrus, the problems are widespread throughout the country in
agriculture right now. And it was Nate that said, last year was
a tough year but yield saved it. Next year is going to be an
even tougher year, regardless of where yields go. The
availability of credit to farmers is very important, whether
that comes from the banks, Farm Credit insurance companies, or
other financial institutions.
Mr. Soto. Thank you.
Mr. Handke. Where we are seeing that diversity too is
sometimes you have one sector cycling up, like cow/calf when
cash grain is going down, but we seem to all be cycling down,
you are not going to be able to average like maybe we have in
some of the past years.
Mr. Soto. Thank you. And I yield back.
The Chairman. Mr. Faso, 5 minutes.
Mr. Faso. Thank you, Mr. Chairman.
Mr. Buzby, you mentioned in your testimony that you
supported the change in the 1,000 Acre Rule, and I am
wondering, how long has that rule been in effect?
Mr. Buzby. Farmer Mac was created in the late 1980s, and it
has been in place ever since the original statute was drafted.
Mr. Faso. And does the rest of the panel agree that that
would be a beneficial thing to lift that limitation on 1,000
acres?
Mr. Handke. Absolutely. We are an active Farmer Mac
participant, and that would be very helpful. As he said, as
these farms have grown, the median size has doubled. It appears
to be outdated.
Mr. Faso. Yes.
Mr. Franzen. We would agree as well. Yes, it is very
important. As we have said, to get through down cycles, we need
all the tools we can, from FSA guaranteed lending, to Farmer
Mac, and other tools to manage our risk.
Mr. Thiessen. And Farm Credit is looking at this as we
speak. We have concerns about structural issues, but at the end
of the day, if you will give us a chance, we will come back to
the Committee with what our concerns are.
Mr. Faso. Okay.
Mr. Marlow. And we have concerns about increasing the
limits significantly. We have concerns that, as we have heard
today, we frequently run out of funding, that when you increase
those limits that means fewer, larger loans. We are very
concerned that there be enough funding, and that it is more
important that everyone who needs it has availability to it,
rather than just it covering everything. What we see very
frequently is FSA directing guaranteed loans used as a part of
a loan package, rather than having to cover the entire package.
And so they can be used as a base, but it is critically
important that that base is available to everyone who needs it,
and in a timely way.
Mr. Buzby. If I could just clarify that the issue that we
have talked about quite a bit, the other panel members, about
the FSA loan limit, which is roughly $1.4 million, and raising
that limit and what impact that might have on small farmers,
that is a different issue than the loan size limit for a Farmer
Mac loan.
Mr. Faso. Sure. And I recognize that. The region I
represent in the Catskills and Hudson Valley in New York State,
we have a lot of smaller farmers, and I am just wondering if
there is a certain geographic disparity in terms of that need
as you see it to raise that 1,000 acre limitation, because my
concern would be, to some degree, what Mr. Marlow was saying,
that I wouldn't want to crowd out the ability of smaller farms'
operations to participate.
Mr. Buzby. And we certainly wouldn't want to do that
either. We have had a focus for many years on small, beginning,
and young farmers. Currently about \1/2\ of the loans in Farmer
Mac's portfolio are to small farms, defined as gross income of
less than $350,000. It is really looking at serving all
farmers, both small and large.
Mr. Faso. Could you provide the Committee with information
as to the geographic dispersal of those loans as well around
the country?
Mr. Buzby. Certainly.
Mr. Faso. I would be certainly interested in hearing it.
And one thing Mr. Marlow said just a moment ago piqued my
interest because we have a lot of cattle operations that have
arisen in the last few years in the Hudson Valley, and I do
hear from people about the difficulty of getting processing
facilities, and the length of time and the distance that they
often have to travel. And I am wondering have any of you looked
at the question of financing for those processing facilities,
and whether there is an overall need for those, or is this
something that might strictly be limited to my part of the
country?
Mr. Marlow. We are seeing that the need for that kind of
processing is across the board. And when you are talking about
a smaller scale farm, it is obvious from what we are talking
about in terms of prices, that those commodity markets are not
something that is going to be sustainable for a small-to-mid-
scale farm. And so looking at both the financing and other
issues that can cover that infrastructure that moves between
the farmer and the market, but also looking at in terms of
access to credit the crop insurance for specialty crops and for
higher-value markets, like the Whole Farm Revenue Crop
Insurance Policy, which is fairly new, these things are geared
more towards allowing smaller, more diversified operators to
get into credit and to be able to borrow. And being able to
extend the safety net into specialty crops, higher-value
markets, the types of things that are going to be more
important in your district, is a very important part of the
process as we move through the farm bill.
Mr. Faso. Yes, I agree. I mean it is interesting because I
have operations that send their product down to Chelsea Market
in Manhattan and they are selling strip steaks for $30 a pound.
And, of course, no one in my district would pay that but down
in Chelsea Market they will. And so it is really important that
we nourish and allow to prosper this thriving agricultural
sector, these small processors, new processors, a lot of young
farmers coming in. I appreciate the panel's testimony here
today.
And with that, Mr. Chairman, I yield back.
The Chairman. Thank you.
Gentlemen, all of you mentioned technology and the need to
update the technology at the USDA. I want to invite you to all
give this Committee specific recommendations in writing that we
can submit to our new Secretary, as soon as Mr. Perdue is
confirmed, and certainly we will be happy to work with you on
that issue.
I know Mr. Scott is in a Financial Services meeting. As you
know, votes pushed this meeting into others, and we are close
to having votes again. I want to thank you for your testimony
and the role that you play in not just the agricultural
economy, but in the rural economies throughout the country.
And with that said, under the Rules of the Committee, the
record of today's hearing will remain open for 10 calendar days
to receive additional materials and supplementary written
responses from the witnesses to any question posed by a Member.
This hearing of the Subcommittee on Commodity Exchanges,
Energy, and Credit is adjourned.
[Whereupon, at 3:54 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Roger Johnson, President, National Farmers Union
April 4, 2017

Hon. K. Michael Conaway, Hon. Collin C. Peterson,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.;
Hon. Austin Scott, Hon. David Scott,
Chairman, Ranking Minority Member,
Subcommittee on Commodity Subcommittee on Commodity
Exchanges, Energy, and Credit, Exchanges, Energy, and Credit,
Washington, D.C.; Washington, D.C.

Dear Chairman Conaway, Chairman Scott, Ranking Member Peterson, and
Ranking Member Scott:

Thank you for holding today's hearing entitled, The Next Farm Bill:
Credit Programs. As you are well aware, the current state of the farm
economy requires robust access to credit. As this Committee works
towards the drafting of a new farm bill, ensuring that the credit
programs match the current and future needs of farmers and ranchers is
particularly important.
Economic indicators of farm and ranch health have continued to
erode from the highs experienced in 2013. Since that peak, net farm
income has declined by 50 percent, putting significant stress on
agricultural operations. If uncorrected, this multiyear downward trend
will do even greater harm to family farmers than what we have already
witnessed. The U.S. Department of Agriculture (USDA) projected
financial liquidity measures, including working capital, are forecasted
to weaken again in 2017. National Farmers Union (NFU) is concerned over
increases in non-performing loans, decline in real estate values,
higher collateral requirements, weaker debt-to-asset ratios, increased
rolling of short and medium-term debt into long-term debt, and high
demand for Farm Service Agency (FSA) loans.
When credit markets tighten demand for FSA loans increases. We have
witnessed demand spike over the last 2 years. As of March 28th, FSA had
made 19,696 loans for a total of roughly $2.9 billion. Current lending
levels have FSA on track to match last year's record spending, when FSA
ran out of money and had a severe backlog of applications at local
offices. As an example, guaranteed ownership loan demand increased by
$500 million.
Last year's continuing resolution (CR) provided FSA additional
flexibility to meet increased demand from 1 fiscal year to the next.
FSA is running out of money provided by the last CR and is now
requesting permission to utilize the flexibility granted last year. The
core problem is that the portfolio needs additional resources to meet
demand. As this Committee looks to the next farm bill, NFU urges you to
keep this increasing demand for agricultural credit in mind.
In addition to increased demand, NFU also urges this Committee to
examine current loan limits. NFU supports increasing individual limits
for FSA loans. Our members' attention is particularly focused on the
direct loan portfolio. Current limits of $300,000 are no longer
adequate and are not reflective of the costs of operating or owning a
farm. Within the guaranteed portfolio, our members support a modest
increase in the lending levels to better align with current market
conditions. All of our support for increases is predicated on
additional funding for the entire loan portfolio. Increasing the
individual limits without increasing overall funding levels would end
up doing more harm than good.
Another important consideration for this Committee is the current
state of FSA loan office capabilities. Serious investments into
updating FSA's information technology tools are required. Basic
abilities, like checking loan balances online, do not exist.
Additionally, in 2019, 40 percent of FSA loan officers will be eligible
for retirement. Should there be widespread retirements among the 1,100
staffers within FSA's loan division, the ability to service existing
loans will be severely eroded.
An important part of the next farm bill will be to build off the
beginning farmer progress made in the last farm bill. There is strong
demand for new and innovative credit programs that are responsive to
the needs of beginning farmers. Our beginning farm members benefited
from the higher microloan limits and the loosened administrative
requirements for eligibility. Since inception, FSA has made 25,070
Direct Operating Microloans for a total of $574.5 million and 274
Direct Farm Ownership Microloans for a total of nearly $10 million. In
the context of the current farm economy, demand for these programs will
continue to grow and funding levels will need to be more robust.
Protecting existing and expanding future credit options for beginning
farmers is essential.
Our members have shared stories of private loan officers creatively
working to provide needed credit. At the same time we have heard other
situations where our members, despite having strong debt-to-asset
ratios, are increasingly challenged to obtain operating credit without
selling off assets. As this trend continues, FSA loans will be more
important than ever. Ensuring FSA has the necessary tools is critical
for the continued viability of distressed farm operations.
As financial indicators continue their slow decline, the work of
this Committee becomes ever more important. NFU appreciates the
Committee taking the time to better understand credit conditions and
programs vital to producer health. We look forward to continuing our
work with this Committee for the benefit of America's farmers and
ranchers.
Sincerely,

Roger Johnson,
President, National Farmers Union.
______

Submitted Letter by Hon. Jim Matheson, Chief Executive Officer,
National Rural Electric Cooperative Association
April 3, 2017

Hon. Austin Scott, Hon. David Scott,
Chairman, Ranking Minority Member,
Subcommittee on Commodity Subcommittee on Commodity
Exchanges, Energy, and Credit, Exchanges, Energy, and Credit,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.

Dear Chairman Scott and Ranking Member Scott:

Thank you for holding this week's hearing on credit programs as you
work toward the next farm bill. On behalf of the over 900 rural
electric cooperatives that make up the National Rural Electric
Cooperative Association, I would like to submit this letter in support
of policies that would improve credit programs under your
Subcommittee's jurisdiction.
As you know, the 2008 Farm Bill provided Farmer Mac with the
authority to include in its secondary market activities loans made by
cooperative utility lenders to rural cooperative utilities.
Cumulatively through the end of 2016, Farmer Mac has purchased nearly
$1.5 billion of utility loans, provided just under $1 billion of credit
protection on utility loans, and provided over $5 billion of wholesale
financing to cooperative rural utility lenders. As a direct result of
the 2008 Farm Bill, rural electric cooperatives and their consumer
owners benefit through low interest rates on favorable terms, passing
along those savings to their members, and your constituents.
Farmer Mac is instrumental in providing capital for rural America
through several methods, including a Farm & Ranch portfolio of
agricultural real estate holdings, a portfolio of USDA guaranteed
loans, and through rural utility financing. We understand that Farmer
Mac, like most financial institutions, is mindful of the
diversification of the sources of its business as part of its overall
approach to risk management. Therefore, we believe that growth in some
parts of Farmer Mac's business could also lead to growth in others as
Farmer Mac strives to maintain balance and diversity in its overall
portfolio.
Farmer Mac's charter currently limits the size of an eligible farm
or ranch mortgage loan to $12.6 million (adjusted for inflation) for
loans secured by more than 1,000 acres of agricultural real estate.
Since Farmer Mac's creation in 1988, the farming and ranching community
has obviously grown to incorporate larger operations, and this limit
has severely limited Farmer Mac's support for this industry. Farmer Mac
is requesting that its charter be updated to reflect today's farming
and ranching operations so that the company can determine appropriate
loan amount and acreage limits as a part of its overall risk
management.
NRECA supports this request not only because it is a reasonable
adjustment for today's farming economics, but because by removing this
burden, Farmer Mac will more easily be able to grow its entire
portfolio in support of rural America. This could lead to growth in the
rural utility portion of its business and bring more benefits to rural
electric systems.
To be sure, NRECA's members' first priority is to deliver
affordable and reliable electricity to their members. However, as you
well know, rural electric cooperatives are more than just utilities.
They are the engines of rural economies and their members, many of whom
are farmers, ranchers, and others involved in agriculture experiencing
stresses in their operations. NRECA supports efforts such as this
proposal by Farmer Mac to assist borrowers in alleviating these
stresses in a safe and sound manner.
Thank you for your consideration.
Sincerely,

Hon. Jim Matheson.
CC:

The Honorable K. Michael Conaway.
The Honorable Collin C. Peterson.
______

Submitted Statement by Coalition of Agricultural Mediation Programs
Dear Chairman Scott and Members of the Subcommittee:

The Coalition of Agricultural Mediation Programs (CAMP) appreciates
the opportunity to submit testimony on behalf of the 40 USDA certified
state agricultural mediation programs. CAMP serves as the voice for the
state programs to enhance their effectiveness in supporting agriculture
across the United States.
CAMP respectfully requests your support in the following three
areas:

Expansion of cases covered under the USDA Agricultural
Mediation Program.

Reauthorization and designation of funding for the program
as mandatory under the farm bill.

Funding levels to match the increase in the number of state
programs and anticipated increase in demand for mediation
services.
Context and Background
The U.S. increasingly relies on foreign countries for its food. In
2015, the U.S. trade deficit in fresh and processed fruits and
vegetables totaled more than $11 billion.\1\ At the same time, the
agricultural workforce continues to age: the average age of farmers has
increased from 50.5 to 58.3 years over the last 30 years.\2\ If the
U.S. hopes to have a semblance of agricultural independence, Congress
needs to support effective tools that help farmers and ranchers resolve
credit problems, secure access to arable lands, and develop transition
plans to keep ag lands in agriculture.
---------------------------------------------------------------------------
\1\Johnson, R. (2016). The U.S. Trade Deficit Situation for Fruit
and Vegetable Products (CRS Report RL34468). Washington D.C.:
Congressional Research Service.
\2\USDA National Agricultural Statistic Survey (2014). 2012 Census
of Agriculture Highlights. Farm Demographics--U.S. Farmers by Gender,
Age, Race, Ethnicity, and More. ACH 12-3.
---------------------------------------------------------------------------
The Agricultural Mediation Programs are especially well suited to
help address these issues. Congress created the state-certified program
in 1988 in response to the 1980s credit crises as part of the
Agricultural Credit Act of 1987. Since their inception, these programs
have functioned as Federal/state partnerships to provide a
confidential, neutral forum to discuss and resolve complex agricultural
loan and credit issues. USDA and state funding allow trained mediators
to provide these services free of charge for eligible cases. The
mediations take place in a confidential and non-adversarial setting,
outside the traditional legal process of foreclosure, bankruptcy,
appeals and litigation. Mediation allows people to develop their own
solutions tailored to the uniqueness of their situation. Mediated
settlements benefit the entire agricultural economy, including
producers, lenders and creditors.
Each year, the USDA mediation programs help agricultural producers,
creditors and USDA agencies resolve thousands of cases, including USDA
adverse decisions and other disputes. Most cases involve farm loans or
credit problems, such as denial of loan applications, restructuring,
and foreclosures. Producers can fall behind on farm loan or credit
payments for any number of reasons, including depressed commodity
prices, equipment repairs, labor shortages, and poor harvests due to
weather or agricultural pests. Financial problems can cascade; with a
poor credit history or negative cash flow, banks, USDA's Farm Service
Agency (FSA) and other creditors may refuse to issue further credit.
Unable to qualify for a farm loan and unable to pay back creditors, the
producer may feel like there are no options left other than to give up
on farming. This scenario is especially common for small-scale farmers,
which make up nearly 90 percent of all farms in the U.S.\3\
---------------------------------------------------------------------------
\3\USDA, Economic Research Service, Farm Income and Weight
Statistics, as of February l7, 2017.
---------------------------------------------------------------------------
Agricultural economists have forecast decreased farm revenue across
many sectors of the agricultural economy for 2017. According to USDA,
``net farm income . . . is forecast at $62.3 billion ($54.8 billion
after adjusting for inflation) for 2017, down 8.7 percent compared to
2016. The calendar year 2016 net cash farm income and net farm income
forecasts are $91.9 billion and $68.3 billion, down 12.2 percent and
15.6 percent from their respective 2015 levels.''\4\ Agricultural
mediation programs across the country have observed an increase in loan
delinquencies for both FSA and commercial lenders' loans. Not
surprisingly, both USDA and agricultural economists anticipate an
increased need for mediation program services in FY17 and FY18.
Additional information about CAMP and the USDA Agricultural Mediation
Program is provided in Exhibit 1.
---------------------------------------------------------------------------
\4\2017 Farm Sector Income Forecast, USDA ERS.
---------------------------------------------------------------------------
The following outlines potential steps Congress could take to
enhance the overall effectiveness and efficiency of the Agricultural
Mediation Program.
Expand Covered Cases To Meet Evolving Needs of the Agricultural
Community
Over the past several years, CAMP has been working with USDA to
expand the types of cases that programs can mediate under the program.
The original focus of the program was on adverse USDA lending
decisions, but Congress has expanded the scope on several occasions to
meet evolving needs of the agricultural community.\5\ USDA also has
added covered cases through the administrative process.\6\ The current
list includes: farm loans, credit issues, adverse decisions on USDA
programs, wetlands determinations, rural water loan programs, rural
development loans, grazing on national forest system lands, pesticide
issues, and such other issues as the Secretary of Agriculture considers
appropriate. Since the last expansion of services, over 10 years ago,
the complexion of agriculture has changed dramatically.
---------------------------------------------------------------------------
\5\USDA Reorganization Act of 1994 and the Grain Standards Act of
2000, adding wetland determinations, conservation compliance, rural
water loan programs, grazing on National Forest System lands,
pesticides, and other issues the Secretary considers appropriate.
\6\USDA Departmental Regulations 4710-001 April 6, 2006, adding
rural housing loans, rural business loans, crop insurance.
---------------------------------------------------------------------------
Due to the price of land, many farmers, especially young farmers,
turn to leasing because they cannot afford to purchase land outright.
These leases are critical to the farming operations but disagreements
can arise between the parties concerning the terms of the lease. With
many farmers approaching retirement age, there is an increasing need
for assistance with family farm transitions, which can involve complex
family dynamics and financial issues. In addition, suburban
encroachment on farmland has led to many conflicts between farmers and
neighbors; disputants often turn to local hearing boards or state
courts, which can be costly and time-consuming.
USDA has encouraged CAMP to work with Congress because the agency
believes it cannot add these issues without Congressional
authorization. USDA's Office of General Counsel has interpreted the
statute to require that; (1) any additional issues added must be under
USDA's jurisdiction, and (2) both parties be ``covered persons'' under
the statute. As a result, all but one of CAMP's many suggestions to add
covered cases have been turned down. Just before leaving office,
Secretary Vilsack signed a memorandum approving organic certification
as a covered case for the mediation program. The memorandum is
currently on hold pending approval from the new Secretary, once
confirmed.
CAMP believes the agricultural community would benefit by allowing
the state agricultural mediation programs to work on lease issues,
family farm transitions, and right-to-farm cases. While the list of
potential suitable issues for mediation is significantly larger, CAMP
has identified these three areas as the highest priority for immediate
expansion. Additional justification for including these cases is
provided in Exhibit 2.
CAMP also proposes that each state program be authorized to tailor
its program to meet the needs of its agricultural community. For
example, in some states, right-to-farm issues are a high priority,
while other states need mediation between GMO and non-GMO farmers.
Ideally, the Secretary of Agriculture in each state should be able to
designate additional issues that the state can cover under its program.
This flexibility would require minor amendments to the statute to
clarify that the issue only has to be under the general jurisdiction of
USDA, only one party needs to be a covered party under the statute, and
in addition to the USDA Secretary of Agriculture, the participating
state's Secretary of Agriculture can add covered cases for that
particular state. See Exhibit 3.
Reauthorize the Program and Designate Funding as a Mandatory
Expenditure Under the Farm Bill
Authorization for the Agricultural Mediation Program was included
in the last farm bill and expires in 2018. This program meets critical
needs of the agricultural community and should be reauthorized through
2023.
With few exceptions, over the past 10 years, USDA issued the grants
to the agricultural mediation programs during the second quarter of the
fiscal year. For example, over the last several years, grants for the
first continuing resolution have arrived in mid-February. Some state
programs are associated with universities or state departments of
agriculture, but most are administered by small nonprofit
organizations, which cannot dip into other revenue sources while
awaiting grant funding. As a discretionary expenditure within the farm
bill, the delay in funding will re-occur each year because OMB will not
transfer grant funding to USDA when the first continuing resolution is
passed. Operating a high-demand program without funding is not
possible. Many programs are forced to choose between taking out loans,
not paying staff for extended periods of time, or temporarily closing
down, which results in services not being available to producers some
times of the year.
To deliver grant funding in a timely manner, the USDA agricultural
mediation program should be designated as a mandatory expenditure under
the farm bill. This would result in grants being issued closer to the
beginning of the fiscal year. Farmers face enough uncertainty due to
weather and commodity prices. They should have mediation services
available when they need them.
Increase Funding To Match the Expansion in the Number of State Programs
Under the statute, funding for the agricultural mediation program
is capped at $7.5M. Since 2000, the program has expanded from 25 states
to 40 states, a 60 percent increase (Exhibit 4). For many years,
funding levels kept pace with the growth in the number of programs.
However, funding has dropped considerably since 2014 despite the
continued increase in programs. The Senate Appropriations
Sub[c]ommittee on Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies proposed increasing funding for
the agricultural mediation program for FY17 from $3.4M to $3.9M. We
believe this budget would enable the 40 state agricultural mediation
programs to provide mediation services necessary to help the
agricultural community work through these challenging times.
Thank you for your favorable consideration of these issues.
exhibit 1
USDA Certified State Agricultural Mediation Programs
Benefits of Mediation:

Mediation provides a confidential forum to discuss complex
issues.

Mediators are neutral. They do not make decisions. They help
parties find solutions.

Mediation builds strong working relationships with
producers, lenders and government agencies.

Decisions are made rapidly by involved parties, reducing
government involvement.

Mediation supports stability and diversity in rural
economies.

Growth:

The number of states with a USDA Certified State
Agricultural Mediation Program has grown from 15 to a total of
40 states in 2016.

Key Components and Issues:

Neutrality. Mediation programs are neutral in practice as
well as in perception. Agricultural producers and USDA program
participants must have confidence that the program settles
disputes in a fair manner.

Confidentiality. Confidentiality is vital to the integrity
and success of the mediation process. Without it, participants
may be apprehensive or unwilling to discuss personal financial
and emotional matters.

Autonomy. USDA certified mediation is a state and Federal
partnership. Congress authorized this program as a grassroots
effort to help deal with disputes unique to each state's
agriculture.

Background:

In 1988, Congress authorized USDA to help develop and
participate in Certified State Farm Mediation Programs under
the USDA Farm Loan Mediation Program--part of the Agricultural
Credit Act of 1987.

In 1992, Congress increased Federal matching funds to 70
percent in support of state programs.

In 1994, Congress expanded the program under the USDA
Reorganization Act, authorizing USDA to offer mediation as part
of the informal appeals process on adverse decisions on USDA
farm program issues.

Mediation programs assist agricultural producers, their
creditors and various USDA agencies to address agricultural
credit problems, USDA adverse decisions and other disputes. The
programs do this in a confidential and non-adversarial setting
outside the traditional legal process of foreclosure,
bankruptcy, appeals and litigation.
CAMP Mission Statement
The purpose of the Coalition of Agriculture Mediation Programs
(CAMP) is to serve as a presence and voice for the use of mediation in
rural disputes. CAMP serves as a clearinghouse and forum for sharing
ideas; examining commonalties and differences; and for enhancing
decisions about the conduct of rural mediation programs.
Participating States
Alabama, Arizona, Arkansas, California, Colorado, Connecticut,
Florida, Georgia,* Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas,
Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi,
Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New
York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania,
Rhode Island, South Dakota, Texas, Utah, Vermont, Virginia, Washington,
Wisconsin, and Wyoming.
---------------------------------------------------------------------------
*Application submitted to USDA, pending authorization.
---------------------------------------------------------------------------
exhibit 2
Potential Additional Covered Cases
Agricultural Lease Issues
Overview: Leasing of land, equipment, and other farm assets can be
a vital part of a farm's overall financial strategy. Farmers unable to
purchase land because of high land values, limited access to capital,
or lack of suitable land turn to leasing. This approach can be a cost-
effective way for new farmers to get started and for established
farmers to expand. Increased lease restrictions or loss of a lease can
negatively affect a farm's cash flow, ability to service debt, and long
term viability. In some cases, resolving a lease dispute has been the
key to USDA Farm Services Agency making or restructuring a loan for a
producer.

Example 1: Mission Farms operates a grain farm on 1,000 acres, \3/
4\ of which is leased from a local businessman. After seeing commodity
prices double, the farmer's landlord said the rent would increase by
65%. Such an increase would significantly reduce the farm's profits,
but losing access to the land would be even worse. Through mediation,
the parties were able to agree on, and structure, a rental rate more in
line with local market conditions, thus preserving the continued
viability of the farm operation.

Example 2: John Bailey has leased 30 acres from a farm widow for
the last 20 years. During this time, he's developed the farm into a
successful fruit and vegetable operation, establishing it as a source
for high quality products at local farmers' markets. He recently
invested in and opened an onsite farm stand to further expand direct
market sales. Shortly before renewing his 10 year lease, John's
landlady passed away. Her children, long removed from the farm, were
inclined to let the lease expire and cash out. John suggested he and
the family discuss some options with a mediator first. Through the
mediation, a solution was found: the family would pursue selling the
farm's development rights and then sell John the farm at its lower
preserved value, under the condition that John shoulder the work for
moving the preservation application forward.
Farm Transition Issues
Overview: Farm/ranch families often face the challenge of how to
pass on the agricultural enterprise from one generation to the next.
Transition issues may include: land division, asset and debt
distribution, responsibility for repayment of farm loans, farm
viability, managing interests and responsibilities of off-farm heirs,
and intergenerational conflict and responsibilities.
Unresolved family and business conflicts often complicate the
process when FSA is considering loan applications. Family and business
restructuring can have direct and significant impacts on debt
management and producers' ability to manage USDA credit, USDA program
obligations, and other agricultural credit. Issues can include FSA
Beginning Farmer Loans, limited resource loans, guaranteed loans, or
direct loans for the producer who is taking over the operation.
Resolving disputes and developing business plans help FSA make loans to
eligible farmers. Resolving issues collaboratively, rather than through
litigation, has the potential to keep farms viable. In many states, FSA
Farm Loan Program personnel, farm financial consultants, human services
consultants, and commercial bankers report that family farm transition
mediation is an essential service.

Example 1: The owners of the Smith Family Farm developed an estate
plan years ago and it is common knowledge that the farm will pass on to
their son who farms with them. The son has never had any farm equity,
but he works side by side with his parents. Suddenly, the father has an
unexpected health setback and accumulates substantial medical bills.
The only way the parents see to recoup the money needed is to sell part
of the farm. The farming son would have to pay top dollar to purchase
the property, but the only collateral he has is a farm truck. The
parents won't co-sign a loan because they need the cash, not more debt.
The parents sell a portion of the farm to someone else. His sweat
equity is worth nothing and his ability to secure a loan is negligible.
With the help of financial counseling and mediation, the son was able
to develop a plan to restructure loans and work out a leasing agreement
with a neighbor who was interested in buying the adjoining fields.

Example 2: The owners of Jones Family Farm have not developed a
farm transition plan. With several on- and off-farm heirs to consider,
the family has a complicated situation. The Jones want to develop a
plan that ensures the farm stays in operation, but they must also find
a way to provide retirement income for the older generation. Other
issues include the farm's operating loans, the transfer of farm assets
to the next generation, and consideration of off-farm heirs and spouses
(whose income and interests will impact the process). The family
decides to use a mediator to help them discuss the issues and develop a
plan that meets everyone's needs.
Right to Farm and Farmer/Neighbor Nuisance Issues
Overview: As rural areas are developed into residential
communities, farmers increasingly encounter neighbors who are
unfamiliar with and unsympathetic to typical and essential farming
practices. New residents might complain about farm noise, hours, dust,
pesticide application, manure management, odors, runoff, irrigation
practices, fences, or newly constructed buildings. Local governments'
familiarity with the normal sights, sounds, and smells of agriculture
also may diminish. Conflicts can arise with municipal ordinances, such
as fence height limits, impervious cover limitations, prohibitions on
specific farming activities, and restrictions on farm building
lighting, signs, ingress/egress, and parking.
In addition to neighbors complaining about farm operations, farmers
might be impacted by neighbors' activities, including trespassing,
noises that disturb livestock, feeding animals without permission, and
damage to fences or boundary issues. Some agricultural communities have
enacted state and local Right to Farm (RTF) regulations in response,
hoping to promote agriculture and protect responsible farms from
nuisance complaints and overly restrictive local regulations.
Disputes that escalate into community conflicts involving multiple
stakeholders can last several years as decisions are appealed and
lawsuits filed. Associated legal fees can have a negative impact on a
farm's viability, access to credit, and ability to pay debts.
Protracted disputes can cause irreparable damage to relationships in
the community. Mediation enables farmers to limit time and money spent
on hearings and litigation and can help parties maintain or restore
relationships and prevent future conflicts.

Example 1: Heyward Farm has been operating as a dairy farm for six
generations. After an adjacent parcel was developed, new residents
started complaining about early tractor noise, activity on weekends,
unbearable odors and flies, and concerns about manure runoff in yards
where children play. The neighbors filed a complaint with the local
agricultural board, which normally would have triggered a long and
costly public hearings process, but the parties decided to try
mediation. Through mediation, the parties were able to express their
points of view. The neighbors gained a better understanding of how the
farm operated and enough concerns were addressed that the formal
complaint was withdrawn and lawsuits were avoided.

Example 2: Hope Vineyards decided to expand its business in two
phases. Phase one, planting an additional 40 acres of grapes, was
completed without incident. Phase two, expanding the winery production
facilities with a new 9,000\2\ ft. building, ran into barriers with the
township. The zoning officer said the building was too high, might not
be permitted in the zone, had an improper setback, required paved
parking, and needed full site plan review. Through mediation involving
the farmer, town, and local agricultural board, an agreement was
reached that gravel parking and a more limited site plan review would
suffice, saving the vineyard thousands of dollars and allowing it to
build the new facilities.
Summary of Benefits of Mediation
Conflict resolution to promote continued farm viability.

Risk management to avoid escalation of conflict.

Litigation mitigation.

Direct impact on current and prospective credit stability.

Better management of farm capital.

Preservation of positive local relationships.
exhibit 3
Proposed Amendments to 7 U.S.C. 5101 and 5106, relating to
Agricultural Mediation Programs.
Proposed new text is [italicized] proposed deletions are shown in
strike-through.
The proposed amendments occur only in 7 U.S.C. 5101 and 5106.
Sections 5102-5105 have been omitted for brevity.
Title 7--Agriculture, Chapter 82--State Agricultural Loan Mediation
Programs
7 U.S.C. 5101 (2015)
5101. Qualifying States

(a) In general

A state is a qualifying state if the Secretary of Agriculture
(hereinafter in this subtitle referred to as the ``Secretary'')
determines that the state has in effect a mediation program that meets
the requirements of subsection (c).

(b) Determination by Secretary

Within 15 days after the Secretary receives from the Governor of a
state a description of the mediation program of the state and a
statement certifying that the state has met all of the requirements of
subsection (c), the Secretary shall determine whether the state is a
qualifying state.

(1) Issues covered

(A) In general

To be certified as a qualifying state, the
mediation program of the state must provide
mediation services to persons described in
paragraph (2) that are involved in agricultural
loans (regardless of whether the loans are made
or guaranteed by the Secretary or made by a
third party).

(B) Other issues

The mediation program of a qualifying state
may provide mediation services to persons
described in paragraph (2) so long as at least
one eligible person is that are involved in one
or more of the following issues under the
general jurisdiction of the Department of
Agriculture:

(i) Wetlands determinations.
(ii) Compliance with farm programs,
including conservation programs.
(iii) Agricultural credit.
(iv) Rural water loan programs.
(v) Grazing on National Forest System
land.
(vi) Pesticides.
(vii) Agricultural lease issues
(viii) Family farm transitions
(ix) Farmer neighbor conflicts
(vii) (x) Such other issues as the
Secretary or the state Secretary of
Agriculture of the state of the
authorized mediation program considers
appropriate.

(2) Persons eligible for mediation

(A) In general

Subject to subparagraph (B), the persons
referred to in paragraph (1) include--

(i) agricultural producers;
(ii) creditors of producers (as
applicable); and
(iii) persons directly affected by
actions of the Department of
Agriculture.

(B) Voluntary participation

(i) In general

Subject to clause (ii) and section
503, a person may not be compelled to
participate in mediation services
provided under this Act.

(ii) State laws

Clause (i) shall not affect a state
law requiring mediation before
foreclosure on agricultural land or
property.

(3) Certification conditions

The Secretary shall certify a state as a qualifying
state with respect to the issues proposed to be covered
by the mediation program of the state if the mediation
program--

(A) provides for mediation services that, if
decisions are reached, result in mediated,
mutually agreeable decisions between the
parties to the mediation;
(B) is authorized or administered by an
agency of the state government or by the
Governor of the state;
(C) provides for the training of mediators;
(D) provides that the mediation sessions
shall be confidential;
(E) ensures, in the case of agricultural
loans, that all lenders and borrowers of
agricultural loans receive adequate
notification of the mediation program; and
(F) ensures, in the case of other issues
covered by the mediation program, that persons
directly affected by actions of the Department
of Agriculture receive adequate notification of
the mediation program.

(d) Definition of mediation services

In this section, the term ``mediation services'', with respect to
mediation or a request for mediation, may include all activities
related to--

(1) the intake and scheduling of cases;
(2) the provision of background and selected information
regarding the mediation process;
(3) financial advisory and counseling services (as
appropriate) performed by a person other than a state mediation
program mediator; and
(4) the mediation session.
7 U.S.C. 5106 (2015)
5106. Authorization of Appropriations

There are authorized to be appropriated to carry out this subtitle
$7,500,000 for each of the Fiscal Years 1988 through 2018 2023.
exhibit 4
USDA State Agricultural Mediation Grants

THE NEXT FARM BILL

(THE FUTURE OF INTERNATIONAL FOOD AID AND AGRICULTURAL DEVELOPMENT)

----------

WEDNESDAY, JUNE 7, 2017

House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Committee met, pursuant to call, at 10:00 a.m., in Room
1300, Longworth House Office Building, Hon. K. Michael Conaway
[Chairman of the Committee] presiding.
Members present: Representatives Conaway, Thompson,
Goodlatte, Lucas, King, Gibbs, Austin Scott of Georgia,
Crawford, Hartzler, Denham, LaMalfa, Yoho, Allen, Rouzer,
Abraham, Kelly, Marshall, Bacon, Faso, Dunn, Arrington,
Peterson, David Scott of Georgia, Costa, Walz, Fudge, McGovern,
Vela, Lujan Grisham, Kuster, Nolan, Bustos, Maloney, Plaskett,
Adams, Evans, Lawson, O'Halleran, Panetta, Soto, and Blunt
Rochester.
Staff present: Ashton Johnston, Bart Fischer, Caleb
Crosswhite, Callie McAdams, Rachel Millard, Stephanie Addison,
Liz Friedlander, Matthew MacKenzie, Troy Phillips, Nicole
Scott, and Carly Reedholm.

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

The Chairman. Good morning. Let's get started.
I am going to ask Congressman Scott to start us off with a
brief prayer.
Austin.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
If I may, before I say the brief prayer, I keep these words
in my pocket. It is from a song from Sidewalk Prophets. I will
just read them real quick: ``Be strong in the Lord. Never give
up hope. You are going to do great things, I already know. God
has got his hand on you, so don't live life in fear. Forgive
and forget, but don't forget why you are here. Take your time
and pray. Thank God for each day. His love will find a way.
These are the words I would say.''
If you will bow your heads with me just very briefly. Lord,
we thank you so much for the many blessings you have given us.
We know our country has a special place. You have been so
generous to us. We just pray that we would continue to find the
ways to give back to those in the world that may not be as
fortunate as we are. We ask that you bless this meeting, bless
the leadership of this country, and bless those who are here to
help move this world in a direction that would be pleasing to
you. In Christ's name we pray. Amen.
The Chairman. Thank you.
This hearing of the Committee on Agriculture entitled, The
Next Farm Bill: The Future of International Food Aid and
Agricultural Development, will come to order.
Good morning and thanks to all of you for joining us this
morning. Before we get started, I want to extend our
condolences to our friends at Didion Milling. John Didion
testified before the Committee in September 2015 about the
important work they are doing in milling grain into specially
designed food aid products. Unfortunately, 1 week ago today,
Didion Milling experienced a catastrophic explosion that took
the lives of three of their employees and injured several
others. Our thoughts and prayers go out to the folks affected
by this tragedy.
As we begin our work today, this hearing builds on the work
that the Committee did last Congress to extensively review
international food aid and agricultural development programs.
At the time, I was adamant that discussions about potential
reforms to the programs occur during the development of the
next farm bill, and that time has arrived. This hearing is also
particularly timely, given the recent release of the
Administration's budget proposal, which calls for drastic cuts
to international food aid programs and the elimination of
funding for both McGovern-Dole and Food for Peace Programs.
I know we will hear from several of you today about the
shortsightedness of such a proposal, and I tend to agree.
Americans are big-hearted folks who love seeing the U.S. flag
on donated rice and other U.S. commodities. As my colleague
Chairman Aderholt noted, there should be no shame in using
taxpayer dollars to buy American food from American farmers to
send overseas to those who literally have nothing else to eat,
especially when the proposed alternative, providing cash-based
assistance, can result in hard-earned taxpayer dollars being
misappropriated or going directly to our agricultural
competitors. International food aid programs not only
contribute to jobs in the United States in the agriculture
sector, but they also create American jobs in the manufacturing
and maritime sectors as well. Eliminating such programs seems
to be contrary to the role of any robust America first policy.
While less drastic than proposed elimination of these
programs, I also fear the continued efforts to chip away at the
core of food aid programs and to increasingly turn them into
cash-based assistance programs will ultimately erode the
alliance of domestic agriculture and maritime supporters that
have long advocated for these programs. That said, I recognize,
as the President does, that there are efficiencies to be gained
within our food aid and ag development programs. In the near
term, as we approach the next farm bill, we take seriously the
task of looking for ways to enhance the programs in a way that
will build consensus and support their ongoing role of American
philanthropy and U.S. agriculture.
Finally, while there are always emergency needs, the budget
constraints we face are real. In the long run, these
constraints will require us to increasingly focus on helping
other countries make structural changes to better assist their
own populations. I look forward to hearing from each of our
witnesses today on how we can achieve these goals.
[The prepared statement of Mr. Conaway follows:]

Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
Good morning and thank you all for joining us.
Before we get started, I wanted to extend my condolences to our
friends at Didion Milling. John Didion testified before the Committee
in September 2015 about the important work they do in milling grain
into specially designed food aid products. Unfortunately, 1 week ago
today, Didion Milling experienced a catastrophic explosion that took
the lives of three employees and injured several others. Our thoughts
and prayers are with all those affected by this tragedy.
As for our work here today, this hearing builds on the work the
Committee did last Congress to extensively review international food
aid and agricultural development programs. At the time, I was adamant
that discussions about potential reforms to the programs occur during
the development of the next farm bill.
That time has come.
This hearing is also particularly timely given the recent release
of the Administration's budget proposal, which calls for drastic cuts
to international food aid programs and the elimination of funding for
both the McGovern-Dole and Food for Peace Programs.
I know we will hear from several of you today about the
shortsightedness of such a proposal. I tend to agree. Americans are big
hearted folks who love seeing the U.S. flag on a donated bag of rice.
As my colleague Chairman Aderholt noted, there should be no shame
in using taxpayer dollars to buy American food from American farmers to
send overseas to those who literally have nothing else to eat--
especially when the proposed alternative, providing cash-based
assistance, can result in hard-earned taxpayer dollars being
misappropriated or going directly to our agricultural competitors.
International food aid programs not only contribute jobs in the
U.S. agricultural sector, but also create American jobs in the
manufacturing and maritime sectors. Eliminating such programs seems
contrary to the role they play in a robust ``America-first'' policy.
While less drastic than the proposed elimination of these programs,
I also fear that continued efforts to chip away at the core of food aid
programs, and to increasingly turn them into cash-based assistance
programs, will ultimately erode the alliance of domestic agriculture
and maritime supporters that have long advocated for these programs.
That said, I recognize, as the President does, that there are
efficiencies to be gained within our food aid and ag development
programs. In the near-term, as we approach the next farm bill, we take
seriously the task of looking for ways to enhance the programs in a way
that will build consensus and support for their ongoing role in
American philanthropy and U.S. agriculture.
Finally, while there will always be emergency needs, the budget
constraints we face are real. In the long run, these constraints will
require us to increasingly focus on helping other countries make the
structural changes needed to better assist their own populations.
I look forward to hearing from each of our witnesses today on how
we can achieve those goals. I now yield to my Ranking Member, Mr.
Peterson for any comments he may have.

The Chairman. And I now yield to my friend, Mr. Peterson,
for any comments he would like to make.
Collin.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Thank you, Mr. Chairman.
We are here today to continue the Committee's work ahead of
the next farm bill.
I welcome today's witnesses to the Agriculture Committee.
The United States, for more than 60 years now, has led the
way in providing food for those in need around the world.
Through partnerships with private organizations, millers, and
shippers, we have delivered more than $80 billion in domestic
product, benefiting hundreds of millions in need around the
world since World War II. These facts and the testimony we will
hear today illustrate the importance of these programs.
As trade deals continue to dominate the discussion, it is
worth pointing out that 11 of our top 15 trading partners in
2017 were once recipients of U.S. assistance. Unfortunately,
the budget put forward by the Administration would completely
eliminate two key U.S. assistance programs, the Food for Peace
Program and the McGovern-Dole Program. I would urge the
Administration and Members of Congress to consider today's
testimony and to look to the work that we did as part of the
last farm bill to improve these programs when considering
potential budget cuts.
I hope our witnesses will be able to share some examples of
program successes but, also, as we approach a new farm bill,
any areas that might be in need of improvement and what
changes, if any, we should consider within the next farm bill.
So, again, I thank the Chairman and look forward to today's
testimony and yield back.
The Chairman. The gentleman yields back.
I want to thank our witnesses today for coming to our
hearing.
We have, first, Mr. Ron Suppes, wheat producer from
Dighton, Kansas?
Mr. Suppes. Yes. Dighton, Kansas.
The Chairman. Dighton, Kansas.
All right. On behalf of U.S. Wheat Associates; Ms. Margaret
Schuler, Senior Vice President of the International Programs
Group, World Vision, Inc.--U.S., here in D.C.; Ms. Navyn Salem,
Founder and Chief Executive Officer of Edesia Nutrition,
Kingston, Rhode Island; Mr. Brian Schoeneman, Political and
Legislative Director here in D.C. with Seafarers International
Union, AFL-CIO, and on behalf of USA Maritime; and Dr. Thomas
Jayne, University Foundation Professor, Michigan State,
Kalamazoo, Michigan, on behalf of the Farm Journal Foundation.
I apologize if I butchered your names too badly. I am from
west Texas, and we have very limited pronunciation talents.
Mr. Suppes, you will begin, 5 minutes.
Mr. Denham. Mr. Chairman, a point of order, if I may. It
appears that these fine USAID products here may require a
napkin. If Members are so apt to follow Mr. Marshall's lead
here, napkins may be in order for today's hearing.
Mr. Marshall. Thank you, sir.
The Chairman. He is wearing it, as opposed to eating it? Is
that what you are telling me?
Mr. Suppes, you are recognized for 5 minutes.

STATEMENT OF RONALD J. SUPPES, DRYLAND WHEAT AND SORGHUM
PRODUCER, DIGHTON, KS; ON BEHALF OF U.S. WHEAT ASSOCIATES

Mr. Suppes. I appreciate your introductions on food aid.
Between you and Mr. Peterson, I don't think I need to give my
speech. You have taken all my talking points.
The Chairman. Yes. But I would still like to hear from you,
though, just for the record.
Mr. Suppes. At any rate, I would like to thank you,
Chairman Conaway, Ranking Member Peterson, and all the Members
of this House Agriculture Committee for allowing me some of
your time to talk to you.
I am from western Kansas. I am a farmer. My name is Ron
Suppes. I farm equal distance from Oklahoma, Colorado, and
Nebraska. During my lifetime, I have had a lot of opportunities
to represent farmers, both Kansas and U.S. wheat farmers. But
on no occasion has there been a more paramount topic that we
need to address. And that is food security. This is a topic I
think we can all agree on.
You probably can't see what I am holding in my hand. But I
assure you that it is something that all respective Kansas
wheat farmers don't leave home without. It is a little bit of
wheat seed.
Wars have been fought over this little seed. Lives have
been lost. Countries have fallen because of lack of food. Food
aid was designed to help curtail such happenings.
The United States continues to be the world leader for food
donations, and these programs give us farmers a reason to be
proud. The wheat I grow is doing good halfway around the world.
I recently had the opportunity to learn more about the
important work by visiting Food for Progress projects in
Tanzania. The Hard Red Winter wheat my family produced may well
have gone to the country receiving wheat from a food aid
program. I speak directly to the value of these programs to the
United States and to the participating farmers.
Food aid continues to matter. In the long-term, it helps
generate good will in other countries, a sentiment I saw
firsthand in Tanzania. These programs also involve a
significant amount of wheat, a fact not lost on Kansas farmers
with full grain bins and more wheat piled on the ground from
last year's historic harvest. We have enough surplus that no
one should be going hungry.
In the marketing year 2015/16, we sent almost 600,000
metric tons or 22 million bushels of Hard Red Winter as food
aid. That makes almost ten percent of last marketing year's
exports, and only Japan, Nigeria, and Mexico imported more Hard
Red Winter. A significant portion of these donations went to
Ethiopia because the country was facing famine. And 8,000 miles
away, wheat farmers in Kansas were helping prevent starvation.
Monetization is an important food aid tool. The value of
monetizing a commodity goes beyond the important development
work it funds. Monetization creates local business
opportunities and increases food availability. A supplementary
benefit of these programs is the good will they foster, which
can build relationships with future trade partners. Being able
to go to Tanzania and talk to the NGO groups left me with a
better understanding of how monetization works.
Talking to farmers and other participants of the program
gave me the feeling that we were doing food aid through
monetization in the correct manner. I visited four of the
projects funded by wheat monetization in the country and talked
to the project participants. These people aren't looking for
charity but for a way to build a better life for their families
and communities, and the programs aren't based on handouts.
Each participant has to have skin in the game. By helping
encourage agricultural development in Tanzania, we are spurring
economic growth, which means Tanzania is more likely to be a
stronger trading partner in the future. It is vital that the
U.S. continue to fund food aid programs overseas.
Farmers are unique stakeholders in the international food
aid conversation, and we have been loyal partners and advocates
of these programs for over 60 years. I want to see us continue
our trend of excellence in providing food aid to the countries
that need it most.
Mr. Chairman, your leadership in this area is appreciated.
And I applaud this Committee's efforts to recognize the
valuable role that the agriculture industry plays in
international food aid.
There is still so much work to feed our growing worldwide
population. But, we are on the right track, and the U.S.
continues to be a strong leader in helping hungry populations
around the world.
Thank you for allowing me to submit testimony this morning.
[The prepared statement of Mr. Suppes follows:]

Prepared Statement of Ronald J. Suppes, Dryland Wheat and Sorghum
Producer, Dighton, KS; on Behalf of U.S. Wheat Associates
Chairman Conaway, Ranking Member Peterson, and Members of the
Committee,

As a wheat farmer from Dighton, Kansas and a Past Chairman of U.S.
Wheat Associates, food aid is a topic of deep interest to me, and I
recently had the opportunity to learn more about smart American
generosity by visiting USDA Food for Progress projects in Tanzania
funded by wheat monetization. The Hard Red Winter (HRW) wheat my family
produced may very well have gone to Tanzania, or to another country
receiving wheat from a food aid program, so I can speak directly to the
value of these programs to the United States and to American farmers in
particular.
Wheat in Food Aid
The wheat industry has been a strong partner in U.S. food aid for
more than 60 years, and American farmers take great pride in being able
to share their bounty with people most in need. More wheat is used in
U.S. in-kind aid than any other commodity, averaging 40 percent of the
total. It is also the most popular commodity for monetization. It is a
versatile product and of key dietary importance--bread products are
staples in diets around the world. Wheat is the source of 20 percent of
the world's caloric intake and provides 20 percent of protein for the
world's most vulnerable four billion people.
The United States continues to be the world leader of in-kind food
aid donations and total development assistance, and maintaining these
programs gives us farmers a reason to be proud--the wheat I grow is
doing good halfway around the world. Food aid has changed a lot since
the Office of Food for Peace was created over 60 years ago by President
Eisenhower (a Kansan, I might add). Now we have a range of tools
available that can be used in more nuanced ways and to best fit the
needs of each situation. Food for Peace does a great job of getting
U.S. commodities in large quantities to populations that need them.
McGovern-Dole, another program with a Kansas founder (are you sensing a
theme here?), works with smaller quantities of food but targets school
feeding and improving nutrition for children, and as we all know,
children are the future. Then you have programs like Farmer to Farmer,
that bring farmers and other experts to communities overseas to provide
short-term technical assistance.
Food aid continues to matter for several reasons. In the long-term,
it helps generate goodwill in other countries, a sentiment I saw
firsthand in Tanzania. But in the short-term, these programs also
involve a significant amount of wheat, a fact not lost on Kansas
farmers with full grain bins and more wheat piled on the ground from
last year's historically high harvest. Moving toward more cash or local
and regional procurement in title II programs would impact U.S. farmers
and hurt a vulnerable population. While these tools have a place in
foreign assistance programs, U.S. commodities play an important role in
helping regions unable to produce wheat and other commodities on their
own due to drought, conflict or other circumstances. We have enough
surplus that no one should be going hungry.
In Marketing Year 2015/16, we sent almost 600,000 metric tons (MT),
or about 22 million bushels, of HRW as food aid. That makes up almost
10% of last marketing year's HRW exports, and only Japan, Nigeria, and
Mexico imported more HRW. Total wheat donations last year were over
700,000 MT, about 26 million bushels, and ranked as a top ten
destination. In addition to HRW, the U.S. sent Hard Red Spring, Soft
White, and Soft Red Winter wheat overseas as food aid. Creating markets
isn't the point here, but we can't discount the size of those
donations. A significant portion of these donations went to Ethiopia
because the country was facing famine. 8,000 miles away, wheat farmers
in Kansas were helping Food for Peace prevent starvation. According to
the World Food Program, four countries are currently at risk of or
experiencing famine now, the worst crisis seen since World War II; in a
time of wheat surplus and low prices, U.S. commodities remain a vital
tool to fight hunger.
Monetization as a Powerful Tool in Agricultural Development
Monetization is a food aid tool that provides necessary commodities
to food-insecure areas and benefits development programs by generating
funding from the sales of donated U.S. commodities. The long-term value
of monetizing a commodity goes beyond the important development work it
funds. Monetization creates local business opportunities and increases
food availability. It can also give local small- and medium-sized
buyers a competitive advantage because it is priced comparably to what
a large buyer would pay. Well timed monetization deliveries can help
stabilize food availability all year, which also helps reduce local
market price volatility. Finally, monetizing U.S. wheat helps stimulate
local milling industries--providing an economic engine and valuable
employment opportunities.
U.S. Wheat Associates also works with NGOs to make sure that wheat
monetization does not disrupt any existing commercial markets. Wheat as
a commodity is a good fit in many countries because there is limited
domestic production, if any. Countries near the equator typically must
import wheat anyway, so wheat monetization doesn't disrupt markets for
domestic farmers.
A supplementary benefit of these programs is the goodwill they
foster, which can build relationships with future trade partners. In
fact, historically, monetized commodities into South Korea and the
Philippines introduced those markets to U.S. exports, and now they're
both top ten markets for U.S. wheat. More recently, monetized U.S.
wheat introduced the benefits of superior quality milling wheat to one
of Ethiopia's larger flour mills. In a traditionally price-driven
market, this positive experience demonstrated an opportunity for future
U.S. wheat imports and generated funding for a local agricultural
development project. The money from the monetization, along with the
bran byproduct from the milled wheat, went to ACDI/VOCA's Feed for
Enhancement for Ethiopian Development project, where the bran was a key
ingredient in the livestock feed concentrates used by the people who
benefit from the project.
Monetizing commodities to fund projects can yield results that
simply giving cash does not. Thanks to monetization through title II
funding, Mozambique grew from two mid-sized mills in the 1990s to more
than seven in 2015. This is because, more than commercial or cash
interactions, monetization transactions have less restrictive payment
terms, allowing millers time to build capital with longer payment
periods. Additionally, the mills were able to conduct transactions in
their local currency when access to foreign currency was limited. The
monetization programs allowed the mills to produce better quality wheat
flour with readily available U.S. wheat, and because U.S. Wheat
Associates followed up on those wheat purchases with technical support
to millers and bakers in the country. These benefits are all on top of
the developmental gains to the country from the original NGO project
the sale funded.
Food for Progress and Tanzania
In Tanzania, I saw how the Hard Red Winter and Hard Red Spring
wheat monetized there allowed the miller purchasing the wheat to pass
along savings to their poorer customers. I also visited four of the
projects funded by wheat monetization in the country. These projects
are versatile and fully embody the Food for Progress program's devotion
to building commercial capacity in agriculture. Two of the projects,
run by Global Communities and Small Enterprise Assistance Funds,
targeted small and medium-sized enterprises so that they could better
expand and work with smallholder farmers. The other two projects, run
by Catholic Relief Services and FINCA International, focused on working
directly with farmers to enhance their production and, even more
importantly, help connect them with markets for their product.
These people aren't looking for charity, but rather for a way to
build a better life for their families and communities. I could not
farm without access to credit, which these farmers and agribusinesses
often lack. Even when they're successful, agriculture is considered too
risky by lenders, so any growth has to come from saved capital. These
projects help overcome that challenge by providing credit to farmers as
well as training and market connections. By helping encourage
agricultural development in Tanzania, we're ultimately spurring
economic growth, which means Tanzania is more likely to be a stronger
trading partner in the future. And the tangible presence of U.S. wheat
in that equation is a symbol that cash can't match. It is vital that
the U.S. continue to fund food aid programs overseas.
Monetization programs are a powerful tool for agricultural
development overseas, but USDA's Food for Progress program is severely
hindered by a transportation cap that hasn't increased to match rising
transportation costs. If the $40 million transportation cap was raised,
we would be able to help more farmers and agribusinesses in developing
countries.
Wheat Industry Working Together on Food Aid
The wheat industry has adopted the following resolutions, which
represent the full range of tools available to U.S. agencies and PVOs.
These resolutions clearly reflect a priority on choosing the right tool
to address a given instance of food insecurity, rather than blanket
support of in-kind food aid. These principles thoroughly capture the
industry's commitment to food aid and its belief that these programs
are vitally important. Those principles are:

Promote wheat as a nutritious component of international
food aid.

Support funding of P.L. 83-480 Title II food assistance
programs at $2.5 billion, the full amount authorized by law.

Support a strong, flexible U.S. food aid program that
contains both in-kind donations and monetization.

Support funding and implementation of local and regional
procurement programs through the Foreign Disaster Assistance
Act and USAID.

Support USDA administration of Food for Progress.

Encourage an increase to the Food for Progress
Transportation Cap and efforts to mitigate the effect of Cargo
Preference rules on cost recovery calculations.

Support the U.S. Government's agricultural development
initiatives as a supplement to existing emergency and non-
emergency humanitarian assistance programs such as P.L. 83-480
Title II programs.
Conclusion
Farmers are unique stakeholders in the international food aid
conversation, and we've been loyal partners and advocates of these
programs since they started. I want to see us continue our trend of
excellence in providing food aid to the countries that need it most. I
want to be able to tell my grandchildren that wheat from my farm is
helping food-insecure populations in rural Sub-Saharan Africa develop
their agricultural infrastructure. And I want our industry to be able
to continue working cooperatively with millers and NGOs in other
countries who see the extensive value of U.S. wheat donations.
This is a year when the U.S. wheat farmer has been a world leader
in producing a surplus of wheat. It is a year when the U.S. needs to be
a world leader in helping provide for this in need with these ample
supplies. When blessed with good fortunes and yields, it is an
obligation to help provide for those who cannot provide for themselves.
It is a humanitarian issue, and food security is the answer to
achieving stability around the world.
Mr. Chairman, your leadership in this area is appreciated, and I
applaud this Committee's efforts to recognize the valuable role that
the agricultural industry plays in international food aid. There's
still so much work to do to feed our growing worldwide population, but
I think we're on the right track, and the U.S. continues to be a strong
leader in helping hungry populations around the world. Thank you for
allowing me to submit testimony for this timely hearing.
Sincerely,

Ron Suppes.

The Chairman. Thank you.
Ms. Schuler, 5 minutes.

STATEMENT OF MARGARET SCHULER, SENIOR VICE
PRESIDENT, INTERNATIONAL PROGRAMS GROUP, WORLD VISION, INC.--
U.S., WASHINGTON, D.C.

Ms. Schuler. Chairman Conaway, Ranking Member Peterson, and
Members of the Committee, thank you for the opportunity to
testify before you today on U.S. international food aid
programs. Your continued leadership and focus on these programs
is critical, especially noting the unprecedented level of
famine and near famine-like conditions currently present in
four countries around the world.
My name is Margaret Schuler, and I am the Senior Vice
President for International Programs at World Vision. Prior to
assuming this position last month, I served as the Regional
Vice President in East Africa, a region currently in the grips
of one of its worst food crises in decades. I have been on the
ground in places like South Sudan where millions of vulnerable
people, mostly women and children, are in a day-to-day fight
for survival. These are lives turned upside down by violence,
who fled searching for safety. In many cases, families watched
their children die along the way. But once they reached their
destination, it was often generous food assistance from the
U.S. Government that allowed their remaining children to
survive.
As a mother, these stories break my heart. Yet, I feel a
sense of hope for the future when people can access the
valuable nutrition they require, oftentimes renewing their
dignity and hope for the future. After all, wanting your
children to be healthy and thrive is one of the great
equalizers in this world.
Days before I left East Africa, I declared a multi-country
hunger emergency at World Vision's highest level of alert.
Today, 25 million people are at significant risk in four
countries of that region: Somalia, South Sudan, Ethiopia, and
Kenya.
As we respond to these crises in East Africa and around the
world, World Vision remains grateful for the support of the
U.S. Government to address global hunger needs, including the
additional funding provided through the Fiscal Year 2017
omnibus for emergency famine relief.
However, as we look at Fiscal Year 2018 and the
Administration's recent budget proposal, we remain deeply
concerned by the recommendation to zero out funding for both
the Food for Peace Program and the McGovern-Dole International
Food for Education and Child Nutrition Program.
Famines don't recognize fiscal years. We must do everything
we can in the moment to keep pace with increased and growing
needs both in humanitarian and development settings. And,
therefore, we urge Congress to continue to robustly fund Food
for Peace and McGovern-Dole. Food security programming builds
more prosperous and stable societies and is fundamentally
aligned with America's role as a global leader. These programs
are essential to shaping a world where our national interests
will thrive. Proposals to eliminate funding for these critical
accounts will have life-and-death consequences for the poorest
people in the world and will threaten America's own safety and
security in the process.
While we continue to advocate for strong funding, we also
stand as ready partners to improve foreign assistance so it
saves more lives and uses taxpayer dollars wisely. Therefore,
World Vision recommends the following measures in the upcoming
farm bill:
First, continuing this Committee's strong support for the
multi-year, multi-sector funding of the development food
assistance activities, including a minimum of at least $350
million each fiscal year. I have personally been involved with
these title II development programs for almost 20 years. I
cannot overstate how important they are to millions of people.
We view this safe box programming as critical in our efforts to
help countries tackle the root causes of poverty by putting
people on the path to self-reliance. World Vision acknowledges
the critical need for emergency food aid this year. But we also
believe funding for these long-term development programs must
remain a priority in the next farm bill, as they help to
prevent and mitigate future food emergencies and the need for
emergency assistance.
Second, eliminating the minimum monetization requirement
under the Food for Peace Program and support use of the
Community Development Fund and 202(e) funding within Food for
Peace non-emergency development programs.
Third, continuing to provide food aid implementers
discretion in using various food aid modalities, including cash
transfers, vouchers, and local and regional procurement in
addition to U.S.-sourced commodities.
Fourth, affirming the Food for Peace strategy of focusing
on host-country government reform which addresses root causes
for poverty and food insecurity by helping people hold their
governments accountable to spend U.S. assistance and domestic
resources effectively and make it sustainable.
World Vision understands program improvements are difficult
to make, as evidenced by our evolving position on the practice
of monetization. But as we reviewed this practice further in
our programming and considered it alongside other food aid
options, we concluded there are often more effective processes
available that would ultimately serve more communities and
serve them better.
Last, I want to reiterate that your leadership counts. We
have made tremendous progress in our fight against hunger. And
because of that effort, the number of hungry people has dropped
by 200 million since 1992.
Thank you, again, for allowing me to testify today. Food
assistance programs are some of the most effective programs
when measured by the number of people helped per U.S. dollar
spent, and we cannot walk away from the poorest and most
vulnerable by eliminating lifesaving programs.
I would be happy to answer any questions you have.
Thank you.
[The prepared statement of Ms. Schuler follows:]

Prepared Statement of Margaret Schuler, Senior Vice President,
International Programs Group, World Vision, Inc.--U.S., Washington,
D.C.
Chairman Conaway, Ranking Member Peterson, and Members of the
Committee, thank you for the opportunity to testify before you today on
U.S. international food aid programs. Your continued leadership and
focus on these critical programs is more important than ever,
especially noting the unprecedented level of famine and near famine-
like conditions present in four countries.
I testify before you today as the Senior Vice President for
International Programs with World Vision--U.S. Prior to assuming this
position last month, I served as the Regional Vice President of World
Vision in East Africa--a region currently in the grips of one of its
worst food crises in decades.
I have been on the ground in places like South Sudan, where
millions of vulnerable people--mostly women and children--impacted by
the violence and crisis in that country, have fled their homes and
often have a day-to-day fight for survival. People whose lives were
turned upside-down by the violence and who fled searching for safety.
In many cases, families watched their children die along the way, but
once they reached their destination, it was often generous food
assistance from the U.S. Government that allowed their remaining
children to survive. Days before I left the region, I declared a multi-
country hunger emergency at World Vision's highest level of alert.
Today, 25 million people are at significant risk in four countries of
the region: Somalia, S. Sudan, Ethiopia and Kenya.
Throughout my remarks today, I hope to address the importance of
U.S. international food aid programs, but also highlight the lives of
individuals most impacted by hunger in this region and around the
world. I will conclude by providing policy and program recommendations
based on World Vision's experience implementing food security programs
in nearly 100 countries around the world.
World Vision Partnership
World Vision is a Christian relief, development, and advocacy
organization serving millions of children and families. Our 45,000
employees are dedicated to tackling the root causes of poverty and
injustice.
World Vision--U.S. has more than one million private donors in
every state and Congressional district, partners with over 16,000
churches in the United States, and works with corporations and
foundations. We are motivated by our Christian faith to serve every
child in need and their family; those of any faith, or none. We partner
with faith leaders throughout the world, equipping them to meet the
needs of their communities.
We are part of a global World Vision Partnership, which last year
implemented more than $2.6 billion in programming to help children,
families and communities through international relief, development, and
advocacy assistance. Although private donors support much of our work,
the U.S. Government is an invaluable partner. We leverage this
partnership to reach many more vulnerable children and ensure that the
precious resources of the American taxpayer are prudently used to
promote and protect the well-being of children and communities abroad.
World Vision's Approach to Food Security Programming
World Vision joins the international community and other partners
in seeking to achieve the global goal of ending hunger by 2030. In
pursuit of this hunger-free world, World Vision works alongside
families to help smallholder farmers to produce their own food and
improve their livelihoods, through increasing their access to markets.
However, when disasters such as drought or conflict occur, World Vision
provides emergency food assistance to ensure children and communities
receive life-saving and nourishing food.
Food assistance is one of the critical global safety nets that
supports the most vulnerable families in managing shocks like
disasters, while empowering them to become more resilient against
future food insecurity, and other drivers of poverty.
In our work, World Vision ensures its programming promotes dignity,
fosters innovation, and is effective in creating lasting change. World
Vision develops tailored and diverse responses based on local contexts.
Our food assistance programming includes the distribution of U.S. as
well as locally and regionally procured food commodities, cash
transfers, and vouchers, which allow hungry families to purchase food
and other essential household items. Additionally, World Vision
implements school meals programs, and resilience building programming
such as cash or food for work or assets.
World Vision's Food Security and Livelihoods team draws upon a
group of technical experts who ensure quality food assistance programs
in nearly 40 countries, often combining various programming modalities
and services to best meet the needs of impacted communities. World
Vision operates food assistance programs in partnership with the United
Nations World Food Program (with whom we are the largest implementing
NGO partner), USDA, USAID, and other partners.
Four Looming Famines and East Africa Food Crisis
With four famines possibly being declared this year, the world is
currently in the midst of its worst humanitarian crises since 1945. As
noted earlier, famine was officially declared in parts of South Sudan,
while people face starvation in Somalia, Nigeria and Yemen. In Ethiopia
and parts of Kenya, drought is contributing to growing food insecurity.
In just the past year alone, the rate of global acute food insecurity
increased by 35 percent, a massive increase from 80 million people in
2015 to 108 million today.
Currently, the majority of global humanitarian need is driven by
civil conflicts, instability, and unresolved political disputes. The
famine in South Sudan is largely a man-made catastrophe and in Somalia,
the humanitarian crisis is a result of the combined effects of the
drought and ongoing conflict. In recent years, World Vision has worked
in 39 of the 56 Organisation for Economic Co-operation and Development
(OECD) declared fragile states, and we remain committed to scaling up
interventions that prove effective in supporting countries as they
transition out of fragility towards greater stability and lasting
peace. All of the East African countries affected by the food security
crises are among the fragile states as identified by the OECD. These
fragile states are an increasing focus of World Vision's global
strategy to help promote peace, end extreme poverty, and limit the
impacts of disasters--all elements that bear on U.S. national security
and economic interests.
In East Africa, a region characterized by high levels of fragility
and vulnerability, the current food crisis is affecting over 25 million
people, requiring urgent, life-saving assistance. More than 3.5 million
children under 5 are acutely malnourished, and 844,900 children are
severely malnourished, with an estimated 14.4 million people in need of
health assistance. Most of those affected live in rural areas and
depend on agriculture and/or livestock for their food and income. In
Kenya, South Sudan, and Somalia, certain areas have already reached, or
are approaching, famine levels. At the same time, the number of people
escaping conflict and hunger is dramatically increasing across the
region with more than 3.3 million refugees, 59 percent of whom are
children, fleeing into neighboring countries. Many of the refugees are
from South Sudan, seeking refuge in Uganda, Kenya and Ethiopia. Uganda
is now hosting over one million refugees, nearly 900,000 of whom are
from South Sudan. This is the largest refugee population in all Sub-
Saharan Africa.
The immediate needs in this crisis are clear--we must get food and
nutritional support in the region quickly and scale up efforts by donor
governments and the international community to respond. We know the
U.S. Government cannot do it alone, but its leadership inspires and
promotes the actions of other donors. And, we also cannot ignore the
long-term impact of malnutrition, particularly in children and pregnant
mothers. Should we fail to address this crisis soon, not only will we
witness more deaths from hunger, but we will see an increase in
stunting in children that will have long-lasting detrimental impact on
the mental and physical development of children and the economic and
social development of communities.
While emergency funding is critical in this immediate crisis, the
longer-term solution is programs that build more resilient, productive
and economically productive rural communities. A core strategy to
achieve this objective is supporting smallholder agriculture
development, including through programs such as the Food for Peace's
Development Food Security Activities.
FY17 Omnibus and Famine Supplemental
Thanks to Congressional leadership, including from Members of this
Committee, $990 million in emergency famine relief, including $300
million for Food for Peace in war-torn South Sudan, Somalia, Yemen and
Nigeria, was recently included in the FY17 omnibus bill.
World Vision joined with partners and other stakeholders to
advocate for this additional funding and we now seek to ensure these
resources are distributed and allocated in a timely and efficient
manner to the regions and people in greatest need. We seek to work with
this Committee to ensure expeditious and effective implementation of
the additional funding, especially the resources directly appropriated
to Food for Peace.
The Administration's FY18 Budget Proposal
As it relates to international food aid programming, the
Administration's FY18 budget request released on Tuesday, May 23rd
included a series of problematic proposals including: a zeroing out of
both Title II, Food for Peace (with any funding for emergency food aid
shifted into the International Disaster Assistance Account (IDA), and
the McGovern-Dole International Food for Education and Child Nutrition
program.
World Vision joins with our partners and strongly opposes these
recommendations, which propose eliminating and/or severely cutting
effective, life-saving funding that help create a safer and more secure
world. Furthermore, the FY18 request from the Administration includes
funding for emergency food needs within the International Disaster
Assistance (IDA) account, yet the Administration also proposes to
reduce IDA from $3.2 billion to $1.65 billion. When comparing the FY18
request to FY16, the cut to IDA is ten percent. Factoring in the
elimination of Title II Food for Peace (although the Food for Peace
office appears to remain and emergency food aid assumed to be now
funded from IDA), the cut to IDA when comparing FY16 to the FY18
request is about 48 percent.
At a time of historic and unprecedented need, when close to 1.4
million children could die this year from famine-like conditions
according to UNICEF, we urge Congress to continue to robustly fund the
Food for Peace program (both emergency and development programs) and
McGovern-Dole International Food for Education and Child Nutrition
program in FY18. The International Disaster Assistance account must
also be funded at FY17 or levels or above which includes the Emergency
Food Security Program.
The Administration's budget proposal reframes the purpose of the
International Affairs Budget, noting that ``international programs help
to advance the national security interests of the United States by
building a more democratic, secure, and prosperous world.'' The goal of
the budget appears to focus more assistance on national security-
aligned interests, as opposed to long-term development or anti-poverty
initiatives, but in the view of World Vision, these are not mutually
exclusive priorities.
Food security programming builds more prosperous and stable
societies, and is fundamentally aligned with America's global
leadership. These programs are essential to shaping a world where our
national interests will thrive. Disproportionate cuts to these accounts
will not make the world safer. In fact, according to a recent report
published by the Chicago Council on Global Affairs, in 2007-2008,
destabilizing rises in food prices produced widespread social unrest
and toppled governments in Haiti and Madagascar and conflicts over food
policy and prices are also linked to the Arab Spring in 2011. Proposals
to eliminate funding for these critical accounts will have life-and-
death consequences for the poorest people in the world, and will harm
America's own safety and security in the process.
Last, as World Vision seeks to ensure greater efficiency and
effectiveness in the U.S. international development and humanitarian
assistance programs, we stand as ready partners willing to improve
foreign assistance so it saves more lives, builds resilience, and
reduces poverty. To this end, we affirm our openness to identifying
reforms to improve programming (we're all in this as partners
together), but not when it means fewer lives saved, or turning our
backs on what we know works.
As such, we are aware of the Administration's interest related to
ongoing reform efforts pertaining to the activities of USAID's Office
of Foreign Disaster Assistance and the Office of Food for Peace. As
these efforts evolve, we affirm the role of Congress and the relevant
authorizing committees in overseeing and leading any reform efforts to
our international development and humanitarian assistance programs, and
support continued stakeholder engagement including with the private-
sector and NGOs.
Title II Food for Peace Program
Since 1954, Food for Peace (FFP) has enabled the United States to
reach more than four billion people with food assistance. As the
largest U.S. Government food aid program, Food for Peace Title II
includes emergency response that distributes food to people in the
grips of natural disasters, conflict, and other food security crises.
Food for Peace also provides funding for non-emergency, development
programs that reduce poverty and build the capacity of beneficiaries to
feed themselves.
Between 2010 and 2015, FFP programs reached an average of 52
million people in 50 countries per year. In addition to meeting food
needs, Food for Peace fosters stability and builds resilience in
regions that might otherwise pose possible national security risks.
FFP's development programs are particularly important in efforts to
end hunger, as they go beyond the ``free hand out'' paradigm by
addressing the root causes of food insecurity. Development Food
Assistance Activities uses a multi-sectoral approach--inclusive of key
areas like resilience, nutrition, and livelihoods--that puts whole
communities on a sustainable path towards self-reliance. Projects are
typically 5 years in length, which give implementers enough time to
achieve real results, like revitalizing a watershed or making a lasting
impact on farmers' skill sets. Food for Peace development programs
primarily serve the poorest communities, using income levels, stunting
rates, and other indicators of extreme poverty to direct resources to
the countries and communities most in need. World Vision is the lead
implementer of three Food for Peace development projects in Zimbabwe,
Ethiopia, and Bangladesh.
The 2014 Farm Bill established funding for development programming
at $350 million per year with the authority to increase this funding to
30% of overall Food for Peace appropriations with the remainder of
funds supporting emergency activities. We view this ``safe box''
programming as critical in our efforts to help countries tackle the
root causes of poverty, by putting people on the path to self-reliance.
Additionally, as part of our efforts to promote nutrition and food
security, according to the FY17 Congressional Budget Justification,
development food assistance was the second largest source of funding
for nutrition programming in U.S. assistance, accounting for $87M in
the FY 2017 request.
World Vision acknowledges the critical need for emergency food aid
this year, but we also believe funding for these long-term development
programs must remain a priority in the next farm bill, as they help to
prevent and mitigate future food emergencies and the need for emergency
assistance. To further illustrate, Congress appropriated close to an
additional $1 billion to meet emergency needs in FY17. To draw that
funding from development programs would have completely depleted
funding for development programming, undermining existing multiyear
investments, and leaving these beneficiaries vulnerable to reversing
back into poverty.
Food for Peace in Zimbabwe and Haiti
In Zimbabwe, World Vision through the Enhancing Nutrition, Stepping
up Resilience and Enterprise (ENSURE) (http://www.wvi.org/food-
assistance/ensure-zimbabwe), a USAID funded program, empowers poor,
rural households in Manicaland and Masvingo provinces to become more
food-secure. In Fiscal Year 2016, 4,682 persons were trained in
disaster preparedness (130 percent of target met), 107 community
assets--like dams, irrigation schemes and gardens--were created or
rehabilitated (445 percent of target met), and 217 producer groups were
supported in goat and poultry value chains (238 percent of target met).
To this end, the quality of food consumption, especially of children
under 23 months as well as pregnant and lactating mothers, was
significantly enhanced, breaking the inter-generational cycle of
malnutrition and poverty.
During the massive El Nino-induced drought in Zimbabwe last year,
World Vision received a $19 million cost modification to our title II-
funded ENSURE program. This flexibility provided by the U.S. Government
enabled us to quickly respond to the rapidly increasing food deficits
experienced by households in the east and southeast of the country,
some of the hardest hit by the drought, with more than 18,000 metric
tons of U.S. commodities. Through this cost modification we provided a
supplemental feeding ration to more than 313,000 people who were
affected by the drought. Additionally, this also protected early gains
made by the development program, by ensuring that many households were
able to protect assets they had generated through U.S. Government
assistance, instead of selling them off, thereby adding to their
longer-term resilience. World Vision and the families with whom we are
engaged greatly appreciate this flexibility and the rapid response it
allowed.
In Haiti, another development food assistance program, Kore Lavi is
supporting 18,150 households with monthly food vouchers in five out of
the ten departments across the island. The program is being led by CARE
and the Government of Haiti, in partnership with WFP, Action Against
Hunger and World Vision, with funding from USAID. This 4 year long
program has the goal of strengthening the Haitian national social
safety net and improving the food security and nutritional status of
vulnerable populations.
In addition to the ongoing voucher program, Kore Lavi was
reinforced with a ``crisis modifier'' from USAID following the impact
of Hurricane Matthew (http://wvi.org/food-assistance/article/planting-
seeds-hope-among-ruin). For 3 months after the hurricane, some 1,100
families received 3,000 Haitian Gourdes (the equivalent of U.S. $50)
per household, per month. This crisis modifier injects emergency
funding into existing development programs to rapidly address emerging
humanitarian needs.
In the words of one beneficiary, a young widow named Dachena,
``[t]he program is really helpful for the boys and me. It has allowed
me to feed them better with the rice, beans, oil and vegetables that I
buy,'' and ``I have observed an improvement in their physical health
and energy. They are gaining some weight.'' For families like
Dachena's, cash transfer programming and emergency crisis modifiers
have been a life-line. Furthermore, they have protected development
gains by enhancing resilience made in disaster prone areas with high
levels of vulnerability, and in this way, help to address the
humanitarian-development divide.
Food for Peace and Private Sector Linkages
World Vision, together with its private-sector and NGO partners,
have also developed innovative approaches to link food-insecure farmers
to suppliers and buyers. Under the USAID Food for Peace TOPs learning
platform, World Vision provided training on market linkages to four
USAID Food for Peace Development Food Assistance Activities and one
USAID Niger Economic Growth funded project. As part of our
collaboration with the TOPS learning platform and with support from
USAID, World Vision produced the Integrating Extremely Poor Producers
into Markets Field Guide (https://agrilinks.org/library/integrating-
extremely-poor-producers-markets-3rd-edition). The Field Guide includes
a set of over 20 tools for market development professionals to use in
order to strengthen the commercial relationships between food-insecure
and extremely poor farmers with private-sector suppliers and buyers.
These commercial market linkages with the private-sector provide
sustainable business relationships that will last well beyond the life
of the USAID funded project.
Food for Peace, Social Accountability, and Good Governance
World Vision's Bangladesh Nobo Jatra Food for Peace Development
Food Assistance Activity is seeking to address underlying causes of
chronic food insecurity through advocacy and government reforms. By
engaging local authorities through this social accountability approach,
Nobo Jatra is working with farmers and government agricultural staff to
identify agricultural service delivery gaps--using social auditing,
community services scorecards, and ``town-hall style'' interface
meetings for citizens with service providers and government officials.
Citizen feedback on services will be used to advocate for
governance reform across the target ministries of health, water and
sanitation, and agriculture. Citizen monitors and committees will work
with government officials to monitor progress and address gaps through
ongoing advocacy. Food for Peace's adoption of social accountability as
a top line objective in its new global strategy issued last year--along
with World Vision's own pioneering of this kind of work--has the
potential to revolutionize these already successful programs by
integrating bottom-up, people-driven governance reforms, which improves
public services and keeps corruption in check.
The McGovern-Dole International Food for Education and Child Nutrition
Program
The McGovern-Dole International Food for Education and Child
Nutrition Program provides the donation of U.S. agricultural
commodities to reduce hunger and malnutrition and promote literacy and
primary education in food-insecure countries. For highly vulnerable
communities, there is an incentive for parents to send their children
to school as they receive the dual benefit of access to both education
and nutritious food. For girls, the program has shown an increase in
school attendance, driving literacy and educational attainment and
helping to institute greater gender balance.
McGovern-Dole has reached 40 million children with food at school
and it is currently active in 24 countries. As implementers of the
McGovern-Dole Food for Education, World Vision is particularly focused
on the long-term sustainability of the program, and engaging host
governments to ensure the program continues beyond the duration of the
grant. World Vision implements these programs in Mozambique and
Nicaragua.
Food for Education: Mozambique
World Vision is implementing a Food for Education project in
Mozambique known as ``Educating Children Together.'' The aim of the
project is to improve the literacy of school-aged children in grades 1-
7, increase the use of health and dietary practices, improve the
quality of literacy instruction, and student and teacher attendance.
Across the two districts in which World Vision currently implements
Food for Education, 8,000 metric tons of food are being used to feed
64,000 beneficiaries, improving food security, and boosting school
attendance especially among girls. Literacy rates have also improved
from two percent at the inception of the project to about 35 percent
because of USDA interventions. In most cases, the lunch provided
through this program is the only meal these children receive all day.
Further, the food provided is fortified with much needed
micronutrients.
The USDA Local and Regional Procurement (LRP) program, made
permanent by the 2014 Farm Bill, is intended to be used in conjunction
with McGovern-Dole programming to fill in nutritional or food
availability gaps for targeted populations through purchasing of
locally sourced food that will help transition management of school
feeding to local governments. World Vision received a $2 million award
in 2016 to implement an LRP project under the current McGovern Dole
Food for Education project in Mozambique. The project leverages the
resources, skills and partnerships built with 43 farmer groups to
supplement school meals with beans, groundnuts and orange fleshed sweet
potatoes in 43 target schools.
In FY16, the project experienced a pipeline break because the
commodities from the U.S. did not arrive on time. During this period,
64 schools out of the 150 target schools received 114 metric tons of
locally sourced food such as maize, beans, groundnuts, sweet potatoes
and vegetables (cabbage, lettuce, onion, tomatoes, etc.) for school
meals before the arrival of the imported Corn Soya Blend (CSB+). This
was, and remains, an effective and efficient way to promote dietary
diversity and demonstrate sustainability.
Food for Education is designed to ensure that school meal programs
can, after a transition period, be transferred to a national or local
government to operate on its own. Indeed, the success of World Vision's
McGovern-Dole program in Mozambique demonstrates the importance of
partnerships with the Government of Mozambique and farmer groups to
strengthen the local supply chain. World Vision views LRP as critical
to the sustainability of school lunch programs. These efforts empower
local farmers to grow the quality and quantity produce needed for
school lunches. Additionally, LRP spurs investment in food processing
industries, and often results in the procurement and the promotion of
culturally appropriate food commodities. As a result of this
collaboration, a sustainable school feeding model has been developed,
resulting in nutritional gains for nearly 64,000 children, and it also
supports the Government of Mozambique efforts to stimulate its own
market development.
Recommendations
World Vision promotes public policy initiatives and legislation
that advance efficient food security and nutrition programming. As
Congress works on the Agricultural Act of 2018, World Vision urges the
enactment of the following policy recommendations that will further
ensure the greatest number of beneficiaries are reached in an
effective, efficient, and culturally-sensitive manner.
Improving Food Assistance Programs in the Farm Bill of 2018

Support and advance the increased use of various food
assistance modalities including cash, food vouchers, food
commodities, and local and regional procurement in Food for
Peace and McGovern-Dole Food for Education.

Considering the estimated 70 million people across 45
countries in need of emergency food assistance during 2017,
World Vision recommends lowering or eliminating the current
requirement that mandates 100 percent of food aid be grown
in the United States, additional modalities can be used
including locally and regionally procured (LRP)
commodities, vouchers, and cash transfers--whichever is the
most efficient option.

An initial LRP pilot project conducted by USDA through
the 2008 Farm Bill found that use of LRP commodities allows
the U.S. to feed more people quicker and at a lower cost.
Additionally, as described above, the LRP program in
Mozambique is encouraging local governments to assume
responsibility for school lunch programs, while also
building the capacity of local farmers. We anticipate the
government will be better able to take the program over
when funding of the grant ends, ensuring the sustainability
of the initial gains achieved.

Provide discretion to food aid implementers on the use of
various food aid modalities.

While a range of various food assistance modalities
exist, there is no ``right'' intervention. In consultation
with donors, World Vision believes implementers, who often
have the most adequate and up to date knowledge on current
conditions, should have discretion over the type(s) of
modalities used in its food aid programming.

Before selecting a modality/modalities to be used in
food aid programming, a comparison of all options should be
considered and evaluated based on the following factors:
appropriateness based on market conditions, feasibility and
likelihood of success, objectives of the program, and the
overall cost of the intervention.

World Visions supports and uses U.S. grown commodities
in its food aid programs when local markets are not
functioning or there is insufficient food available to meet
the local food need. When local market conditions are
favorable and adequate quantities of food are available,
local commodities can be purchased and then used in country
or regional response efforts. We also utilize cash
transfers which allow qualifying beneficiaries to purchase
food and other household items in local markets and
vouchers as a form of cash based transfers that are used
when there is a perceived risk of transferring cash or if
there is a need to ensure people receive a specific type of
food.

Eliminate the minimum monetization requirement and support
use of the Community Development Fund and 202[(]e[)] funding
within Food for Peace non-emergency, development programs.

Under current U.S. law, at least 15% of non-emergency
food aid funding must be made available to qualifying
nongovernmental organizations (NGOs) for monetization.

Due to costs associated with monetization, including
current U.S. law that requires using more expensive U.S.
cargo ships for transportation of U.S. commodities, World
Vision recognizes monetization can often be an ineffective
practice.

Community Development Funds (CDF) are a portion of
Development Assistance funding that complement Food for
Peace Title II development programming.

CDF funds should continue be used to support
community-level development activities so that title II
non-emergency monetization is not undermining other U.S.
Government efforts to boost local agriculture production
and local markets. This will ensure title II development
programs are using U.S. taxpayer money as efficiently as
possible to build self-reliance in food-insecure
communities.

The 2014 Farm Bill increased the amount of Food for
Peace funding available to 202[(]e[)] allowing USAID to
expand the use of these funds to include cash-based food
assistance, when appropriate, in recipient countries where
a title II program is already operating. World Vision
supports both the use of 202[(]e[)] funds, as well as
Community Development Funds, allowing our programs to avoid
using the costly, and time-consuming process of
monetization.

Eliminate Cargo preference.

Cargo preference is a law that requires at least 50
percent of the gross tonnage of all government generated
cargo, meaning food procured, furnished, or financed by the
U.S. Government, to be transported on privately owned,
U.S.-flag commercial vessels. Often, food aid can be
shipped on non-U.S. vessels at much lower rates, resulting
in more beneficiaries being served through additional
resources being spent on food and not shipping costs. World
Vision urges Congress to consider eliminating or reducing
the minimum tonnage of food aid to be shipped on U.S.
flagged vessels.

Leverage crisis modifiers in Food for Peace with more
frequency and depth to enhance resilience to shocks and protect
development gains in agriculture, food security and livelihoods

USAID has pioneered the use of crisis modifiers to
quickly inject emergency funds during crises into existing
development programs. These funds allow partners to respond
rapidly to address humanitarian needs, reducing livelihood
and other development losses.

Crisis modifiers are agile and respond quickly to
changing needs. Emergency food aid is used to reach
vulnerable beneficiaries, and once these needs are met,
often a return to the original development activities in
the area is resumed.

Further leverage good governance and social accountability
programs in Food for Peace and McGovern-Dole Food for Education
to empower vulnerable and disadvantaged populations to improve
their own food security through more transparent and responsive
public and private institutions. World Vision affirms the Food
for Peace strategy of focusing on host country government
reform which addresses root causes of poverty and food
insecurity by helping people hold their own governments
accountable to spend U.S. assistance and domestic resources
effectively and make it sustainable. The World Vision
Development Food Assistance Activity in Bangladesh mentioned
earlier illustrates the impact of this critical Food for Peace
program component.

World Vision's Citizen Voice and Action programming
has been highlighted above in our Food for Peace
programming which serves as an effective model in promoting
social accountability and good governance. By facilitating
relevant, tangible and high quality civic education on
government policies and planning for food security, WV
supports civil society with the knowledge and confidence to
engage with local government officials on whether and how
government programs and policies are effective.

Through simple but compelling social accountability
approaches, World Vision is helping community leaders,
farmers, and other stakeholders to identify their key
priorities and needs, while facilitating local and national
platforms for them to address these priorities directly to
key decision makers in government.

World Vision's evidence-based best practices in this
area, addressing root causes and supporting greater self-
reliance, combined with Food for Peace strategy and
practice--both supporting communities to engage directly
with their governments over the most fundamental need of
food security--are a strategic combination. Social
accountability--or citizen-state engagement--is now an
`operational model' helping Food for Peace and its partners
to achieve better governance and sustainability for food
security, including in fragile states. Emerging World
Vision research is showing that this work increases state
legitimacy in fragile contexts, thus mitigating cycles of
ongoing conflict that threaten food security.

Further invest in development food assistance programming in
fragile contexts through Food for Peace.

Much of the humanitarian need today has been driven by
civil wars, instability, and unresolved political disputes
including in South Sudan and to some extent in Somalia. By
intervening in fragile states before they become failed
ones, future famines and food insecurity crises can be
averted.

Implement innovative and flexible approaches to
addressing wide-spread extreme poverty and vulnerability,
including through adopt multi-year, flexible funding.
Conclusion
At World Vision, our organization's theme this year is life in all
its fullness, as Christians, as people of faith we take this prophetic
call seriously, its central to our mission and all we do.
World Vision will remain focused and dedicated, alongside many
partners, in responding to the immediate needs of affected communities
throughout East Africa and beyond. But the window of opportunity to
avert a larger catastrophe is rapidly closing. We believe that if
governments including the U.S., international donors and humanitarian
actors all act swiftly, we can prevent this crisis from worsening, but
the time to act is now. If we don't, we will have failed in living out
our American values, and for many of us, our Christian call to care for
the least of these.
We hope that Congress and this Committee will reject the
Administration's budget proposal related to food aid programming and
continue to provide strong leadership and advocate for the funding and
programs that are needed to respond to this crisis. Additionally, we
stand ready as partners to work with the Committee to make improvements
to our food aid programs, so that the can better meet the needs of the
world's most vulnerable populations, while ensuring greater peace and
stability around the globe. We also urge Members of this Committee to
demonstrate strong support for the International Affairs Budget as
discussions around 2018 appropriations begins.
Thank you for the opportunity to testify today.
Appendix
World Vision East Africa Hunger Response Situation Report No. 5
25 May 2017

Key Highlights
Vulnerable populations in Somalia, southeastern Ethiopia,
and northern Kenya continue to face life-threatening acute food
insecurity, following delayed and erratic seasonal rains across
the Horn of Africa, according to the Famine Early Warning
Systems Network (FEWS NET).

Despite an unprecedented scale-up in donor contributions to
address the humanitarian crisis and prevent Famine[*] in
Somalia, additional relief assistance is urgently needed. The
late onset of seasonal rains, increased malnutrition levels,
and the ongoing cholera outbreak--all of which are compounded
by humanitarian access constraints--are immediate challenges to
be addressed.
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*Famine: `A catastrophic food shortage affecting large numbers of
people due to climatic, environmental and socioeconomic reasons,' UN
DHA, Glossary of Humanitarian Terms, 2008.

Severe drought has dried up water resources in half of
Kenya's 47 counties. An estimated three million people lack
access to clean water. Hygiene promotion activities and the
rehabilitation of water points, boreholes and water trucks are
urgently required, including in schools and health clinics.
Poor sanitation and shortage of safe drinking water is leading
to an increase of waterborne diseases, especially among
---------------------------------------------------------------------------
children under age 5.

5.5 million people in South Sudan are severely food-
insecure. The onset of the rains has added a set of natural
barriers, making it difficult to reach people in need of
assistance. The total number of people in need of humanitarian
and protection services is 7.5 million.

World Vision has received 37 percent of its desired funding
of an appeal for $110 million USD. While this money has enabled
a response to some of the most affected communities, the need
is far much greater and urgent. The unmet sum of over $69
million USD is urgently needed to scale up humanitarian
assistance in the four countries. Kenya remains the lowest
funded at 0.04 percent.
Situation Highlights

25M are in crisis and need humanitarian assistance.

$110.3M[**] required for humanitarian assistance.
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[**]All financial figures in U.S. dollars.

3.5M children under 5 are acutely malnourished.

844,900 children are severely malnourished.

14.4M people require health assistance.
Humanitarian Situation Overview
Ethiopia: Humanitarian requirements have increased with at least
2.2 million people needing food assistance, in addition to the 5.6
million relief food beneficiaries identified at the beginning of the
year. A scaled-up response is critical in curbing the spread of an
Acute Watery Diarrhoea (AWD) outbreak within Somali and other at-risk
regions. The region is the worst affected by the current outbreak of
AWD, accounting for 91 per cent of the reported cases.
Kenya: More than 2.6 million Kenyans are severely food-insecure and
this number is rapidly rising. Many pastoralist households are
experiencing crisis levels of acute food insecurity (IPC Phase 3).
During the lean season (July to September) many families will
experience emergency acute food insecurity (IPC Phase 4), just one step
away from famine. High levels of malnutrition are also prevalent across
the arid and semi-arid lands. Three sub-counties report Global Acute
Malnutrition rates of 30 percent, double the emergency threshold. An
estimated 553,000 children under age 5 and pregnant and lactating women
will require Blanket Supplementary Feeding in five counties over the
next 6 months.
Somalia: The humanitarian situation continues to deteriorate and
the possibility of famine in 2017 persists. Acute malnutrition is on
the rise across the country, increasing the risk of diseases. UNICEF
projects that over 275,000 children face or will suffer life-
threatening severe acute malnutrition in 2017. Major disease outbreaks
such as AWD/cholera and measles are spreading.
South Sudan: South Sudan is the world's fastest growing refugee
crisis. Among those seeking safety in Uganda, Sudan, Ethiopia, Kenya,
the Democratic Republic of the Congo (DRC) and the Central African
Republic (CAR) are around one million children. According to the latest
report from OCHA, 1.9 million people are internally displaced while 1.7
million South Sudanese refugees are living in foreign countries.
What World Vision Is Doing
Ethiopia

392,130 people reached with livelihood assistance.

84,510 people reached with health and nutrition services.

75,400 people reached with WASH services.

138,220 people reached with direct food assistance.
Kenya

202,680 people reached with livelihood assistance.

2,940 people reached with health and nutrition services.

8,580 children reached with protection and education assistance.

21,500 people reached with WASH services.
Somalia

57,645 people reached with livelihood and food assistance.

100,020 people reached with health and nutrition services.

1,380 people reached with protection and education services.

175,700 people reached with WASH services.
South Sudan

187,590 people reached with livelihood and food assistance.

83,625 people reached with health and nutrition services.

28,750 people reached with education and protection services.

167,500 people reached with WASH services.
People In Need of Assistance

2.7 million people targeted for humanitarian
assistance.

>1.5 million people reached with humanitarian
assistance.
Response Highlights

840,045 people reached with livelihood and direct
food assistance.

271,095 people reached with health and nutrition
services.

440,100 people reached with water, sanitation and
hygiene.

38,710 children reached with child protection and
education interventions.

30,034 people reached with shelter and non food items
interventions.
Gaps and Funding Requirements
(in millions U.S.$)

110.3M required for hunger crisis response.

World Vision Humanitarian Donors and Partners

Primary Contact Information
Christopher M. Hoffman,
Regional Humanitarian and Emergency Affairs Director.
E-mail: Christopher_Hoffman@wvi.org.
Skype: chrishoffmandrm.

Khary Dickerson,
Regional Resource Development Director.
E-mail: Khary_dickerson@wvi.org.
Skype: mansa31.

Mark Nonkes,
Response Communication Manager.
E-mail: Mark_Nonkes@wvi.org.
Skype: marknonkes.

The Chairman. The gentlelady's time has expired.
Ms. Salem, 5 minutes.

STATEMENT OF NAVYN SALEM, FOUNDER AND CHIEF EXECUTIVE OFFICER,
EDESIA INC., KINGSTOWN, RI

Ms. Salem. Thank you, Chairman Conaway, Ranking Member
Peterson, and the Members of the Committee.
My name is Navyn Salem, and I am the Founder and CEO of
Edesia, a social enterprise on a mission to treat and prevent
malnutrition for the world's most vulnerable populations.
From my office in North Kingstown, Rhode Island, I can look
out and see thousands of boxes run on conveyor belts outside my
office on the factory floor with a familiar USAID logo and a
message from the American people. This message, which my team
of 70 has helped spread to 50 countries, holds real meaning.
Inside this miracle food packet, next time, I will provide
napkins, includes peanuts from Texas and Georgia; milk powder
from Pennsylvania, New York, Indiana, and Michigan; vegetable
oil from Kentucky and Maryland; vitamins and minerals from
Illinois and New Jersey. What the American farmers and ranchers
sow and reap, what the American plants have processed with
utmost regard for quality is carried across state lines from
hard-working American truckers to my factory in Rhode Island so
that my team can take every ingredient and turn it into an
alchemy of lifesaving, ready-to-use therapeutic food, or RUTF,
that has the power to save lives.
Allow me to share a brief story with you. A year ago, I was
in a health clinic in rural Liberia passing by mothers sitting
on wooden benches waiting their turn to see the doctor. The
Ebola outbreak had just ended, and a semi-sense of normalcy was
returning. A young mother entered the clinic with a baby so
small I thought she wasn't real. I pulled her out of a long
line of patients waiting to be checked by healthcare workers
and placed her on a scale. She was 7 months old, and she
weighed 7 pounds. This is the same weight as my daughter, Mia,
was the day she was born. The little girl's name was Surprice,
and she was quickly diagnosed with severe, acute malnutrition.
Someone in her condition is too malnourished to be treated with
basic foods. I handed her this RUTF packet with the USAID logo
on it. After a few bites, everyone in clinic watched her perk
up right before our eyes. And it was that miracle that I have
witnessed so many times in rural clinics all over Africa.
With a solution so simple this little girl was given life
and renewed hope. And thanks to the combined efforts of
American farmers, manufacturers, transporters, Edesia, and
USAID, she may just grow up to be one of Liberia's next
leaders.
I am not the typical face of a nonprofit. I solve problems
through business and set goals that are sustainable,
measurable, and scalable. I run a world-class, advanced
manufacturing, state-of-the-art, 83,000\2\ plant that creates
jobs. We are laser focused on innovation and determined to save
the lives of those suffering from malnutrition. We have
purchased over a hundred million dollars of agricultural
commodities from 15 states. We are the largest international
exporter in our state. My team is busy working 24 hours a day
to make life possible.
Since 2010, these collective efforts have helped reach over
five million malnourished children in partnership with the
USDA, USAID, UNICEF, and the World Food Programme, agencies
which heroically deliver this critical food aid and assistance
in some of the hardest to reach, most inhospitable places on
Earth.
It was this week 70 years ago, June 5, 1947, that George
Marshall delivered a powerful speech. He said: ``Our policy is
directed not against any country or doctrine, but against
hunger, poverty, desperation, and chaos. Hunger and insecurity
are the worst enemies of peace.'' His words rang true, and they
ring ever true now. After World War II, it was France, Italy,
Germany that suffered from drought and extreme hunger. Today,
as we gather for this hearing, catastrophic famines are looming
in Yemen, Somalia, South Sudan, and Nigeria. Extreme hunger and
malnutrition threaten the stability and nations of our world.
If we want to fight terrorism, feeding people is one of the
most effective tools that we have to spread peace and
stability. Products like RUTF not only save lives, but they
build the brain trust of the next generation so that these
children have the tools to study in school, to become
productive members of their community, and to be our collective
future. When I see a box of RUTF from Rhode Island sitting in a
dusty clinic in Liberia, I am proud. I am proud because it
reflects the best of American agriculture, manufacturing, and
ingenuity. We in this room hold the power to continue this
heroic work, which for millions of malnourished children is a
matter of life and death. With strong, decisive leadership, you
as Representatives of the American people, can show the world
that there is no smarter way to put America first than by
helping to feed the world's most vulnerable populations.
I urge you, Members of this distinguished Agriculture
Committee, to do everything in your legislative power to
safeguard international food aid, including Food for Peace
Title II Program. It is a true and meaningful gift from the
American people.
[The prepared statement of Ms. Salem follows:]

Prepared Statement of Navyn Salem, Founder and Chief Executive Officer,
Edesia Inc., Kingstown, RI
Introduction
As the Founder and CEO of Edesia and a private citizen, I
appreciate the opportunity to submit testimony to the United States
Agriculture Committee Hearing for the Next Farm Bill: The Future of
International Food Aid and Agriculture Development. I would like to
thank the Members of this Committee for their commitment to food
security and agricultural development, both here and abroad. The robust
U.S. agricultural supply chain and food aid programs make businesses
like mine, and the impact they make, possible. Edesia\1\ is a Rhode
Island-based nonprofit social enterprise and manufacturer that works in
partnership with the U.S. Government to promote global stability and
national security for America by supplying evidence-based, lifesaving
nutritional support to vulnerable children worldwide. International
Food Aid is a critical part of the U.S. economy and an important tool
for our national security--it is an America first policy.
---------------------------------------------------------------------------
\1\https://www.edesianutrition.org/.
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Let me begin by sharing a story with you that I believe well
illustrates why I am here and why your continued commitment to food
security and agriculture development is so critical to creating a world
of hope and security for all Americans. A year ago I was in a health
clinic in rural Liberia, passing by mothers sitting on wooden benches
waiting their turn to see the doctor. The Ebola virus outbreak had just
ended and a semi-sense of normalcy was returning. A young mother
entered the clinic with a baby so small I thought she wasn't real.
I pulled her out of the long line of patients waiting to be checked
by the healthcare worker. The little girl's name was Surprice. I
unbundled her from her mother's back and placed her on the scale. She
was 7 months old and weighed only 7 pounds, the same weight as my
daughter was at birth.
Surprice had severe acute malnutrition. I handed her a packet of
ready-to-use therapeutic food, commonly known as Plumpy'Nut, a
lifesaving and revolutionary fortified peanut paste, specifically
designed to treat severely malnourished children, that does not require
refrigeration or the addition of water. It can reach the most remote
villages because of its 2 year shelf life and its simplicity allows
mothers to treat their children at home, freeing up critical hospital
beds and healthcare resources.
The foil packet I gave to Surprice was marked with the USAID logo
and the message ``Gift of the American People.'' Those were not empty
words. They held real meaning. Inside were peanuts from Texas and
Georgia, milk powder from Pennsylvania, New York, Indiana, and
Michigan. Vegetable oils from Kentucky and Maryland. Vitamins and
minerals made in Illinois and New Jersey. What the American farmers had
sewn and reaped and what the American processing facilities had
processed with utmost regard for quality, was carried across state
lines by hardworking American truckers to the Rhode Island factory so
that my team of 70 could turn every ingredient into an alchemy of
lifesaving ready-to-use therapeutic food--so that this one little girl
in Liberia could have her chance at life. After a few bites of the
fortified peanut paste, Surprice started to perk up and breathe easier
right before our eyes. We no longer felt so worried because we knew
this little girl was going to make it.

That is what we do at Edesia. With the help of American farmers,
manufacturers, and transporters, we strengthen the fabric of our world
one malnourished child at a time. There are 28 million pounds of
American agricultural products that go into our lifesaving efforts each
year. Through our work, we have infused well over $100 million dollars
into the U.S. economy.
Edesia and Our Products
Millions of children throughout Africa, Asia, Latin America, and
the Middle East are dying needlessly from severe acute malnutrition--a
completely preventable condition caused by a lack of adequate nutrients
in the diet--and this crisis is having an immediate and lasting adverse
impact on the stability of entire regions. The reality of something so
unimaginable in this day and age was what led me to start Edesia to
tackle this problem while creating jobs for my state and throughout the
supply chain.
Since our first USAID grant helped Edesia launch operations in
2010, we have manufactured enough lifesaving peanut-based ready-to-use
therapeutic and supplementary foods to help reach over five million
malnourished children in 50 countries in partnership with USAID/USDA
along with UNICEF and the World Food Programme, whose every day heroic
efforts to deliver aid and assistance in some of the hardest-to-reach,
most inhospitable places on our planet mostly go unsung.
In any given year on our planet there are over 35 million children
throughout Africa, Asia, Latin America, and the Middle East quietly
suffering from some form of acute malnutrition that will either rob
them of life or of their true potential. They desperately need
innovative solutions, including the kind of evidence-based, ready-to-
use therapeutic and supplementary foods we make in our factory. Only
20% of that need is being met, not due to lack of capacity, but due to
lack of funds and adequate programming.
GDP, Emerging Markets, and Global Security
The World Bank estimates that malnutrition reduces the GDP of
countries by as much as ten percent. This is not why we help save
lives, but the productivity increase is certainly a critical part of
what we do. Higher GDP leads to stronger markets for American products.
High-income countries are the biggest consumers of America's high-value
agricultural and food products, but demand is increasing at a robust
16% pace in lower-middle-income and low-income countries.\2\
---------------------------------------------------------------------------
\2\Andrea Durkin. March 2017. Growing Markets, Growing Incomes:
Leveraging Trade Facilitation for Farmers. Chicago Council on Global
Affairs. https://www.thechicagocouncil.org/sites/default/files/
leveraging_trade_facilitation_farmers_march17.pdf.
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While rising global economies expand markets for American goods;
hunger, food insecurity, and malnutrition are concurrently linked to
violence, conflict, migratory activities, and potentially
radicalization leading to political instability that ultimately affects
the United States.\3\ Ending malnutrition is fundamental to fighting
terrorism. A healthy, well-nourished child stays in school, stays out
of the clinic and out of trouble, and gives back to his or her family,
community, and world in significant and positive ways.
---------------------------------------------------------------------------
\3\Cullen S. Hendrix. April 2016. When Hunger Strikes: How Food
Security Abroad Matters for National Security at Home. Chicago Council
on Global Affairs. https://www.thechicagocouncil.org/sites/default/
files/Report_When_Hunger_Strikes_1604.pdf.
---------------------------------------------------------------------------
In a February 2017 letter, 120 retired military generals, from all
branches of the armed forces, wrote to Congressional leadership in
support of diplomacy and international aid and development.\4\ They
spoke out strongly that military inventions are not enough to confront
the crisis facing our nation and that the best way to keep our
military's men and women out of harm's way is to support stability in
vulnerable regions abroad.
---------------------------------------------------------------------------
\4\http://www.usglc.org/downloads/2017/02/
FY18_International_Affairs_Budget_House_
Senate.pdf.
---------------------------------------------------------------------------
Edesia-U.S. Government Partnerships
In 2010, Congress allocated $10 million to USDA's Foreign
Agriculture Services for a Micronutrient-Fortified Food Aid Pilot
Program (MFFAPP) intended to work with the public and private-sector to
develop new nutritional products. Edesia partnered with the National
Soybean Research Lab and a food factory in Haiti to develop a
specialized food for school children who otherwise did not have access
to hot lunch due to lack of water or cooking facilities.
USAID commissioned Tufts University in 2011 to evaluate how to
improve upon the nutritional aspects of their food aid baskets through
the Food Aid Quality Review.\5\ They found that putting nutrition at
the heart of the food aid agenda enhanced the impact and credibility of
USAID title II programming. This included an emphasis on products that
are ``fit-for-purpose,'' such as ready-to-use foods and fortified
blended foods (ex: corn-soy blend) for the treatment and prevention of
malnutrition, in addition to the standard bulk commodities that are
required to feed the general population during times of need. While
these enhanced nutritional products may be costlier per pound, their
positive impact on specific measurable nutrition outcomes that add to
the resilience of communities makes them a smart investment with a high
rate of return.
---------------------------------------------------------------------------
\5\Webb, Patrick, Beatrice Lorge Rogers, Irwin Rosenberg, Nina
Schlossman, Christine Wanke, Jack Bagriansky, Kate Sadler, Quentin
Johnson, Jessica Tilahun, Amelia Reese Masterson, Anuradha Narayan.
2011. Improving the Nutritional Quality of U.S. Food Aid:
Recommendations for Changes to Products and Programs. Boston, MA: Tufts
University.
---------------------------------------------------------------------------
Edesia has since 2010 participated in the farm bill-authorized,
International Food Relief Partnership (IFRP) program. This program
provides shelf-stable products to predominately faith-based groups
assisting especially vulnerable populations. In this climate of
austerity, we ask the Members of the House Agriculture Committee to
protect these vital programs in next farm bill.
President's Budget and National Security
While not a directly in the scope of this Committee, I wanted to
take the opportunity to address the President's proposed budget. The
White House budget proposal that requests removal of funding from Title
II Food Aid of the Agricultural Trade Development and Assistance Act of
1954 (Public Law 83-480) is in opposition to the humanitarian nature of
the American people and will result in job losses here in America. We
can be both America First and responsible global citizens. Financial
contributions generously provided by the American people and authorized
by Congress support the critical work the humanitarian sector and
government are doing, through Food for Peace, to further America's
mission abroad.
The world is currently in the midst of the worst cluster of
humanitarian disasters in recent memory, putting over 20 million people
at risk. With a famine declared in South Sudan and Somalia, Nigeria,
and Yemen headed in the same direction, on top of the ongoing conflict
and crisis in Syria, continued financial support of food aid and
humanitarian assistance, and strong leadership from the United States
is needed now more than ever. We saw support from Congress for the FY
2017 budget, and we hope to see that support continue in the budget for
FY 2018 and with the reauthorization of the 2018 Farm Bill.
Humanitarian aid is good for recipients, as well as the citizens of the
United States, as it provides both jobs and economic development here,
future trading partners abroad, and improved global security.
Hunger has the power to threaten the stability of nations. After
WWII, it was France, Germany, and Italy that suffered from drought and
extreme hunger. Today it is Yemen, Somalia, and Nigeria where terrorism
grows amid hunger. If our goal is to fight terrorism, then feeding
people is one of the most effective tools we have to spread peace and
stability and thereby keeping U.S. national security interests at the
forefront of our agenda.
For decades, humanitarian aid and food aid have garnered bipartisan
support from Congress and the White House. It was this week 70 years
ago that George Marshall delivered a powerful speech. He said, ``Our
policy is directed not against any country or doctrine but against
hunger, poverty, desperation and chaos. Hunger and insecurity are the
worst enemies of peace.''
His words rang true then and they ring ever true now. With global
food insecurity at all-time high levels--the highest since World War
II--this is nowhere near the time to pull away from the American
tradition of compassion and striving toward a better world for all.
Ending malnutrition is how the world gets stronger, safer, and more
resilient.
Conclusion
As the CEO of a U.S. social enterprise, I solve problems through
business in ways that are sustainable, scalable, and measurable. Edesia
creates jobs, is laser-focused on innovation and determined to save the
lives of those suffering from the deadly consequences of conflict,
drought, and natural disasters. For over 70 years, humanitarian aid and
food aid have garnered bipartisan support from Congress and the White
House, who understood not only the moral imperative of these actions,
but also the important national security benefits and the increased
economic opportunities that are created for our farmers, manufacturers,
and transporters. We, as Americans, need to continue demonstrating
strong, decisive leadership in this area and show the world that
Americans do not turn their back on human suffering.
A failure to act now could lead to not only an increase in hunger
and malnutrition but also to greater worldwide instability and
insecurity that will cost us far more in the future. With strong U.S.
leadership, we can consolidate the gains made in the past decade and
accelerate progress toward the elimination of extreme hunger and
malnutrition, to benefit both the United States as well as the world,
especially its most vulnerable people.
Members of this distinguished Committee, I urge you to do
everything within your legislative power to safeguard and shield the
funding that, as a true and meaningful gift of the American people, is
powerfully helping American farmers, manufacturers, and transporters
put food on their tables while it also does the critical work of
healing the wounds of our world that so desperately need mending.
In summary, we ask that this Committee preserve the positive
benefits of international food aid through:

Authorizing a farm bill that includes Food for Peace and
McGovern-Dole.

Acknowledging that science-based, high-impact commodities
hold a crucial place in food aid, in addition to staple
commodities.

Maintaining fit-for-purpose products, like ready-to-use
foods and fortified blended flours, that effectively treat
malnutrition in vulnerable populations.

Continuing to support research that positions the U.S. as a
leader in innovative products and advanced manufacturing.

Thank you again for providing me the opportunity to testify, and
thank you for holding this hearing--the support and involvement of the
agricultural community has been and will continue to be crucial in
keeping these important programs running. Please do not hesitate to
contact me if the Committee has any questions or would like further
information as you continue the 2018 Farm Bill process.
Edesia's New State-of-the Art 83,000\2\ Factory

Edesia Uses 100% American Commodities

Boxes of RUTF Ready-To-Ship to Somalia

Box of USAID Procured RUTF in Liberia Clinic

Before and After Treatment With Ready-To-Use Therapeutic Food

Edesia's Procurement 2017--by U.S. State

Edesia's Agricultural Procurement 2017

The Chairman. Thank you, ma'am.
Mr. Schoeneman, 5 minutes.

STATEMENT OF BRIAN W. SCHOENEMAN, J.D., POLITICAL AND
LEGISLATIVE DIRECTOR, SEAFARERS INTERNATIONAL UNION (AFL-CIO),
WASHINGTON, D.C.; ON BEHALF OF USA MARITIME

Mr. Schoeneman. Thank you, Chairman Conaway, Ranking Member
Peterson, and Members of the Committee, for allowing me the
opportunity to testify before you today. My name is Brian
Schoeneman, Legislative Director for the Seafarers
International Union, AFL-CIO. I am here today representing USA
Maritime, a coalition of American vessel owners and operators,
trade associations, and maritime labor.
President Trump announced in his inaugural address his
Administration would adopt an America first policy following
two simple rules: Buy American and Hire American. Those words
resonated deeply for those of us in America's maritime
industry, whether it was striking the first blow for
independence on the high seas in 1775, braving German torpedoes
in 1942, or Somali pirates in 2009, or even the natural dangers
of the sea each and every day, America's merchant mariners,
some of whom are with us in the audience today, have always
answered our nation's call to bring supplies to our soldiers,
commerce to our partners, and food, like Navyn talked about, to
hungry people.
America's humanitarian aid programs have always put America
first. From the beginning, these programs represented the best
ideals America had to offer. American food, grown in American
soil and harvested by American farmers, is shipped through
American ports on vessels crewed by American mariners to feed
millions of hungry people, all through the generosity of the
American taxpayer. This partnership has kept these programs
strong for over 60 years.
Yet, despite that strength, for the last decade or more,
these programs have been subjected to a protracted campaign to
eliminate the very thing that has made them so successful:
Americans.
USAID, along with foreign think tanks and their fellow
travelers, have done everything in their power to take America
out of American food aid. Well, everything except American
money. Claiming the need for added flexibility and efficiency,
these so-called food aid reformers have twisted these programs.
Not so long ago, the single biggest cost in the P.L. 83-480
Food for Peace Program was food. Today, according to the GAO,
food and ocean transport represent slightly more than \1/3\ of
the total outlays for P.L. 83-480. Added flexibility has
resulted in less food aid and more cash giveaways, food
vouchers, and foreign commodity purchases, all using money
intended for buying and shipping American food. This is wrong.
Congress should put an end to it.
I can't put it any plainer than this: Food aid is essential
to the American merchant marine. It is one of the largest
sources of cargo for our fleet today. We have seen what happens
when we lose that cargo. In 2012, Congress reduced the
percentage of food aid reserved for American flag ships from 75
percent to 50 percent. At the same time, USAID has been
diverting money away from the purchase and shipment of U.S.
commodities. The direct result has been the loss of 25 ships,
that is the equivalent of \1/4\ of our fleet, since 2011. But
more important than the ships, which are easily replaceable,
you give me enough money, I will buy you a ship today, is the
loss of jobs. These losses represent the equivalent of over
2,400 seafaring jobs. America depends on its merchant marine to
support our warfighters overseas. And without a merchant
marine, we would be held hostage to foreign interests in any
future conflict.
The same can be said for our foreign commerce. Our merchant
mariners are a vital national and economic security asset. And
food aid and cargo preference help keep those mariners working
in peace time so that they are available in wartime. Without
them, we cannot defend this country. It is that simple.
The men and women you see with me today are apprentices
from the Paul Hall Center for Maritime Training and Education,
Piney Point, Maryland. They are about to embark on a new career
in the maritime industry. Many of these men and women are
veterans. All of them are patriots. And all of them, if they
end up sailing deep sea, at some point, will carry food aid. It
is inevitable. We owe them a debt of gratitude for their
service, not the casual slander we often see in food aid reform
debates. Just yesterday, a Senate Foreign Relations Committee
staffer referred to them, to my face, as greedy and deserving
of no empathy in these conversations; they are merely an
inefficiency to be removed. He was wrong. These apprentices
represent the future of the merchant marine and our country,
and they deserve to be treated with respect, not accused of
greed or of starving children simply because they want to serve
their country at sea and get paid a living wage to do it.
American farmers and mariners have been the backbone of
advocacy in support of these humanitarian aid programs for
years. We have long warned that cutting us out of these
programs would lead eventually to their repeal. And what has
happened? For the first time in history, the President of the
United States is openly calling for the elimination of Food for
Peace and McGovern-Dole. This would be a disaster for America's
farmers and mariners and for hundreds of thousands, millions of
people, hungry people, around the world. The next farm bill,
you all should reject the calls for elimination of these
programs and return them to their America first roots. Congress
should roll back the added flexibility USAID has abused. It
should consider whether USAID is even the most appropriate
agency to continue implementation of these programs.
The USDA has run these programs for many years, and we were
very pleased with our support from them. And we would love to
see these programs back in the USDA. I would like to thank you
all for allowing me to speak before you. I am happy to answer
any of your questions.
[The prepared statement of Mr. Schoeneman follows:]

Prepared Statement of Brian W. Schoeneman, J.D., Political and
Legislative Director, Seafarers International Union (AFL-CIO),
Washington, D.C.; on Behalf of USA Maritime
Good morning, Chairman Conaway, Ranking Member Peterson, and
Members of the Committee.
I thank you for conducting this hearing and for giving me the
opportunity to testify. I would also be remiss if I did not thank all
of you for your continued support of the U.S. Merchant Marine, the
American farmers, and our international food aid programs. I am
testifying today on behalf of USA Maritime. USA Maritime includes
American vessel owners and operators, trade associations, and maritime
labor, and is committed to ensuring that the United States Merchant
Marine continues to sail, protecting America by supporting our
warfighters, enhancing our economy through trade, and providing good-
paying jobs to tens of thousands of Americans across our country. USA
Maritime stands to ensure that we, as a nation, are not soon wholly
dependent upon foreign interests to connect our economy to the world.
President Trump announced in his inaugural address that ``a new
vision will govern our land. From this moment on, it's going to be
America First.''\1\ The President announced his desire that his new
Administration ``follow two simple rules: Buy American and hire
American.''\2\
---------------------------------------------------------------------------
\1\President Donald J. Trump, Inaugural Address (Jan. 20, 2017).
\2\Id.
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For the United States Merchant Marine, these are words that
resonate deeply. The men and women of the United States Merchant Marine
have been putting America first for our entire existence. It was
American merchant mariners, angered by British threats to bombard
Machias, Maine, for no other reason than the residents were unwilling
to load a cargo of lumber destined to be turned into British barracks
in Boston, who struck the first blow for American liberty and
independence on the high seas in 1775.\3\ Fully a year before the
Declaration of Independence, these Merchant Mariners risked their lives
to defend what would become the United States of America.
---------------------------------------------------------------------------
\3\See generally, 1 Gardner Weld Allen, A Naval History Of The
American Revolution 8-10 (1913).
---------------------------------------------------------------------------
To put it simply--America's mariners have been putting America
first even before there was an America. Throughout the decades and
centuries that followed, American mariners would continue to risk their
lives, braving British men-o-war, Confederate commerce raiders, German
torpedoes, and the inherent dangers of the high seas to bring supplies
to our soldiers, commerce to our partners, and food to hungry people
around the world.
In peace and war, the United States Merchant Marine has answered
America's call and we have always put America first. Unfortunately,
when it comes to America's international food aid programs, too many of
our colleagues and friends in previous Administrations, and even some
Members of this House, have signaled they do not agree with this
approach.
As the House begins its deliberations on the next farm bill, we
urge the House Agriculture Committee to ignore the siren calls for
``greater flexibility'' from the so-called ``food aid reform
advocates'' who would like to fundamentally change our international
food aid programs from what they are today--reliable, time-tested, and
transparent U.S. commodity donation programs--into yet more foreign
cash giveaway programs that the American people do not support and will
not continue to fund. In fact, recent polling by Rasmussen indicates
that 57% of Americans view the level of foreign aid the U.S. Government
will give in this fiscal year alone as already too much.\4\
---------------------------------------------------------------------------
\4\Rasmussenreports.com, Most See U.S. Foreign Aid As A Bad Deal
for America, http://www.rasmussenreports.com/public_content/politics/
general_politics/march_2017/most_see_u_s_
foreign_aid_as_a_bad_deal_for_america (last visited June 1, 2017).
---------------------------------------------------------------------------
What has made America's in-kind food aid programs, including our
flagship P.L. 83-480 Food for Peace program,\5\ different has been
these programs' ``America first'' approach to foreign aid.\6\ American
agricultural commodities, grown in American soil and harvested by
American farmers, are shipped through American ports on vessels crewed
by American mariners to feed the hungry people of the world, all as a
result of the generosity of the American taxpayer. America remains the
single largest donor of international food assistance, giving over $2.5
billion in aid annually.\7\
---------------------------------------------------------------------------
\5\Agricultural Trade Development and Assistance Act of 1954, Pub.
L. No. 83-480 (1954), amended by the Food, Conservation, and Energy Act
of 2008, Pub. L. No. 110-246 (2008).
\6\In Secretary of State Tillerson's recent speech to State
Department employees, he stated that translating ``America first'' into
our foreign policy would be America first for national security and
economic prosperity. No other program under State's control translates
this vision like Food for Peace. Remarks of Rex. W. Tillerson, U.S.
Secretary of State (May 3, 2017), available at https://www.state.gov/
secretary/remarks/2017/05/270620.htm.
\7\U.S. Gov't Accountability Office, GAO-17-224, International Food
Assistance: USAID Has Controls for Implementation and Support Costs But
Should Strengthen Financial Oversight 1 (2017). [hereinafter 2017 GAO
Report].
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Over \1/2\ of that, roughly $1.5 billion, is funded through the
Food for Peace program.\8\ Food for Peace is overseen by the United
States Agency for International Development (USAID), while the Food for
Progress\9\ and McGovern-Dole\10\ programs are overseen by the United
States Department of Agriculture (USDA) Foreign Agricultural Service
(FAS).
---------------------------------------------------------------------------
\8\Id.
\9\ Food Security Act of 1985, Pub. L. No. 99-198, Title XI, 1110,
99 Stat. 1354, codified as amended at 7 U.S.C. 1736o (2017).
\10\Farm Security and Rural Investment Act of 2002, Pub. L. No.
107-171, Title III, 3107, 116 Stat. 295, codified as amended at 7
U.S.C. 1736o-1 (2017).
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Under America's cargo preference laws,\11\ at least \1/2\ of all
civilian agency cargoes, including title II commodities, must be
shipped on U.S.-Flag vessels. These laws make up a critical part of the
Federal Government's mix of laws and programs designed to ensure that
the United States maintains a merchant marine capable of carrying a
portion of our waterborne commerce. This has been the official policy
of the Federal Government since 1936,\12\ but it has long been a
cornerstone of American national defense.
---------------------------------------------------------------------------
\11\See Military Cargo Preference Act of 1904, as codified at 10
U.S.C. 2631 (2017), and Cargo Preference Act of 1954, as codified at
46 U.S.C. 55305 (2017).
\12\See Merchant Marine Act of 1946, 46 U.S.C. 50101 (2017).
---------------------------------------------------------------------------
Thanks to the strong domestic constituency that supports Food for
Peace--America's farmers, mariners, and the private voluntary
organizations that oversee implementation of these programs in various
countries around the globe--this program has enjoyed strong and
consistent support in Congress and in past Administrations. For more
than 60 years, this domestic support has shielded Food for Peace from
harsh spending cuts and efforts to significantly change the program.
Despite our best efforts, however, the ``food aid reform''
community has been moderately successful in its efforts to undermine
the simple formula that has made Food for Peace a success for over 60
years--sending American food overseas on U.S.-Flag vessels. Knowing it
could not essentially change a popular program that continues to work
as it was intended, it has adopted a ``death by a thousand cuts''
strategy, diverting more and more funding away from the core mission of
the program in the name of ``flexibility'' that already exists in other
Department of State programs under the Foreign Assistance Act or Global
Food Security Act.
For example, the 2014 Farm Bill again increased funds that can be
diverted for ``Section 202(e)'' administrative and overhead costs.\13\
USAID took that expanded authority and used it primarily to fund cash,
voucher, and foreign commodity purchase programs.\14\ This has led to a
major increase in these administrative and overhead costs within the
Title II Food for Peace program. In FY 2011, 202(e) costs were
approximately $180.7 million.\15\ In FY 2015, 202(e) rose sharply, to
$288.5 million, a 62% increase in less than 5 years.\16\ At the same
time that USAID is using 202(e) administrative funds to support these
cash and voucher projects, it is diverting massive amounts of funding
away from U.S. commodity purchases to ``internal transport shipping and
handling'' (ITSH) accounts and using these funds to support cash,
voucher, and foreign commodity purchase programs contrary to the
requirements of the Food for Peace Act.\17\ Further, GAO found that
USAID has failed to collect detailed information such as receipts or
other documentation to determine where all of this 202(e) and ITSH
funding is even going.\18\ As GAO noted: ``Cash transfers and food
vouchers are associated with different risks than U.S. in-kind food
assistance, such as risks related to the potential diversion of cash,
counterfeiting of food vouchers, and diversion of food voucher
reimbursement funds.''\19\
---------------------------------------------------------------------------
\13\2017 GAO Report at 6.
\14\Id. at 12, noting that ``[o]bligations of 202(e) funding for
cash transfers, food vouchers, and local and regional procurement in
Fiscal Years 2014 and 2015 constituted 75 percent and 96 percent,
respectively, of the additional authorized 202(e) funding that the
agency utilized for those years.''
\15\ See Hearing on Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations for 2016 Before the
Subcomm. On Agriculture, Rural Development, Food and Drug
Administration and Related Agencies of the H. Comm. on Appropriations,
114th Cong. 1232-34 (2016). (responses of USAID to written
interrogatories from Subcommittee Chairman Aderholt).
\16\Id. at 1232.
\17\2017 GAO Report at 33-34.
\18\Id. at 23.
\19\Id. at 35 n. 59.
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Over the 5 year period between FY 2011 and 2015, 202(e) and ITSH
funding accounted for 44% of all Food for Peace funding, according to
GAO.\20\ Yet USAID's own submission for the record before the House
Appropriations Committee indicated that as of 2015, 202(e) and ITSH
costs, which do not even include ocean shipping costs, now account for
nearly 60% of all the P.L. 83-480 Title II Food for Peace funding--
close to $800 million of the program's $1.3 billion in outlays.\21\ Of
the funding appropriated for Food for Peace, only 25% of it, roughly
$332 million, is used to purchase U.S. commodities and $106 million is
spent on ocean freight costs, or 8.2% of the total funding outlays for
Food for Peace.\22\
---------------------------------------------------------------------------
\20\Id. at 8.
\21\Supra note 15 at 1234 (FY 2015 data).
\22\Id. Notably, only approximately \1/2\ of this cargo is
allocated to U.S.-Flag vessels.
---------------------------------------------------------------------------
This is where we are today. Food for Peace sees only 35% of its
funding going to the purchase and ocean shipment of American-grown
commodities, while almost \2/3\ of the program is spent on nebulous
administrative costs, cash handouts, vouchers, and foreign commodity
purchase programs, all of which have other funding mechanisms elsewhere
within USAID's control. Using the generous but limited flexibility
Congress gave it in the 2014 Farm Bill, USAID has converted too much of
Food for Peace from a time-tested, transparent, reliable in- kind
program that promotes economic development at home, assisting both the
agriculture and maritime sectors, into a backdoor cash giveaway program
that GAO has concluded in multiple reports lacks appropriate oversight.
In light of these failings, and their apparent absence in USDA-run
programs, now may be the time to consider restoring more authority to
USDA for overseas humanitarian assistance.
Maritime industry proponents of Food for Peace have long decried
the constant watering-down of America's food aid programs, arguing that
by weakening the use of American-grown in-kind aid shipped on U.S.-Flag
vessels, the ``food aid reform'' community would damage Food for
Peace's credibility and domestic popularity.\23\ We are generally
shouted down by those interests, accused of starving children and
lining our pockets with U.S. taxpayer dollars.\24\ Our response has
invariably been that by removing American agriculture and maritime
interests from Food for Peace, the ``food aid reform'' community would
be undermining the future stability of these programs by destroying
their natural domestic constituency, and that eventually they would be
viewed as unnecessary, unsustainable spending with no domestic benefit.
That, coupled with the fact that Europe and other nations are lagging
significantly behind the United States in their humanitarian assistance
programs,\25\ it would be increasingly difficult to justify to the
American taxpayer giving away so much money when other nations are not
paying their fair share.
---------------------------------------------------------------------------
\23\See generally, Joint Hearing on U.S. International Food Aid
Programs: Transportation Perspectives Before the Subcomms. on Coast
Guard and Maritime Transportation of the H. Comm. on Transportation and
Infrastructure and Livestock and Foreign Agriculture of the H. Comm. on
Agriculture, 114th Cong. 1 (2015) (statements of Phillip J. Shapiro and
Brian W. Schoeneman) [hereinafter Joint Food Aid Hearing].
\24\See, e.g., Reforming Food Aid: Desperate Need to Do Better:
Hearing Before the H. Comm. on Foreign Affairs, 114th Cong. 5-6 (2015)
(statement of Christopher B. Barrett, Cornell University). Dr. Barrett
stated at the hearing that Congressional support for cargo preference
represented ``the trade [of] 11 or 12 children's lives for a single
job.''
\25\2017 GAO Report, supra note 7.
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This is exactly what has happened.
For the first time since the program's creation in 1954, the
President of the United States has openly advocated for the elimination
of the Title II Food for Peace program, and the McGovern-Dole program
along with it.\26\ Using the same argument that the ``food aid reform''
community has been making over the years, the President's budget would
dismantle Food for Peace and McGovern-Dole, indicating that these needs
could be better met through the International Disaster Assistance (IDA)
Account--while at the same time calling for cuts to that account.
---------------------------------------------------------------------------
\26\Office of Mgmt. & Budget, Major Savings and Reforms, Budget of
the U.S. Government Fiscal Year 2018 73 (2017).
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This would be a disaster for America's farmers and mariners, and
would have a direct, damaging impact on American national security.
We urge Congress to oppose the elimination of Food for Peace,
oppose the elimination of McGovern-Dole, and oppose efforts from the
``food aid reform'' community to fundamentally alter the Title II Food
for Peace program--a program that still partially continues to work as
intended, providing economic benefits to American farmers, millers,
mariners, longshoremen, and transport workers, while ensuring that
life-saving food makes its way into the hands of needy people across
the world. Finally, we would urge Congress to review whether USAID is
the most appropriate agency to continue oversight and implementation of
these programs, ``given the continued, unresolved lapses GAO has noted,
and the comparative absence of concerns with USDA's handling of these
programs throughout most of their history.''
It is difficult to understate the importance of food aid to the
United States Merchant Marine. While some in the ``food aid reform''
community have attempted to downplay the importance of food aid to the
maritime industry,\27\ those in the industry understand its critical
importance as one of the largest sources of government-impelled cargo
available to U.S.-Flag vessels today. The Maritime Administration
(MARAD) has made it clear\28\ that changes made to cargo preference in
the Moving Ahead for Progress in the 21st Century Act of 2013 (MAP-
21),\29\ which reduced the percentage of food aid cargoes reserved for
the Merchant Marine from 75% to 50%, have reduced the U.S.-Flag
international fleet from 106 vessels in 2011 to 81 as of May 1,
2017.\30\
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\27\See, e.g., Reforming Food Aid: Desperate Need to Do Better:
Hearing Before the H. Comm. on Foreign Affairs, 114th Cong. 5-6 (2015)
(statement of Christopher B. Barrett, Cornell University.
\28\Joint Food Aid Hearing (statement of Paul N. Jaenichen,
Administrator, Maritime Administration, U.S. Department of
Transportation). Administrator Jaenichen testified that the U.S.-Flag
international fleet declined from 106 to 78 in 2015, with the decline
corresponding directly to MAP-21. He went on to state that the loss of
preference cargo has had a ``dramatic effect'' on the maritime
industry, and is the primary cause of the U.S.-Flag fleet's decline
over the last 7 years.
\29\Moving Ahead for Progress in the 21st Century Act, Pub. L. No.
112-141 100124, 126 Stat. 915 (2012).
\30\U.S. Mar. Admin., United States Flag Privately-Owned Merchant
Fleet Report 1 (2017). MARAD produces this report monthly; it then
posted on its website and may be retrieved at https://
www.marad.dot.gov/consolidated_20170501/.
---------------------------------------------------------------------------
This is a devastating blow to our national defense sealift
capability.
The Consolidated Appropriations Act of 2014\31\ required MARAD to
prepare a report to Congress on the current and future impacts of
reductions in government-impelled cargo on the U.S. Merchant Marine as
a result of changes to cargo preference requirements, including those
made as part of MAP-21 and reductions to P.L. 83-480. The report, which
was transmitted to Congress on April 21, 2015, paints a clear picture--
without cargo preference, most of the U.S.-Flag fleet would disappear
and the reductions in food aid cargoes have had a real, meaningful
impact on the decline of the merchant marine.\32\ Over the last decade,
food aid has made up more than half of the preference cargo tonnage
carried by U.S.-Flag carriers--more than even Department of Defense
cargoes which, unlike food aid, are subject to a 100% cargo preference
requirement.\33\
---------------------------------------------------------------------------
\31\Consolidated Appropriations Act of 2014, Pub. L. No. 113-76,
169, 128 Stat. 598 (2014).
\32\See U.S. Mar. Admin., Report for Congress on the Impacts of
Reductions In Government Impelled Cargo on the U.S. Merchant Marine 2-3
(2015).
\33\Id.
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We have seen a major drop in the amount of food aid cargo carried
by the U.S.-Fleet, with total cargo amounts dropping 77% from 2000 to
2013. In 1999, 103 American ships carried 6,361,000 gross tons of food
aid cargo, both pre-packaged and bulk. In 2013, the fleet dropped to 76
ships, carrying only 1,070,000 tons of food aid.\34\ Although some
critics have wheeled forward various theories questioning the role of
food aid cargoes in sustaining the merchant marine,23 the correlation
between the decline of food aid tonnage and the decline of our fleet is
undeniable.
---------------------------------------------------------------------------
\34\Id.
---------------------------------------------------------------------------
Since 2010, the size of the U.S.-Flag fleet has dropped by 23%,
from 99 vessels to 81, and that number is expected to continue to drop
unless something is done to strengthen the cargo base.\24\
More important than the loss of the ships, however, is the loss of
peacetime merchant mariner jobs--and the mariners who work them. Amidst
all the discussion about ships and cargo, it is easy to forget (and
those who are most critical of cargo preference always do) the most
important aspect of the American Merchant Marine--what makes the
merchant marine fundamentally American--are the men and women who crew
these vessels.
These men and women, some of the most highly trained and skilled
mariners in the world, are the heart of our merchant marine. They are
the one irreplaceable asset in any discussion of maritime policy. These
are the same men and women who willingly brave the dangers of the sea,
who sail into combat zones with military cargo, or pirate-infested
waters with critical, life-saving food aid, who helped evacuate
Manhattan Island on September 11, 2001, and who provided the critical
sealift necessary to support our warfighters in every American conflict
from the earliest days of the Revolution to Operations Enduring Freedom
and Iraqi Freedom. While a ship may be bought in a day, it can take
years to train and certify a merchant mariner.\35\
---------------------------------------------------------------------------
\35\For more in-depth analysis on the difficulties in replacing
merchant mariners see generally Joint Hearing Testimony, supra note 23.
---------------------------------------------------------------------------
Our mariner pool is already at the breaking point, and General
Darren McDew, commander of the United States Transportation Command
(USTRANSCOM), has testified at multiple hearings in the House and
Senate that we do not have the number of mariners necessary to meet the
sealift requirements of a Desert Shield/Desert Storm-sized military
response abroad.\36\ The resulting loss of ships due in no small
measure to the reductions in food aid has resulted in the loss of
approximately 1,000 mariner jobs since 2010 alone.\37\
---------------------------------------------------------------------------
\36\See Joint Hearing Testimony, supra note 23. General McDew
stated in his comments before the two subcommittees that the mariner
pool is ``on the very hairy edge of being able'' to sustain immediate
sealift requirements, and would not be able to meet sustained
requirements beyond the first 4 to 5 months of a conflict. This
sustainment also does not include potential casualties or losses. See
also Hearing on the State of the United States Transportation Command
Before the Senate Armed Services Committee, 115th Cong. 1 (2017)
(statement of General Darren W. McDew) and Hearing on the Current State
of U.S. Transportation Command Before the House Armed Services
Committee, 115th Cong. 1 (2017) (statement of General Darren W. McDew).
\37\MARAD Impacts Report at 8.
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Supporting the military has been fundamental to the American
Merchant Marine for its entire existence. For example, since 2009,
privately owned U.S.-Flag commercial vessels and their civilian U.S.
citizen crews have transported more than 90% of the sustainment cargo
needed to support U.S. military operations and rebuilding programs in
Iraq and Afghanistan.\38\
---------------------------------------------------------------------------
\38\Hearing on the Maritime Administration's Fiscal Year 2016
Budget Request Before the Subcomm. on Coast Guard and Maritime
Transportation of the H. Comm. on Transportation and Infrastructure,
114th Cong. 2 (2015) (statement of Paul N. Jaenichen, Administrator,
Maritime Administration, U.S. Department of Transportation).
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Ensuring that we have an adequate mariner pool to crew the
privately owned U.S.-Flag international fleet (which includes vessels
enrolled in the Maritime Security Program (MSP)\39\ and non-MSP
vessels), our government fleets (including the civilians who crew
vessels of the Military Sealift Command), and our reserve fleets
(including the Ready Reserve Force and the National Defense Reserve
Force) has been the fundamental purpose of Federal maritime policy in
modern times and we are dangerously close to failing to achieve that
purpose.
---------------------------------------------------------------------------
\39\46 U.S.C. 53101-53111 (2017). The Maritime Security Program
is a jointly administered Defense Department and Maritime
Administration program of 60 militarily useful and commercially viable
ships. In exchange for a yearly stipend payment of $5 million designed
to help offset, but not completely cover, the increased cost of
maintaining a vessel under the U.S.-Flag, the Department of Defense has
access to the ships, mariners and intermodal networks of all the
contracted companies. The MSP fleet is the backbone of the U.S.-Flag
international fleet, but it can only function in conjunction with
government-generated cargo, including defense and food aid. Without
cargo, the vessels in the program are not commercially viable and would
not be sustainable, even if stipend payments were significantly
increased.
---------------------------------------------------------------------------
Without the cargoes made available under cargo preference through
Food for Peace and related foreign aid programs, it is clear the U.S.-
Flag fleet would continue its decline and the pool of mariner jobs
needed to provide the necessary mariners for national security needs
would dry up. Food aid is a critical component of America's strategic
sealift program. It is vital that Congress continue its steadfast
support for in-kind food aid and cargo preference as part of our
Federal support for the Merchant Marine.
Furthermore, it is critical that any changes made to Food for Peace
in the farm bill go towards returning the program back to its roots--as
an in-kind, America-first program fueled by American commodities
shipped on American vessels crewed by American mariners--and away from
the cash giveaway, voucher, and foreign commodity purchase programs
that USAID has carved out of Food for Peace. USAID has abused the added
discretion it was given in the 2014 Farm Bill for 202(e) and we would
urge Congress to rescind the intrusion of these programs into Food for
Peace. At the same time, USAID should be directed to introduce greater
oversight and financial accountability to the 202(e) and ITSH accounts,
including capping both of them at a more responsible percentage of the
overall title II program and limiting ITSH to the support of U.S. in-
kind food aid, so that the bulk of Food for Peace funding goes where it
is supposed to go--getting wholesome American commodities to those
facing the worst food insecurity. Finally, we would urge Congress to
review whether USAID is the most appropriate agency to continue
oversight and implementation of these programs, given the continued,
unresolved lapses GAO has noted, and the comparative absence of
concerns with USDA's handling of these programs throughout most of
their history.
The maritime industry stands ready and willing to continue our 60
year partnership with Congress and the agricultural community to make
our foreign food aid programs a continued success. As always, we are
willing to work together to find better solutions to speed up
deliveries, reduce costs and promote greater efficiency in our
international food assistance programs. What we will not do, however,
is sit back and allow the misguided good intentions of the ``food aid
reform'' community to permanently destroy these programs. They do too
much good for too many people at home and abroad and they must be
preserved.

The Chairman. Thank you, sir.
Dr. Jayne, 5 minutes.

STATEMENT OF THOMAS S. JAYNE, Ph.D., FOUNDATION
PROFESSOR OF AGRICULTURAL, FOOD, AND RESOURCE
ECONOMICS AND CO-DIRECTOR, ALLIANCE FOR AFRICAN PARTNERSHIP,
MICHIGAN STATE UNIVERSITY, KALAMAZOO, MI; ON BEHALF OF FARM
JOURNAL FOUNDATION

Dr. Jayne. Yes. Mr. Chairman, Ranking Member Peterson,
Members of the Committee, thank you for holding this hearing
today on the next farm bill and the future of international
food aid and ag development. Much of my statement today will
reflect policy recommendations that appear in a brief that I
coauthored in work that the Farm Journal Foundation has
commissioned and released earlier this year. It is on the web.
I am not going to go into too many details on recommendations
now because of the time.
But, my basic message, Mr. Chairman, is very simple. It is
that U.S. agricultural development assistance is in the U.S.
national interest. It creates jobs in the U.S. and win-win
situations both here at home and overseas. I am going to divide
this into two pieces.
I would first like to explain all of the various ways in
which that win-win occurs and why it is in the United States'
interests to continue to promote U.S. ag development
assistance; and second, to go into a little bit about how
taxpayer money spent on this could be actually made more
effective and create actually greater win-wins for the U.S. and
for our partners overseas.
First of all, why should the United States use taxpayer
money to promote agricultural development in developing regions
like Africa? Well, as most of you, I am sure, know, the
population growth in the world over the next several decades is
going to occur basically outside our borders. Africa is a place
right now that is growing rapidly. The population in Africa
today is one billion. But in 30 years, it is going to be two
billion people and account for 24 percent of the world's
population. This is where the demand for agricultural products
is growing most rapidly. And so it is in our interests to
convert those two billion people from food aid recipients into
people who have the purchasing power to demand food and to
encourage greater stability in the world and greater trade and
investment between developing regions and ours. The potential
for job growth over the next decade in the U.S. agribusiness
and farm growth is very clear. All of the research evidence
that has been done on this points it in the direction that it
is very much in our interests to promote agricultural
development in developing countries.
Nigeria, a country that used to be a big food aid
recipient, now is the third largest importer of U.S. wheat;
Ghana, is in the top ten rice importers of U.S. products; and
Angola, is the fourth largest importer of broiler meat from the
U.S. These are just examples of how U.S. agribusiness and
farmers can benefit from rising incomes in the third world.
So now why is it in our interests to promote agriculture?
Why agriculture in particular? Well, in regions like Africa
where 70 percent of the population is engaged in farming, the
best way to promote income growth, most effectively, is to help
develop those 70 percent of the population so that they have a
little bit more money in their pockets. And when they start
spending that money, they are spending it on all manner of non-
farm goods as well as food. And this is what accelerates the
transition of developing countries from agrarian societies into
non-farm diversified economies that are more plugged into world
trade. And so the potential here for win-wins with U.S.
agribusiness and farmers cannot be overemphasized.
A second major advantage to promoting U.S. ag development
assistance is because it promotes peace and stability. And many
of the prior speakers have emphasized this. I recall hearing
General Mattis on a television program about 2 or 3 weeks ago
talk about how effective each dollar spent on U.S. ag
development assistance can actually avert the need for five
times more money on bullets and military expenditures down the
line to quell civil unrest down the road. And it can also avert
the need for humanitarian disaster assistance to a much greater
proportion. It could be money well spent from the standpoint of
promoting peace and stability and averting future costs that
the U.S. might need to incur.
The third reason why it is a win-win for us is because it
promotes soft power. It projects soft power around the world
for the United States. Many of you understand that the good
will that is created by U.S. assistance cannot be
overemphasized. China certainly understands this well too. And
you might know that about a thousand Africans each year are
educated in Mandarin and then, after they become fluent in
Mandarin, are brought back to China to participate in advanced-
degree training in China. Then they come back to fill high-
level positions in African governments and in the private-
sector in Africa. And, as you can imagine, the influence that
those people have in determining future trade relations, future
private-sector investment, and so forth, is going to be quite
significant.
So we wouldn't want to wake up 10 years from now finding
that many of our opportunities to invest in Africa and to
derive benefits from trade relations in Africa are locked up
from us because of foresight of other countries to develop
these inroads while we don't do that.
So there are three reasons. And, by the way, if you go to--
--
The Chairman. Dr. Jayne, I am going to have to ask you to
summarize, you are way over time.
Dr. Jayne. Okay. All right. Thank you very much, Mr.
Chairman.
[The prepared statement of Dr. Jayne follows:]

Prepared Statement of Thomas S. Jayne, Ph.D., Foundation Professor of
Agricultural, Food, and Resource Economics and Co-Director, Alliance
for African Partnership, Michigan State University, Kalamazoo, MI; on
Behalf of Farm Journal Foundation
American Investment in Global Food Security
Mr. Chairman, Ranking Member Peterson, Members of the Committee,
thank you for holding this hearing today on, The Next Farm Bill: the
Future of International Food Aid and Agricultural Development. I
appreciate the opportunity to provide testimony on U.S. Agricultural
Development efforts and its potential to sustainably promote food
security, rising living standards, the development of markets and
trade, and more stable and secure nations in developing regions around
the world.
I am Thomas Jayne, University Foundation Professor of Agricultural,
Food, and Resource Economics at Michigan State University and Co-
Director of the Alliance for African Partnership. Much of my statement
today will reflect policy recommendations which appear in a brief that
I co-authored, in work that the Farm Journal Foundation commissioned
and released earlier this year, on the subject of human and
institutional capacity-building for African agriculture and its
benefits to the United States. Two other policy briefs were also
commissioned and released by the Foundation earlier this year on the
topics of agricultural research and agricultural trade technical
assistance. These papers were commissioned to provide recommendations
on how U.S. agriculture can more effectively improve living standards
in developing areas while simultaneously benefitting U.S. agriculture
and agribusiness more generally. Fundamentally, I believe that these
three briefs demonstrate the great value that U.S. investments in
agricultural development provide to the American people, and that U.S.
Agricultural Development and Research investments should continue to be
fully funded.
In this written testimony, I will first provide evidence that
agricultural growth in Africa accelerates broad economic growth and
represents a win-win for both Africans and Americans, especially U.S.
farmers and agribusiness. Second, I argue that in order to capitalize
on these win-wins for the U.S. and for Africa, U.S. development
assistance needs to emphasize the sustainable development of African
agricultural institutions--the same types of organizations that U.S.
farmers benefited from so greatly in our own country. Third, I provide
some specific recommendations to enable U.S. development assistance to
effectively achieve these win-win outcomes.
Promoting Agricultural Development in Africa Is In the U.S. National
Interest
U.S. investments in development builds markets and trade,
contributes to rising living standards, promotes stability, and creates
win-wins for host countries and US interests. According to USAID, 43 of
the top 50 consumer nations of American agricultural products were once
U.S. foreign aid recipients. One of these countries, Indonesia, has
gone from being the largest recipient of USDA food assistance just ten
years ago, to becoming the United States' ninth-largest export market
for agricultural, fish and forest products. In fiscal year 2010, the
United States exported $2.3 billion worth of agricultural goods to
Indonesia, a six-fold increase over the course of a decade. Similarly,
South Korea, once a major US aid recipient is the 6th largest importer
of US agricultural products in 2016, importing US corn, meat, and other
commodities (USDA).
Africa is going to be the next big growth market for U.S.
agriculture and agribusiness. This is because of the region's rapid
population growth, income growth, and urbanization. Roughly 70% of
Africans are currently engaged in agriculture. But this statistic is
declining swiftly as the region develops. Success in promoting
agricultural productivity will provide millions of African farmers with
more income, which they spend in the local economy, raising the demand
for goods and services in the non-farm economy. In this way, and just
as it has in Europe and the USA over the past 150 years and more
recently in Asia, agricultural productivity growth generates new jobs
and new investment in agribusiness and in the broader economy,
contributing to a transformed and diversified economy in which the
majority of people live in urban areas and are in non-farm jobs.
The data presented in the tables in the Annex shows the following:
(1) because of rapid population growth, food imports into Africa are
almost certain to continue to rise dramatically; this will especially
be the case with continued strong economic growth, as this causes more
rapid urbanization and transition of the labor force from farming to
non-farm activities; (2) the rate of economic growth in Africa will
continue to be tied to the performance of its agricultural sector; and
(3) strong agricultural growth in Africa and the broader income growth
that it generates, will accelerate the rate of food imports, and most
of the main food imported into Africa are crops exported by North
American agribusiness. With the exception of South Africa, the region's
agricultural exports (mainly tea, cocoa, coffee, cotton, tropical
fruits, and cut flowers) generally do not compete with U.S. farmers.
To summarize so far:

1. Agricultural productivity growth is at the heart of Africa's
economic transformation. With nearly 75 percent of poor
people in developing countries living in rural areas,
growth in the agriculture sector has been found by the
World Bank, on average, to be at least twice as effective
in reducing poverty as growth in other sectors. Over the
past 15 years, African governments that have effectively
promoted farm productivity growth have enjoyed faster rates
of poverty reduction, higher rates of labor productivity in
the non-farm segments of the economy, and a more rapid exit
of the labor force out of farming. Because the economies of
most African countries still depend largely on the
performance of agriculture, public investments in
agricultural productivity growth will be an important
component of an effective youth employment strategy. Young
people between 15 and 34 years of age account for roughly
60 percent of Africa's labor force. Often considered more
of a burden than a benefit, Africa's youthful workforce
could open up a wide range of economic opportunities in
farming, in the downstream stages of agrifood systems and
in the broader non-farm economy, with the right mix of
policies and public investments toward agriculture.

2. Africa's economic growth is in the United States' economic and
national security interests, for the following reasons:

Sub-Saharan Africa imports roughly $45 billion of food
products annually--7 times more than it did in 2000. The
region's food imports will continue to rise rapidly,
especially if the region continues to develop as it has
recently. By 2050, sub-Saharan Africa will contain 2.1
billion people--23 percent of the world's population
compared to 12 percent today. Rapidly rising population and
incomes in Africa will increase the demand for a safe,
affordable, and sustainable global food supply. U.S.
farmers and agribusiness can help themselves by helping
Africa to meet its rapidly growing food needs, by investing
in the region's agrifood systems, and by supporting a
sustainable and efficient global food system.

Data from USDA's Foreign Agricultural Service confirms
that sub-Saharan Africa is one of the fastest-growing
regions for U.S. agricultural exports. Looking forward,
middle class growth in Sub-Saharan Africa is expected to
grow by more than 80 percent by 2022, and will lead all
regions, except South Asia, in growth of food sales, which
are expected to increase by nearly 60 percent over the next
decade. 2016 export figures from USDA show that Nigeria is
now the third-largest U.S. wheat market, Angola is the
four-largest broiler meat market, and Ghana ranks as one of
the top ten U.S. rice markets.

In addition to creating U.S. export opportunities,
sustainable agricultural development in Africa also
promotes political and economic stability in the region,
contributing to U.S. national security. It is increasingly
understood that effective U.S. development assistance
programs will avert the need for subsequent and more costly
military and disaster response expenditures. Ultimately, a
country that can ensure adequate food for its people is
more likely to be politically stable. Retired military
leaders in the U.S. agree. On 27 February 2017, 120 retired
three and four-star U.S. military generals and admirals
sent a letter to Congressional leadership to share their
``strong conviction that elevating and strengthening
diplomacy and development alongside defence are critical to
keeping America safe.''
Toward More Effective U.S. Development Assistance Programs
While the evidence is clear that promoting agricultural growth in
Africa is in the U.S. national interest, the realization of these win-
wins will require that U.S. development assistance is actually
effective in promoting agricultural growth. U.S. development assistance
must therefore be as effective as it can possibly be to have its
desired effects. Fortunately, there is plenty of evidence to guide us.
Those who oversee development programs need to recognize how
dramatically the socioeconomic and political landscape in Africa has
changed over the last several decades. There are at least three major
differences to be taken into account:

First, many more Africans today possess job expertise
related to agrifood systems, both in the public and private-
sectors, than 25 years ago. Many were educated internationally,
possess valuable technical skills, and can operate effectively
in their countries given superior knowledge of local culture
and connections with centers of local power. Many are eloquent
spokespersons and advocates for African agriculture and are
capable of influencing their own governments' investments and
policies. An effective U.S. strategy toward African
agricultural development will engage African professionals more
than in the past.

Second, African governments increasingly insist that
international support be guided to build their own public R&D,
extension, and policy analysis institutes. They increasingly
disapprove of, and are frustrated by, foreign development funds
setting up parallel channels that compete with the mandates of
their own public agricultural institutions.

The U.S. (and westernized countries more generally) are now
facing greater competition from very different forms of
development assistance, namely from China. China is today
investing major economic, political and social capital into
Africa to build markets for Chinese business. And it is
starting to pay dividends. Each year, China trains over 1,000
prominent Africans in Mandarin, many of whom subsequently
travel to China to obtain advanced graduate degrees in various
subjects. Upon their return to Africa, these Chinese-trained
professionals assume high-level positions in African
governments and the private-sector, and may look favourably at
future alliances and business ventures with Chinese firms, much
as U.S.-trained African professionals did in the 1970s and
1980s before their numbers were sharply curtailed starting
around 1990. See https://en.wikipedia.org/wiki/
Confucius_Institute and https://en.wikipedia.org/wiki/Hanban to
get an appreciation of the extensive ways in which Chinese
educational and development organizations are influencing the
political and economic environment in a rapidly growing and
developing region that constitutes potentially valuable growth
markets for U.S. business.
Strengthening the U.S. Approach: A New Model of Technical Assistance
How can U.S. agricultural development assistance more effectively
help achieve Africa's agricultural development vision? We know what
institutions have helped U.S. agriculture become among the strongest
such sectors in the world over the past 150 years--national
agricultural research and extension systems (e.g., USDA, extension
service), policy institutes and think tanks (e.g., ERS, foundations,
institutes), science-based land grant universities producing and
extending new technologies and know-how to farmers, agricultural
training colleges and vocational schools. Strengthening those same
types of institutions in Africa can help to sustainably launch their
agricultural sectors as well.
Building agricultural institutions all over the world has entailed
three components: talented people with technical skills, facilities
(lab equipment, budgets for field trials and other recurrent costs) and
operations management.
Of all types of agricultural expenditures, spending on research and
development is among the most crucial to growth, yet most African
agricultural research systems are woefully under-funded. Their
weaknesses constrain the pace of agricultural productivity growth in
the region. Asian farmers benefit from the fact that their governments
spend over eight times more annually on agricultural R&D on average
than African governments. Not surprisingly, the pace of agricultural
productivity growth in Asia has eclipsed that of Africa over the last
several decades.
And because the benefits of most agricultural R&D investments
accrue broadly and cannot be captured by firms investing in them, there
is a strong role for sustained support for public R&D. Enhancing the
capacity of African public agricultural R&D and extension systems
should be a priority area for U.S. assistance.
Unfortunately, little progress has been made over the past several
decades in creating African universities and scientific crop and
livestock institutes capable of developing improved technologies
appropriate for the wide range of African farming conditions.
Similarly, little progress has been made to rehabilitate weak national
agricultural extension systems. U.S. development assistance has
typically addressed these weaknesses by providing grants to
international organizations, private development-oriented companies,
and international universities, developing alternative modes of
technology transfer and extension. A key challenge for U.S. development
assistance will be to find cost-effective ways of building the capacity
of local institutions--those providing R&D, extension, education,
policy analysis, and dissemination--to support agricultural
productivity growth and broader economic transformation in the region.
To do so, it is necessary to identify the parts of U.S. assistance that
are working well, those that aren't, and find ways to improve outcomes.
U.S. development assistance can better leverage the expertise of US
Agriculture in this process. The United States has one of the most
dynamic and productive agricultural systems in the world. Historians
and economists point to the land-grant university system, the U.S.
Cooperative Extension Service, the USDA and its Economic Research
Service (ERS), and other public agricultural institutions as major
drivers of US agricultural growth. The United States is capable of
providing needed leadership and expertise to support the development of
strong agricultural institutions in Africa - a precondition for the
region's sustainable development.
Bottom line: We propose that the main thrust of a new approach be
to shift the role of U.S. institutions from providing the technologies,
services, and answers to equipping African organizations to do so
themselves. Over the span of the next 1 or 2 decades, this will be the
most effective and cost-saving approach to achieving win-win outcomes
for African and U.S. interests.
How To Develop Mutually Beneficial Partnerships Between U.S.
Development Partners and Local Agricultural Organizations
If we are looking to transform Agricultural Development to generate
better results, with fewer financial resources, helping African
institutions more directly to do more will allow U.S. dollars to go
farther. Grantees raise revenues through overhead rates on the grant
and enhance preeminent capacity in particular thematic areas. Overhead
charges may account for as much as 50 percent of the total value of
U.S. grants to some grantees, such as international organizations,
universities, NGOs, and private for-profit companies and interests may
not align with the grantor's interest in building capacity to phase out
over time.
As a result, capacity building assistance is often less effective
than it could be. International universities play an important `public
goods' role in producing policy-relevant knowledge and new technologies
that can be successfully adapted in developing countries and by
discovering emerging trends that shape public discussions on important
topics in African agriculture. Continuing this type of work is crucial
but should be done in a way that engages local African institutions in
the process as equal partners.
U.S. capacity building programs must also consider how to make
long-term individual capacity building more cost-effective. The
training of scientists with master's and doctoral degrees at major
land-grant universities in the United States costs at least $65,000 per
year when relocation costs, living costs, and overheads are counted.
The total cost is five times that of producing MSc graduates through
the African Economic Research Consortium's Collaborative Masters in
Agricultural Economics and Extension sandwich program at the University
of Pretoria, which may serve as a model for experimentation and
replication in other fields. This program allows graduate students from
developing countries to get classroom training at the University of
Pretoria, but conduct field research for their theses in their home
countries under the joint supervision of local and international
professors. Where regional demand is sufficient, U.S. universities may
also consider providing affordable graduate-level training at overseas
campuses in collaboration with one or more African universities.
Stop Bypassing Local African Policy Institutes and Universities
Few African-led policy institutes or universities have been
centerpieces of long-term U.S. capacity building support. Despite some
notable successes in recent years whereby U.S. development assistance
has built the capacity of local policy research institutes, progress
has generally been very limited. The perception that these institutions
are weak has effectively sidelined them in policy-oriented grant-making
processes. Instead, significant grants intended to assist in developing
agricultural policy, monitoring and data generation capacity have been
allocated to international organizations that provide important
services to local organizations, such as ministries of agriculture, but
that devote a small fraction of their budgets to helping African
organizations deliver such services themselves.
The task of transforming African agriculture should therefore shift
to encouraging leadership from African experts and organizations, even
as both international and local players remain involved. It is not an
either/or issue but one of achieving the appropriate balance, with
dynamic, cooperative partnerships as the foundational principle.
Effective U.S. assistance will also recognize that collective action is
required to address many types of challenges, such as climate change,
sustainable agricultural intensification, and promoting free and fair
trade. Currently, development assistance tends to side-step many
collective action problems by creating parallel organizations and
systems that can be sustained only as long as donor projects remain
funded.
The U.S. Congress should consider an approach that more effectively
encourages relevant U.S. agencies to recognize the long-term nature of
capacity building work in key agricultural institutions in developing
countries, and give them the authority to provide appropriate funding
and oversight frameworks. It is crucial that U.S. efforts also involve
significant investment on the part of the national governments in
Africa--they must have `skin in the game', to leverage U.S.
investments, ensure sustainability and bolster national agrifood
systems to maintain progress once donor funds are no longer available.
As a response to the global food crisis in 2007-9, several Members
of the 111th U.S. Congress introduced legislation that would have
created a U.S. global food security strategy that included the
establishment of a Higher Education Collaboration for Technology,
Agriculture, Research, and Extension (HECTARE) Program designed to
develop and sustain the education, research, and institutional support
for a developing country's agricultural science and education sector.
The bill was not enacted into law.
Global leaders committed themselves to addressing global U.S.
assistance at a G8 Summit in L'Aquila Italy in 2009. The United States
responded by establishing the Feed the Future program. While
comprehensive in a number of areas such as support for women and
smallholder farmers, market development, and access to seeds, a strong
higher education and human and institutional capacity program is
absent.
A single HECTARE-type program has been established, and that one,
Innovative Agricultural Research Initiative (iAGRI) is funded at the
USAID Mission level in Tanzania. Ohio State leads a consortium of six
U.S. universities--Michigan State, Virginia Tech, University of
Florida, Tuskegee, Iowa State--working to build both human and
institutional capacity at Tanzania's Sokoine University. The iAGRI
program has been very successful in helping the Tanzanian agricultural
sector, and represents an example worth emulating.

Recommendations to consider in the Farm Bill:

Capitalize on USDA's extensive knowledge and technical
expertise to enhance capacity within (1) local agricultural
extension systems working with millions of farmers; working
from a local institutional base and (2) policy analysis units
in developing nations, especially on SPS technical regulations,
trade facilitation, and overcoming barriers to markets. USDA
should undertake to develop monitoring and evaluation
techniques that are more suitable for the long-term investments
and payoffs that are characteristic of institution-building
efforts. For instance;

The current Farmer-to-Farmer program could be
augmented to address intuitional capacity building needs in
the areas they are serving, from a local institutional
base.

Congress could also give USAID the flexibility to
offer USDA extension personnel and other agricultural
specialists long-term assignments to work with counterpart
institutions in Africa. This approach might allow USDA to
apply its domestic extension experience internationally to
strengthen counterpart African public sector extension
systems.

Expand the Innovative Agricultural Research Initiative
(iAGRI) program model established at the University of Sokoine
in Tanzania to a multi-country pilot to scale up teaching,
research, and extension programs that address organizational
development challenges by providing management training and
matching local organizations with sister organizations in the
U.S., at a fraction of the cost of training in the U.S. The
iAGRI project represents a unique combination of fostering a
range of agricultural institutions within Tanzania, and similar
efforts should be encouraged elsewhere in Sub-Saharan Africa.
In addition to costing a fraction of what a U.S. based model
costs, the host African institutions provide resources, further
leveraging U.S. dollars and building sustainability.

Open the Cochran Fellows program to training government
officials and private-sector employees charged with overseeing
SPS standards-setting testing and certification of food and
agricultural products, with the aim of bringing those efforts
up to international standards.

Bolster funding and flexibility for USDA's Foreign
Agricultural Service, both to expand coverage of agricultural
attache offices in developing countries and to increase the
level of expertise in existing offices, in order to better
assist U.S. agribusiness firms operating within developing
countries and those development activities requiring
agricultural expertise, especially as they relate to trade.

Create mechanisms to help land-grant faculty members with
agricultural experiment station appointments through funding
from the Hatch Act to identify and recruit scientists from
universities in developing countries to build local programs of
agricultural research, extension and market information
dissemination.

Under the current Peace Corps program, create a 1 to 2 year
agricultural specialization program for recent agriculture
graduates and faculty from U.S. institutions in partnership
with 4-H or Future Farmers of America (FFA) that focuses on
strengthening the capacity of agricultural education and
extension in developing countries. AgriCorps is a great private
U.S. model that could be authorized and supported.

As some development agencies and private foundations do,
mandate lower overheads on grants to international development
partners.

For grants where the lead grantee is an international
partner, consider putting greater oversight and direction on
the activities of U.S. partners--universities, NGOs, and
private development firms--so that their activities directly
target capacity building objectives within the grant. In many
cases, this will require more intensive official review of
grant budgets to ensure that sufficient grant funds are flowing
to recipient organizations and that the effort expended by U.S.
university staff is devoted to directly supporting particular
objectives of the grant. This could apply across USDA programs
to ensure more sustainable outcomes and local ownership.

Where appropriate, require that substantial shares of total
project funds be subcontracted to local African partners
(perhaps with a minimum threshold) with oversight of how such
funds are allocated.

In addition to ensuring that U.S. assistance contributes to
national plans, Congress should consider requiring that to the
extent possible, U.S. development assistance be contingent upon
financial or in-kind commitments from the host government to
ensure mutual ownership and sustainability.

USDA may wish to build exit strategies into international
programs that aim to graduate over time. To do this, USDA
should consider mandating that capacity building efforts with
national and local institutions be built into requests for
proposals, and include appropriate budget lines with
milestones. These aspects should be evaluated to ensure that
international development partners support national systems
rather than parallel ones, and build the capacity needed to
phase down U.S. assistance.

For instance, the McGovern Dole program was authorized
in 2002, and includes flexible funding in support of
capacity building to facilitate government ownership and
support the eventual phase out of U.S. assistance. To
further incentivize capacity building and government
ownership, we recommend that the House Agriculture
Committee consider report language to incentivize better
coordination and grantee support to local institutions by
making USDA awards contingent on direct capacity building
support with clear goals, budget lines and timelines for
the eventual graduation of U.S. assistance and hand over of
programs to national partners, where appropriate.

Consider new models of partnership between U.S. and
African universities to reduce the costs of educating the
next generation of advanced degree holders in Africa. As
indicated above, programs such as iAGRI and the African
Economic Research Consortium's Collaborative Masters in
Agricultural Economics and Extension may be models to
explore. Where regional demand is sufficient, U.S.
universities may also consider partnering with African
universities to provide affordable graduate-level training
at overseas campuses.

Domestically, U.S. Agriculture needs to maintain its comparative
edge. After 150 years of investing in Public Agricultural Research,
U.S. farmers are the most productive in the world, but China, Brazil
and India are catching up and the three countries outspend the U.S. by
$2.66 for every $1 the U.S. spends. To ensure U.S. agriculture
maintains its edge in productivity and innovation, we need ensure that
we have adequate funding for agricultural research here at home. On the
authorizing side, recommendations to consider under the research title
to better leverage R&D resources and expertise could include;

Giving USDA the flexibility to fund basic and applied
research projects that are conducted outside the United States
by lowering bureaucratic barriers for USDA (and State
Agricultural Experiment Stations (SAESs)) engagement in
international R&D by amending Section 1402 of the National
Agricultural Research, Extension, and Teaching Policy Act of
1977. This would facilitate more work which is beneficial to
both U.S. and foreign producers, such as on plant or animal
disease, and could also strengthen the collaborative
relationship between USDA and USAID on agricultural research,
both in terms of research planning and execution.

Revisit the basis of the formula funds provided for state
agricultural experiment stations, putting more weight on the
relative values of agricultural production and nutrition as the
bases for cross-state allocation. Combined with more stringent
state-matching requirements, moves in this direction could
strike a balance between Federal versus state funding, in which
efficient financing principles would call for financing
``local'' public goods using ``local'' taxes. This shift could
also spur more emphasis on nutrition.

Create a commodity check-off program or research assessment
aimed specifically at generating funds for agricultural
research to be managed outside existing U.S. check-offs
programs. To make such a program palatable to grower groups,
the government could offer matching funds (up to some
predetermined limit), thus splitting the R&D burden between
check-off programs and general tax revenues. Including other
industries that benefit from agricultural R&D in the scheme
(such as input suppliers and food processors) would allow for
even more agricultural R&D and, if implemented wisely,
substantially correct the persistent under-investment in
agricultural R&D.
Conclusions
The time has arrived for the United States to invest directly in
long-term capacity building of African universities, agricultural
training colleges, vocational schools, national crop science research
organizations, extension systems, and policy analysis institutes.
International private companies, universities, and NGOs have important
but increasingly redefined roles that put African institutions in the
lead. African governments should show greater financial commitment to
building the capacity of public agricultural organizations, and
innovative cost-sharing arrangements among foundations, international
development agencies, and African governments might provide scope for
leveraging greater mutual commitment to the development of African
agrifood systems.
There are strong mutually shared aspirations in the United States
and throughout Africa that could be realized through more effective
support for African agriculture. U.S. and African governments share
core interests in promoting private investment in African food systems
in partnership with local firms and in supporting fair agricultural
trade and a sustainable global food system. It is increasingly
recognized that African agricultural exports in the majority of cases
do not compete with U.S. farm interests and are in most instances
highly complementary. Rising farm incomes in Africa promote growth
multipliers that expand private investment and employment opportunities
in African agrifood systems and more broadly in the rest of the
economy. Rising incomes in Africa also promote U.S. export interests.
Moreover, sustainable agricultural development in Africa promotes
political and economic stability in the region. These are the benefits
that would emerge from strong partnerships between African governments,
the private-sector and millions of African farmers and entrepreneurs
supported by enlightened U.S. development assistance programs.
The United States can help the stronger African universities and
research institutes to carry out many of the land-grant activities that
U.S. universities undertake at home, providing know-how and extension
support to farmers and local agribusiness firms, and training the next
generation of young Africans to contribute to their nations'
development. Once enacted, the proposals made here will take time to
generate their full impact. This is why there is no time to waste in
getting started.
* * * * *
All three agricultural policy briefs commissioned by the Farm
Journal Foundation can be downloaded at the following URL: http://
www.farmersfeedingtheworld.org/policy-briefing/.
Annex
Figure 1. Sub-Saharan Africa's Share of World Population Will Rise From
12% to 23% to 35% Between 2015 to 2050 to 2100

Source: Jayne, et. al., 2017.
Figure 2. GDP Growth in Sub-Saharan Africa Tracks Agricultural GDP
Growth, 1970-2014

Source: ACET, 2017.
Figure 3. Value of Food Imports by Sub-Saharan African Countries and
Top Commodities Imported

Trends in Food Imports (1,000$), 1961- Share of Top Ten Food Imports
2013 (2013), % Total Food

Source: ACET, 2017.

Table 1. The Top Five Foods and the Top Five Food Imports in Sub-Saharan
Africa, By Sub-Region, 2013
------------------------------------------------------------------------
Top five Western Middle Eastern Southern
foods Africa Africa Africa Africa
------------------------------------------------------------------------
Consumption
------------------------------------------------------------------------
Top five 1. Rice 1. Cassava 1. Maize 1. Maize
foods (by 2. Cassava 2. Maize 2. Wheat 2. Wheat
caloric 3. Vegetable 3. Vegetable 3. Rice 3. Vegetable
intake) oils oils 4. Cassava oils
4. Maize 4. Wheat 5. Pulses 4. Sugar
5. Yams 5. Rice 5. Rice
Percent of 52 50 53 71
calories
supplied by
top five
foods
(kilocalori
es per
capita per
year)
------------------------------------------------------------------------
Imports
------------------------------------------------------------------------
Top five 1. Rice 1. Wheat 1. Wheat 1. Vegetable
food 2. Wheat products products oils
imports products 2. Poultry 2. Vegetable 2. Fruits and
(percent of 3. Vegetable meat oils vegetables
total oils 3. Rice 3. Sugar 3. Rice
imports by 4. Palm oil 4. Vegetable 4. Rice 4. Wheat
value) 5. Sugar oils 5. Fruits and products
5. Sugar vegetables 5. Sugar
Top five 78 56 74 54
food
imports
(percent of
total food
imports by
value)
Food imports 14 12 13 4
(percent of
total
imports by
value)
------------------------------------------------------------------------
Source: FAOSTAT Online, ACET, 2017

The Chairman. Thank you, sir.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
I now recognize myself for 5 minutes.
This is the face of five little girls eating lunch, or
breakfast, at a McGovern-Dole program site. I had an
opportunity to go to this school in Ethiopia, Addis Ababa, last
May, May of 2016, to see these programs at work. We got to
watch these little girls eat. If they go to school a certain
number of days in a month, they get to take an extra ration of
oil home with them to their families to give them an incentive
so the families keep these little girls in school.
We went from this program to a mountainous region at a
final distribution point for emergency food aid to watch that
process happening. I watched a slightly built young fellow as
two other big fellows dropped a 110 pound sack of rice on his
back. He kind of slumped under it, walked over to his donkey,
put it on there, and came back for the other food that he was
getting. And at least for the next several days, that family
would not go hungry. And these little girls will not be hungry
either.
The entire time I was there I thought about the wonderful
stuff we are doing. This is really good stuff. These kids are
eating. They are going to school. It was also in the back of my
mind the entire time that we have mortgaged our own children's
future doing good things and that one of these days we may face
a very daunting challenge of how to continue to do the good
work we are doing here but also respect the challenges and the
threats to the long-term survival of this country with $20
trillion in debt and growing. And one of these days, either me
or somebody in this position is going to face those hard
choices and have to decide between American children and
Americans and the great work we are doing overseas. And it is
going to require the Wisdom of Solomon to make that happen.
At least, this President has highlighted that with his
budget. I disagree with what he has done. But we are now
talking about it in much more meaningful terms than we were
before the submission of that budget. And it is important that
we do this because we are going to have to make hard choices
between good stuff. The easy stuff that we shouldn't spend
money on, that is just going to go away. But we are going to
have to make hard choices between the good stuff.
Dr. Jayne, I cut you off a second ago. How can we move
toward self-sufficiency in countries versus continuing to do
the emergency feeding? What can we do--in lieu of, just
continuing to provide food--to allow these countries to
transition to self-sufficiency?
Dr. Jayne. Okay. Thank you.
We have made progress over the last decade or two on this.
And you can see a progressive weaning of developing countries
off of food aid as they develop, more of the same. But it is
possible to make our development assistance even more effective
than it has been. And that is by emphasizing the same kind of
development of local agricultural institutions much in the same
way that the United States, 150 years ago, and its farmers
benefited from the USDA Cooperative Extension Program, the
land-grant universities that worked on crop science and
developed new varieties for farmers. These are the nuts-and-
bolts kinds of investments that we can be using to develop
those countries and wean them off of the need for food aid.
The Chairman. In your testimony, you mentioned AgriCorps.
Would you brief the group as to what AgriCorps does, Dr. Jayne?
Dr. Jayne. I don't think it was me who said AgriCorps, Mr.
Chairman.
The Chairman. All right.
Well, then I will talk about AgriCorps.
Dr. Jayne. Okay. Thanks.
The Chairman. AgriCorps is a privately funded group of
young men and women who graduated from our universities with
agriculture degrees.
Dr. Jayne. Sure.
The Chairman. They have grown up on farms, and this group
sends them to Ghana. And they are now in Liberia this year
setting up 4-H programs in these schools. The one we visited,
the junior high school, which is as far as it can go in Ghana--
their programs of learning how to grow things and make money--
supports four scholarships to high school students under this
4-H program. And when 4-H started there, the pregnancy rate
among young middle school kids was something like 60 percent.
Today, for the kids that participate in 4-H, the pregnancy rate
is zero. These are good programs. This has no taxpayer dollars
involved, just a program coming out of Throckmorton, Texas,
where some local folks decided we need to spread that 4-H
program, you mentioned the extension programs, to Ghana and
Liberia. There is good stuff going on.
With that, I recognize Mr. Peterson for 5 minutes.
Mr. Peterson. Thank you, Mr. Chairman.
As you guys have noted, the World Food Programme and Famine
Early Warning System predicts these four famines this year. And
some of you have alluded to this in your testimony. But if you
have experience, any of you, of the current conditions in these
countries, could you give us your perspective of what is
happening on the ground? Some of you did this, to some extent,
but if you could elaborate a little more specifically of what
is going on, on the ground, and how these programs are going to
be used to try to alleviate that?
Ms. Schuler. Thank you.
So I can speak to the situation in East Africa. As I said,
I just came from East Africa. And there were four countries in
particular that were at crisis level. Ethiopia, South Sudan,
and Somalia: South Sudan and Somalia actually were at famine
stage. People and children were already dying in those
countries. The situation in South Sudan is dramatic. In many
places, because of the violence and just the general crisis
situation and insecurity in that country, it is very difficult
even to deliver food aid into certain places. There are food
drops, for example, that happen. And I actually was out there a
couple of months ago and saw a team of our staff from World
Vision who had just come back from the field, and these guys
are out in the field waiting for those food drops so that they
can ensure that that food gets to the most vulnerable people.
In Somalia, the same situation, World Vision and other
development actors are on the ground implementing programs with
title II resources and in partnership with WFP that often uses
U.S. Government food resources. These programs are critical.
They are a critical piece of our programming in response to
this famine in East Africa. And what is beautiful is that there
is a general effort by everyone to bring in more resources from
the U.S. Government. But we also have a lot of private citizens
around the U.S. that also bring in private resources, care
about people on the ground who are starving, care about
children. And when we talk about the fact that we partner with
the U.S. Government to provide food aid, they like that. They
feel there is leverage there, and that it is a partnership.
There are 25 million people in East Africa alone at risk of
starvation and food insecurity. And these programs are
important today. Many of those children will starve if we cut
these programs.
Thank you.
Mr. Peterson. Is the basis for this coming from these
programs? The folks that are getting this out into the
countryside, is this food that we have shipped under the Food
for Peace Program, and then they are the ones trying to get it
out into the country? Is that how it is working?
Ms. Schuler. I will give you an example of Ethiopia, a
country that I have worked in for almost 20 years. You
mentioned that you recently visited Ethiopia. Fantastic
progress has been made in Ethiopia because of a program like
the Joint Emergency Program that a number of PVOs are a part
of. It is an emergency food assistance program led by Catholic
Relief Services. And there is also quite a large title II
development program in that country.
And so, in these places where there is severe food
insecurity and possibility of famine, the title II program is
being implemented. And that food is going to people in that
country, right now, today, through that JEOP and through the
title II development program. With the JEOP, it is more
emergency food assistance. With the title II development
program, this is trying to mitigate the impact of future
disasters by building resilience in the communities.
Absolutely, title II programming is helping organizations like
World Vision deliver food to very vulnerable people in these
countries.
Mr. Peterson. I yield back.
The Chairman. Mr. Gibbs, 5 minutes.
Mr. Gibbs. Thank you, Mr. Chairman.
Thanks for having this hearing. I think it is important.
If you look back at history, American action after World
War I versus what we did after World War II with the Marshall
Plan paid much dividends, Food for Peace, and all that work we
did.
Mr. Schoeneman, you commented about, it used to be, I
guess, USAID's budget, most of it went for food and
transportation. Now it is about \1/3\. Can you expound a little
bit about what is occurring there?
Mr. Schoeneman. Sure. What we are seeing is the constant
push for added flexibility that folks in the reform community
have been trying to make has eaten up a large portion of the
funding that goes to title II. My written testimony, if you
take a look at it, about \1/4\ of what we spend on outlays for
title II is going to buy commodities. Less than ten percent
goes on ocean freight. Less than ten percent is inland freight
in the United States. Twenty percent, including the lockbox
funding, is 202(e), which in the 2014 Farm Bill was plussed-up
and increased. And almost all of that increase has gone to cash
programs and food voucher programs and local/regional purchase.
And then you have a huge amount of money that is going for
inland transportation, storage, and handling.
Now, that doesn't make any sense to me. GAO highlighted
that in their last report because ITSH should be going down if
the amount of title II American food is being reduced in
country, because that is only supposed to be used to move and
warehouse American food.
I have a hard time trying to figure out why the numbers are
looking the way that they are doing, particularly as commodity
prices have been going down. At the end of the day, we really
need better oversight.
Mr. Gibbs. I guess I am confused. The cash payments are
going to buy commodities here in this country or going to
commodities elsewhere?
Mr. Schoeneman. Elsewhere. GAO's last report basically said
that of the increase that was given, the added flexibility
given to USAID in the 2014 Farm Bill, something like 90 percent
in the last year of that increase went to cash assistance, food
voucher programs, local-regional purchase, not buying American
commodities.
Mr. Gibbs. We are hurting American farmers, American
agriculture.
Mr. Schoeneman. Correct. And that is the biggest issue. And
Chairman Conaway pointed this out. When we do these local-
regional purchase programs, I understand that there is a need
for it, and we support some flexibility. But we have to keep in
mind, American farmers compete internationally, and this is a
global market. Every dollar that an American taxpayer sends
overseas to buy foreign food is not a dollar being spent here
in the United States. It is not economic activity in the United
States. It is not cargo that is going to be shipped on an
American ship coming out of Texas or anywhere in the Gulf. That
is a big issue for us, and that is why we are really concerned
with the way the program has been going.
Mr. Gibbs. Another thing I want to make sure is
highlighted, you mentioned in your testimony the cargo
preference and the Jones Act, having a viable merchant marine
industry and the impact it has when they are at the beck and
call of the Defense Department when there is an emergency. The
best example probably was when we kicked Saddam Hussein out of
Kuwait, when the merchant marine had to haul all of that
equipment over there and the cost we would have for the United
States Navy to maintain those kinds of ships to be available
every once in a while when needed would be a lot more. That is
an important point that needs to be made that people don't
quite understand. You highlighted the cargo preference keeps
merchant mariners operating because of that. Do you want to
expound a little bit on that?
Mr. Schoeneman. Sure. Congressman Gibbs is absolutely
right. The bottom line: A ship is like a car. And cargo is like
gasoline. If you don't have cargo, the ship doesn't move. If
you don't have gas, the car doesn't move.
You can buy as many ships as you want. You can have them
sitting up, tied next to the quay. If there is no cargo to keep
them commercially viable in peacetime, then my members aren't
sailing. They are not making money. The companies aren't making
money, and all this is, is a drain on the taxpayer. The whole
point of cargo preference is to provide a cargo base that is of
things we are already buying and already shipping anyway. It is
not like we are going out of our way to buy stuff that we don't
need to send it over to Africa or Asia or even defense cargo.
We are taking stuff that we are already going to buy, and we
are just requiring it to be moved on U.S. ships. And that way
we provide the cargo base that keeps my members working. That
is critical. And if we don't have that, the merchant marine
goes away. And that is why these programs have been around
since 1904 and 1954, respectively.
Mr. Gibbs. I am almost out of time.
Ms. Salem, I am just curious. What is the cost of a packet
like this?
Ms. Salem. That is interesting that you bring that up,
because running a business, one of our most important things is
to look at costs. And since we started this just 8 years ago,
the cost of these packets has gone down dramatically. Where a
box used to cost $55, we are now down to $38. And that is due
to efficiencies, economies of scale, et cetera, per packet, it
is about 30.
Mr. Gibbs. Thank you. My time is up. I yield back.
The Chairman. Ms. Fudge, 5 minutes.
Ms. Fudge. Thank you, very much, Mr. Chairman. And thank
you all for being here today.
With leadership comes responsibility. If, in fact, we are
the leaders of the world, we need to take some responsibility,
if indeed we still are. Of all the things we could cut, we
would cut food. We have become complicit, or will become
complicit, in the starvation of women and children.
How many guns do we need? How much ammunition do we need?
It is immoral. It is heartless, and it is not even
strategic for our world relations. It cuts jobs in this
country. It is the most ridiculous thing I have ever heard. If
we are leaders, it comes with some responsibility.
Ms. Schuler, the McGovern-Dole Program does provide
agricultural commodities to reduce hunger and promote literacy.
For young girls in these developing countries, the program has
shown some additional benefits. Could you address that, please?
Ms. Schuler. Thank you.
So the McGovern-Dole Program is a really smart and
important program. I will give you an example of a McGovern-
Dole Program that we have in Mozambique. It supports thousands
of children to go to school and supports school feeding for
those children. And the outcomes then are improved nutrition
for those children, more girls in school, and improved literacy
rates. It is one of the most critical programs that we can do.
We all care about the well-being of children around the
world. The programs I have seen that improve literacy rates,
for example, it is amazing what you find when kids can read.
You ask the kids: ``Can you read?'' And they hold up their
book. They are so proud that they can read. Their parents are
peering in the window. I have seen this all over Africa. This
is a fantastic way to spend our money.
Being able to go to school, having good nutrition, it helps
learning outcomes. It is a fantastic and important way to use
U.S. Government resources.
Ms. Fudge. Thank you very much. I am really not going to
ask any other questions. I just want to close with this. When
we question the viability of NATO, when we no longer want to be
in the Paris accord, when we pick fights with mayors that we
don't need to pick fights with, at some point, it will not be
America first; it will be America alone.
I yield back.
Ms. Plaskett. Madam, if you would yield just a moment to
me? Right here.
Ms. Fudge. Yes.
Ms. Plaskett. Thank you.
Ms. Schuler, just when you talked about literacy, besides
just the pride, what economically happens in African countries
and African villages when women, and particularly girls, are
educated and can read? Economically, not just in sense of
pride.
Ms. Schuler. Educating women and girls is one of the most
important things that we can do in Africa to build communities,
to build households. Oftentimes, if you think of a household,
the women in a household in Africa are often responsible for
management of that household like in many, many places. And so,
if you have uneducated women and poorly educated women, they
are less able to manage their household in terms of economics.
And I will talk about that in a minute. But they are also less
able to keep their children healthy, less able to understand
how to keep their family healthy. But, oftentimes, when women
are more educated, they are able to start, for example, if you
can link them with a microfinance program, they are able to
start a small business. And when you give a woman a loan, boy,
she will take that, and she will do something fantastic with
that.
And we have seen that in so many cases where educated
women, educated girls, have stronger households, better economy
in the household, are able to have small businesses and to
thrive. And that helps the overall economy of the country.
Ms. Plaskett. Thank you so much.
Thank you, Congresswoman, for yielding to me. Because if we
don't want to take on the responsibility, at least let's just
be strategically smart about this.
Mr. Suppes. Mr. Chairman, could I comment on Ms. Schuler's
comments?
The Chairman. Yes.
Mr. Suppes. I saw what she is talking about firsthand in
our visit to Tanzania pertaining to the ladies, the women.
Probably 70 percent of the farmers there, maybe 65 percent, are
women.
The bankers, they are not from Tanzania, the bankers are
like FINCA and some of these organizations, prefer to deal with
the ladies. The ladies are more comprehensive. They are
probably more apt to repay their loans. One individual lady
there had been in the program for 19 years, I believe. And they
started out by being loaned basically $200, pretty high
interest rate. And they are expected to pay it back. But this
lady was able to acquire an acre or two and get it paid for.
She was able to send her children through school. It doesn't
cost much, but it costs a lot there in relationship to their
dollar. I would like to verify what she has been talking about.
The women are kind of running things over there. Whether that
is good or not, I am not sure.
The Chairman. The gentlelady's time has expired.
Mr. Scott.
Mr. Austin Scott of Georgia. I don't know if you intended
to destroy any future political career. But you just did.
Yours, not ours.
Ma'am, Ms. Salem, we have a gentleman named Mark Moore who,
in 2009, founded MANA in Fitzgerald, Georgia, where they
manufacture a very similar product. I shared that product with
one of the finest men I have ever met, General Kelly at the
time, now it is Secretary Kelly, as we were discussing the
importance of these types of programs throughout the world.
He had one suggestion on the package. This is from someone
who knows what they are talking about, not me. And the MANA
package had the same USAID symbol on it. The American flag
should probably be more prominently displayed on the package.
Just a suggestion from someone. I have made that same
suggestion to others as well. Because while I am glad, as Ms.
Schuler has said, the education is improving, many people can't
read the packages. And the American flag is a global symbol for
good. And any way it can be more prominently displayed, I would
appreciate.
Ms. Salem. Okay. And those decisions are made strictly by
USAID. We are taking direction from the higher-ups at USAID.
Mr. Austin Scott of Georgia. We will give USAID a little
instruction there.
But I do appreciate what you do. It is an extremely
important mission. And thousands, if not millions, of people
have benefited from the work of you and organizations like MANA
and the people that volunteer their time.
I am very familiar with merchant marines. My father-in-law
was a merchant marine. I have been to Kings Point. I had the
discussion with the Navy this past week about the value of our
merchant marines, and certainly we are extremely concerned
that, over the last several years, while there are 10,000 more
ships in the fleet worldwide, that the U.S. fleet is down by
about 30 percent to 169 of the 41,674 merchant vessels in the
world. Please don't take this question as anything other than
just asking for the facts.
How much more does it cost us to ship it on a U.S.-flagged
vessel than it would cost on a non-U.S.-flagged vessel?
Mr. Schoeneman. That is a very difficult question to
answer.
Mr. Austin Scott of Georgia. I just mean container to
container.
Mr. Schoeneman. Well, that is the problem. It changes every
day. If I had to ballpark it, and somebody is going to yell at
me for saying this, I would say maybe ten percent more. But, at
the end of the day, the economic benefit and the value to the
taxpayer way outweighs whatever that differential would be.
Mr. Scott of Georgia. We cannot win a fight overseas if we
cannot get our equipment there.
Ms. Schuler, is that the calculation, ten percent more that
other people, is that number approximately?
Ms. Schuler. I don't have that number calculation. I do
know that currently, \1/2\ of food aid budget is spent on
shipping and related costs. For my comment on just efficiency
and ensuring that we work together to look for ways to get the
most resource to the people in need.
Mr. Schoeneman. If I can comment on that, briefly,
Congressman Scott?
Mr. Scott of Georgia. We have to maintain the merchant
marine fleet.
Mr. Schoeneman. We do. And let's be clear, the shipping
amount, the amount of money that goes to shipping, it is easy
to conflate that, because that includes everything. That is not
just the ocean side, which is about 8.2 percent. That includes
the inland freight in the United States. It includes all of the
getting and transporting, and handling of the materials in
country that would be charged no matter who or where we sourced
the products from. At the end of the day, it is always going to
cost some kind of money to get the products from the port to
get into the hands of folks.
I just wanted to make clear that, at least on the ocean
side, we are minuscule compared to the amount of money that the
overall program has.
Mr. Scott of Georgia. I would be interested in seeing the
calculations. And, again, I recognize and had this discussion
with the highest levels in the Navy this past week, literally,
about the value of the Merchant Marines Academy.
With that said, let me just thank you for what you do. It
is an important part of who we are as America, and I look
forward to continuing to support you.
With that, Mr. Chairman, I yield the 13 seconds.
The Chairman. The gentleman yields back.
Mr. McGovern, 5 minutes.
Mr. McGovern. Thank you. Mr. Chairman, I would like to ask
for unanimous consent to insert into the record a letter sent
to us from 100+ Christian leaders urging that we support these
international food aid programs.
The Chairman. Without objection.
[The information referred to is located on p. 1173.]
Mr. McGovern. I want to thank all of you for being here. I
appreciate your thoughtful and insightful testimony. I am
encouraged by the support you have all expressed for our
international food programs. I am particularly grateful for
your support for Food for Peace, and McGovern-Dole, and you all
kind of represent very different perspectives. And so let me
say, I agree with you. And you are right. These are all
important programs.
And like you, I have seen many of these programs up close
and personal firsthand. I have witnessed U.S. NGOs,
humanitarian aid workers, and our own USDA and USAID field
officers responding on the ground with emergency food and water
and medical attention to deal with the masses of refugees
fleeing violence or natural disasters, or drought or what have
you. But their courage and compassion and their professional
expertise just takes my breath away. We have some incredible
people responding to these emergencies. And it makes me proud
to be an American, quite frankly, when I see these programs in
action.
I have seen how these programs provide kids with nutritious
meals in school settings, like McGovern-Dole, and allows these
kids to be able to learn. You can't learn on an empty stomach.
It encourages parents to send their kids to school, because
there is food there. It encourages parents to send more girls
to school, and they are incredibly successful.
I have had mothers come up and thank me when I visited
McGovern-Dole programs, thank the people in the United States
for what they are doing. I remember I was in Colombia many
years ago visiting a McGovern-Dole program, and a mother came
up to me and introduced me to her 11 year old son and said that
every day in this terrible slum they were living in, one of the
armed actors comes through the neighborhood asking this mother
to give up her 11 year old son so he can join one of the armed
groups. And she said, and they say to her that we can give him
something you can't, and that is we can feed him.
Because of the programs that the U.S. taxpayers support,
this mother can now send her kid to school. He is getting fed,
and he is going to learn to read and write and maybe be a
leader in that country. And she says to send my thanks the
people of the United States.
I just have this kind of radical idea that that kind of
stuff is good for us. It is good for our national security.
When people like you, they don't want to blow you up. Yet, we
are having this crazy battle now with the President's budget.
And I am sorry. It is heartless. It is reckless. It is
self-defeating, and it is stupid. Why would we even go after
these programs that not only deal with a humanitarian crisis,
but actually help us. I am grateful to the farmers who grow the
food. I am grateful to the railroads, the truckers, the port
workers who transport and warehouse the commodities and other
supplies, to the shippers, the U.S. Merchant Marines, everybody
who transport our food around the world, to all the NGOs and
humanitarian aid workers. Nothing could be more in the
immediate and long-term national security interest as well as
our economic and social interest of the United States.
I tell people all the time that hunger is a political
condition. We can eliminate it. You guys all have ideas how to
eliminate it. It is we that don't have the political will. We
should be debating about how we enhance this. This is
ridiculous that we are talking about cutting or eliminating it.
I am embarrassed, quite frankly, that a budget like this is
before us.
Since the President's budget is supposed to be a national
security budget, let me throw the question out to you. How do
you view these programs as contributing to the U.S. national
security interests both in the immediate and the long-term?
Anybody?
Dr. Jayne?
Dr. Jayne. Thank you very much.
So there are particular programs that have been proven to
promote development and goodwill and all of the things that you
mentioned.
Okay. AgriCorps is one of them that the chair mentioned.
Another one is the Farmer to Farmer Program. That is a USDA
program where retired farmers from the U.S. with expertise of
some kind, go over to a developing country, work with farmers
there. There are many ambassadors of goodwill, and they are
promoting development at the same time.
Those programs really need to be expanded in order to
promote a win-win situation.
Mr. McGovern. Right. It gets to the point that, look,
extreme poverty and hunger leads to chaos and war and conflict.
This is where terrorists go to find recruits. It is in our
national security.
Ms. Schuler?
Ms. Schuler. Yes. Just speaking about Somalia, which I am
more familiar with, in East Africa, Somalia is a place where
the U.S. Government with its colleagues in Ethiopia and other
countries are trying to reduce the threat of Al Shabaab. By
supporting programs like this, we have an OFDA and Food for
Peace emergency program in Somalia. We can imagine. We are
feeding people. We are supporting people. They are getting to
know us as the good heart of America. You could imagine that
people would join those terrorist groups if they had nothing.
Like you said, they have nothing.
They might be enticed with something else. But these
programs make a difference in places like Somalia, and it
directly reduces the influence of Al Shabaab and reduces the
number of people that will join those terrorist groups.
Mr. McGovern. We are very generous. It is worth fighting
for. Thank you.
The Chairman. The gentleman's time has expired.
Mr. Crawford, 5 minutes.
Mr. Crawford. Thank you, Mr. Chairman.
Ms. Schuler, in your testimony concerning USAID and
maritime mentions that monetization continues to form its
existing food programs that could actually damage the program's
credibility, domestic support over time. Is that of concern to
World Vision?
Ms. Schuler. Thanks.
Ms. Salem. I am in the middle here.
Ms. Schuler. For World Vision and for many humanitarian
organizations, our number one objective is to improve the well-
being of the poorest people in the world. That is kind of where
we focus our efforts.
And what is beautiful about this title II program, for
example, and I have been involved in this program for years in
different ways, both at headquarters and also in the field, is
the partnership that we have between NGOs, shippers, farmers,
government. And it is just a really nice partnership. If you
have ever been to Kansas City in the meetings there, it is just
a nice feel. It is a good partnership.
But, the program has been going for 60 years. It is always
good to look at constant improvement and review. And so for us,
we just believe that all of these parties that are partnering
should get together and look at ways to improve the way we do
business and reform the system if necessary so that we can get
the most resource to the most people. And that is really what
we hope.
We would never hope that those efforts to improve
efficiency would result in a cutting of the program overall.
That would never be our intent. But, it is good business to
look at reviewing and improving as necessary.
Mr. Schoeneman. Congressman Crawford, if I could throw in
there. The benefit and the advocacy that farmers like Ron and
the mariners like my guys sitting in the back row here have
provided over the years puts a human face and American face on
a program that otherwise could be characterized as just another
excuse for Americans to run up the credit card to give away
money to people overseas.
I have heard that phraseology used about programs like
this. And it is completely wrong, and that is what makes this
program good. As Chairman Conaway pointed out, we are $20
trillion in debt. If we are going to be spending money on these
programs, we have to be spending it in the best way possible in
a way that helps to provide an economic and a political benefit
at home not just overseas, and that is what this program has
always done.
And that is why you have American mariners, you have
American farmers coming up here hand in glove working together
to make sure that this program stays viable, and that is why it
has worked for 60 years. And if we cut American farmers out, if
we cut American mariners out of these programs, then all we are
going to have left is a check, and checks don't vote.
Mr. Crawford. Well, let me just say, I am for P.L. 83-480.
I am for these programs, but I want to make a distinction
between those commodities that we use as a part of these
programs versus cash, which is oftentimes a point of debate.
So my point being this: Cash has a habit of turning into
things these programs weren't designed for. What I would like
to find out is, GAO has indicated cash assistance can be
susceptible to fraud and abuse. Have any of your organizations
implemented any kind of protections to combat that type of
phenomena from taking place?
Because I agree with you. I want to get nutrition to people
who need it, but I don't want to put cash in the hands of
people who might use that against the folks that need our
assistance. Any comments there?
Ms. Salem?
Ms. Salem. Yes. It is kind of ironic that this is the
program that we are threatening to cut, because most of the
countries in the world are giving cash, and the U.S. is the one
who is holding on to trying to keep the Americans in mind when
we are adding these items to the budget.
And so it is a program that is very much in our own self-
interest. And so to me, it is kind of ironic that it is slated
to be deleted from the budget. In the field we are always able
to monitor very closely what products are where, how much they
are getting used. We are doing monitoring and evaluation
everywhere to make sure that we are seeing actual outcomes.
I just also want to say that while sometimes we feel like
the world is falling apart, and we have famines, and we have
all these issues, like, overall, we are trending in the right
direction, that these 60, 70 years of these policies have
dramatically increased the state of the world.
We used to have two billion people who lived under $2 a
day. Now we have a billion. That is a massive improvement. When
I got started in this business, we had five million children
who would die from severe acute malnutrition every year. It is
down to three. That is just in 7 years. These programs and all
of these efforts that all of us at this table are working on
are working. And we are trending in the right direction, and we
are making a big dent in changing these lives. We can't stop
now.
Mr. Crawford. Thank you.
I yield back.
The Chairman. The gentleman's time has expired. Mr. Evans,
5 minutes.
Mr. Evans. Thank you, Mr. Chairman.
I would like to ask this question of everyone at the table.
As we head into consideration of the farm bill expiring in
September of 2018, what would each of you set forth as top
issues for consideration?
Dr. Jayne. Thank you, Mr. Evans.
Any kind of program that helps to build capacity locally so
that there is sustainable capacity being developed in
developing countries that will encourage these countries to
become more committed to private trade and investment that will
always be a win-win for them and for the United States.
In general terms, any kind of program that is going to
support those objectives should be nurtured. And my colleagues
here, I am sure, will agree with me. That even though there is
always going to be a need for food aid when there are
disasters, by far the preference both here as well as in
developing countries, will be to help them become self-
sufficient, as the chair mentioned earlier, and to become more
commercial partners rather than dependent disaster partners.
Anything that promotes that objective would be in our interest.
Mr. Schoeneman. Congressman, the point that I made earlier,
at least for us, our biggest goal would be that whatever
changes or reforms that the Congress is looking at in the farm
bill, we focus on returning Title II, P.L. 83-480, to the
program it was and always has been, which is an in-kind program
that is designed to get food in the hands of the hungry people.
I think we have enough flexibility. We have done enough
tinkering in all of these programs over the last 10 years to
give USAID and other folks the flexibility they need in other
accounts with different pots of money that they can use to
address immediate issues that they need. And that this program
should remain an in-kind program.
The other thing I would say is, this Committee needs to do
oversight on USAID. I know they are not in within your
jurisdiction, but get it back, because our biggest concern when
I look at some of these numbers, they just don't make any sense
to me. And if they are not making sense to me, I am sure they
are not making any sense to you.
And I would like to hear from USAID directly where are
their controls. Where is the transparency? Where is the
accountability? Because I don't want to see any of the funds
that were supposed to go to buy food, supposed to go in the
hands of kids ending up where it is not supposed to be. We all
can take a wild guess where that would be.
Ms. Salem. I would echo that the Food for Peace Title II
programs that we are currently working in, the products that we
make are evidence-based, and this was done in collaboration
with USAID, who commissioned a study through Tufts to make sure
that our American food aid basket was the best that is there,
and that we are looking at what the issues are on the ground
and then delivering evidence-based solutions for that.
You all have a before-and-after picture that I submitted
with our written testimony. That picture and that
transformation is proof that this is the impact that we can
make. That is as evidence-based as I can think of. And that is
as measurable as I can think of.
And to watch children be able to transform like that in a 6
week period from near death to running around and playing like
a 2 year old should, those are important programs of Food for
Peace. We are proud to have been partners with them to make
this impact significant.
Ms. Schuler. Yes, thank you.
As per my testimony, I will reiterate by maybe giving a
little context. Continuing to fund the multi-year, multi-
country development programs is critical. In years like this,
even though there are emergencies, you still need that
development programming, the long-term programing, to prevent
and kind of mitigate these emergencies. That is just a critical
piece of what we do, building resilience in households and the
communities for longer-term sustainability. That has to
continue. That will be something we would like to say.
And then also, this idea of continuing to leave a little
bit of flexibility in the way that we program. Programming with
cash or vouchers or commodity, in different contexts you might
need different ways of programming and to reach different
groups of people at different times.
This idea that it is all commodity-based maybe is not the
best way to look at it, and that is something we would like to
see a little bit more flexibility in the way that we use the
resources.
Then as I said, eliminating the minimum monetization
requirement, because it is costly and often an inefficient way
to do business.
The Chairman. The gentleman's time has expired.
Mr. Lucas, 5 minutes.
Mr. Evans. Mr. Chair----
Mr. Lucas. Thank you, Mr. Chairman.
And I apologize for having stepped out briefly for another
committee hearing. My neighbor up in Kansas, could I turn to
you for a moment. And I realize that this question has already
been asked. I apologize. But let's expand on it for a moment.
When we send the actual commodity out into the food
programs out into the world, there are certain quality
standards that have to be met. Can you discuss for a moment
what it takes to be a U.S. participant in providing actual
product to these programs that go around the world?
Mr. Suppes. It probably depends on the country and what
product they are trying to make and who is going to be the
recipient of that process.
Mr. Lucas. Well, give us an example of the most challenging
extreme and then give us an example of the simplest, just to
give us a feel----
Mr. Suppes. Well, I can give you an example. The U.S.
probably has some of the strictest grading standards in the
world as far as wheat. I can speak to wheat.
Take Argentina, for example. They are in the Mercosur with
Brazil, which is similar to NAFTA. And since they are in close
proximity, the transportation is less than if we ship something
there, but if we try to ship something to Brazil, there is a
ten percent tariff coming in there, so we are at a disadvantage
there. But, yet, Argentine wheat doesn't meet the specs that
the Brazilians want, so they prefer to have U.S. wheat. And
that happens in other countries.
If, for example, a flour mill has Russian wheat, and it
doesn't quite meet their specifications, they will buy some
U.S. wheat to blend with that and strengthen it. I don't know
that I can specifically answer your question, but we do from
start to finish, for example, our research in Kansas or in
Oklahoma or wherever it is, start out with a lot of perimeters
that those researchers go by. These are the things that we want
to end up with. They will grow these little plants of wheat,
and every year they throw thousands away because they don't
meet their specs.
Once those things are in production, we do milling and
baking tests based on criteria sent to us by the millers in the
U.S. We have to meet their specifications. Then when the
harvest completes, FGIS is in there inspecting again, and
especially when shipments go out of the country. But when it
goes to a foreign country, it is based specifically on specs
coming from that position, like if a certain country wants
certain specs, they write it in the contract.
Mr. Lucas. When it comes to the quality of the product and
the nutrition programs that we have, the U.S. generally, it is
fair to say the recipients are ensured the highest quality
product on nutrition?
Mr. Suppes. Yes. You will be getting probably the best
quality wheat in the world. And that is why we are having a
problem competing with the Black Sea wheat coming out. We can't
price our quality that low. We don't want to price our quality
that low. It is a better product.
The thing you run into by buying wheat from next door, for
example, in Africa, it will be inconsistent. You may have some
good quality wheat. You may have some poor. But what the world
likes about U.S. wheat is the quality as well as the
consistency so they don't have to change their mill settings.
The thing we are concerned about with buying next door is
protein content and gluten, and you are kind of mentioning
that. And so in our research, we try to develop those
strengths.
So we are the most reliable source of wheat in the world.
And you go visit these customers we have, and they will tell
you that. Then they are faced with the fact, can they afford
it? A lot of times they don't.
Mr. Lucas. But ultimately, if we are using public
resources, and we are trying to help our fellow citizens on the
planet, we have a responsibility to make sure they get the
maximum benefit from that?
Mr. Suppes. Yes. And that would be a point that I would add
to what Mr. Evans asked. We need continued financing for ARS
research as well as private coming into it. But the ARS is very
important. That has been cut back, and so the U.S. farmers have
had to pick up a lot of that tab, which we do.
If you have ever been to the innovation center in Kansas
that we have, it is fantastic. We have people coming in. They
are from General Mills teaming up with our scientists there.
They are doing some wonderful things there.
Mr. Lucas. Mr. Chairman, my time is about to expire, and I
yield back.
The Chairman. The gentleman yields back.
Mr. Panetta, 5 minutes.
Mr. Suppes. Excuse me. Could I answer Mr. Evans's question?
The Chairman. We are supposed to each get 5 minutes, and so
you can submit your answer for the record if you would like to,
sir.
Mr. Suppes. I see, okay.
Mr. Panetta. Mr. Chairman, thank you.
The first thing, if I may, Mr. Chairman, and I apologize
for not saying this earlier, I would like to introduce into the
record per unanimous consent two letters that I have here. The
first letter being from 121 retired three- and four-star flag
and general officers from all branches of the armed services
stressing the strengthening of diplomacy and development
alongside defense, which are critical to keeping America safe.
The second letter is from over 200 business leaders to
Secretary of State Tillerson, which talks about how we can
advance our interests overseas and support jobs here in our
country through the need of strong international affairs
budget.
The Chairman. Without objection.
[The letters referred to are located on p. 1174.]
Mr. Panetta. Thank you.
Ladies and gentlemen, thank you very much for being here. I
appreciate the preparation. I appreciate your testimony being
willing to come and talk to all of us.
As you have heard today from many of the questions, many of
the statements of us on the Agriculture Committee, it is one of
the reasons why I enjoy being on this Committee. You find a lot
of bipartisan support here for a number of issues, and that we,
I believe, based on the districts that we come from throughout
this nation, we truly understand what it means to be secure not
only in this country but abroad.
We understand our future food security. We understand our
national security, and clearly, these areas that you have
talked of today definitely demonstrate that. We appreciate you
being here to reinforce that. Thank you very much.
It is clear that when it comes to the United States and our
affairs abroad, we have a responsibility to play, and that when
we don't live up to that responsibility, when we don't lead,
that vacuum is filled, and we have seen that over and over. Be
it as you mentioned in Africa with China, be it in Syria with
Russia, be it in South Sudan with the devastation that is going
on right now.
I have an article in front of me that basically says, if
America does nothing, 50 percent of South Sudan's population
could be gone.
It is clear that being American, as I have heard, being
American means that we bear the burden of serving be it in this
country, be it abroad. I truly agree with that. It sounds like
all of you do. I know that many of us on this Agriculture
Committee agree with that as well. And so that is why you are
hearing so much support for these programs.
Obviously, we want to work to save these programs, but
let's talk about if they were saved, give me some of the
improvements that could be made. What could be improved with
the programs that you have spoken of today?
Dr. Jayne, if you could.
Dr. Jayne. Thank you. I appreciate your impassioned and
well-articulated views on that.
Okay. In terms of what we could do to improve it. In the
long run, as I mentioned in response to Mr. Evans, that the
programs that are developing local capacity should really be
the emphasis.
Many of us have this image of developing countries or
Africa as a place where there is no expertise; we have to
really fill the void ourselves to do that. That is certainly
not the case anymore. It is a really outdated mode.
By the way, I should mention this: Of my 30 years that I
have worked in this area, I have lived in Africa for 7 of those
years. And I have been able to see over the span of 3 decades
the amazing increase in technical expertise that is locally
there. And any kind of coherent U.S. development policy towards
them is going to engage those people more directly in our
programs.
Because they can be advocates, they can influence
government policy in important ways. Bringing them into the
equation into our programs is really going to be in our
interests as well as in their interests just in the same way
that China is doing right now.
Mr. Schoeneman. Congressman, I would say at least on the
maritime side, we have been working very hard to increase our
efficiency to try to speed up deliveries to make sure we get
food where it needs to be faster. One of the easiest things we
think USAID could do would simply be to adopt commercial terms
in their contracting with other companies. It would make things
a lot easier.
It would not create the issues now where we are having very
odd ways of handling the cargo and getting ships booked to get
them overseas. If we were using commercial terms, it would make
things a lot easier on our side and speed things up.
The other thing I would say is, we know in advance where a
lot of these famines are going to be. We have gotten the early
forecasting. We have been doing a lot of warehousing and
prepositioning of food overseas. I would like to see us
continue to do that and strengthen that so that we are moving
things closer, moving American food to positions that are
easier to get inland using American ships.
The Chairman. The gentleman's time has expired.
Mr. Abraham, 5 minutes.
Mr. Abraham. Thank you, Mr. Chairman.
I thank the panel for being here. I have been many places
over the world, in a previous life, on humanitarian missions,
and I certainly understand the badge of honor that we as
Americans carry but that also carries responsibility and
accountability.
I am an advocate of President Trump's America First policy.
I totally believe that when America carries a burden of food
aid to these underdevelopment and unfortunate countries and
these unfortunate people that we should also bear the
responsibility and the accountability of delivering this food
economically and safely.
I don't trust the cash. I don't trust the vouchers. I am
hopeful that we can trust the locally and regionally produced
food; however, it is malpractice if we spend three to five
times per bushel of wheat on a local production when we can buy
more American wheat and feed more people. That 7 month old that
weighs 7 pounds, and that may be shortsighted, you say, on my
end, but that 7 month old that weighs 7 pounds, her and her
mother really don't care 5 years down the road. They are just
trying to live until tomorrow. And we need to deliver more
American commodities to them with American flagged ships. It
does go back to U.S. security; it does go back to national
security, and it goes back to food security.
Mr. Schoeneman, we have often with wars and rumors of wars,
which continue to pop up globally, have proverbially been
caught with our pants down, because we have not had the
shipping to move troops and tanks and planes to areas of
criticality very quickly. And that is where the merchant
marines come in, the merchant mariners.
Expound on how important that is that we can't afford to
have 25 less ships than we had in previous years as far as a
national security issue is concerned.
Mr. Schoeneman. Absolutely, Congressman.
The bottom line for us is the vast majority of military
cargo that goes overseas to sustain our warfighters goes on
American commercial ships not Navy ships. It is the American
commercial maritime industry that carries a vast majority of
these products. They need cargo in peace time so that those
ships are available and those mariners, more importantly, are
available to crew those vessels.
We have approximately right now, in the industry sailing
deep sea, about 11,300 mariners. That is barely enough for us
to cover our commercial fleet as well as the surge fleet that
the Maritime Administration and the Department of Defense
maintain, and we can only do that for about 4 months at a time.
And if we had to fulfill sustained combat operations for
more than 4 months, we would be in trouble, because we don't
have the mariners. And the issue, really, with these jobs is it
takes a long time to grow a mariner. Each of my members sitting
in the back there, they are going to work and study for at
least a year before they are ready to start an entry-level job
in the industry.
And to train a senior-level mariner, a captain, or a chief
engineering, it takes 10+ years plus the sea time and all the
accreditations, all the licensing requirements, all the medical
requirements. You can't just pick somebody off the street and
send them to war even as a merchant mariner. And we have done
that in the past, and it has caused a lot of problems.
World War II, we had to ramp up so quickly that to the
extent that we were losing a ship a day in 1942. One in every
26 merchant mariners during World War II perished on the high
seas. We cannot sustain that in a modern setting right now. If
we even lost one ship, it would be catastrophic, because that
is how much this fleet has atrophied.
We need these programs. We need cargo preference to keep
these cargoes on these vessels. In fact, we need more. Right
now, we carry about 50 percent, after the MAP-21 law changed
the percentage, 50 percent of this in cargo. I wish we carried
100 percent of it. Because anything that keeps these ships
moving provides jobs for these folks that need them that can
crew these vessels in wartime, and they are absolutely
critical, and we can't go to war without them.
Mr. Abraham. Thank you, Mr. Chairman. I will yield back.
Mr. Suppes. Could I comment?
The Chairman. Yes, sir. You have 30 seconds.
Mr. Suppes. Okay. One thing that has come up, that I have
noticed, that kind of bothers me, is that there are some Food
for Progress projects that are not funding because the
transportation line item has been used up.
So apparently, when the transportation of $40 million runs
out, the programs cease. Perhaps we should take a look at maybe
increasing that line item so that we can fulfill more of the
projects that USDA has in mind. Thank you.
The Chairman. The gentleman yields back.
Ms. Blunt Rochester, for 5 minutes.
Ms. Blunt Rochester. Thank you, Mr. Chairman.
And thank you to the panel. What is really special is to
see the different perspectives up here, all pretty much saying
the same thing in terms of the importance of food security. And
I have had the opportunity last month with my friend and
colleague, Roger Marshall, to actually have a conversation in a
video on Global Week of Action on Hunger and Famine. And it
just reiterates why many of us like being on this Committee,
because when we have common goals, we are able to achieve some
great things for our country.
As someone who has lived and worked abroad, I have worked
in Ethiopia, Uganda, I have had the opportunity to live in
China for 4 years and seeing exactly what you talked about in
terms of the expansion of African nations and just the synergy
that is happening there. This really is important to me,
because it is not just about benefiting other nations and other
people, but it is also about the respect and up lifting the
United States of America.
I have a couple of questions, and I hope to get to the main
two, but they are for the whole panel. The first is, there has
been a lot of support for agriculture development from the
private-sector, including companies like Delaware's own DuPont,
Coca-Cola, and others. And many people think that because of
this, there is really not a need for the government to invest
in this type of work, and that the private-sector can do it.
What would happen if the U.S. were to stop investing in
agriculture development, and can the private-sector make up the
difference?
Dr. Jayne. Thank you so much. It wouldn't stop the
development of these areas, but it would retard the pace at
which they develop.
So the private-sector certainly is understanding that
because of demographic change in the world, most of the
increased demand for food is going to be in developing
countries. They see that market.
But what they may not see is that the pace at which the
demand grows in these countries is going to depend on the
extent to which development assistance can effectively promote
income growth in these countries. Because the rate of food
demand is going to increase not just on population growth but
also on income growth.
So to the extent that U.S. development assistance can be
effective in promoting income growth, it is going to be a win-
win for everybody, for our partners in Africa as well as for
our private-sector partners.
Ms. Blunt Rochester. Thank you.
Anybody else can jump in, or I can go to my quick second
question?
Mr. Suppes. As I mentioned earlier in our innovation center
in Kansas, we do a lot of co-op with private and public and see
no problem with that. We share information. We share research,
but I do see a problem with the public getting clear out of it.
Ms. Blunt Rochester. Thank you. Thank you.
And then my second question is more about reorganization.
There is a lot of reorganization happening across the
Administration and some in the field of agriculture. And I just
wanted to get your opinions as stakeholders, all of you are
different stakeholders, could you talk a little bit about reorg
for agriculture?
Mr. Schoeneman?
Mr. Schoeneman. I was vocal about this. We have had
experience working with USDA for quite a number of years. We
have had experience working with USAID. My biggest concern with
USAID is that very many times they forget the first two letters
of USAID are US, the United States. And all too often, they are
focused entirely on their mission, and they don't think about
any of the political realities at home or even why these
programs were created in the first place.
I work with KCCO, and the folks in Kansas City have always
been excellent. They have been great supporters of these
programs for years. A lot of us in maritime feel a lot more
comfortable with them than we do with USAID. And it is
unfortunate, because we have done our best to try to work with
these folks over the last 10 years, but I will tell you, we are
constantly vilified; we are constantly treated like we are
starving kids because we want to create good-paying jobs for
Americans. I don't agree with that. From our perspective, we
would love to see USDA take a larger role in P.L. 83-480.
Dr. Jayne. My partner and I have to have a beer later on to
try to work this out. In my view USAID and Global Food Security
Act has done tremendous things to promote development. In line
with my previous point, the private-sector and the U.S.
interests broadly are well served by development in general,
which is what USAID is doing.
Even though there may be particular aspects that Mr.
Schoeneman, I may agree with him on, overall, in the main, the
development agenda that USAID has is promoting national
interests for us. Thank you.
Ms. Blunt Rochester. Thank you.
I yield back.
The Chairman. The gentlelady yields back.
Mr. Yoho, 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman.
Thank you for holding this important hearing. And I
appreciate the panel sitting here.
The Chairman. Is your microphone on?
Mr. Yoho. Yes, sir. Well, it is now.
The Chairman. It is a tough concept.
Mr. Yoho. I know it.
Welcome.
Thank you, Mr. Chairman. I am pleased the Agriculture
Committee is holding this important hearing on the future of
foreign aid as it pertains to the farm bill. It is crucial that
this Committee, indeed, all the Members of the House evaluate
how we structure our nation's foreign aid.
The world has changed and our methods of delivering foreign
aid need to change as well. We must focus on efficiently
transitioning aid recipient countries to trading partners. We
need a paradigm shift from aid to trade. And I know a lot of
people might want to take a hatchet and cut foreign aid off and
say we are not doing a good job.
I came up here 4 years ago. I am in my fifth year. I came
up here to get rid of foreign aid, but I have become a lot more
learned in those 4 years. And what I have learned is what
General Mattis said. If you cut foreign aid, buy more
ammunition, because you are going to need it.
We need to transition, and we need to be more effective at
how we do what we do. I am the Chairman of the Caucus on
Effective Foreign Assistance, and this is something that we are
very passionate about. We have done some good things in the
program with the different farm bills and the different
initiatives that have come out here, but we rely on you guys in
the industry to make this more effective.
I know there are a lot of things on the table. Do we put
more grain over into an area, or do we put more money in there.
We need all the above depending on the circumstance.
My background is agriculture. When you have an emergency
situation, a humanitarian situation, you need to get food there
now. But long-term, I think there is a need to have a cash-base
portion of this, but not all of it. I don't think you want to
go for all of it. But the other thing you need to do while we
are doing that, and this is where we have seen us change, is
the development of the foreign production of food.
Our university where I come from, they are doing meat
production in northern Africa. And if I were to ask you the
areas that you guys deal with the most, what continent is it, I
would assume it is probably Africa. Is that correct?
Dr. Jayne. Yes.
Mr. Yoho. All right. And you look at the amount of money
that we have put over there, it is in the billions of dollars,
and there is 1.11 billion people that live there: 650 million
people today in the 21st century don't have electricity. You
can't really help a nation if the governments aren't willing to
help. We have to pick those governments that are willing to be
adaptable, and that is what I like some of the things in OPEC
and things like that.
I am sorry I wasn't here earlier. When you look at the way
we go forward, and we have the debate about do we ship raw
products over there, and I am all for supporting our American
farmers, and I am all for supporting people in those other
countries, but we have to do it to where it doesn't break the
domestic market.
And we have just seen the recent example with peanuts in
Haiti. And I forget how many tons we dumped into Haiti, but it
took the incentive from the indigenous farmers to stop growing
peanuts, because there was no market for them to market their
products. As we do this, I would like to hear from whoever best
can answer this.
Ms. Salem, go ahead. And how do you direct this, and how do
you work, and more importantly, work with a government to get
them on the same page? And that is where I like what we do with
OPEC and MCC, because they do a great job, because they hold
those governments accountable. What is your experience?
Ms. Salem. It is a great question. We can't have these
programs eliminated, but we do have to make them more efficient
to some degree. The world is a big place. And while I am in
very much in support of sending things from the U.S., I
strongly believe there has to be a combination of the two. And
in my industry, we actually are part of the partnership.
And so we have eight factories that are local suppliers in
countries like Niger, Ethiopia, India, Haiti, and they are in
malnutrition hot spots. They can produce those types of food
locally. And then what we do from Edesia is we subsidize the
other countries. Because we can't have a factory in Syria. That
doesn't make any sense.
So by working together, by having both local production and
support from the U.S., we have the flexibility to, depending on
the situation, to be able to respond the most efficiently, cost
effectively, and the smartest way to really----
Mr. Yoho. I am going to cut you off there, because I am
about out of time.
With our budgetary restraints that we are facing as a
nation, we have to be more effective at what we do, and we rely
on you to become more effective at that and focus on aid not
trade, and let's transition these countries off as soon as we
can.
Thank you, and I yield back.
The Chairman. The gentleman's time has expired.
Ms. Adams, 5 minutes.
Ms. Adams. Thank you, Mr. Chairman.
And I want to thank all of the witnesses for your
testimony.
I have read often in the Bible that there are probably more
than 3,000 references to how we treat the poor, the least of
us.
We have always been a compassionate nation, and I guess
sometimes if your belly doesn't growl because you are hungry,
maybe you just don't understand. But having said that, I
represent the 12th District in North Carolina. And I have seen
firsthand the issues of food insecurity just in my district,
and even my state ranks high in food insecurity. I am real
passionate about this issue.
Having said that, with South Sudan, and Somalia, and Yemen,
and Nigeria facing famine conditions, and 52 million children
worldwide suffering from acute malnutrition, the U.S. foreign
assistance is crucial. I certainly appreciate all the comments
you all have made in support of that.
Ms. Schuler, international food aid has been a component of
United States foreign policy with bipartisan support for over 6
decades. And I am real delighted to be on this Committee
because of the bipartisan compassion that we seem to have.
President Reagan, when signing the proclamation establishing
World Food Day said that all Americans can be proud of our
country's continuing efforts to battle world hunger.
President Trump's budget, however, would zero out and
severely cut funding for those vital international programs,
and with the long tradition of bipartisan support for these
programs, do you feel that there is justification for abruptly
zeroing out these programs?
Ms. Schuler. No, I do not feel there is justification. I
think it would be a huge mistake. It would impact millions of
people, and it would damage our reputation as a country almost
immediately. As I said before, these programs are some of the
best, most effective programs in terms of helping millions of
people, and they absolutely need to be kept, yes.
Ms. Adams. Thank you. You mentioned in your testimony that
70 million people worldwide would face severe food insecurity,
and thank you for bringing that to our attention.
Mr. Suppes, you were not able to respond to a question of
my colleague here, so I wanted to give my brother an
opportunity to get that back in.
In terms of the question that he asked about the top issue
for our consideration as we consider the farm bill that would
be expiring in September, if you would like to comment, I would
like to hear what you have to say about that.
Mr. Suppes. Well, first of all, I am here because I think
monetization is very important. In fact, I am currently
planting sorghum right now and my tractor is idle. That is how
important it is, I need to be here to talk to you about it.
The other thing is getting off topic a little bit, you talk
about the farm program, we need to really take a little crop
insurance, and that is the only thing I really have to hang my
hat on as far as a farmer. Whatever the word sustainable means,
it keeps me there.
And as I mentioned before, research, ARS research. And in
wheat. We need to continue that. We have been cutting back. And
in cutting back, then it throws the burden back to the farmer
itself, which is okay. We are willing to pick some of that up,
but it also goes to the private companies. As long as we have
kind of an equal representation, there. We are in pretty good
shape.
Ms. Adams. Great. Well, thank you very much.
Mr. Suppes. Thank you.
Ms. Adams. Mr. Chairman, I will yield back my few minutes.
The Chairman. The gentlelady yields back.
Mr. Marshall, you are cleaned up?
Mr. Marshall. Yes, sir. I am ready to go.
The Chairman. All right.
Mr. Marshall. Thank you, Mr. Chairman.
Mr. Suppes, you and I live in the largest agricultural
producing district in the country. We grew up in the backyard
of one of the coauthors of the McGovern-Dole bill, or as we
call it, the Dole-McGovern bill back home. Despite that, we
literally have mountains of grain and nowhere to go with them.
Despite that, we have food insecurities in our own
district, in our own state, and in our own world. You chose to
be here. Most of your colleagues are back home planting
sorghum, as you just said, and you have been overseas. Why do
you do this? What is your passion? What drives you?
Mr. Suppes. Well, just being a farmer and being outdoors
and being an agriculturist, a conservationist, an economist,
and a humanitarian probably brings me to that. I can only
imagine, I have been in enough countries representing farmers
through U.S. Wheat Associates, that I have seen a lot of this
stuff not necessarily food aid, but talking to flour millers.
As you are in country, you could see what is going on in
Africa, in Nigeria, or these other countries. And you are
thinking, well, the U.S. has a presence there in a lot of
places. We probably need more. I suppose my exposure to those
things have brought me here.
Mr. Marshall. Okay. Thank you.
Ms. Salem, I have looked at your package here. And there is
one ingredient missing. Mr. Suppes there has the highest
protein content of wheat in the world that he grows. And we
just want to make a little push to get some wheat in there.
And I want to ask you kind of the same question. You are
basically a volunteer for your organization. What is your
passion? What brought you here to start this company?
Ms. Salem. One thing, being a mom. I have four daughters,
but my family is from Tanzania, the last three generations. I
have seen too many times firsthand what it looks like to lose a
child and to hear those sounds and to sit with a mother who has
lost her child. And that is the only reason I am here. That is
the only reason I get up every morning to take on this fight,
which is never easy.
It is for those mothers who have had to lose children for
the most ridiculous reason. We know how to treat severe acute
malnutrition. It doesn't take any research. It just takes will
and action to make it happen.
Mr. Marshall. Thanks. Thanks for your passion.
I, too, have been blessed to travel to places from Haiti to
Africa. And typically, I saw more kwashiorkor syndrome as
opposed to marasmus. I am just curious in the world, the places
you are treating, are you seeing more than the other? Is it
more protein? Is it more calorie-based nutrition issues?
Ms. Salem. You are getting very technical now, Mr.
Marshall.
Mr. Marshall. Yes.
Ms. Salem. I think that what we are trying to do, we don't
just make this one product. We make an entire range.
Mr. Marshall. Oh, okay.
Ms. Salem. About eight. And obviously, very focused also on
innovation too. We are looking at all of the different the
issues that are going, from prevention of malnutrition for
under 2s, severe acute, moderate acute, chronic, stunting,
pregnant and lactating women. We are looking at all the issues
and trying to design specific products that can help design
nutritional outcomes that are measurable and have clinical
trials along with it to be able to prove these outcomes.
Whatever the problem is, we are looking at solutions and
innovative solutions and willing to work with partners on the
ground who are seeing things to create something that can work
well in the field.
Mr. Marshall. Is it more a protein deficiency in Africa or
in Haiti, or is that more of just a caloric intake or both?
Ms. Salem. At this point, I would say more caloric because
of the drought. And when you add a drought plus war, you are
really just lacking food in general. Not as much the diet
diversity maybe what we are seeing more in Central America.
Mr. Marshall. There is not a better protein source, of
course, than Kansas beef. Have you guys tried to do anything
with beef as far as prepared product like this, is it just too
costly?
Ms. Salem. Yes.
Mr. Marshall. Surely, it is an incredible protein source?
Ms. Salem. Right. It is definitely a cost issue. And
peanuts are something that are grown here, but also in all of
Africa and Latin America too. These types of formulas are being
able to be produced locally and here as well. Beef might knock
us out of the----
Mr. Marshall. Well, a big chunk of your expense is cost, it
sounds like transportation. Is that 50 percent of the product,
getting it from Point A to B? Is that a big chunk of it?
Ms. Salem. No. If you are shipping a container that is
valued with about $60,000 worth of products, an average
shipping cost would be $5,000. The majority is spent on the
food.
Mr. Marshall. All right. Thank you.
And I yield back.
Ms. Salem. Thank you.
The Chairman. Mr. Soto, 5 minutes.
Mr. Soto. Thank you, Mr. Chairman.
A lot of us are concerned we are at a real crossroads with
regard to American leadership abroad, whether it was with
support of NATO, whether it was a withdrawal from the Paris
climate accord, or now with the elimination or proposed
elimination of the McGovern-Dole Food for Education Program.
But for argument's sake, let's start with America, first. I
would like to ask, first, Mr. Suppes, with regard to domestic
hunger, do we have enough of our commodities remaining in the
United States to be able to feed the United States like wheat
or other key commodities?
Mr. Suppes. There is no problem there.
Mr. Soto. Okay.
And then, Dr. Jayne, what would you say are the current
causes of domestic hunger? Is it the foreign aid program or
there are other factors?
Dr. Jayne. No, I don't think it has anything to do with the
foreign aid program. It is purchasing power issues, access to
cash to purchase food. There are some significant poverty
issues in this country.
Mr. Soto. And then let's turn to American jobs that would
be lost.
Mr. Schoeneman, what would be the number of jobs lost among
our seafarers if this program is eliminated?
Mr. Schoeneman. It is hard to say. It would depend on the
number of ships that were lost. But I will tell you, we have
lost about 2,400 just in the last 5 years since we changed the
percentage that we carry.
But the maritime industry alone accounts for hundreds of
thousands of jobs direct and indirect that are involved
specifically in this program, and those jobs would probably go
away if these programs went away.
Mr. Soto. We are talking about hundreds of jobs, thousands
of jobs, or tens of thousands of jobs? Just as an estimate.
Mr. Schoeneman. I would say at least tens of thousands if
not more.
Mr. Soto. And then going to keeping America safe, if we
pull away from these programs, I would like to ask Ms. Schuler
and Ms. Salem, who fills this vacuum, and what effect would it
be on keeping America safe?
Ms. Schuler. Well, as I talked about Somalia, Somalia is
one of the countries where the U.S. is fighting hard against a
terrorist group, Al Shabaab, where we have seen many attacks in
Kenya, Ethiopia, and elsewhere. They would fill the gap. If we
pulled out of Somalia with our assistance, kids, young people,
people who felt there was no hope, they would turn toward those
terrorist groups, and America would be a loser.
Mr. Soto. And would it be fair to say that there would be a
increase in piracy among Somalians and others who in the past
have made that region unstable?
Ms. Schuler. Possibly, yes.
Mr. Soto. And then what is your opinion, Ms. Salem? Who
would fill the void for a lot of these programs if we left?
Ms. Salem. Yes, I agree. One of the areas that we are very
involved in Nigeria. In the north when Boko Haram was defeated
and humanitarian aid workers went in, they found 250,000
severely malnourished kids. That means that is \1/4\ million
people who are basically near death. And so this is what the
terrorists are doing to people in these countries, and so we
need to continue to fight to be the leader in those regions and
defeat that way of thinking, you have another question?
Mr. Soto. Thank you.
Mr. Suppes, I want to go back to emerging markets for
agriculture. We had great growing season, but prices were low.
How do you think this would affect growth in agriculture, going
forward, if we didn't lead in with some of these food aid
programs in emerging markets?
Mr. Suppes. Well, it is probably not the place to talk
about rankings, but as far as exports?
Mr. Soto. As far as growth in exports based upon a lead-in
on these programs.
Mr. Suppes. Okay. If you put together all the food aid
programs that we currently do in a year and take the wheat and
add the wheat all up, wheat in my area, it would amount to
probably the fourth largest customer that I have, which would
be called Food Aid. If you look at the Pacific Northwest, that
would be about number ten as far as customer.
Now, we are not here to look at customers, but eventually
after you produce food aid for these people, a lot of those
countries do end up becoming our customers.
Mr. Soto. I don't want to interrupt but one last question.
What type of job loss do you think would happen among, for
instance, our wheat industry if this program was eliminated?
Mr. Suppes. Well, you are looking at elevator systems. You
are looking at rail lines that handle the commodity. You are
looking at the maritime. It is all connected. You might even
lose a few more farmers. You are talking about a lot of jobs.
Mr. Soto. Thank you.
The Chairman. The gentleman's time has expired.
Mr. Allen, 5 minutes.
Mr. Allen. Thank you, Mr. Chairman.
Thank you all for being here today to tell your stories and
experiences on how international food aid programs are
important to your organizations, and how they continue to
benefit various sections of the U.S. economy.
With the new Administration, we have heard a different
approach in platform, and we have heard it here today about
America first. The equivalent of that would be certainly, I
would want to donate to your worthy cause, but it would be
improper for me to go to the bank and borrow the money to
donate to you to have my children cosign that note and have
them pay that debt at some point in time.
So that is just an illustration of where this country is.
As we know for years, we have historically been a leading
provider in international food aid, and in sum, you mentioned
your organization is just that, American agriculture
commodities, grown and harvested by American farmers, and I
want to thank you for highlighting that today in your
discussion.
Mr. Schoeneman, I was particularly interested in hearing
your testimony, as it provided, and we touched on it, about the
U.S.-flagged vessels and the reduction of those U.S.-flagged
vessels. Is this a politically correct issue?
Mr. Allen. If it is our food and we are sending it over
there, shouldn't it be on our ships?
Mr. Schoeneman. Absolutely. I don't think it is a
politically correct issue. It all comes down to money. I think
that is the real concern.
Mr. Allen. Okay.
Mr. Schoeneman. Unfortunately, we are the quiet service. We
do our jobs. Our members, we go to work every day. I go to work
every day to make sure my members go to work every day. Unless
something bad happens, you don't usually hear about the
maritime industry. We keep our heads down, and we get our work
done. And that has made it very easy, unfortunately, in some of
these debates, to use us as a pay-for or use us as a means of
trying to balance something out somewhere else. MAP-21 is a
perfect example of that. That was a transportation bill in
2012, under a deal that was cut back in the 1980s, we were to
carry 75 percent of all food aid cargoes. That was reduced by
25 percent to 50 percent in MAP-21. And in addition to that, in
the next year's budget, there was a program called Ocean
Freight Differential that essentially would require the Federal
Government, the Maritime Administration, to reimburse USDA, the
Food For Peace Program, for whatever the difference was in the
cost of transporting all this grain on American ships versus
what it would have cost them if it was foreign. It was
mandatory spending. It was automatic. There was never an issue.
But, unfortunately, the Budget Committee hates mandatory
spending, and that was something that they zeroed out. Now we
have a self-fulfilling prophesy of transportation costs that
are going up, and the result, because we are not covering
those. It is difficult for us when we are looking at this
program, we see that the appropriations have stayed about flat,
and the amount of money we are spending on transportation is
going up. The amount of money we are spending on food is going
down. We need to find ways to fix this. But cutting the
mariners out is horrible for national security.
Mr. Allen. How are we getting the food over there?
Mr. Schoeneman. Well, that is part of the problem. A lot of
the new flexibility ideas that folks have put out there is to
either provide cash. Now, I have been told that that is a very
minuscule amount of money, but it is still more money than is
going to buy food. We have vouchers. We are buying food
locally, but then it is being shipped on foreign-flagged
vessels from a new point of origin over there, not on American
ships. And, unfortunately, since we are only carrying \1/2\, we
love to remind USAID that the 50 percent is a minimum, not a
maximum. We can carry as much cargo as they want to give us.
But, unfortunately, they do their best to try to keep it at
that 50 percent level, and that makes it hard.
Mr. Allen. Ms. Schuler, Ms. Salem, thank you for your work.
It is amazing what you are doing there, Ms. Salem, with your
business. And just one last question.
In this country, we have an obesity problem. In this
country we waste more food than we eat. And there are people
starving around the world. Why can't we solve this?
Ms. Salem. You bring up a great point. If we were able to
eliminate the waste alone, we would be able to feed the whole
world a couple times over. We are wasting 30 percent of all
food that is----
Mr. Allen. And then get our U.S. fleet to take it over to
these countries----
Ms. Salem. I hope it is not wasted----
Mr. Allen. Ms. Schuler, you have any closing comments?
Ms. Schuler. Well, I would just say that, in many
countries, you also have issues related to conflict. Many of
the countries that we are talking about that have huge food
assistance needs are countries with conflicts. We need to work
together with government and provide leadership to solve those
crises.
Mr. Allen. Right and provide leadership. Yes. Exactly.
Thank you.
I yield back.
The Chairman. The gentleman's time has expired.
Mr. Lawson, 5 minutes.
Mr. Lawson. Thank you.
And I have learned a great deal from you all this morning.
Because I have not been involved in international food
programs. I have heard a whole lot about them. But to just
listen to you all has been very stimulating.
Two things I am concerned about is, one, what might have
been Ms. Salem talking about how China trains some of the
people from Africa in their language, and then they go back,
and they come back again. And they eventually are going to be
leaders in their country and so forth.
How does that affect us in America?
Dr. Jayne. Yes. Okay. Thank you. I think that was me.
China observes an opportunity in developing countries. They
are going for it. They are investing heavily in both soft and
hard forms of infrastructure, training, and all of this.
How is that affecting the United States? It sort of depends
on how the United States responds. If the United States
responds recognizing that these are opportunities for win-win
situations, and they go after those opportunities through the
programs of USAID and USDA, and the kind of programs that we
are looking at here, we have an opportunity to get the America
first objectives, which many people here have kind of talked
about. We can get those objectives through a U.S. development
assistance program that is well articulated.
I would say that even if the view is just America first, it
is in America first interests to get out there and promote
development in other countries because our private-sector is
going to win from that. China is doing what is in China's best
interests. And how can we fault them for that? It would be
unfortunate if all of the opportunities available for the
United States to benefit from promoting trade and development
in Africa, that we don't take advantage of that. That is where
we are at risk, if we don't carry forward some of the programs
that have been discussed during this hearing.
Thank you.
Mr. Lawson. Yes.
Ms. Schuler. If you remember, George W. Bush was seen as a
leader on HIV and AIDS across Africa, for example. And people
still talk about that in Africa, how great of a job the U.S.
did in terms of helping to reduce the impact and mitigate the
impact of HIV/AIDS. Why can't we be a leader in ending hunger
and being a leader in the world in that regard? That would be a
beautiful way to strengthen the U.S. reputation around the
world and help the America first cause.
Mr. Lawson. Okay. If we can still be a leader in the Food
for Progress Program, which increases our capacity around the
world, who are we in competition with? Is that just where we
want to be?
Dr. Jayne. Yes, sir. Thank you.
One of the questions that we frequently hear people say is,
``Why should we promote agricultural development in countries?
They are just going to take away our markets and compete with
us.'' Well, if you look at the kind of crops that are exported
out of Africa, it is usually cocoa, tea, coffee, cut flowers,
tropical fruits, to a lesser extent cotton. Okay? With the
exception of cotton, none of these other crops really compete
with our U.S. exports. That is why it is increasingly a win-win
to promote development in both areas. They are very compatible
and synergistic with each other. Our farmers, and our broader
agribusiness community, stand to gain a lot by development in
these areas of the world.
Mr. Lawson. Mr. Chairman, with that, I yield back.
The Chairman. The gentleman yields back. Thank you.
Mr. Goodlatte, 5 minutes.
Mr. Goodlatte. Thank you, Mr. Chairman.
This has been a very good hearing. I really appreciate all
of your participation, and I agree with some of what almost all
of you have said.
I agree with Dr. Jayne that food production in these
countries and sustainability is absolutely critical. We have to
have that. But I also agree with Mr. Schoeneman and our wheat
grower and probably Ms. Salem that as much of this as we can do
to promote growth in the United States of support for this
program by producing it, processing it, and shipping it from
the United States to handle emergency food aid is vitally
important to keep the support for this program, or you are
going to see more and more public support for the kind of
proposals that do completely cut these programs out.
Dr. Jayne, let me start with you. I am concerned about the
efficiency of some of these programs that are run to encourage
that production. I have been to Ethiopia as well. I have been
to schools, just like the Chairman has, seen children being
fed, very nutritious, and also some pretty inexpensive food
that gets them to school and gets them through the day. But
then, as I drove there, I saw the most archaic, and this is in
Ethiopia, with beautiful farmland, being farmed with animals,
basically. I saw very little mechanized equipment.
What is USAID doing, and are there other U.S. Government
programs, or is it primarily relying on USAID, to get a place
like that modernized and more efficient so they can take
advantage of that farmland and produce for their own people?
Dr. Jayne. That is a great question. USAID, I believe, is
doing the bulk of U.S. Government programs toward development
assistance. And, of course, the fact----
Mr. Goodlatte. How efficient are they? I get the impression
that a lot of money is wasted. I have been to Haiti, too, where
Congress appropriated $2 billion, not just for food aid but for
rebuilding a devastated country that was the worst in the
Western Hemisphere before the earthquake and then just totally
devastated after the earthquake. And I see a lot of waste. What
is going on?
Dr. Jayne. Well, certainly, almost all of these programs
could be made more efficient. That is true.
One example I can give you right off is that our capacity-
building programs, which are designed to train the next
generation of scientists locally and extension workers and
farmers locally, that can be done much more efficiently.
Mr. Goodlatte. Are we paying Americans to go over and do
this like the Chinese are doing? Are we bringing people from
these countries to the U.S. like the Chinese?
Dr. Jayne. We are mostly bringing them to the U.S. And it
costs us $65,000 a year to bring someone overseas into a land-
grant U.S. system for training, $65,000 per year.
Mr. Goodlatte. Why?
Dr. Jayne. It costs about $7,000 per year to train someone
locally. And we are starting----
Mr. Goodlatte. Is a U.S. person going over there to train
them? Because I want the U.S. to get credit for this.
Dr. Jayne. Of course. Yes. And we are needing to innovate,
and we are seeing ways in which we need to partner more with
universities overseas to develop----
Mr. Goodlatte. I want to ask Ms. Salem a question or two as
well. I never heard of this before. I think it is phenomenal. I
am really impressed. And I am interested in knowing what you
think about what overall percentage of U.S. food aid should be
fortified, nutrient-dense products like those produced by
Edesia.
Ms. Salem. Yes. It is a good question. Our product is not a
silver bullet for hunger. We are really focused on very
specific cases of malnutrition, specifically moderate----
Mr. Goodlatte. Immediate, get it there quickly, it can be
prepositioned?
Ms. Salem. But also for the right people. You want the bulk
grains to be used for adults and people who don't fall into the
most vulnerable categories. We want to save this just for those
that are really at the brink of death, who are in clinics, it
is like a food by prescription. Think of it as a medical food
versus grains. That is really what we need to be using these
for, not for the masses.
Mr. Goodlatte. How do you pronounce your name, sir?
Mr. Suppes. Suppes.
Mr. Goodlatte. Like it looks.
Mr. Suppes. In Tanzania, the wheat that we sent over there
to that flour mill, it is a very large flour mill; is, of
course, fortified. And they told us that they were selling this
to the underprivileged at a cheaper rate.
Mr. Goodlatte. You are happy to sell it over there. You are
happy to sell it to the U.S. Government to distribute over
there. And you are also happy to sell it to Ms. Salem, right?
Mr. Suppes. Absolutely. She could make crackers and put
this peanut butter in between. It would be phenomenal.
Ms. Salem. So many new ideas.
Mr. Goodlatte. My time has expired. Thank you, Mr.
Chairman.
The Chairman. The Chairman of the Nutrition Subcommittee,
Mr. Thompson.
Mr. Thompson. Mr. Chairman, thank you. Thank you for all
members of the panel. This is a very important hearing that we
are having. Nutrition does matter. It certainly matters here at
home, and it matters overseas in areas where we have talked
about what we can do to improve. I happen to believe, and maybe
I am wrong. Maybe I am just naive. I have been accused of that
on occasion. I happen to believe the United States has been the
most effective force for good of putting food in the bellies of
hungry people overseas.
Am I wrong? Am I naive on that? We are looking at how we
can improve, right? But we are not really here to mourn the
fact that we have failed. I think that we should be very proud
of what this nation has done, what American farmers and farm
families have provided. I actually think that is kind of a
bias, being from a pretty rural area. Looking out for your
neighbors is sort of a characteristic of rural America. I
always say the best part of living in a rural community is that
everybody knows your business. The worst part is everybody
knows your business. And the fact is that we do have an impact
around the world.
I want to come back to how we get things there briefly.
Mr. Schoeneman, and you have talked about this a little
bit, it is my understanding that our agriculture and maritime
communities have developed an enduring bipartisan partnership
in these programs. How would this partnership be impacted by
proposals to turn these programs into more overseas cash
handouts, which I have concerns with when I look at the news
headlines over the past 10, 12 years? I mean, I know food winds
up in hungry bellies. Cash sometimes winds up different places.
Or perhaps a voucher program or by weakened cargo preference
requirements, how would that impact support for funding these
programs?
Mr. Schoeneman. What we have been telling folks for the
last 10 years is, if you remove the domestic constituency
between the American farmer, the American mariner, the PVOs,
and the other organizations that provide this aid, these
programs are going to die. They are going to get zeroed out. It
is an inevitability. Because when you look at these programs,
if there is not a domestic support for them politically, then
what do they become? As Mr. Yoho and Mr. Allen pointed out,
they are just giveaway programs. And we don't have the money to
do it anymore.
As the Chairman said, we are $20 trillion in debt. If we
are going to be spending our taxpayer dollars, it has to be on
something that has a domestic benefit. You cut out the
political constituencies for these programs at home, they are
going to go away. And the President's budget is a perfect
example of that. No other President has taken a shot at
McGovern-Dole and P.L. 83-480 the way that President Trump did.
The only reason he was able to do that is because we so
undermined the domestic program that we have cut out the
Americans in it, and it makes it easy to cut away. I am very
concerned if we do not put the Americans back in this program,
that these programs are going to go away, period.
Mr. Thompson. Can you elaborate on the efforts made by
shippers to ensure efficient delivery? You made reference to
this, but I wondered if you could flesh that out a little more,
efforts to ensure efficient delivery of food aid cargoes in
emergency situations. Are there other steps that could be taken
to improve the speed of delivery of U.S. in-kind commodities
during emergencies?
Mr. Schoeneman. As I noted earlier, if we can try to mirror
the commercial industry's practices in the food aid sector,
that would make things much easier on our guys trying to handle
the inland transportation as well as the port transportation
getting them on the ships. Commercial terms would be a big
impact on that.
Prepositioning, doing more prepositioning would be
beneficial so that we can cut down on the travel times. And
then, frankly, a lot of the issues I see the USAID members
trying to play the game of how do we get to that 50 percent
threshold and those types of things. If we simply carried all
the cargo, it would make it much easier. From that perspective,
if we were able to increase the percentage that we carry, and
then we can work together with USAID to find creative ways to
be innovative and to move things faster, I am fully confident
that the industry can do that, and we look to working with them
to do that in the future.
Mr. Thompson. Thank you.
Ms. Schuler, based on your experience in the field, do you
believe PVOs are currently able to provide the appropriate mix
of food aid modalities in response to world hunger needs while
protecting against fraud and abuse?
Ms. Schuler. Yes. I think that the PVO community is working
very hard on looking at ways to hold partners accountable and
communities accountable and their own agencies. World Vision,
for example, has a program called Citizen Voice in Action. It
actually engages people at the community level to hold their
governments, to hold other partners, accountable. And this is a
great tool and has been very successful in reducing fraud with
food aid programs but also with other programs.
Mr. Thompson. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
Thank you very, very much. What a terrific panel today.
Each of you have brought a face and a perspective to this
important issue, and I appreciate you coming to D.C. to make
that happen.
Sonny Perdue, our new Secretary of Agriculture, has a new
motto for USDA. It is: ``Do Right and Feed Everybody.'' And
clearly that is on the front of your minds. This is a hard
subject. In addition to going to see the McGovern-Dole Program
and the emergency program, we also went to Jordan to see the
voucher-cash assistance program in a Syrian refugee camp just
south of the Syrian border. You don't go into a refugee camp of
some 80,000 people and come out the same person that you went
in. And those vouchers actually were being used to buy U.S.
rice. It was in smaller packages in the grocery store that was
set up in the camp.
It is clear we are going to need a blend of cash and
products. And every one of you made good points. Whether it is
one of the references Ms. Adams made to the poor in the Bible,
where Christ said: ``You will have the poor with you always.''
You are not going to be able to work your way out of a job. We
are going to always have the poor with us, and there is going
to be some responsibility. And we all bear some responsibility
to feeding, whether it is reacting to natural disasters,
droughts, hurricanes, earthquakes, other things that happen, or
it is in response to man's inhumanity to man. The wreck in
Venezuela, that is just a government that mistreated its
people, corruption, mismanaged, whatever it is in these
countries that have these problems. We, as Americans, with the
blessings we have, do have the responsibility to assist where
we can.
As I also mentioned, we have tough sledding ahead for our
own country. We don't have an unlimited checkbook, even though
it appears that way. We don't. We are going to be using the
Wisdom of Solomon to try to figure out how we continue to do
the very best we need to do around the world and create that
leadership that everyone talks about. America is a leader. You
don't hear any other country who is referenced in response to
these kinds of issues the way America is referenced. And that
is a point of pride for us. We have done good stuff around the
world, as G.T. mentioned, and we will continue to do it,
whether it is through governments, Ms. Salem and the private-
sector doing what you do best. We are going to continue to
help. And each of you have helped us this morning gain a better
understanding of how tough this is going to be. Please pray for
our decision makers, because these are going to be hard
priorities to set and hard things to do that are coming at us a
whole lot quicker than maybe we even thought.
Again, what a great panel you were this morning. I thank
each of you very, very much.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses should
any of the witnesses want to respond to something that you
needed to get into the record. We will take that for any
question posed by the Member.
This hearing of the Committee on Agriculture is adjourned.
Thank y'all.
[Whereupon, at 12:23 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Press Release by Hon. James P. McGovern, a Representative in
Congress from Massachusetts
March 16, 2017
http://www.usglc.org/2017/03/16/100-christian-leaders-tell-
congressional-leadership-protect-foreign-assistance/
Press Release
U.S. Global Leadership Coalition
100+ Christian leaders tell Congressional leadership: Protect foreign
assistance
Catholic and evangelical leaders, pastors, artists, and other
high-profile Christians urge lawmakers to support resources for
the State Department and USAID

Washington, D.C.--More than 100 Christian leaders from across the
United States are calling on Congress to avoid disproportionate cuts to
America's foreign assistance programs that make up less than 1% of the
Federal budget.
In a letter to the House and Senate leadership, the signers write:
``It is our moral responsibility to urge you to support and protect the
International Affairs Budget'' noting ``we cannot turn our back on
those in desperate need.''
The signers--representing the Catholic and evangelical
communities--include national leaders, pastors, heads of faith
organizations, recording artists and authors. Cardinal Timothy Dolan
and Rev. Samuel Rodriguez--who spoke at the 2017 Inauguration--also are
among the signers.
As the budget process moves to Capitol Hill, the leaders stress
that America must remain that ``shining city on a hill'' that ``brings
hope to poor, hungry, [and] vulnerable.''
* * * * *
March 16, 2017

Hon. Mitch McConnell, Hon. Charles E. Schumer,
Majority Leader, Minority Leader,
U.S. Senate, U.S. Senate,
Washington, D.C.; Washington, D.C.;
Hon. Paul Ryan, Hon. Hon. Nancy Pelosi,
Speaker, Minority Leader,
U.S. House of Representatives, U.S. House of Representatives,
Washington, D.C.; Washington, D.C.

Dear Majority Leader McConnell, Minority Leader Schumer, Speaker
Ryan, and Minority Leader Pelosi,

As Christian leaders, it's an honor to represent dedicated and
faithful citizens living in every Congressional district in this
country. We're writing to share our support for the International
Affairs Budget that every day brings hope to poor, hungry, vulnerable
and displaced men, women and children around the world.
America is blessed with fertile land, abundant natural resources, a
strong economy, and faithful citizens who value religious freedom. But
beyond our borders, many countries experience unparalleled suffering
and loss of life due to extreme poverty, disease, natural disasters,
and conflict. Today, there are 65 million displaced people, the most
since World War II, and 795 million people still go to bed hungry every
night.
Matthew 25 tells us when we serve the least of these, we are
serving the Lord. As people of faith, we cannot turn our back on those
in desperate need. We are grateful for America's global development and
diplomacy programs that have been instrumental in saving lives,
safeguarding religious liberties, and keeping America safe and secure.
Both Republican and Democratic Administrations have strong legacies of
supporting humanitarian and development programs that enable countless
people to pull themselves out of poverty and live life with dignity. It
is through these diplomatic and development tools that we've seen
countries and communities build peaceful, productive societies that do
not turn to violence or terrorism.
At a time when we're especially security conscious, the
International Affairs Budget is crucial to demonstrating our values to
the world, building friendships with other nations, and lowering
security risks around the world.
With just one percent of our nation's budget, the International
Affairs Budget has helped alleviate the suffering of millions;
drastically cutting the number of people living in extreme poverty in
half, stopping the spread of infectious diseases like HIV/AIDs and
Ebola, and nearly eliminating polio. Additionally, it promotes freedom
and human rights, protecting religious freedom for millions around the
world.
As followers of Christ, it is our moral responsibility to urge you
to support and protect the International Affairs Budget, and avoid
disproportionate cuts to these vital programs that ensure that our
country continues to be the ``shining city upon a hill.''
Thank you for your consideration.

Timothy Cardinal Dolan, Archbishop Bishop Horace E. Smith, MD, Senior
of New York Pastor, Apostolic Faith Church
Rev. Dr. Samuel Rodriguez, Ted Esler, President, Missio Nexus
President, National Hispanic Rev. Dr. Michael L. Henderson,
Christian Leadership Conference Senior Pastor, New Beginnings
Church
Leith Anderson, President, National Dr. G. Craig Williford, President,
Association of Evangelicals Multnomah University
Rich Stearns, President, World Carmen Fowler Laberge, President,
Vision USA Presbyterian Lay Committee
Bishop Gregory J. Mansour, Chairman Colin P. Watson, Sr., Director of
of the Board, Catholic Relief Ministries and Administration,
Services Christian Reformed Church in North
Michael W. Smith, Singer/Songwriter America
Dr. George O. Wood, General Dr. Don Argue, Ambassador at Large,
Superintendent, Assemblies of God Convoy of Hope
Dr. Ronnie Floyd, Immediate Past Scott Ridout, President, Converge
President, Southern Baptist
Convention
Amy Grant, Singer/Songwriter Rev. Dr. Liz Mosbo VerHage,
Associate Pastor, Quest Church
Shirley V. Hoogstra, J.D., Gregory Loewer, Pastor for
President, Council for Christian Missions, Columbia Baptist Church
Colleges & Universities
Tom Lin, President & CEO, Jim Lyon, General Director, Church
InterVarsity Christian Fellowship of God Ministries
Third Day, Christian Rock Band Constantine M. Triantafilou,
Jonathan Reckford, CEO, Habitat for Executive Director & CEO,
Humanity International Orthodox Christian
Charities (IOCC)
Mark Labberton, President, Fuller Alan Robinson, National Director,
Theological Seminary Brethren in Christ, U.S.
Jo Anne Lyon, General Mark S. Young, President, Denver
Superintendent Emerita, The Seminary
Wesleyan Church
Most Reverend Jerome E. Listecki, M. Craig Barnes, President,
Archdiocese of Milwaukee Princeton Theological Seminary
Most Reverend Salvatore J. Adam Pray, Minister, theChurch.at
Cordileone, Archbishop of San
Francisco
David Wilson, General Secretary, Dennis Hollinger, Ph.D., President,
Church of the Nazarene Gordon-Conwell Theological
Seminary
Rev. Gabriel Salguero, President, Alan Cureton, President, University
National Latino Evangelical of Northwestern
Coalition
Most Reverend Joseph E. Kurtz, Jon Middendorf, Pastor, OKC First
D.D., Archbishop of Louisville Church of the Nazarene
Santiago ``Jimmy'' Mellado, Rev. Bobby Griffith, Jr., Pastor,
President & CEO, Compassion City Presbyterian Church
International
John Crosby, Senior Pastor, Christ Rev. David Cassidy, Pastor, Christ
Presbyterian Church Community Church
Rev. Johnnie Moore, Author Dr. Timothy J. Brooks, Lead Pastor,
South Portland Church of the
Nazarene
Bob Bouwer, Reverend, Faith Church Rev. Doug Serven, Pastor, City
(8 locations) Presbyterian Church
John K. Jenkins Sr., Senior Pastor, Rev. Dan Claire, Rector, Church of
First Baptist Church of Glenarden the Resurrection
Keith Stewart, Senior Pastor, Rev. Joel St. Clair, Pastor, Mosaic
Springcreek Church Community Church
Alec Hill, President Emeritus, Dr. O. Alan Noble, Assistant
InterVarsity Christian Fellowship Professor of English, Oklahoma
Baptist University
Scott Arbeiter, President, World Rev. Dr. Irwyn Ince Jr., Pastor,
Relief Corporation City of Hope Presbyterian Church
Martha Newsome, President & CEO, Rev. Russ Whitfield, Pastor, Grace
Medical Teams International Mosaic Church
J. Ron Byler, Executive Director, The Right Rev. Dr. Steven A.
Mennonite Central Committee Breedlove, Diocese, Christ our
Mike Mantel, President & CEO, Hope, Anglican Church in North
Living Water International America
Carol Bremer-Bennett, Executive Rev. Alan Cross, Executive
Director, World Renew Director, Community Development
Gary Edmonds, President & CEO, Food Initiatives, Montgomery Baptist
for the Hungry Association
Anita Smith, President, Children's Rev. Dr. James C. Howell, Senior
AIDS Fund Pastor, Myers Park United
Methodist Church
Shepherd Smith, President, Rev. Don Flowers, Jr., Senior
Institute for Youth Development Pastor, Providence Baptist Church
Bruce Wilkinson, President & CEO, The Most Rev. Dr. Foley Beach,
Catholic Medical Mission Board Archbishop, Anglican Church in
North America
Steve Stirling, President & CEO, Dr. Chris Ellis, Minister of
MAP International Mission and Outreach, Second
Baptist Church
Peter Vander Meulen, Coordinator in Dr. Stephen Cook, Senior Pastor,
Office of Social Justice, Second Baptist Church
Christian Reformed Church in North Dr. Christopher Pollock, Lead
America Pastor, Midtown Church
Joel K. Johnson, Pastor, Westwood Peter Greer, CEO, HOPE
Community Church International
James H. Barnes III, President, David W. Kendall, Bishop, Free
Bethel University Methodist Church, USA
Steve Moore, Board Chair, World David T. Roller, Bishop, Free
Relief Methodist Church, USA
Deborah Smith Pegues, Board of Matthew A. Thomas, Bishop, Free
Directors, World Vision USA Methodist Church, USA
Rev. Jonathan Odom, Pastor, Asbury Justin B. Fung, Pastor of Teaching
UMC & Formation, The District Church
Dr. Mark Wilbanks, Senior Pastor, Jason Surratt, Pastor of
Wieuca Road Baptist Church Stewardship and Global Missions,
Seacoast Church
Dr. Stephen Treash, Senior Pastor, Dr. Gregg Okkesson, Dean, Asbury
Black Rock Church Theological Seminary
Laura Truax, Senior Pastor, LaSalle Stephanie Summers, CEO, Center for
Street Church Public Justice
Jeffrey Moes, Senior Pastor, Ruth Anne Reese, Ph.D., Professor
Sunnybrook Community Church of New Testament, Asbury
Gino Grunberg, Co-Pastor, Harbor Theological Seminary
Christian Center
Rev. Jay Madden, Pastor for Brandon Heath, Singer/Songwriter
Mission, Peachtree Presbyterian
Church
Chris Cramer, Pastor, Orchard Grove Dr. Stephen Offutt, Assistant
Community Church Professor of Development Studies,
Chad Hayward, Executive Director, Asbury Theological Seminary
Accord Network
Galen Carey, Vice President of Matt Maher, Singer/Songwriter
Government Relations, National Jonathan Martin, Writer and Speaker
Association of Evangelicals
Scott Garber, Author Aaron Graham, Lead Pastor, The
District Church
Ken Wytsma, Senior Pastor, Antioch Rev. Eugene Cho, Lead Pastor &
Church Founder, Quest Church/One Day's
Wages
William Minchin, Pastor of Business
Administration, Grace Fellowship
Church

CC:

Hon. Donald Trump, President;
Hon. Mike Pence, Vice President;
Hon. Rex Tillerson, Secretary of State.
______

Submitted Letters by Hon. Jimmy Panetta, a Representative in Congress
from California
February 27, 2017

Hon. Paul Ryan, Hon. Mitch McConnell,
Speaker of the House, Majority Leader,
U.S. House of Representatives, U.S. Senate,
Washington, D.C.; Washington, D.C.;
Hon. Nancy Pelosi, Hon. Charles E. Schumer,
Minority Leader, Minority Leader,
U.S. House of Representatives, U.S. Senate,
Washington, D.C.; Washington, D.C.

Dear Speaker Ryan, Minority Leader Pelosi, Majority Leader
McConnell, and Minority Leader Schumer:

As you and your colleagues address the Federal budget for Fiscal
Year 2018, we write as retired three and four star flag and general
officers from all branches of the armed services to share our strong
conviction that elevating and strengthening diplomacy and development
alongside defense are critical to keeping America safe.
We know from our service in uniform that many of the crises our
nation faces do not have military solutions alone--from confronting
violent extremist groups like ISIS in the Middle East and North Africa
to preventing pandemics like Ebola and stabilizing weak and fragile
states that can lead to greater instability. There are 65 million
displaced people today, the most since World War II, with consequences
including refugee flows that are threatening America's strategic allies
in Israel, Jordan, Turkey, and Europe.
The State Department, USAID, Millennium Challenge Corporation,
Peace Corps and other development agencies are critical to preventing
conflict and reducing the need to put our men and women in uniform in
harm's way. As Secretary James Mattis said while Commander of U.S.
Central Command, ``If you don't fully fund the State Department, then I
need to buy more ammunition.'' The military will lead the fight against
terrorism on the battlefield, but it needs strong civilian partners in
the battle against the drivers of extremism--lack of opportunity,
insecurity, injustice, and hopelessness.
We recognize that America's strategic investments in diplomacy and
development--like all of U.S. investments--must be effective and
accountable. Significant reforms have been undertaken since 9/11, many
of which have been embodied in recent legislation in Congress with
strong bipartisan support--on human trafficking, the rights of women
and girls, trade and energy in Africa, wildlife trafficking, water,
food security, and transparency and accountability.
We urge you to ensure that resources for the International Affairs
Budget keep pace with the growing global threats and opportunities we
face. Now is not the time to retreat.
Sincerely,

1. General Keith B. Alexander, USA (Ret.), Director, National
Security Agency (2005-2014), Commander, U.S. Cyber Command (2010-2014)
2. General John R. Allen, USMC (Ret.), Commander, NATO International
Security Force (2011-2013), Commander, U.S. Forces-Afghanistan (2011-
2013)
3. Lt. General Edward G. Anderson III, USA (Ret.), Vice Commander,
U.S. Element, North American Aerospace Defense Command/Deputy
Commander, U.S. Northern Command (2002-2004)
4. Lt. General Thomas L. Baptiste, USAF (Ret.), Deputy Chairman,
NATO Military Committee (2004-2007)
5. Lt. General Ronald R. Blanck, USA (Ret.), Surgeon General of the
United States Army (1996-2000)
6. Lt. General H. Steven Blum, USA (Ret.), Deputy Commander, U.S.
North American Aerospace Defense Command and U.S. Northern Command
(2009-2010)
7. Lt. General Steven W. Boutelle, USA (Ret.), Chief Information
Officer and G6, United States Army (2003-2007)
8. Admiral Frank L. Bowman, USN (Ret.), Director, Naval Nuclear
Propulsion (1996-2004)
9. General Charles G. Boyd, USAF (Ret.), Deputy Commander in Chief,
U.S. European Command (1992-1995)
10. General Bryan Doug Brown, USA (Ret.), Commander, U.S. Special
Operations Command (2003-2007)
11. General Arthur E. Brown, Jr., USA (Ret.), Vice Chief of Staff of
the United States Army (1987-1989)
12. Vice Admiral Michael Bucchi, USN (Ret.), Commander of the United
States Third Fleet (2000-2003)
13. Lt. General John H. Campbell, USAF (Ret.), Associate Director of
Central Intelligence for Military Support, Central Intelligence Agency
(2000-2003)
14. General Bruce Carlson, USAF (Ret.), Director, National
Reconnaissance Office (2009-2012)
15. General George W. Casey, Jr., USA (Ret.), Chief of Staff of the
United States Army (2007-2011)
16. Lt. General John G. Castellaw, USMC (Ret.), Deputy Commandant
for Programs and Resources (2007-2008)
17. Lt. General Dennis D. Cavin, USA (Ret.), Commander, U.S. Army
Accessions Command (2002-2004)
18. General Peter W. Chiarelli, USA (Ret.), Vice Chief of Staff,
U.S. Army (2008-2012)
19. Lt. General Daniel W. Christman, USA (Ret.), Superintendent,
United States Military Academy (1996-2001)
20. Lt. General George R. Christmas, USMC (Ret.), Deputy Chief of
Staff for Manpower and Reserve Affairs (1994-1996)
21. Admiral Vern Clark, USN (Ret.), Chief of Naval Operations (2000-
2005)
22. Admiral Archie R. Clemins, USN (Ret.), Commander in Chief, U.S.
Pacific Fleet (1996-1999)
23. General Richard A. ``Dick'' Cody, USA (Ret.), Vice Chief of
Staff, United States Army (2004-2008)
24. Lt. General John B. Conaway, USAF (Ret.), Chief, National Guard
Bureau (1990-1993)
25. General James T. Conway, USMC (Ret.), Commandant, U.S. Marine
Corps (2006-2010)
26. General John D.W. Corley, USAF (Ret.), Commander, Air Combat
Command (2007-2009)
27. General Bantz J. Craddock, USA (Ret.), Commander, U.S. European
Command and NATO Supreme Allied Commander Europe (2006-2009)
28. Vice Admiral Lewis W. Crenshaw, Jr., USN (Ret.), Deputy Chief of
Naval Operations for Resources, Requirements, and Assessments (2004-
2007)
29. Lt. General John ``Mark'' M. Curran, USA (Ret.), Deputy
Commanding General Futures, U.S. Army Training and Doctrine Command
(2003-2007)
30. General Terrence R. Dake, USMC (Ret.), Assistant Commandant,
U.S. Marine Corps (1998-2000)
31. Lt. General Robert R. Dierker, USAF (Ret.), Deputy Commander,
U.S. Pacific Command (2002-2004)
32. Admiral Kirkland H. Donald, USN (Ret.), Director, Naval Nuclear
Propulsion (2004-2012)
33. Lt. General James M. Dubik, USA (Ret.), Commander, Multi
National Security Transition Command and NATO Training Mission-Iraq
(2007-2008)
34. Lt. General Kenneth E. Eickmann, USAF (Ret.), Commander,
Aeronautical Systems Center, U.S. Air Force (1996-1998)
35. Admiral William J. Fallon, USN (Ret.), Commander, U.S. Central
Command (2007-2008)
36. Admiral Thomas B. Fargo, USN (Ret.), Commander, U.S. Pacific
Command (2002-2005)
37. Admiral Mark P. Fitzgerald, USN (Ret.), Commander, U.S. Naval
Forces Europe (2007-2010) and U.S. Naval Forces Africa (2009-2010)
38. General Ronald R. Fogleman, USAF (Ret.), Chief of Staff of the
United States Air Force (1994-1997)
39. Lt. General Benjamin C. Freakley, USA (Ret.), Commander, U.S.
Army Accessions Command (2007-2012)
40. Lt. General Robert G. Gard, Jr., USA (Ret.), President, National
Defense University (1977-1981)
41. Admiral Jonathan W. Greenert, USN (Ret.), Chief of Naval
Operations (2011-2015)
42. Lt. General Arthur J. Gregg, USA (Ret.), Army Deputy Chief of
Staff (1979-1981)
43. Lt. General Wallace C. Gregson, USMC (Ret.), Commanding General,
Marine Corps Forces Pacific and Marine Corps Forces Central Command
(2003-2005)
44. Vice Admiral Lee F. Gunn, USN (Ret.), Inspector General, U.S.
Navy (1997-2000)
45. General Michael W. Hagee, USMC (Ret.), Commandant, U.S. Marine
Corps (2003-2006)
46. Lt. General Michael A. Hamel, USAF (Ret.), Commander, Air Force
Space and Missile Systems Center (2005-2008)
47. General John W. Handy, USAF (Ret.), Commander, U.S.
Transportation Command and Commander, Air Mobility Command (2001-2005)
48. Admiral John C. Harvey, Jr., USN (Ret.), Commander, U.S. Fleet
Forces Command (2009-2012)
49. General Richard E. Hawley, USAF (Ret.), Commander, Air Combat
Command (1996-1999)
50. General Michael V. Hayden, USAF (Ret.), Director, Central
Intelligence Agency (2006-2009)
51. General Paul V. Hester, USAF (Ret.), Commander, Pacific Air
Forces, Air Component Commander for the U.S. Pacific Command Commander
(2004-2007)
52. General James T. Hill, USA (Ret.), Commander, U.S. Southern
Command (2002-2004)
53. Admiral James R. Hogg, USN (Ret.), U.S. Military Representative,
NATO Military Committee (1988-1991)
54. Lt. General Walter S. Hogle Jr., USAF (Ret.), Commander, 15th
Air Force (2000-2001)
55. Lt. General Steven A. Hummer, USMC (Ret.), Deputy Commander for
Military Operations, U.S. Africa Command (2013-2015)
56. Lt. General William E. Ingram, Jr., USA (Ret.), Director, U.S.
Army National Guard (2011-2014)
57. General James L. Jamerson, USAF (Ret.), Deputy Commander in
Chief, U.S. European Command (1995-1998)
58. Lt. General Arlen D. Jameson, USAF (Ret.), Deputy Commander in
Chief, U.S. Strategic Command (1993-1996)
59. Admiral Gregory G. Johnson, USN (Ret.), Commander, U.S. Naval
Forces Europe/Commander in Chief, Allied Forces Southern Europe (2001-
2004)
60. Admiral Jerome L. Johnson, USN (Ret.), Vice Chief of Naval
Operations (1990-1992)
61. Lt. General P.K. ``Ken'' Keen, USA (Ret.), Chief, Office of the
U.S. Defense Representative to Pakistan (2011-2013)
62. Lt. General Richard L. Kelly, USMC (Ret.), Deputy Commandant,
Installations and Logistics (2002-2005)
63. Lt. General Claudia J. Kennedy, USA (Ret.), Deputy Chief of
Staff for Army Intelligence (1997-2000)
64. General Paul J. Kern, USA (Ret.), Commanding General, U.S. Army
Materiel Command (2001-2004)
65. General William F. Kernan, USA (Ret.), Supreme Allied Commander,
Atlantic/Commander in Chief, U.S. Joint Forces Command (2000-2002)
66. Lt. General Donald L. Kerrick, USA (Ret.), Deputy National
Security Advisor to The President of the United States (2000-2001)
67. Lt. General Bruce B. Knutson, USMC (Ret.), Commanding General,
Marine Corp Combat Command (2000-2001)
68. Vice Admiral Albert H. Konetzni, Jr., USN (Ret.), Deputy
Commander, U.S. Fleet Forces Command and U.S. Atlantic Fleet (2001-
2004)
69. General Charles Chandler Krulak, USMC (Ret.), Commandant of the
Marine Corps (1995-1999)
70. Lt. General William J. Lennox, Jr., USA (Ret.), Superintendent,
United States Military Academy (2001-2006)
71. Vice Admiral Stephen F. Loftus, USN (Ret.), Deputy Chief of
Naval Operations for Logistics (1990-1994)
72. General Lance W. Lord, USAF (Ret.), Commander, U.S. Air Force
Space Command (2002-2006)
73. Admiral James M. Loy, USCG (Ret.), Commandant, U.S. Coast Guard
(1998-2002)
74. Vice Admiral Joseph Maguire, USN (Ret.), Deputy Director for
Strategic Operational Planning, National Counterterrorism Center (2007-
2010)
75. Admiral Henry H. Mauz, Jr., USN (Ret.), Commander in Chief, U.S.
Atlantic Fleet (1992-1994)
76. Vice Admiral Justin D. McCarthy, SC, USN (Ret.), Deputy Chief of
Naval Operations, Fleet Readiness, and Logistics (2004-2007)
77. Lt. General Dennis McCarthy, USMC (Ret.), Commander, Marine
Forces Reserve (2001-2005)
78. Vice Admiral John ``Mike'' M. McConnell, USN (Ret.), Director of
the National Security Agency (1992-1996)
79. General David D. McKiernan, USA (Ret.), Commander, International
Security Assistance Force in Afghanistan (2008-2009)
80. General Dan K. McNeill, USA, (Ret.), Commander, International
Security Assistance Force (ISAF) in Afghanistan (2007-2008)
81. General Merrill A. McPeak, USAF (Ret.), Chief of Staff, U.S. Air
Force (1990-1994)
82. Lt. General Paul T. Mikolashek, USA (Ret.), Inspector General,
U.S. Army/Commanding General of the Third U.S. Army Forces Central
Command (2000-2002)
83. Vice Admiral Joseph S. Mobley, USN (Ret.), Commander, Naval Air
Force, U.S. Atlantic Fleet (1998-2001)
84. General Thomas R. Morgan, USMC (Ret.), Assistant Commandant of
the U.S. Marine Corps (1986-1988)
85. Lt. General Carol A. Mutter, USMC (Ret.), Deputy Chief of Staff,
Manpower and Reserve Affairs, Marine Corps (1996-1998)
86. Admiral Robert J. Natter, USN (Ret.), Commander, Fleet Forces
Command/Commander, U.S. Atlantic Fleet (2000-2003)
87. General William L. Nyland, USMC (Ret.), Assistant Commandant,
U.S. Marine Corps (2002-2005)
88. Lt. General Tad J. Oelstrom, USAF (Ret.), Superintendent, U.S.
Air Force Academy (1997-2000)
89. Admiral Eric T. Olson, USN (Ret.), Commander, U.S. Special
Operation Command (2007-2011)
90. Lt. General H.P. ``Pete'' Osman, USMC (Ret.), Commanding General
II MEF (2002-2004)
91. Lt. General Jeffrey W. Oster, USMC (Ret.), Deputy Administrator
and Chief Operating Officer, Coalition Provisional Authority, Iraq
(2004), Deputy Commandant for Programs and Resources, Headquarters
Marine Corps (1998)
92. Admiral William A. Owens, USN (Ret.), Vice Chairman, Joint
Chiefs of Staff, (1994-1996)
93. Lt. General Frank A. Panter, Jr., USMC (Ret.), Deputy Commandant
for Installations and Logistics (2009-2012)
94. Vice Admiral David Pekoske, USCG (Ret.), Vice Commandant, U.S.
Coast Guard (2009-2010)
95. General David H. Petraeus, USA (Ret.), Director, Central
Intelligence Agency (2011-2012); Commander, Coalition Forces in
Afghanistan (2010-2011) and Iraq (2007-2008)
96. Vice Admiral Carol M. Pottenger, USN (Ret.), Deputy Chief of
Staff for Capability Development, NATO Allied Command Transformation
(2010-2013)
97. Admiral Joseph W. Prueher, USN (Ret.), Commander in Chief, U.S.
Pacific Command (1996-1999)
98. Lt. General Harry D. Raduege, Jr., USAF (Ret.), Director,
Defense Information Systems Agency/Commander, Joint Task Force for
Global Network Operations/Deputy Commander, Global Network Operations
and Defense, U.S. Strategic Command Joint Forces Headquarters,
Information Operations (2000-2005)
99. Vice Admiral Norman W. Ray, USN (Ret.), Deputy Chairman, NATO
Military Committee (1992-1995)
100. Lt. General John F. Regni, USAF (Ret.), Superintendent, United
States Air Force Academy (2005-2009)
101. General Victor ``Gene'' E. Renuart, USAF (Ret.), Commander,
North American Aerospace Defense Command and U.S. Northern Command
(2007-2010)
102. General Robert W. RisCassi, USA (Ret.), Commander in Chief,
United Nations Command/Commander in Chief, Republic of Korea/U.S.
Combined Forces Command (1990-1993)
103. Lt. General Norman R. Seip, USAF (Ret.), Commander, 12th Air
Force /Air Forces Southern (2006-2009)
104. General Henry H. Shelton, USA (Ret.), Chairman, Joint Chiefs of
Staff (1997-2001)
105. Admiral William D. Smith, USN (Ret.), U.S. Military
Representative, NATO Military Committee (1991-1993)
106. Admiral Leighton W. Smith, Jr., USN (Ret.), Commander in Chief,
U.S. Naval Forces Europe/Commander in Chief, Allied Forces Southern
Europe (1994-1996)
107. Lt. General James N. Soligan, USAF (Ret.), Deputy Chief of
Staff for Transformation, Allied Command Transformation (2006-2010)
108. Admiral James G. Stavridis, USN (Ret.), Commander, U.S.
European Command and NATO Supreme Allied Commander, Europe (2009-2013)
109. Lt. General Martin R. Steele, USMC (Ret.), Deputy Chief of
Staff for Plans, Policies and Operations, U.S. Marine Corps (1997-1999)
110. General Carl W. Stiner, USA (Ret.), Commander in Chief, U.S.
Special Operations Command (1990-1993)
111. Vice Admiral Edward M. Straw, USN (Ret.), Director, Defense
Logistics Agency (1992-1996)
112. Vice Admiral William D. Sullivan, USN (Ret.), U.S. Military
Representative to NATO Military Committee (2006-2009)
113. Lt. General William J. Troy, USA (Ret.), Director, Army Staff
(2010-2013)
114. Admiral Henry G. Ulrich, USN (Ret.), Commander, U.S. Naval
Forces Europe/Commander, Joint Forces Command Naples (2005-2008)
115. General Charles F. Wald, USAF (Ret.), Deputy Commander, U.S.
European Command (2002-2006)
116. General William S. Wallace, USA (Ret.), Commanding General,
U.S. Army Training and Doctrine Command (2005-2008)
117. Lt. General William ``Kip'' E. Ward, USA (Ret.), Commander,
U.S. Africa Command (2007-2011)
118. General Charles E. Wilhelm, USMC (Ret.), Commander, U.S.
Southern Command (1997-2000)
119. General Michael J. Williams, USMC (Ret.), Assistant Commandant,
U.S. Marine Corps (2000-2002)
120. General Ronald W. Yates, USAF (Ret.), Commander, Air Force
Materiel Command (1992-1995)
121. General Anthony C. Zinni, USMC (Ret.), Commander in Chief, U.S.
Central Command (1997-2000)

CC:

Secretary of State Rex Tillerson,
Secretary of Defense James Mattis,
National Security Advisor H.R. McMaster.

May 22, 2017

Hon. Rex Tillerson,
Secretary,
U.S. Department of State
Washington, D.C.

Dear Secretary Tillerson,

As business leaders, we are writing to voice our strong belief in
the return on investment from the U.S. International Affairs Budget in
advancing America's economic interests overseas and supporting jobs at
home.
With 95 percent of the world's consumers outside the United States
and many of the fastest growing economies in the developing world, now
is the time to double down on America's global economic leadership.
America's diplomats and development experts help build and open new
markets for U.S. exports by doing what only government can do: fight
corruption, strengthen the rule of law, and promote host country
leadership to create the enabling environment for private investment.
Our country's investments have generated impressive results: eleven of
America's top fifteen export markets are in countries that have been
recipients of U.S. foreign assistance.
Strategic investments in diplomacy and development make America
safer and more prosperous. American companies depend on robust U.S.
engagement overseas, especially in the fast growing markets in the
developing world. Our embassies and consulates around the world are
essential partners for American businesses to ensure we can compete on
a level playing field. Trade promotion programs have helped drive
American exports, which today make up almost 13 percent of America's
$18 trillion economy and support about one in five American jobs.
The State Department and USAID are increasingly partnering with
American businesses to catalyze and leverage private-sector expertise
and resources to create sustainable solutions at scale on a range of
challenges such as energy, health, and agriculture. And today, host
countries themselves are driving policy changes to compete for American
investments. Moreover, America's global economic leadership also
embodies our country's values--promoting economic freedom, prosperity,
and entrepreneurship that can mitigate the drivers of violent extremism
in the world today. In today's global economy, we have a significant
opportunity to strengthen the State Department, USAID, and our
development agencies and the capacity to partner with the private-
sector to address global challenges and to expand opportunity.
We are committed to working with you in your role as Secretary of
State to share our perspectives on the importance of U.S. international
affairs programs to boost our exports abroad and our jobs here at home,
and we urge your support for a strong International Affairs Budget for
Fiscal Year 2018.
Respectfully,

Chris Policinski, President and Terry Grant, President, Utah
CEO, Land O'Lakes Market, KeyBank
Andrew Tisch, Co-Chairman, Loews Trey Grayson, President & CEO,
Corporation Northern Kentucky Chamber of
David MacLennan, Chairman and CEO, Commerce
Cargill
Sarah Thorn, Senior Director, Keith Guller, CEO, Essex Industries
Global Government Affairs, Walmart Dan Haley, President & CEO,
Colorado Oil & Gas Association
Caroline Roan, Vice President, David Hart, Executive Vice
Corporate Responsibility, Pfizer, President, Florida Chamber of
Inc.; President, Pfizer Foundation Commerce
Kate Rumbaugh, Vice President, Chris Henney, President, Ohio
Government Relations, The Coca- Agribusiness Association
Cola Company Aaron Hermsen, Director of Business
John Murphy, Senior Vice President Development, China Iowa Group
for International Policy, U.S. Dave Hofferbert, President, Bond
Chamber of Commerce Technologies, Inc.
Jim Collins, Executive Vice Gregory Hopkins, Partner &
President, DuPont President, Solitude Wealth
Brad Figel, Vice President Public Management
Affairs North America, Mars, Inc. Kevin Hougen, President & CEO,
Aurora Chamber of Commerce
Connie Justice, President, Planson Galen Hull, President, Hull
International International
Paul Neureiter, Executive Director Thomas Hulseman, Managing Director,
for International Government Metro Chicago Exports
Affairs, AMGEN Mark Ingrao, President & CEO,
Kathryn Reilly, Global Director Greater Reston Chamber of Commerce
Public Affairs, Aon
Tara Hogan Charles, Associate Bob Jameson, President & CEO, Fort
Director, Global Government Worth Convention & Visitors Bureau
Relations, Procter & Gamble
H.C. Shin, Executive Vice Andrea Jett Fletcher, Executive
President, International Director, French-American Chamber
Operations, 3M of Commerce
Michael Boyle, CEO, Boyle Energy
Services & Technology
Bill Lane, Chair Emeritus, U.S. John Kalaras, CEO, Quality Training
Global Leadership Coalition Institute
Jeff Rowe, President of Global Jeffrey B. Kendall, President, JBK
Seeds and North America, Syngenta Integrated Solutions, LLC
Robert Kill, President & CEO,
Enterprise Minnesota
Philip de Leon, Director, Public Joseph Kirk, Executive Director,
Affairs & International Business, Mon Valley Progress Council
AGCO Corporation Wally Kocemba, Chairman & CFO,
Calhoun Companies
Hugh Welsh, President, DSM Katie Kruger, CEO, Denver Metro
Nutrition Commercial Association of
Peter Tichansky, President, REALTORS
Business Council for International Matt Krupp, Co-Owner, Desantis
Understanding Krupp, LLC
Doug Galen, CEO, RippleWorks Kitty Kurth, President, Kurth Lampe
David Wilhelm, Partner & Chief Emily Lane, Vice President of
Strategy Officer, Hecate Energy Sales, Calendar Islands Maine
Pamela Venzke, Global Government Lobster
Affairs & Policy, General Electric Craig Lang, President, The Prairie
Strategy Group
Florizelle Liser, President & CEO, Lloyd Le Page, President & CEO,
Corporate Council on Africa Heartland Global, Inc.
Kathryn D. Karol, Vice President, Kirk Leeds, CEO, Iowa Soybean
Global Government & Corporate Association
Affairs, Caterpillar Inc. Donna Lindquist, President, Soleil
Global Communications
Dan Gaynor, Global Communications, Lou Ann Lineham, President, Linehan
Nike Associates, LLC
Kevin Kolevar, Vice President, Doug Loon, President, Minnesota
Global Government Affairs, The Dow Chamber of Commerce
Chemical Company Kevin Lutz, President, Armstrong
Printery, Inc.
Laura Lane, President, Global Kevon Makell, Founder & CEO, Seww
Public Affairs, UPS Energy
Melissa Froehlich-Flood, Vice Dr. Toby Malichi, Founder, Global
President, Government Affairs, Chief Executive, and Ambassador of
Marriott Trade, Malichi Group Worldwide
Gary M. Cohen, Executive Vice Ron Marston, President & CEO, HCCA
President and President, Global International
Health and Development BD (Becton, Frances Martinez, Founder & CEO,
Dickinson and Company) North Shore Latino Business
Lisa Malloy, Senior Director, Association, Inc.
Global Policy Group, Intel Nick Mastronardi, Founder & CEO,
Corporation POLCO
Kris Charles, Senior Vice Jason Mathis, Executive Director,
President, Global Corporate Downtown Alliance
Affairs, Kellogg Robert Mayes, CEO, Keel Point
Ambassador Richard Holwill, Vice Eddie McBride, President & CEO,
President, Public Policy, Amway Lubbock Chamber of Commerce
Jeffrey N. Simmons, President, Sandi McDonough, President & CEO,
Elanco Animal Health Portland Business Alliance
Tom Halverson, CEO, CoBank
Ken Fletcher, CAO, Pike Enterprises Candace McGraw, CEO, Cincinnati/
Peter M. Robinson, President & CEO, Northern Kentucky International
United States Council for Airport
International Business Larry McQueary, COO, Indy Fuel
Karl Jensen, Senior Vice President, Daniel McVety, President, Japan
National Governments, CH2M China Carolina
J. Patrick Michaels, Founder,
Chairman & CEO, CEA Group
Ward Brehm, Founder, Chairman, The David Milton, Chief Supply Chain
Brehm Group Officer, Payless ShoeSource
Chris Keuleman, Vice President, Mortada Mohamed, Executive
Global Government Relations, Director, Texas International
International Paper Business Council
Frederick S. Humphies, Jr., Aneezal Mohamed, General Counsel,
Corporate Vice President, U.S. Compliance Officer & Secretary,
Government Affairs, Microsoft Commercial Vehicle Group
Corporation
Dave Adkisson, President & CEO, Beau Morrow, Owner, Left Hand
Kentucky Chamber of Commerce Design
Wilfred Muskens, President & CEO,
Stevens & Lee
Joseph Albert, Owner, Eli H. Albert Ron Ness, President, North Dakota
Agency Petroleum Council
Diane Alleva Caceres, Principal, Laura Ortega, Executive Director,
Market Access International, Inc. International Business Council,
Illinois Chamber of Commerce
Luis Arguello, President & CEO, Ersal Ozdemir, President & CEO,
DemeTECH Keystone Corporation
Jeremy Arthur, President & CEO, Saul Newton, Executive Director,
Chamber of Commerce Association of Wisconsin Veterans Chamber of
Alabama Commerce
Connie Bacon, Commissioner, Port of Jerry Pacheco, President, Border
Tacoma Industrial Association
Doug Badger, Executive Director, Jim Page, President & CEO, Chamber
Pacific Northwest International of Commerce of West Alabama
Trade Association
Travis Barnes, President & Founder, Richard Paullin, Executive
Hotel Tango Artisan Distillery Director, The International Trade
Association of Greater Chicago
Gene Barr, President & CEO, Raymond Pilcher, President, Raven
Pennsylvania Chamber of Business Ridge Resources
and Industry Heather Potters, Chief Business
Kurt R. Bauer, President & CEO, Development Officer, PharmaJet,
Wisconsin Manufacturers & Commerce Inc.
Lane Beattie, President & CEO, Salt Ramiro Prudencio, President & CEO,
Lake Chamber Burson-Marsteller Latin America
Jon Bennett, Vice-President of Robert Quick, President & CEO,
Business Development, Catalyze Commerce Lexington
Dallas Laurie Radke, President, Green Bay
Area Chamber of Commerce
Thomas Bentley, Owner & Chairman of Rona Rahlf, President & CEO, Utah
the Board, Bentley World Packaging Valley Chamber of Commerce
John Bernloehr, President, Brooks Raiford, President & CEO,
Consolidated Metal Products, Inc. North Carolina Technology
Carl Blackstone, President & CEO, Association (NCTA)
Greater Columbia Chamber of Michael Ralston, President, Iowa
Commerce Association of Business and
Silvia Bonillam, Director, Small Industry
Business Development Center, Bede Ramcharan, President & CEO,
Illinois Hispanic Chamber of Indatatech
Commerce
Antonio Boyd, President, Think Tank Olga Ramundo, President, Express
Consulting Group, LLC Travel
Tony Braida, Vice President, Josh Rawitch, Senior Vice
Bankers Trust Global Banking President, Communications, Arizona
Becky Brooks, President & Executive Diamondbacks
Director, Ruidoso Valley Chamber Joe Reagan, President & CEO, St.
of Commerce Louis Regional Chamber
Kelly Brough, President & CEO, Jeff Reigle, President & CEO, Regal
Denver Metro Chamber of Commerce Ware, Inc.
Gene Reineke, CEO, Hawthorne
Strategy Group
Cindy Brown, President, Chippewa John Reinhart, CEO & Executive
Valley Bean Director, Port of Virginia
John Bruntz, President & CEO, The Colin Renk, Executive Director,
Boulder Company America China Society of Indiana
Anne Burkett, Executive Director, Sandra Renner, CEO, FasTrack Global
North Alabama International Trade Expansion Solutions, Inc.
Association Jim Roche, President, Business &
Bob Burleson, President, Florida Industry Association of New
Transportation Builders Hampshire
Association Bob Rohrlack, President & CEO,
Jay Byers, President & CEO, Greater Greater Tampa Chamber of Commerce
Des Moines Partnership
Steve Cain, President, Triangle Robert Rotondo, President, Rotondo
North Carolina British American Enterprises, Inc.
Business Council Jack Roy, Owner, Jax Enterprises
William Canary, President & CEO, David Rudd, Partner, Ballard Spahr,
Business Council of Alabama LLP
Ben Cannatti, Executive Director, Rebecca Ryan, Founder, Next
Main Street Jobs Coalition Generation Consulting
John Casper, President & CEO, Mel Sanderson, Vice President of
Oshkosh Chamber of Commerce International Affairs, Freeport
Kip Cheroutes, President, Japan- McMoRan, Inc.
U.S. Network, Inc.
Lalit Chordia, President & Founder, Lydia Sarson, Executive Director,
Thar Tech German American Chamber of
Gil Cisneros, Chairman & CEO, Commerce of Philadelphia
Chamber of the Americas
Jay Clemens, President & CEO, Joe Savarise, Executive Director,
Associated Oregon Industries Ohio Hotel & Lodging Association
Jonathan Coffin, Vice President,
VOX Global
Harvey Cohen, President, KZB, Inc. Chris Saxman, Executive Director,
Virginia FREE
Todd Connor, CEO, Bunker Labs David Schaffert, CEO, Olympia
Caralynn Nowinski Collens, CEO, UI Thurston County Chamber of
LABS Commerce
Alfonso Cornejo, President, Dean Schieve, President, Victus
Hispanic Chamber Cincinnati USA Motion and DMD Consulting
Bill Cronin, President & CEO, Pasco Michael Schmitt, Executive
Economic Development Council, Inc. Director, America-Israel Chamber
of Commerce Chicago
Joe Crookham, President, Musco Bret Scholtes, President & CEO,
Lighting Omega Protein Corporation
Maryann Crush, Manager, South Ralph Schulz, President, Nashville
Boston Transit Systems, LLC Area Chamber of Commerce
Dan Culhane, President & CEO, Ames Mike Shanley, Founder & CEO,
Chamber of Commerce Konektid International
Yuri Cunza, President & CEO, Stephanie Simpson, Vice President,
Nashville Area Hispanic Chamber of Texas Association of Manufacturers
Commerce
Eric Dallimore, Owner, Leon Gallery Bill Sisson, President & CEO,
Mobile Chamber of Commerce
Sarah Davasher-Wisdom, COO, Greater Nathan Slonaker, President,
Louisville, Inc. Columbus International Affairs
Daniel Davis, President & CEO, Opportunity
Jacksonville Chamber of Commerce Jim Spadaccini, CEO & Creative
Director, Ideum
Richard Dayoub, President & CEO, Bruce Steinberg, President, Relyco
Greater El Paso Chamber of Michael Strange, President, Bassett
Commerce Ice Cream
Ryan Deckert, President, Oregon Carol Stymiest, President, Canadian
Business Association Business Association of North
Connor Deering, President, Cemen Carolina
Tech, Inc.
Dustin DeVries, Co-Founder, Greg Summerhays, President & CEO,
Technology Consultant, Caffeine Sandy Area Chamber of Commerce
Interactive Technologies David Taylor, President,
Brian Dicken, Vice President of Pennsylvania Manufacturers
Advocacy & Public Policy, Toledo Association
Regional Chamber of Commerce
Billie Dragoo, Founder & CEO, Christian Thwaites, Chief
RepuCare Strategist, Brouwer & Janachowski
Steve Dust, President & CEO, Jon Troen, President & CEO, Mittera
Greater Cedar Valley Alliance and Group
Chamber Brett Vassey, President & CEO,
Barry DuVal, CEO, Virginia Chamber Virginia Manufacturers Association
of Commerce
Lauri Elliott, Chairman & Executive Liane Ventura, Senior Vice
Director, Afribiz Group, Inc. President, Greater Miami Chamber
Jason Espinoza, President, New of Commerce
Mexico Association of Commerce and Chad Vorthmann, Executive Vice
Industry President, Colorado Farm Bureau
Joe E. Evans, Owner, Evtex Chris Wallace, President, Texas
Companies Association of Business
Keith Evans, President, Key Jeff Wasden, President, Colorado
Financial Insurance Agency, Inc. Business Roundtable
Teresa Faidley, Senior Vice Joyce Waugh, President & CEO,
President, Schaumburg Bank & Trust Roanoke Chamber of Commerce
Company N.A. Cherod Webber, President & CEO,
Terry Fankhauser, Executive Vice Innovative Global Supply, LLC
President, Colorado Cattlemen's Ed Webb, President & CEO, World
Association Trade Center Kentucky
Ronald J. Finlayson, CEO, E-Systems Deborah Wilkinson, President,
Corporation Wilkinson Global Connections
Beverly Flaten, Vice President of Sheryl Wohlford, Owner, Automation-
International & Domestic Plus
Marketing, JM Grain Richard Yang, President, Carolinas
Henry Florsheim, President & CEO, Chinese Chamber of Commerce
Wichita Falls Chamber of Commerce Steven Zylstra, President & CEO,
Arizona Technology Council
Michael Ford, Chairman, Mid- Howard Glicken, Founder, Chairman &
Atlantic District Export Council CEO, The Americas Group
Nathan Frampton, President,
Fanimation
Stephanie Freeman, President & CEO, Neel Gonuguntla, President, U.S.
Dunwoody Perimeter Chamber India Chamber Of Commerce DFW
Jenny Fulton, Founder, Miss Jenny's Dean Gorder, Executive Director,
Pickles North Dakota Trade Office
David Gessel, Executive Vice Matt Glazer, Executive Director,
President, Utah Hospital Austin Young Chamber of Commerce
Association

______

Supplementary Material Submitted by Navyn Salem, Founder and Chief
Executive Officer, Edesia Inc.
[June 27, 2017]

I appreciate the opportunity to submit additional information for
the Congressional record. On behalf of myself and the people who work
with me to make transformational, evidence-based ready-to-use foods, I
want to say thank you for the opportunity to give a voice to those who
have none, and who's lives and the lives of their children are in grave
danger. Since 2010, I have appreciated the partnership of USAID and the
USDA, two U.S. agencies that have never wavered in their shared
commitment to help promote a more stable and secure world through the
power of food aid.
I applaud the Committee's commitment to their efforts, which are
both doing good in the world and creating economic opportunities in our
communities. While all of the reasons below--national security,
economic stability, increased GDP, job creation are important, Edesia
is here first and foremost because we have the opportunity to the save
lives. Together, we have the power to make a difference in the life of
millions.
There are several issues that I wish to address in response to
common themes of the hearing and Members' questions:

Mr. McGovern. . . . Since the President's budget is supposed
to be a national security budget, let me throw the question out
to you. How do you view these programs as contributing to the
U.S. national security interests both in the immediate and the
long-term? Anybody?

Food security is national security and to this end USAID's Food for
Peace is a critical partner in ensuring America's security. Hunger,
food insecurity, and malnutrition are linked to violence, conflict,
migratory activities, and potentially radicalization. These elements
lead to political instability and terrorism that ultimately affect the
United States. Food for Peace's food aid works to combat extreme
deprivation, understanding that political stability depends on people's
basic needs being met. We strongly support the comments of General
Mattis and other military leadership on this issue--food aid is an
essential tool for defense and is cheaper than bombs.

Mr. Evans. . . . I would like to ask this question of
everyone at the table. As we head into consideration of the
farm bill expiring in September of 2018, what would each of you
set forth as top issues for consideration?

Maintaining level funding authorization for food aid programs,
especially Food for Peace, Title [II] of Public Law 83-480, is critical
for American jobs and our mission in the world. In this climate of
austerity, we ask that the Committee continue to protect food aid
programs in the next farm bill. While we support some additional
flexibility in food aid, we feel that in-kind food aid is an important
part of the U.S. humanitarian response that creates economic
opportunity at home, future trading partners abroad, and improved
global security.
The commitment by this Committee, and the Agencies it oversees, to
science-based, results-driven innovation has positioned American,
companies, like Edesia, as industry leaders. This includes putting
nutrition at the center of the food aid basket by focusing on the need
for nutritional commodities that are effective and ``fit for
purpose'',\1\ such as ready-to-use foods and corn-soy blend, for
vulnerable populations (young children, pregnant women, people living
with HIV/AIDS) in addition to bulk commodities for feeding the general
population. Ready-to-use foods currently account for only 1.5% of the
food aid basket purchase and we would like to see this percentage
doubled in the program in order to meet more of the current needs of
children with acute malnutrition. Investments in nutrition-specific
solutions have a positive impact on long-term GDP growth and overall
issues of safety and security both at home and abroad. In 1984, there
were zero practical remedies for Ethiopian children enduring the
extreme pain of famine. In 2017, the very best solutions are readily
available and can easily be deployed anywhere famine exists. Tackling
and ending the global health crisis of malnutrition in our time is now
possible.
---------------------------------------------------------------------------
\1\Webb, P., B. Rogers, I. Rosenberg, N. Schlossman, C. Wanke, J.
Bagriansky, K. Sadler, Q. Johnson, J. Tilahun, A. Reese Masterson, A.
Narayan. 2011. Delivering Improved Nutrition: Recommendations for
Changes to U.S. Food Aid Products and Programs. Boston, MA: Tufts
University.

The Chairman. . . . How can we move toward self-sufficiency
in countries versus continuing to do the emergency feeding?
What can we do--in lieu of, just continuing to provide food--to
---------------------------------------------------------------------------
allow these countries to transition to self-sufficiency?

Early intervention with the right ``fit-for-purpose'' nutritional
products can lead to a lifetime of health and productivity for children
who do not succumb to malnutrition or its effects. The nutritional
support that USAID provides through food aid improves long-term
stability and economic development. Reductions in chronic malnutrition
rates can increase GDP by 4-11% in Asia and Africa,\2\ creating
countries which are more stable, and productive. These counties are
able to not only support themselves but transition to becoming
consumers in the global market. Along with food aid, development
programs that focus on supply chains, agricultural markets, and
nutrition education move countries toward self-sufficiency.
---------------------------------------------------------------------------
\2\World Bank. 2016. Investing in nutrition: the foundation for
development--an investment framework to reach the global nutrition
targets. Washington, D.C. : World Bank Group. http://
documents.worldbank.org/curated/en/963161467989517289/Investing-in-
nutrition-the-foundation-for-development-an-investment-framework-to-
reach-the-global-nutrition-targets.
---------------------------------------------------------------------------
______

Supplementary Material Submitted by Thomas S. Jayne, Ph.D., Foundation
Professor of Agricultural, Food, and Resource Economics and Co-
Director, Alliance for African Partnership, Michigan State University;
on behalf of Farm Journal Foundation
The Chairman. . . . How can we move toward self-sufficiency
in countries versus continuing to do the emergency feeding?

A recent U.K. study in Kenya and Ethiopia estimates that every $1
invested in resilience will result in $2.90 in reduced humanitarian
spending and avoided losses as well as improved poverty, hunger, and
malnutrition outcomes.
With roughly 70% of Africans currently engaged in agriculture, the
U.S. should invest in; (a.) Agricultural Development that will help
farmers grow more of their own food (b.) capacity building to
strengthen agricultural and academic institutions, and (c.) technical
assistance to strengthen local food systems and markets. These measures
will address the root causes of food insecurity. A resilient food
system and strong institutions will ultimately lessen the need for more
costly humanitarian assistance when shocks like drought occur, and will
help governments' better respond to their own needs.
Here are two examples of how U.S. Feed the Future investments are
already having an impact, helping people to feed themselves and
reducing the need for emergency aid;

Malawi--A comparison of two communities in Malawi between 2016 and
2017 illustrates the point.

Last year, Malawi's 10 month humanitarian response cost the
USG a total of $126 million in Food for Peace emergency, and
some repurposed Feed the Future and ENV resources. According to
the World Food Programme, the estimated cost to deliver food to
one of the families was approximately $390 per household over
the 10 month response period (including rations, transportation
of food, and administrative costs). Other than the food rations
the village had received, there was no other development
assistance--their situation strongly suggested that they would
likely require food again during the next shock.

By contrast, a community in which USAID invested an
estimated $376 per household over 5 years did not require food
assistance during last year's emergency. Over the long-term,
this comparison suggests that the savings from helping people
become more self-sufficient could be extraordinary.

Feed the Future is also assisting the private-sector and the
Government of Malawi by providing technical assistance with
warehouse receipts to help farmers store grain and achieve
better prices, while also supporting food needs during deficit
periods. This will help Malawi to be more resilient and less
reliant on the U.S. for emergency assistance.

Ethiopia:

Data USAID collected from the same households every 2 months
over the course of the 2016 El Nino drought in Ethiopia's
lowlands provides even more powerful evidence in this regard.
Among those that experienced the most severe drought
conditions, households in communities reached by Feed the
Future's comprehensive resilience programs were largely able to
maintain food security during the 2016 drought with only minor
impacts on household nutrition despite the fact that the
drought was more severe and farther reaching than the 1985
drought that led to widespread famine. By contrast, households
in other communities that did not receive assistance with their
agricultural practices experienced a significant, 30% decline
in their food security status and required food assistance.

The Chairman. . . . What can we do--in lieu of, just
continuing to provide food--to allow these countries to
transition to self-sufficiency?

U.S. assistance can be more targeted to help transition to local
ownership. A more cost-effective, direct approach should include;

1. A new approach that would shift the role of U.S. institutions
from providing the technologies, services, and answers to
equipping African organizations to do so themselves.

2. Significant investment on the part of the national governments in
Africa--they must have `skin in the game', to leverage U.S.
investments, ensure sustainability and bolster national
agrifood systems to maintain progress once donor funds are
no longer available, similar to what the Millennium
Challenge Corporation (MCC) requires for country compacts.

3. The U.S. could provide more technical assistance to help
governments maintain and rotate their grain reserves to use
them more effectively. Government grain reserves exist
across Africa in countries for instance, in: Malawi,
Ethiopia, Kenya, Mali, Zimbabwe, Nigeria, Tanzania and
Zambia. Ethiopia has been successful to some extent in
managing their reserves, but others have been less
successful with poor control of grain condition, management
and rotations causing grain to rot, rather than be
available when the countries need it most.

4. Proposals from U.S. grantees that include a plan from the outset
that allows for a transition to nationally owned and
operated programs

The World Food Programme and the World Bank published a
report
entitled ``Rethinking School Feeding: Social Safety Nets,
Child Development,
and the Education Sector (https://
openknowledge.worldbank.org/
bitstream/handle/10986/2634/48742.pdf).'' On pages 39 and
40, they re-
port on ``Key Elements of the School Feeding Program
Transition Process''.
They found that successful transitions to nationally
funded and operated
school feeding programs usually include an agreement at
the outset. They
recommend that a successful plan include an agreement
between the gov-
ernment and implementing partners about the duration of
external assist-
ance, and clear time frames and milestones for the
transition process. This
kind of approach could be applied to U.S. food aid
programs like McGovern-
Dole as host countries experience greater economic and
agricultural growth.
McGovern-Dole can step up the capacity building and Feed
the Future
would support the Agricultural side, connecting
productive farmers to the
school feeding market.

5. One could look at the viability of private initiatives, like the
famine insurance scheme now overseen by the African Union.
Theoretically, it might be an effective public-private
partnership to reduce the need for emergency aid and could
bring in more donor money. Having host governments and
other donors contribute to insurance could reduce the U.S.
humanitarian outlays significantly in strategic geographies
in Africa.

The Chairman. Would you brief the group as to what AgriCorps
does, Dr. Jayne?

AgriCorps is an innovative private model that uses recent
agriculture graduates and faculty from U.S. institutions in partnership
with 4-H or Future Farmers of America (FFA) to strengthen the capacity
of agricultural education and extension in developing countries. They
provide direct technical assistance to developing country partners at a
fraction of the cost of International or U.S. partners. In 2016, they
had 19 dynamic young fellows who volunteered for 1 year and embedded
within a community or local organization in Ghana, sharing their
technical expertise to improve practices. When the fellows return to
the U.S., the impact of their work in Africa will continue. To reap all
of the benefits of this program--not just overseas, but here at home as
well--the Committee could recommend that returning AgriCorps
participants be considered for key positions in American agriculture
including those positions identified by USDA in workforce and
succession planning. This would be a great model public-private model
for the Agriculture Committee to consider in the farm bill to provide
the kind of capacity building we suggest for Agricultural Development
in our written testimony.

Of the estimated 800 million people facing hunger globally, \1/2\
are farmers. Helping farmers feed their families and have enough to
sell on the local market will help their communities thrive. Locally
gained food security through agricultural productivity and an improved
food system will contribute to stability by stemming the flow of human
migration and trafficking while reducing the number of people who join
armed groups out of desperation to feed their families and make an
adequate living.
Throughout the developed world, agriculture accounts for a
significant share of countries' GDP and labor force. When agricultural
development assistance from the United States and other donor nations
is provided, this helps to improve the agricultural productivity of
smallholder farmers and thus income generated by that sector in a given
country. This contributes to creating greater economic prosperity which
tends to be shared fairly widely among the population. As individual
farming households gain more discretionary income, they can afford to
get their children educated, which improves the family's long-term
financial prospects and when these gains are aggregated across villages
and provinces, also bolsters the national economy and contributes to
more secure nations.
Under such improved economic conditions, evidence suggests that the
likelihood of sustained civil conflict or widespread militia/insurgent
activity is reduced. On the other side of the coin, where poor economic
opportunities persist, the likelihood of conflict grows. Recent
examples abound--we know that the food price volatility experienced
globally in 2007-08 spurred food riots in dozens of countries, and is
seen as a major factor in the unrest, which toppled several governments
during the Arab Spring. An extended drought in Syria between 2006 and
2009, limited local food availability and is considered a contributing
factor in the civil conflict that arose in that country in 2011 and
which has driven millions of Syrians to either become displaced
internally or to migrate in search of safety and the opportunity to
feed their children.
Today, there are an estimated 65 million people who have been
forcibly displaced because of the threat that military conflict and/or
food insecurity posed to them in their home countries, the highest
number since the end of the Second World War. That total includes more
than 22 million refugees primarily from the Middle East and Africa, who
have placed large economic burdens on neighboring countries and created
political backlashes in many other countries that are farther removed
geographically.
When countries can produce more of their own food, they are less
reliant on accessing the international market. Such markets are doubly
risky because world food prices move not only because of commodity
price shifts but also due to energy price volatility affecting the cost
of ocean transport. The food price crisis of 2007-08 was amplified by
energy price volatility over the same period, as oil prices soared from
$70/barrel in January 2007 to $156/barrel in June 2008. Countries in
Sub-Saharan Africa that had invested in agriculture and food systems
fared better than African countries that rely heavily on imports to
meet their basic food needs. For instance, in Uganda, when the prices
of expensive imported commodities rose during the crisis, families
purchased less expensive, locally grown alternatives on the market. As
a result, Uganda's food security remained relatively stable.
A broader example of this relationship can also be seen in Rwanda.
In 1994, a vicious civil war between two tribal groups broke out, which
is estimated to have cost at \1/2\ million lives. At the time, the
country had a per capita GDP of about $107, and corn yields averaging
only 1.2 tons per hectare in the 5 years leading up to the conflict.
Since that conflict, and especially over the last several years, both
the Rwandan Government and donor countries (the United States among
them) have invested heavily in the country's agricultural sector--the
latter to the tune of nearly $50 million per year, and maize yields
have nearly doubled, to more than 2.3 tons per hectare. The country's
per capita GDP is now about $700 per year, and child stunting rates
have fallen. According to Worldwide Governance Indicators calculated by
professional statisticians at the World Bank and the Brookings
Institution, Rwanda was in the top \1/4\ of Sub-Saharan African
countries in terms of their political stability as of 2015.
In a March 2017 letter to Congressional leadership, spearheaded by
the U.S. Global Leadership Coalition, more than 120 retired Three- and
Four-Star Generals and Admirals asserted that ``elevating and
strengthening diplomacy and development alongside defense are critical
to keeping America safe.'' This letter was sent in response to the
release of President Trump's s ``skinny budget'', which called for
reducing funding at the U.S. Agency for International Development by 31
percent for Fiscal Year 2018. The full text of the letter can be found
at this link: http://www.usglc.org/2017/02/27/over-120-retired-
generals-admirals-on-state-and-usaid-budget-now-is-not-the-time-to-
retreat/.

No one does Agriculture as well as the U.S. The upcoming farm bill
offers Congress the opportunity to encourage USDA and the land-grant
university system to leverage their strengths in agricultural research
and institutional expertise in agricultural education and extension
more effectively in U.S. global food security efforts. Recommendations
are outlined in the written testimony, with some specifics below.
Increasing public sector funding for agricultural research and
development is crucial to ensure that U.S. Agriculture maintains its
comparative edge in productivity. Funding for U.S. public Ag R&D over
the years has flat lined. China, Brazil and India now outspending the
U.S. $2.66 for every $1 the U.S. spends. We can leverage federal
funding with State and Private-Sector funding to strengthen U.S. public
R&D efforts.
We believe that such assistance not only benefits producers in
developing countries, but over the long run, creates economic benefits
for the United States as well, in terms of expanded market
opportunities. This view was well expressed in an Op-Ed penned by
Senator Jerry Moran in the June 2, 2017 issue of Agri-Pulse. In that
Op-Ed, he pointed out that ``by investing in global agriculture
development, not only can we guide food-insecure countries down a path
that leads to greater peace and prosperity, but we can also develop
long-term trading partners who purchase Kansas grown food and
agriculture products. That's a win-win.'' That Op-Ed can be found at
the following link: https://www.agri-pulse.com/articles/9315-opinion-
global-agriculture-development-benefits-americas-farmers.
The following steps be considered in relevant legislation:
Farm Bill Research Title
(1) Give USDA the flexibility to fund basic and applied research
projects that are conducted outside the United States by lowering
bureaucratic barriers for USDA (and State Agricultural Experiment
Stations (SAESs)) engagement in international R&D by amending Section
1402 of the National Agricultural Research, Extension, and Teaching
Policy Act of 1977 to ``encourage intramural and extramural science
programs in research, extension and teaching that strengthen American
agriculture through global partnerships and engagement.'' This language
would facilitate more work which is beneficial to both U.S. and foreign
producers, such as on plant or animal disease, and could also
strengthen the collaborative relationship between USDA and USAID on
agricultural research, both in terms of research planning and
execution.
(2) Update the basis of the formula funds provided for state
agricultural experiment stations, putting more weight on the relative
values of agricultural production as a basic determinant for cross-
state allocation.
(3) Create a commodity check-off program or research assessment
aimed specifically at generating funds for agricultural research to be
managed outside existing U.S. check-offs programs. The government can
offer matching funds (up to some predetermined limit), thus splitting
the R&D burden between check-off programs and general tax revenues.
Including other industries that benefit from agricultural R&D in the
scheme (such as input suppliers and food processors) would allow for
even more agricultural R&D and, if implemented wisely, substantially
correct the persistent underinvestment in agricultural R&D.
Farm Bill Trade Title
(4) The U.S. Government made crucial investments through the
African Graduate Fellowship Program beginning in the 1960s and 1970s to
help developing countries create their own agricultural institutions
and research capacity, but such long-term training efforts are largely
a thing of the past today. In order to bring back some of this
capability, we should consider bolstering funding for the Borlaug
Fellows program, and provide at least some of the Fellows sufficient
resources to pursue a full graduate degree.
(5) Coordinate Farmer-to-Farmer, Cochran and Borlaug Fellowships
from an oversight perspective, and allow USDA flexibility to offer
extension personnel and other agricultural specialists longer-term
assignments to follow up on work with counterpart institutions in
Africa, building on previous work conducted under Farmer-to-Farmer,
Cochran and Borlaug projects.
(6) Capitalize on USDA's extensive knowledge and technical
expertise to enhance capacity within (1) local agricultural extension
systems working with millions of farmers; working from a local
institutional base and (2) policy analysis units in developing nations,
especially on SPS technical regulations, trade facilitation, and
overcoming barriers to markets. USDA should undertake to develop
monitoring and evaluation techniques that are more suitable for the
long-term investments and payoffs that are characteristic of
institution-building efforts. For instance;

a. Open the Cochran Fellows program to training government officials
and private sector employees charged with overseeing SPS
standards-setting testing and certification of food and
agricultural products, with the aim of bringing those
efforts up to international standards.

b. Augment the current Farmer-to-Farmer program to address
intuitional capacity building needs in the areas they are
serving, from a local institutional base. Congress could
consider effective private capacity building models like
AgriCorps, potentially through Farmer to Farmer. Upon
returning to the U.S., these AgriCorps fellows should be
considered for employment in U.S. agriculture, including at
USDA as the Department implements its workforce and
succession plans.

c. Congress could also give USAID the flexibility to offer USDA
extension personnel and other agricultural specialists
long-term assignments to work with counterpart institutions
in Africa. This approach might allow USDA to apply its
domestic extension experience internationally to strengthen
counterpart African public sector extension systems.

(7) Modify the statutory responsibilities of USDA agricultural
attaches to include providing assistance to U.S. agribusiness firms
engaged in commerce within developing countries, not just to those
conducting trade with such countries.
Global Food Security Act Reauthorization
(8) Make U.S. capacity building programs more cost-effective by
supporting more local African policy institutes, implementers and
universities by encouraging leadership from African experts and
organizations, even as both international and local players remain
involved.
(9) Consider supporting programs that train scientists in Africa
rather than in the U.S. to reduce costs.
(10) Require that national governments in Africa prioritize
agriculture and provide budgets for these activities to leverage U.S.
investments and ensure sustainability, similar to what the Millennium
Challenge Corporation (MCC) requires for country compacts.
(11) Expand the Innovative Agricultural Research Initiative (iAGRI)
program model established at the University of Sokoine in Tanzania to a
multi-country pilot to scale-up teaching research, and extension
programs that address organizational development challenges by
providing management training and matching local organizations with
sister organizations in the U.S., at a fraction of the cost of training
in the U.S. The iAGRI project represents a unique combination of
fostering a range of agricultural institutions within Tanzania, and
similar efforts should be encouraged elsewhere in Sub-Saharan Africa.
In addition to costing a fraction of what a U.S. based model costs, the
host African institutions provide resources, further leveraging U.S.
dollars and building sustainability.

Mr. Yoho. . . . It is crucial that this Committee, indeed,
all the Members of the House evaluate how we structure our
nation's foreign aid.
The world has changed and our methods of delivering foreign
aid need to change as well. We must focus on efficiently
transitioning aid recipient countries to trading partners. We
need a paradigm shift from aid to trade.

In Sub-Saharan Africa, 41 African countries have signed compacts
under the Comprehensive Africa Agriculture Development Program (CAADP),
which commits them to review the needs in their own agricultural
sectors and invest their own resources in addressing them. There are
two concrete goals associated with such compacts--(1) allocate at least
ten percent of their own government expenditures to the agricultural
sector, and (2) achieve six percent annual growth in agricultural GDP.
As a result, on average, public agricultural expenditures have
risen by more than seven percent per year across Africa since 2003,
nearly doubling public agricultural expenditures since the launch of
CAADP. USAID and USDA should consider requiring national governments in
Africa to provide significant investment in Agriculture to ensure
sustainability and bolster national agrifood systems, similar to what
the Millennium Challenge Corporation (MCC) requires for country
compacts. It might be necessary to ratchet up the required level of
national investment through their national budgets gradually over a
several year period, but the concept of requiring 'skin in the game' is
a sound one. It helps ensure that the national government has a stake
in maintaining funding to sustain those activities once U.S. funding
flows have ended.
Shifting USAID to Trade
With Africa's projections for growth detailed in the written
testimony, supporting Ag Development in Sub-Saharan Africa will lead to
an exponential increase in economic growth in their economies, with
positive market growth for U.S. Agriculture, and the broader U.S.
economy. Here are some statistics on how the U.S. economy stands to
benefit from trade versus aid;

1. Many countries once dependent on food aid are now big buyers of
U.S. food products. According to USAID, 43 of the top 50
consumer nations of American agricultural products were
once U.S. foreign aid recipients. One of these countries,
Indonesia, has gone from being the largest recipient of
USDA food assistance just ten years ago, to becoming the
United States' ninth-largest export market for
agricultural, fish and forest products. In Fiscal Year
2010, the United States exported $2.3 billion worth of
agricultural goods to Indonesia, a six-fold increase over
the course of a decade. Similarly, South Korea, once a
major U.S. aid recipient is the 6th largest importer of
U.S. agricultural products in 2016, importing U.S. corn,
meat, and other commodities (USDA).

2. Africa's food import bill has risen seven-fold in the past 15
years to roughly $45 billion annually and will likely
continue to expand rapidly especially with income growth.

3. Estimates of job created in the U.S. resulting from increased
U.S. food exports (greater demand for transport services,
finance, insurance, reinsurance, port facilities, storage,
input supply, and farming) are significant. See below;

U.S. agricultural exports more than doubled in value between
2006 and 2014, from $82 billion to $168 billion. Based on
2014 USDA/ERS estimates of the multiplier effects of U.S.
agricultural exports, that increase supported nearly
650,000 jobs and generated $109 billion in additional U.S.
economic activity over that period.
With respect to Sub-Saharan Africa, the $2.3 billion in U.S.
agricultural exports shipped annually to that region on
average over the last 5 years (2012-2016) supported 17,440
jobs throughout the U.S. economy and generated an
additional $2.9 billion in U.S. economic activity each year
here at home.

For concrete proposals from the written testimony that could
be considered for the Farm Bill or GFSA Reauthorization, see
the response to Mr. Evans.
______

Joint Submitted Statement by Action Against Hunger, et al.*
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*Statement submitted by: Action Against Hunger, The Borgen Project,
Bread for the World, CARE, Catholic Relief Services, Church World
Service, Global Citizen, Interaction, Mercy Corps, Modernizing Foreign
Assistance Network, ONE, Oxfam America, Save the Children, World Food
Program USA, World Vision U.S.
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Chairman Conaway and Ranking Member Peterson, as international
humanitarian and development organizations devoted to addressing the
needs of the most vulnerable people around the world, we would like to
thank you for holding a hearing on June 7, entitled The Next Farm Bill:
The Future of International Food Aid and Agricultural Development. We
especially appreciate your words of support for these programs, and the
steadfast commitment you have shown them over the years. We stand as
ready partners to work with you and other Members of the House
Committee on Agriculture and with the members of the House
Appropriations Subcommittee on Agriculture, Rural Development, Food and
Drug Administration and Related Agencies to ensure their continued
funding in annual appropriations bills and that their reauthorization
in the next farm bill retains existing flexibilities and improves how
these programs function, while using taxpayer dollars as wisely as
possible.
As U.S.-based charities and faith-based organizations, many of
which are implementing these programs, we strongly oppose the
elimination of funding for the Food for Peace and McGovern-Dole
programs, as outlined in the Administration's FY 2018 Budget Proposal.
Cutting lifesaving programs does not improve upon assistance or stretch
dollars to reach more people. Instead, the Administration's proposal
would gut our country's two largest food aid programs.
Cutting funding to the Food for Peace Title II program would leave
over 41 million people without assistance,\1\ 33 million of whom would
almost certainly face hunger and starvation without such assistance.
---------------------------------------------------------------------------
\1\Food for Peace--Fiscal Year 2016 Programs, U.S. Agency for
International Development, undated https://www.usaid.gov/sites/default/
files/documents/1866/FY_2016_Fact_Sheet_
FINAL_6.1.2017.pdf.
---------------------------------------------------------------------------
The McGovern-Dole program provides school lunches for poor children
in primary and secondary school. Oftentimes, the food distributed
through the program is the only meal these children receive each day,
and as a result, school attendance in program areas is greatly
increased, especially for girls who likely would not receive an
education without the incentives provided by the program. To date,
McGovern-Dole has reached 40 million children and is active in 24
countries.
At a time when more than 20 million people in four countries are
currently at risk of famine, adequate funding levels from both
authorizers and appropriators for these critical food aid programs is
more important than ever. We therefore respectfully request that both
the McGovern-Dole and Food for Peace be reauthorized in the next farm
bill.
During the hearing, a number of questions were raised regarding how
international food assistance programs are implemented, and their
associated costs. We would like to respond to some of these points.
Integrity of Food Assistance
It was suggested during the hearing that the use of ``cash'' in
programs was less secure than the use of commodities in programs. In
this case, ``cash'' refers to cash transfers, vouchers, and local and
regional procurement of food commodities. As many implementing
organizations know, there are challenges to ensuring the security of
any aid program, and many safeguards are put into place to protect the
integrityof programs of both types of assistance.
Implementing organizations identify and deliver assistance under
strict compliance requirements and take the necessary measures to
ensure that resources reach the intended recipients. In commodity and
cash programs, meticulous records are kept to ensure assistance is
distributed to the right people and is not diverted to other purposes.
In most programs, there is no government entity involved in handling
these resources (the largest exception in current programs is the off-
market monetization of food aid commodities arranged with the
Government of Bangladesh). USAID implementing partners are accountable
to the agency, and to Congress, in how they utilize these resources.
They know who is receiving commodities, and they know what is being
bought with vouchers and cash transfers. In both cases, implementers
use real time data to monitor these programs. The scenario that some
critics of different food aid modalities have painted of corrupt
government officials skimming off the top is highly unlikely in either
cash or commodity programs.
Cargo Preference
Several Committee Members inquired as to the costs related to cargo
preference and the impact it has on food aid programs. The estimate
that the costs associated with U.S.-flagged shipping is only about ten
percent higher than competitively bid foreign flag vessels offered by
the witness for USA Maritime at the hearing is lower than reported in
recently published studies. Available data demonstrates the costs are
much higher.

In 2015, a report by the U.S. Government Accountability
Office (GAO) found that cargo preference laws increased the
cost of shipping across all food aid programs by 23 percent on
average between 2011 and 2014, and by 36 percent just on USDA
administered food aid programs.\2\ The GAO also noted that this
resulted in food aid programs spending approximately $107
million more on ocean freight during this period than they
otherwise would have if cargo preference laws were not applied.
---------------------------------------------------------------------------
\2\International Food Assistance: Cargo Preference Increases Food
Aid Shipping Costs, and benefits are Unclear, GAO-15-666, August 26,
2015 https://www.gao.gov/products/GAO-15-666.

Looking at food aid shipments from 2012 through mid-2015,
the American Enterprise Institute (AEI) found that packaged
shipments on U.S.-flagged vessels cost $61 more per ton and
bulk shipments cost $33 more per ton.\3\ According to AEI,
cargo preference requirements added $50 million more a year to
ocean freight costs during this period.
---------------------------------------------------------------------------
\3\Stephanie Mercier & Vincent H. Smith, Military readiness and
food aid cargo preference: Many costs and few benefits, American
Enterprise Institute, September 28, 2015, http://www.aei.org/
publication/military-readiness-and-food-aid-cargo-preference-many-
costs-and-few-benefits/.

And, in a 2011 study by the Maritime Administration, it was
found that operating costs for U.S.-flagged vessels were 2.7
times more expensive than equivalent foreign flag vessels.\4\
---------------------------------------------------------------------------
\4\Comparison of U.S. and Foreign-Flag Operating Costs, U.S.
Department of Transportation, Maritime Administration, September 2011,
https://www.marad.dot.gov/wpcontent/uploads/pdf/
Comparison_of_US_and_Foreign_Flag_Operating_Costs.pdf.

It was also suggested during the hearing that cargo preference
requirements for food aid programs be increased from the current 50
percent requirement. Given the impacts cargo preference requirements
have on reducing beneficiary reach, we strongly oppose this idea and
note it will only mean more food aid dollars going to ocean freight and
less going to the purchase of food for people in need. We in fact
encourage the Committee and all of Congress to find ways to reduce the
impact of cargo preference on food aid programs. This could be done by
reducing or eliminating the current 50 percent requirement, and/or
changing how cargo preference laws are applied. For instance, USDA food
aid programs require that the minimum percentage be met by each awarded
project, in each country, in each year. Moving away from such a narrow
approach in calculating cargo preference would also reduce its impact
on programs.
Monetization in Title II
Currently, the farm bill requires that 15 percent of the
commodities used for development programs in title II be monetized.
This means the commodities must be sold in foreign markets to raise
proceeds that are then used to fund development programs. As the GAO
reported in 2011, proceeds made through monetization on average only
account for 75 percent of the total cost to purchase and ship those
commodities in the first place, making monetization an inefficient
means to fund programs.\5\
---------------------------------------------------------------------------
\5\International Food Assistance: Funding Development Projects
through the Purchase, Shipment, and Sale of U.S. Commodities Is
Inefficient and Can Cause Adverse Market Impacts, GAO-11-636, June
2011, http://www.gao.gov/assets/330/320013.pdf.
---------------------------------------------------------------------------
We recommend that the requirement to monetize in title II programs
be replaced with permissive authority to utilize monetization. This
will preserve the ability to use monetization in instances where it
makes sense, while allowing programs to continue to move away from
monetization when benefits do not outweigh its inherent inefficiencies.
We also underscore that shifting monetization from a requirement to a
permissive authority will not result in a change in the amount of U.S.
commodities shipped overseas; it will simply end a requirement to sell
those commodities once they arrive in a developing country.
Community Development Fund and Title II
The 2008 Farm bill established a minimum funding level for non-
emergency, development programs under title II. These programs,
referred to as the ``safebox'' or Development Food Aid Programs
(DFAPs), are multi-sectoral, multi-year programs that address root
causes of hunger. Without the assurance provided by the safebox, some
believe that funding for long-term development could be diverted during
times of high emergency needs, such as those we are currently
experiencing. Stable funding for development programs is critical, as
these programs often focus on building the resilience of vulnerable
regions to withstand shocks, which can ultimately reduce the number of
people in need of emergency assistance in future crises.
For the last several years, USAID has used waiver authority to
substitute some title II funding going towards the safebox with funding
from the Development Assistance account, under the auspices of the
Community Development Fund (CDF). With the funding made available
through the CDF, and additional funding for direct program costs made
possible by changes in the 202(e) account during the last farm bill,
USAID has substantially reduced the use of monetization in title II
programs, thus making them more efficient. It is also important to note
that use of CDF provides programs additional direct cash funding in a
way that does not reduce the amount of U.S. commodities made available
through title II--they are simply shifted to emergency uses.
We strongly recommend that the Committee support this arrangement
in the next farm bill, and provide a means to USAID to implement this
approach without relying on its waiver authority. Specifically, we ask
the Committee to adopt provisions that allow USAID to use other funds
it is appropriated in the implementation of title II safebox programs,
and that funds used in this way may be counted towards the minimum
required funding levels for non-emergency programs. Through this, the
reliance of monetization is reduced, programs have more flexibility in
the modalities they can utilize, and the level of commodities used in
programs is not reduced.
Implementation of the Food for Peace Program
It was also suggested by the USA Maritime witness that USDA assume
responsibility for implementing the Food for Peace program. We can only
assume this suggestion was made because USA Maritime prefers to work
under USDA's narrower interpretation of the cargo preference law that
would result in greater use of U.S.-flagged vessels, as our experience
in the actual management of programs does not present any reason to
make such a drastic change.
Title II programs are managed by USAID's Office of Food for Peace
(OFFP). In addition to title II, the OFFP also manages implementation
of the Emergency Food Security Program (EFSP), which funds cash-based
emergency food assistance programs. This gives OFFP the ability to
coordinate the entire U.S. emergency food assistance response, ensuring
the commodities and cash made available are used in the most
appropriate ways. The OFFP also works closely with the Office of
Foreign Disaster Assistance (OFDA), which responds to non-food
emergency needs, to ensure the full scope of emergency needs is
addressed. Together, this allows USAID to effectively coordinate
emergency response, despite the multiple funding streams that
contribute to the response. Moving implementation of title II programs
to an entirely different agency would likely diminish current
coordination with EFSP and OFDA programming, making our emergency
response efforts less effective.
Conclusion
Given the Administration's misguided decision to recommend the
elimination of funding for these programs, now more than ever it is
necessary to work together and redouble our efforts to fully fund these
programs. We need to ensure that U.S. food and nutrition assistance
reaches as many people as possible and responds to emergencies as
quickly as possible. Updating food aid programs to allow them to
operate more efficiently and help more people in need, while
maintaining strong bipartisan support, should be everyone's goal. The
ability of USAID to use the right tools at the right time to address
hunger and malnutrition--including food vouchers, cash transfers, local
and regional procurement, and U.S. commodities--is vital to ensuring
that we can respond to crises effectively and that United States
assistance reaches millions more people at no additional cost.
We look forward to working with your Committee, other Members of
Congress and the range of interested stakeholders to strengthen food
aid programs, fully fund food assistance in order to meet urgent
humanitarian needs and build resilience in poor communities over the
long term, to protect the core focus of helping hungry, malnourished,
and vulnerable people, and to continue to increase the effectiveness of
existing food assistance programs. Together, we can help ensure U.S.
international food aid remains an American and global success.
______

Submitted Questions
Response from Margaret Schuler, Senior Vice President, International
Programs Group, World Vision, Inc.--U.S.
Questions Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Question 1. Why does Food for Peace use multiple modalities in its
operations, including commodities and cash transfers?
Answer. While a range of various food assistance modalities exist,
there is no ``right'' intervention. General food distributions in times
of emergency and non-emergency ensures beneficiaries receive sufficient
calories, while supplementary food distributions often emphasize
nutritious foods among pregnant and lactating women and their young
children in the first 1,000 days of life.
In the U.S. context, through the Food for Peace program, U.S. grown
commodities are sold to the U.S. Government by American farmers to be
used in food assistance programming. This type of food aid is ideal
when local markets are not functioning or there is insufficient food
available to meet the local food need. When local market conditions are
favorable and adequate quantities of food are available, local
commodities can be purchased and then used in country or regional
response efforts. In both contexts, this food assistance can be
exchanged for participation in programs known as food for assets or
food for work which are designed in an effort to address underlying
causes of hunger and poverty, by building up the capacities and
institutions of the impacted communities.
Additional modalities include cash transfers, which allow
qualifying beneficiaries to purchase food and other household items in
local markets. Vouchers are a form of cash-based transfers that are
used when there is a perceived risk of transferring cash, or if there
is a need to ensure people receive a specific type of food.
Before selecting a modality or multiple/modalities to be used in
food assistance programming, a comparison of all options are considered
and evaluated based on the following factors: appropriateness based on
market conditions, feasibility and likelihood of success, objectives of
the program, and the overall cost of the intervention.
The ability of USAID to use the right tools at the right time to
address hunger and malnutrition--including food vouchers, cash
transfers, local and regional procurement, and US commodities--is vital
to ensuring that we can respond to crises effectively and that United
States assistance reaches millions more people at no additional cost.

Question 2. How do organizations like yours make sure taxpayer
dollars are protected from waste, fraud and abuse?
Answer. It was suggested during the hearing that the use of
``cash'' in programs was less secure than the use of commodities in
programs. In this case, ``cash'' refers to cash transfers, vouchers,
and local and regional procurement of food commodities. As many
implementing organizations know, there are challenges to ensuring the
security of any aid program, and many safeguards are put into place to
protect the integrity of programs of both types of assistance.
Implementing organizations identify and deliver assistance under
strict compliance requirements and take the necessary measures to
ensure that resources reach the intended recipients. In commodity and
cash programs, meticulous records are kept to ensure assistance is
distributed to the right people and is not diverted to other purposes.
In most programs, there is no government entity involved in handling
these resources (the largest exception in current programs is the off-
market monetization of food aidcommodities arranged with the Government
of Bangladesh).
USAID implementing partners are accountable to the agency, and to
Congress, in how they utilize these resources. They know who is
receiving commodities, and they know what is being bought with vouchers
and cash transfers. In both cases, implementers use real time data to
monitor these programs. The scenario that some critics of different
food aid modalities have painted of corrupt government officials
skimming off the top is highly unlikely in either cash or commodity
programs.
Response from Brian W. Schoeneman, J.D., Political and Legislative
Director, Seafarers International Union (AFL-CIO); on Behalf of
USA Maritime*
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*There was no response from the witness by the time this hearing
was published.
---------------------------------------------------------------------------
Question Submitted by Hon. David Rouzer, a Representative in Congress
from North Carolina
Question It seems to me that one thing that food aid reformers
overlook are the economic benefits of sourcing our humanitarian
assistance cargoes at home. Can you talk a little more about the
different parts of the economy that benefit from the food aid programs?
Answer.
Questions Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Question 1. The U.S. has established a 200 mile perimeter from its
coastlines within which maritime vessels are required reduce their
emissions.
To meet strict requirements triggered in 2015, ships have been
switching to cleaner-burning, lower-sulfur fuel when they reach this
zone.
Additional emission caps are pending for 2020 or 2025, which will
apply to all shipping routes, including outside the 200 mile perimeter.
An OECD report concluded that this could have a significant impact
on shipping costs.
What is your take on the effect this will have on shipping costs,
and prices for end-users?
Answer.

Question 2. What do you believe is the appropriate role for the
shipping industry in the area of environmental protection?
Answer.

THE NEXT FARM BILL

(SNAP TECHNOLOGY AND MODERNIZATION)

----------

THURSDAY, JUNE 8, 2017

House of Representatives,
Subcommittee on Nutrition,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Glenn
Thompson [Chairman of the Subcommittee] presiding.
Members present: Representatives Thompson, DesJarlais,
Hartzler, Davis, Yoho, Marshall, Faso, Arrington, McGovern,
Adams, Evans, Lujan Grisham, Lawson, and Panetta.
Staff present: Caleb Crosswhite, Callie McAdams, Jennifer
Tiller, Mary Rose Conroy, Rachel Millard, Stephanie Addison,
Kellie Adesina, Lisa Shelton, Troy Phillips, and Carly
Reedholm.

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

The Chairman. Good morning. This hearing of the
Subcommittee on Nutrition entitled, The Next Farm Bill: SNAP
Technology and Modernization, will come to order.
Good morning once again. Welcome to everyone to today's
Nutrition Subcommittee hearing on SNAP technology and
modernization. Thank you to everyone for taking the time to be
here, especially our four witnesses.
As many of you know, our Committee has conducted a thorough
review of SNAP over, well, at this point, over the past 2\1/2\
years. And I want to take a moment to share why this was done
and what we hope to achieve as we move to farm bill
reauthorization.
First, this program touches more than 42 million Americans
each month. It is the largest domestic hunger safety net
program in the country. We have a responsibility to ensure that
we evaluate how this anti-poverty program is serving those it
intends to help.
Second, we need to get the policy right. As we approach the
upcoming farm bill it is critical we understand opportunities
to amend and improve the program to properly account for the
changes that come with our evolving, technological world. This
hearing's purpose is to discuss technology and modernization of
SNAP, including areas to enhance program integrity, streamline
delivery of services, improve the customer experience, and ease
administrative burdens.
Today we will hear about two distinct systems SNAP state
agencies utilize to determine program eligibility and issue
benefits. On the issuance side, electronic benefits transfer,
or EBT, is an electronic system that allows a recipient to
authorize the transfer of their government benefits from a
Federal account to a retailer account to pay for products
received. It is important to note that the transition to EBT,
completed in 2004, represented a tremendous step forward in
improving the program's integrity, administrative efficiency,
and customer service.
Prior to issuing benefits to households, state agencies
determine whether households qualify for the program. To
qualify for SNAP, applicants must meet the eligibility and
income requirements mandated by Congress, which are tied to the
Federal poverty level. New eligibility systems are rules-based,
with SNAP law, regulations, and policy built in, generating
eligibility calculations using program rules when workers enter
households' data. Most states also rely on integrated
eligibility systems, IESs, which determine eligibility for SNAP
along with other benefits, such as Medicaid and TANF.
In addition to EBT and eligibility system modernizations,
many states and counties are working on improving the
experience of SNAP households through enhancements to their
business processes and customer-facing technologies. Now, these
and other technology initiatives, combined with data-driven
business process improvements, can enhance administrative
efficiency at the state level while making the process of
applying for SNAP benefits more streamlined for households in
need.
I want to thank all of our witnesses for sharing their time
and their expertise. I look forward to hearing from experts in
EBT, eligibility systems, customer-centric business processes
and technology applications, and about how the evolution and
innovation within those arenas helps to improve the efficiency
of this important program.
[The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good morning, and welcome to today's Nutrition Subcommittee hearing
on SNAP technology and modernization. Thank you to everyone for taking
the time to be here, particularly our four witnesses.
As many of you know, our Committee has conducted a thorough review
of SNAP over the past 2 years. I want to take a moment to share why
this was done and what we hope to achieve as we move to farm bill
reauthorization.
First, this program touches more than 42 million Americans each
month--it is the largest domestic hunger safety net program in the
country. We have a responsibility to ensure we evaluate how this anti-
poverty program is serving those it intends to help.
Second, we need to get the policy right. As we approach the
upcoming farm bill it is critical we understand opportunities to amend
and improve the program to properly account for the changes that come
with our evolving, technological world. This hearing's purpose is to
discuss technology and modernization of SNAP, including areas to
enhance program integrity, streamline delivery of services, improve the
customer experience, and ease administrative burdens.
Today we will hear about two distinct systems SNAP state agencies
utilize to determine program eligibility and issue benefits. On the
issuance side, electronic benefits transfer, or EBT, is an electronic
system that allows a recipient to authorize transfer of their
government benefits from a Federal account to a retailer account to pay
for products received. It is important to note that the transition to
EBT, completed in 2004, represented a tremendous step forward in
improving the program's integrity, administrative efficiency, and
customer service.
Prior to issuing benefits to households, state agencies determine
whether households qualify for the program. To qualify for SNAP,
applicants must meet the eligibility and income requirements mandated
by Congress, which are tied to the Federal poverty level. New
eligibility systems are rules-based, with SNAP law, regulations, and
policy built in, generating eligibility calculations using program
rules when workers enter households' data. Most states also rely on
integrated eligibility systems which determine eligibility for SNAP
along with other benefits programs, such as Medicaid and TANF.
In addition to EBT and eligibility system modernizations, many
states and counties are working on improving the experience of SNAP
households through enhancements to their business processes and
customer-facing technology. These and other technology initiatives,
combined with data-driven business process improvements, can enhance
administrative efficiency at the state level while making the process
of applying for SNAP benefits more streamlined for households in need.
I want to thank all of our witnesses for sharing their time and
expertise. I look forward to hearing from experts in EBT, eligibility
systems, and customer-centric business processes and technology
applications, and about how the evolution and innovation within these
arenas helps to improve the efficacy of this important program.
I now recognize Mr. McGovern for any opening comments he would like
to make.

The Chairman. I now recognize my friend and colleague, Mr.
McGovern, our Ranking Member, for his opening comments.

OPENING STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE
IN CONGRESS FROM MASSACHUSETTS

Mr. McGovern. Well, thank you, Mr. Chairman. And I want to
thank all of our witnesses for being here today, and I am
pleased that we have the opportunity to discuss SNAP technology
and modernization as we prepare for the next farm bill.
Modernizing our IT infrastructure to increase efficiency
and improve access to benefits is certainly an important goal;
one that I strongly support. We can constantly find ways to
make improvements, and we know that there are some issues out
there. I cringe every time I hear a story about a mother who is
working two jobs and trying to raise a family, who ends up
going to a grocery store and, for whatever reason, there is a
glitch and her EBT card doesn't work and she can't buy her
groceries. That is something that should not happen, and
especially with all of our advanced technologies it shouldn't
happen, and we certainly need to find ways to improve that.
But, I should also point out that a lot of the IT
improvements that are moving forward, just like many other
improvements we have discussed in our over 21 hearings on SNAP
in this Committee, cost money. And I am deeply concerned about
the availability of additional resources for SNAP, given the
devastating budget that President Trump released a few weeks
ago.
The President's budget, in case you forgot, cuts SNAP; our
nation's first line of defense against hunger, by $193 billion.
That is a 25 percent cut. What baffles me about the White House
proposal is it attempts to gut a program that is working. And
that is what we have learned in the 21 hearings that we have
had here. It is one of the most efficient and effective Federal
programs that we have. It helps to alleviate poverty, promote
long-term health, and lessen hunger in communities all across
this country.
In our hearings we have heard from witnesses, both
Democratic witnesses and Republican witnesses, about the power
of SNAP and our anti-hunger safety net. We learned that the
current benefit level, which averages about $1.40 per person,
per day, is inadequate and certainly should not be cut. Among a
number of other important points, we learned that supporting
innovations in the program, creating evidence-based programs
and good case management takes well-funded Federal investments.
President Trump's own Secretary of Agriculture, Sonny
Perdue, told this Committee last month that SNAP is, ``a very
important, effective program.'' He told us that there was no
need to dramatically reform the program because, ``you don't
try to fix things that aren't broken.''
Now, I agree with Secretary Perdue on those points, and
encourage President Trump and his OMB Director, Mick Mulvaney,
our former colleague, to listen to the experts when it comes to
SNAP and other anti-hunger programs.
In all of the hearings, we haven't heard from one witness
who suggested cutting SNAP. President Trump's budget is
reckless, and in my opinion, if it ever gets enacted, is
heartless. We should do everything in our power to stop these
dangerous proposals from advancing in this Congress.
So again, I welcome the conversation about IT modernization
in SNAP. And let's continue to support good ideas, let's make
this all better, let's make it easier for people to recertify.
Again, a lot of the people we are talking about are working,
and their lives are filled so they don't have time for endless
bureaucracy or endless waiting, or making appointments, and
they certainly should be able to make sure that their card
works when they go into a grocery store. That means it is
important that we realize to make these advancements, we cannot
cut the program. SNAP cannot be an ATM machine for other
priorities.
I look forward to hearing from our witnesses. I thank you
for being here. And I yield back my time.
The Chairman. I thank the gentleman.
The chair would request that other Members submit their
opening statements for the record so the witnesses may begin
their testimony, and to ensure that there is ample time for
questions.
And I would like to welcome our witnesses to the table. We
are joined by Mr. Jason Boswell, Vice President for Programs,
of Conduent, out of Sandy Springs, Georgia; Mr. Steve Mathison,
Senior Vice President of Network Relations, First Data, Omaha,
NE; Ms. Vickie Yates Brown Glisson, Secretary, Kentucky Cabinet
for Health and Family Services, Frankfort, Kentucky; and Ms.
Lauren Aaronson, Assistant Deputy Commissioner, Office of
Business Process Innovation, Human Resources Administration,
New York, New York.
You see the lights in front of you. All of the Members have
received your written testimony. We thank you for that
preparation ahead of time. Well done. And so we are going to
proceed with 5 minutes of oral testimony. You will see that it
will be a green light, and when it gets to yellow, it gives you
basically a minute left, and when you get to red, I would just
ask at that point wrap up whatever current thought or statement
that you are in the middle of. And then we will proceed after
all four members of the panel have presented your oral
testimony, then we will do a question and answer opportunity at
that point with the Members.
Mr. Boswell, please begin when you are ready.

STATEMENT OF JASON BOSWELL, VICE PRESIDENT FOR
PROGRAMS, CONDUENT, STATE AND LOCAL SOLUTIONS, INC., FLORHAM
PARK, NJ

Mr. Boswell. Good morning. On behalf of Conduent and
myself, I would like to thank the Committee for the opportunity
to speak with you today, to discuss SNAP technology and
modernization as it applies to the services we provide or
influence.
Conduent is the world's largest provider of diversified
business process services, with a tremendous focus on public-
sector services for each level of government; Federal, state,
and local. A significant portion of our business services are
directed to health, human, and social service programs, with
payments capability such as EBT being a centerpiece of those
services.
As you know, EBT is the SNAP benefit delivery technology
utilized by all states, and is the services and industry in
which I have served, and had the opportunity to serve in, for
the last 15 years. My written testimony provides more detailed
insight into our view of how SNAP and EBT delivery may embrace
and benefit from new and modern technologies, but to briefly
highlight some of those areas for our discussion today, our
view is that EBT and the end-to-end SNAP eligibility process
would greatly benefit from a greater embrace of mobile
technologies, not only for immediate recipient services, but to
align the EBT industry to be positioned to better adapt to a
changing payments culture and infrastructure.
Mobile solutions for EBT processors, such as Conduent, can
not only provide customer service on EBT accounts, but can be a
vehicle for program communications, education, and incentive
for healthy and nutritional choices. From an eligibility
management perspective, mobility offers more streamlined
approaches to document intake, verification, communication, and
appointment scheduling, just as examples.
In addition to mobile services, the private-sector can,
with the collaborative partnership with our state and Federal
customer partners, offer a variety of additional services into
the end-to-end SNAP eligibility and delivery process to reduce
cost, increase efficiency, and provide greater tools for
program integrity, monitoring, and enforcement. These may
include the adoption of EBT-specific business intelligence and
data analytics tools which Conduent offers, changes in the EBT
card program policy as it relates to use and design, as well as
relaxing or removing restrictions that prevent states from
seeking private-sector assistance with SNAP eligibility
process.
While we appreciate the position that final determination
of eligibility belongs with the merit employees, there are a
variety of eligibility service components that could be
performed by the private-sector not only to introduce program
efficiency, but to ensure that the merit employees can focus
more centrally and specifically on the more complex aspects of
each case they manage.
FNS should approve the use of non-merit personnel,
including contractor staff in the constituent call centers that
involve client contact during the application and case
management process. This includes conducting interviews and
certifying households, simplifying the intake process,
telephone inquiries, case management, and appointment
scheduling are just a few examples where states could
potentially reduce costs and infrastructure, facilities, and
other overhead through employing a private-sector vendor with
the experience, capacity, scalability, to perform those
services. These changes can improve a state's service delivery
model across human service programs, address the increase in
workload due to the changes in the integrated eligibility
systems, and provide worker relief across programs so that
merit workers may focus on eligibility final determination and
services.
Thank you.
[The prepared statement of Mr. Boswell follows:]

Prepared Statement of Jason Boswell, Vice President for Programs,
Conduent, State and Local Solutions, Inc., Florham Park, NJ
I am pleased to submit this statement for the record to the House
Committee on Agriculture, Subcommittee on Nutrition. My name is Jason
Boswell and I'm a Vice President with Conduent, State & Local
Solutions, Inc. We appreciate the opportunity to participate in a
discussion on how technology and modernization can be leveraged to
improve delivery and access to SNAP. Conduent is on the technological
forefront in its use of automated systems and is committed to
integrating the latest technology across all our business lines to
increase efficiencies and improve services to individuals. Our
portfolio includes closed proprietary network programs such as SNAP and
WIC and open network programs that use a prepaid debit card for TANF,
Child Support, Unemployment and other cash programs. Our experience in
providing technology solution for government benefit services in 34
states can be seen below:

20 years of experience operating EBT, WIC, Debit Card, and
eCC programs.

109,600 POS devices currently deployed.

$86 billion in benefits/payments issued in 2016.

More than 3.2 billion transactions processed per year.

913 million IVR calls in 2016.

25.7 million CSR calls in 2016.

25 EBT SNAP programs.

7 EBT WIC programs.

110 Debit card programs.

9 Electronic Child Care programs.

As the national leader in providing EBT services our goal is to
continually improve access to benefits, use technology to provide SNAP
participants with benefit information to support decisions for making
healthy choices, and to continually implement new technologies that
help us achieve these goals. In order to utilize and take advantage of
new technologies the EBT program must evolve. In the following pages we
discuss different options available in the marketplace today.
Mobility--A relatively new offering for SNAP benefit recipients is
the availability of a mobile app to view program balances,
transactions, and enable cardholder alerts. Our mobile app is available
for both Android and iOS users and is free to download in the
respective app stores. By providing three options for cardholders to
obtain program information, the Interactive Voice Response (IVR) toll
free number, the Internet and a mobile app, cardholders are able to
access information in the manner which is most easy for their
lifestyle. Providing a mobile app also helps to empower recipients to
monitor their account for potential fraudulent use by others that may
have access to their SNAP benefit card. Additionally the mobile app can
be a tool to convey important program information quickly to recipients
or could be used to influence spending behavior by offering incentive
(e.g., coupons) for healthy food purchases.
Another innovation that is on the cusp for SNAP with respect to
mobility is the potential use of mobile wallets for making purchases.
As point of sale equipment has been upgraded in recent years, many
retailers have installed new credit card readers capable of accepting
near field communication (NFC) or contactless transactions. Mobile
Wallets such as Samsung Pay or Apple Pay are now more mainstream.
Mobile wallets allow individuals to carry credit card or debit card
information in a digital form on their mobile device. Instead of using
a physical plastic card to make purchases, individuals can pay with
their smartphone, tablet, or smart watch. Mobility does not need to be
limited to credit cards or debit cards and indeed can be a successful
tool in reducing costs for the EBT program. Mobile payments is fast
becoming a preferred method to allow individuals to make purchases
using either a secure passcode or utilize the fingerprint option to pay
for purchases. Not only is the use of mobile payment secure but the
transaction is quick and easy for the consumer. EBT could greatly
benefit from the implementation of mobile payments even in the closed
network environment.
Fraud Analytics--Data Warehouses and business intelligence tools
are utilized by most states however, advance fraud analytics, specific
to EBT, are not common. These tools are generally not requested in RFPs
however where deployed by Conduent, they offer predictive modeling to
assist in identifying potential fraud. Our Intelligent Analysis Portal
(IAP) uses a weighted formula to factor in 20 different key fraud
indicators to produce targeted lists of suspicious behavior that states
can use as a foundation for investigations. Rather than combing through
hundreds of pages of individual reports, states using the advanced
fraud tools have access to short, clear targeted reports of the
suspicious transactions that are most likely to be fraudulent. This
streamlines administrative efforts in order to achieve maximum results.
Advanced analytics and intelligent fraud tools can aid both the USDA
and states in rapid fraud identification and generate reports specific
to each states need.
As an example of the effectiveness of the IAP, Conduent recently
received the following from the South Carolina Attorney General's
office.

``I am writing to thank you for your involvement in the trial
in York County, South Carolina last week. You handled yourself
very well on the witness stand and I appreciate your
preparation and patience with the process. The state secured a
guilty verdict, and I believe a large portion of that was due
to getting the records into evidence through you as a records
custodian for Conduent. I also believe presenting the records
in an organized format through use of the data warehouse was a
vital part of the trial.''

Within the Conduent IAP, analytical analysis can be performed on a
variety of identification measures including but not limited to:

Rapid or repeated transactions which identifies merchants
who perform abnormal, rapid transactions in a short time.

Early morning manual swipes to identify merchants who do
abnormal early morning manual transactions.

Travel distance to merchant which identifies recipients who
travel more than the average travel time to do the transaction
for that area.

Deposit amount--identify the recipients with abnormal
deposit in terms of dollar amount or frequency.

Multiple card replacement, for example greater than four
cards replaced in the last 12 months.

High percent of total available benefits taken in one
transaction or at one location.

Odd hours transactions for large amounts or large percent of
total availability.

Alert on merchant activity that increases or decreases by
certain amounts.

Alert on top vendors for sales, returns, credits (outside
frequently used big box retail or grocers).

Address changes across large ZIP [C]ode differentials.

Shopping patterns across large geographic differentials.

Out-of-state spending activity over 50 percent in last 3
months.

Out-of-state and out-of-border state spending activity over
50 percent in last 3 months.

Identify ``frequent flyers'' for disputes or fraud claims

Analytical techniques include a variety of methods including:

Outlier Detection--Compares data to automatically find
retailers, recipients, and shopping patterns that stand out
from their peers.

Network Analysis--Locates and links retailers and recipients
that are connected to each other and highlights groups with
similar suspect behavior patterns.

Temporal Analysis--Uses time to identify retailers whose
sales, adjustments, or return volume has suddenly spiked upward
or downward when nothing else has changed.

Peer Analysis--Various retailer or recipient behavior events
are identified as ``key fraud indicators''. These events are
scored separately and in combination to identify the highest-
risk retailers or recipients.

As more and more states implement fraud analytic tools and
technology enhancements, the benefits to reducing fraud will continue
to grow.
Call Personalization--Conduent has recently implemented advance
technology for SNAP recipients calling the IVR to obtain program
information. By levering ANI (Automatic Number Identification), our
system identifies the originating phone numbers for incoming calls.
Through innovative data analysis (or ``smart learning'') we are able to
determine the normal call patterns of a caller such as card number
entered, language choice and menu options for information being
requested. The system then shortens the call by requesting only
abbreviated information from a caller and then presenting them with the
call flow most similar to their prior requests. A caller always has the
option for the full menu after providing them their customized options
based on historical calls.
Building on the success of call personalization, Conduent has the
ability to leveraging meta data from caller's ANI information and
historical IVR data to identify fraudulent callers as they are in
process. We expect to provide this information to state personnel to
assist with internal investigations and prosecution.
Photo ID Cards--There are recent innovations with respect to for
photo cards on SNAP benefit cards that are still being monitored for
their impact. The recent final rule issued by FNS regarding SNAP Photo
EBT Card Implementation Requirements, is one such example.
One benefit of adding recipient photos to SNAP cards is the
fraudulent selling of the cards to other non-authorized persons for
some smaller value than the benefits on the card. The industry calls
this ``hand-to-hand'' fraud. If photos are present, a cardholder may be
less likely to ``sell'' the card and PIN to those persons seeking to
``buy'' an EBT card and PIN. Where photos are added to cards, a policy
change to require cardholders to pay for replacement cards may also cut
down on this type of fraud. Suspending benefits for cardholders who
have excessive card replacement requests may also be another fraud
deterrent.
As equipment has evolved at the point of sale, generally a person
does not hand their card to a sales person to perform a transaction but
instead ``swipes'' their own card and returns it to their wallet. This
impacts the ability to verify the photo on the card with the person
making the purchases. Enhanced mandates can be implemented that would
require this added security check but would impact the checkout process
for retailers and recipients. Current policies would also need to be
evaluated as there are current FNS guidelines that prohibit denying
transactions. An example would be if a recipient provided their card to
a caregiver to make food purchases on their behalf, the card currently
would be accepted if the person had the physical card in their
possession and enters the associated PIN to complete the transaction.
We are committed to the monitoring programs where photo cards have
been implemented for ongoing program efficiencies and work with the
states and FNS on additional enhancements to provide fraud reduction
and administrative support.
In closing, I would like to thank you for your time and for the
opportunity to discuss this important topic. We look forward to
continuing to support the SNAP community with innovative technology for
all participating stakeholders.

The Chairman. Mr. Boswell, thank you so much for your
testimony.
Mr. Mathison, go ahead and proceed with your 5 minutes when
you are ready.

STATEMENT OF STEVE MATHISON, SENIOR VICE PRESIDENT OF NETWORK
RELATIONS, FIRST DATA CORPORATION, OMAHA, NE

Mr. Mathison. Good morning, Chairman Thompson, Ranking
Member McGovern, and Members of the Committee. My name is Steve
Mathison, I am the Senior Vice President of Network Relations
at First Data Corporation, and I am pleased to be here today on
behalf of myself and my company, and appreciate the opportunity
to share with you our perspective on the modernization of the
SNAP program.
By way of background, First Data sits at the center of
actual global electronic commerce. We serve approximately six
million business locations and 4,000 financial institutions
around the world, and we facilitate the secure routing of card
transactions between those two constituents.
By way of example, in 2016 we powered 88 billion global
transactions; more than 2,800 transactions each second,
totaling approximately $2.2 trillion U.S. last year.
First Data's role in the SNAP system is to enable retailers
to accept SNAP cards in their stores, and ensure that each
transaction is routed to the appropriate state for both the
authorization and settlement process.
As we think about the future of SNAP and the desire for a
more modern system, technology availability comes immediately
to mind. In the bank card world, the infrastructure supporting
the payments rails is subject to a series of rules, agreements,
and oversight that ensures that outages do not regularly occur.
For example, Visa and MasterCard take an active role in
ensuring that there are service-level agreements and sufficient
technology and infrastructure across the entire payments
ecosystem so that if a systems issue were to occur, there are
redundancies and business continuity plans to ensure that
commerce is not disrupted. And as a secondary level, there are
multiple Federal and governmental oversight controls, risk
management protocols, and departments that have oversight of
the financial and service industry, including players like
First Data, like the FFIEC, the FDIC, the OCC, and the Federal
Reserve, that also play an active role in making sure that the
continuity of the program is ensured.
The lack of similar service standards and requirements for
SNAP processing tends to lead to the SNAP cards not working for
a large number of cardholders on a fairly frequent basis. As
you can imagine, system-wide outages have negative impacts on
SNAP recipients by reducing their access and creating extra
inefficiencies and costs. We think this is an area that the
Federal Government should explore.
When we think about payment security, we generally focus on
criminals attempting to compromise the card number. This stolen
card information can be used to create counterfeit cards, and
criminals can use those cards to make purchases fraudulently.
What we see across our retailer base is the broader government
benefit card environment has very small amounts of counterfeit
fraud. The reason for this is because each SNAP recipient must
use their PIN to perform a transaction. They have to have their
physical card and a PIN as something that only they know.
Because this two-factor authentication is an effective method
for preventing fraud, we believe PINs should continue to be
mandatory. As retailers move into the online grocery space
where a traditional PIN pad is not necessarily present for the
purchase, we think it is important for the government agencies
to explore enhanced security in this space. Specifically, we
recommend that the Federal Government explore requiring that
SNAP transactions made online should have this two-factor
authentication. Fraud in the e-commerce space is much higher
than the physical point of sale, and as such, having a way to
keep fraud rates manageable and low in these higher-risk
transactions will be an important factor in keeping SNAP funds
flowing as benefits to recipients, rather than fraud losses to
criminals. Maintaining and protecting the integrity of the
program is crucial.
Finally, we believe the government should be taking steps
to encourage competition among the payment processors that
contract with state agencies. Currently, there are few
processors that occupy this space. While there is some limited
competition during the bidding process, once a contractor wins
a bid from a state, the processor effectively becomes a
monopoly for how that state's transactions must be processed.
Retailers that wish to offer SNAP acceptance in their stores
must process with that contractor, and only that contractor.
This has become problematic because of the introduction of new
fees by the processors and contractors to the retailers.
Retailers are essentially forced to accept any fee that is
assessed because there is no other option for processing the
SNAP transaction for that state.
We generally believe that the Federal Government should
take the position that the imposition of fees for enabling SNAP
in their stores; fees that don't necessarily go to the states,
should be prohibited. As an alternative, we suggest the
creation of a mechanism for a retailer to negotiate these fees,
and/or process their SNAP transactions with a competing
contractor for a given state in a competitive environment.
In conclusion, we commend the Committee for exploring ways
to modernize the SNAP program. Many Americans rely on the
program to improve their lives, and we believe these Americans
should have the same positive experiences when transacting with
their SNAP cards as others do when transacting with traditional
bank-issued credit and debit cards.
As one of the entities that provides the infrastructure
used to transport payment card data securely and efficiently,
we appreciate the opportunity to provide our perspective, and
look forward to keeping an open dialogue with the Committee
Members as new ideas are brought to bear.
Thank you, and I will be happy to answer any questions that
anyone may have.
[The prepared statement of Mr. Mathison follows:]

Prepared Statement of Steve Mathison, Senior Vice President of Network
Relations, First Data Corporation, Omaha, NE
Good morning, Chairman Thompson, Ranking Member McGovern, and
Members of the Committee.
My name is Steve Mathison, and I am Senior Vice President of
Network Relations at First Data Corporation. I am pleased to be here
today on behalf of First Data, and I appreciate the opportunity to
share with you our perspective on the modernization of the Supplemental
Nutrition Assistance Program (SNAP) and efforts to make it more
efficient and effective for the millions of Americans who rely on these
benefits in their everyday lives.
After providing an overview of First Data's role in the SNAP
system, I will focus my comments on three primary areas: (1)
technological availability; (2) payments security; and (3) increased
competition.
First Data sits at the center of global electronic commerce.
Founded more than 40 years ago, First Data serves approximately six
million business locations and 4,000 financial institutions around the
world. We are one of the largest retailer payment processor and bank
issuer processors in the world, enabling businesses to accept
electronic payments, helping financial institutions issue credit,
debit, and prepaid cards, and routing secure transactions between them.
In 2016, we powered 88 billion global transactions, or more than 2,800
transactions every second of every day, totaling $2.2 trillion per
year, which is equivalent to nearly 10% of U.S. Gross Domestic Product.
In addition, First Data owns the STAR debit network, with over one
million point of sale (POS) and ATM locations nationwide.
Overview of SNAP Payment Processing
In order to consider our comments in the appropriate context, it is
important to understand the basic transaction flow for a cardholder
using an electronic benefit transaction (EBT) card. Technology
providers like First Data enable commerce by facilitating the
transaction processing connections between retailers, networks, and
payment card issuers. Behind the scenes, the process is broken down
into two distinct transaction processes: authorization and settlement.
When a consumer uses a payment card to purchase goods, the retailer
must obtain authorization for the purchase from the bank that issued
the card. This authorization is confirmation that the consumer's
account is in good standing and that there are sufficient funds
available in the consumer's account to cover the purchase. And, if the
authentication process includes the consumer's Personal Identification
Number (PIN), that PIN is also validated by the issuer to ensure the
legitimate consumer is the one attempting the purchase. In the case of
SNAP EBT cards, the state holding the SNAP funds is considered to be
the card issuer (and the state may contract that service out to a third
party to manage the accounts on the state's behalf). The authorization
is, essentially, a request to make funds available to the retailer for
the purchase.
If the authorization request meets the card issuer's requirements,
and the PIN passes the issuer's PIN validation algorithm, a reply is
returned to the retailer, via the retailer's payment processor,
indicating that the request has been approved. If the authorization
request does not meet the card issuer's requirements, or if the PIN
validation is unsuccessful, the retailer is informed that the requested
transaction has been declined.
The final step is the ``settlement'' process in which funds are
received in aggregate from the card issuer (i.e., the state holding the
EBT account) for all approved SNAP transactions occurring at all
retailers accepting SNAP cards during that business day. Funds are then
separated into the proper amounts for each respective retailer, and
those funds representing all the approved SNAP transactions processed
at a retailer's location are then transmitted to each retailer's bank
account.
First Data's role in the SNAP system is to enable retailers to
accept SNAP cards in their stores and ensure that each SNAP transaction
is routed to the appropriate state for both the authorization and
settlement processes: we authorize SNAP transactions for retailers
accepting the cards, our STAR network also authorizes cash transactions
in authorized locations for SNAP cardholders, and we settle the
accounts for our retail customers for approved SNAP transactions that
have occurred during the day.
Technology Improvements
As we think about the future of SNAP and the desire for a more
modern system, technological availability comes immediately to mind. In
the bank-issued card world, the infrastructure supporting the payments
rails is subject to a series of rules and agreements to ensure that
outages do not regularly occur.
Quest is the network that provides the operating rules that govern
the distribution of government benefits including SNAP. Quest is
governed by the National Automated Clearing House Association and
encourages that government entities incorporate the Quest rules in
their contracts with third party entities used to distribute benefits.
There are differences in how the oversight and controls for the
bank-issued credit and debit cards are managed by global payments
networks such as Visa or MasterCard versus how the oversight and
controls are managed relative to the Quest network. For example, in the
case of a Visa or MasterCard network, those two entities take an active
role in ensuring that there are service-level agreements and sufficient
technology infrastructure across the entire payments ecosystem so that
if a systems issue were to occur at a payment processor, the network,
or at a financial institution that issues the cards, there are
redundancies and business continuity plans to ensure that commerce is
not disrupted. The lack of similar service standards and requirements
for SNAP processing leads to the SNAP cards not working for large
numbers of cardholders on a fairly frequent basis. As you can imagine,
system-wide outages have negative impacts on SNAP recipients by
reducing their access to necessary purchases, causing frustration for
retailers and cardholders alike, creating extra inefficiencies and
costs, and undermining confidence in the program.
We think this is an area that the Federal Government should
explore. Adding baseline standards not only provides an incentive for
state agencies and SNAP providers to improve, it will also lead to
increased systems availability, lower costs, and an overall improvement
in throughput which ultimately will ensure the consumers standing in
the checkout lanes can get their benefits when they need them.
Payments Security
Additionally, we think the SNAP program could benefit from taking a
more modern look at payments security. When we think about payments
security in this space, we generally are thinking about criminals
attempting to compromise the card number. This can occur when a
criminal steals the card information at the card swipe, or steals it by
hacking into the systems where card information is stored. The stolen
card information is then used to create counterfeit cards by encoding
the card information onto the magnetic stripe of generic plastic cards.
Or, criminals can use that card number online to make unauthorized
purchases.
The traditional bank-issued debit and credit cards have been
undergoing a transition from relying solely on the magnetic stripe on
the back of the card to including a more secure chip that interfaces
with a point of sale terminal for the transmission of transaction data.
The chips have microcomputers in them that are able to produce dynamic
cryptograms and algorithms that make the cards much more difficult to
counterfeit than the card data from a magnetic stripe, which holds only
static information. Since the chip data is very difficult to reproduce,
this lowers the incentive a criminal might have to steal card
information--since the stolen card data from a chip card is very
difficult to monetize via the conventional process of creating a
counterfeit card and making fraudulent purchases, there is little to no
benefit from stealing the card data in the first place.
However, chip technology, while certainly more advanced than the
magnetic stripe, is not a panacea for all card fraud; its benefits are
limited to stopping counterfeit card production.
There is an unresolved industry question about whether state
agencies should be prescribing chip technology for SNAP cards. From
what we see across our retailer base, the broader government benefit
card environment has very small amounts of counterfeit fraud (i.e.,
stealing the card information from a legitimate SNAP card, reproducing
a duplicate of the original card, and using that duplicate to make
purchases), because PINs are required for all government benefit cards,
including SNAP cards. In other words, First Data isn't seeing much
counterfeit card production in the government space; and since adding a
chip primarily only addresses counterfeit cards used at the physical
point of sale, we don't believe that prescribing chip implementation in
SNAP cards will create material fraud reductions or cost savings across
the SNAP payments ecosystem.
However, the reason the counterfeit fraud is low is because each
SNAP recipient must use two-factor authentication to make a SNAP
purchase--the cardholder must present his/her physical card and must
enter a PIN for each and every transaction. And because the two-factor
authentication is an effective method for preventing fraud, First Data
believes PINs should continue to be mandatory.
The Payment Card Industry Data Security Standard (PCI DSS) governs
data security for credit and debit cards, and PCI requires, for
example, a certain level of hardware security. For example, PIN pads
today self-destruct if anyone tries to tamper with them or even open
them to access their internal technology.
When a consumer enters a PIN on a PIN pad at a retailer location,
the PIN is encrypted, leading to a much more secure transaction.
Several years ago, only about \1/2\ of the 8-10 million retailers
that accept credit and debit cards had PIN pads. With the migration to
chip cards, however, many retailers have decided to upgrade their point
of sale terminals to be able to securely accept and process the chip
card that's presented.
It's now fairly standard in the industry for a retailer to have a
standard PIN pad, because the keys for the security chips are also in
the PIN pads.
As more retailers move into the online grocery space--where a
traditional PIN pad is not present because the consumer is transacting
from his/her computer or smart phone--we think it's important for
government agencies to explore enhanced security.
Specifically, we recommend that the Federal Government explore
requiring that SNAP transactions made online or in an eCommerce
environment (i.e., the consumer does not transact within the retailer's
physical store, but rather initiates the transaction remotely via a
computer or a mobile phone) should have two-factor authentication. Two-
factor authentication involves data other than simply authenticating
that the individual attempting the transaction has an account number.
In addition to something the individual has (such as their SNAP
card), the second factor of authentication typically takes the form of
either something the individual knows (such as a PIN or the answer to
security questions) or something the individual is (such as fingerprint
scans).
Additional forms of cardholder authentication are key in order to
enable SNAP redemptions for emerging opportunities such as online
grocery shopping and remote ordering for in-home delivery. Fraud in the
eCommerce space is much higher than the physical point of sale. As
such, having a way to keep fraud rates manageable and low in these
higher-risk transactions will be an important factor in keeping SNAP
funds flowing as benefits to recipients rather than fraud losses.
Increased Competition
Finally, as we think about a sustainable future of SNAP that leads
to positive cardholder experiences, we believe the government should be
taking steps to encourage competition among the payment processors that
contract with state agencies to manage the state's SNAP programs.
Currently, there are few processors that occupy this space. And
while these processors compete with each other as they bid to be a
state's SNAP contractor, generally the state selects only those
contractors with the lowest cost bids, which creates a cost prohibitive
environment for other processors to try to enter the market.
While there is limited competition during the bidding process, once
a contractor wins a bid from a state, that processor effectively
becomes a monopoly for how that state's SNAP transactions must be
processed. Retailers that wish to offer SNAP acceptance in their stores
must process with that contractor. There is no alternative; the
retailer must simply acquiesce to the demands of the contractor. This
has become especially problematic because of the introduction of new
fees by the dominant processors in an effort to supplement the thin-
margin bids used to win the state's SNAP contract. These fees impact
the retailers accepting the cards and the retailer processors like
First Data who route the transaction from the retailer location to the
network and the state.
Retailers and merchant processors are in a tough situation where
they are essentially forced to accept any fee that is assessed by these
state processors because there is no other option for processing a SNAP
transaction for that state.
Generally, we believe the Federal Government should take the
position that the imposition of processing and transaction fees for
state processors is prohibited. Simply put, charging the retailers a
fee for allowing a SNAP beneficiary to buy groceries at their store is
unfair. The imposition of these fees could have the chilling effect of
retailers deciding to curtail or cease acceptance of SNAP benefits
altogether.
Or, as an alternative, we suggest the creation of a mechanism for a
retailer to negotiate and/or process their SNAP transactions with a
competing contractor for a given state. If fees must be imposed, they
could be market-driven, competitive, and negotiated rather than imposed
unilaterally.
In conclusion, as the electronic payments system continues to adapt
to respond to innovative technologies as well as growing cyber threats,
we commend the Committee for exploring ways to modernize the SNAP
program. Clearly many Americans rely on the program to improve their
lives, and we believe these Americans should have the same positive
experiences when transacting with SNAP cards as others do when
transacting with traditional bank-issued credit and debit cards.
As one of the entities that provides the infrastructure used to
transport payment card data securely and efficiently along the payments
rails, we appreciate the opportunity to provide our perspective on
modernization efforts and look forward to keeping an open dialogue with
the Committee Members as new ideas are brought to bear.
Thank you, and I will be happy to answer any questions you may have
at this time.

The Chairman. Mr. Mathison, thank you for your oral
testimony.
Secretary Glisson, please go ahead and proceed with your 5
minutes whenever you are ready.

STATEMENT OF VICKIE YATES BROWN GLISSON, J.D.,
SECRETARY, KENTUCKY CABINET FOR HEALTH AND FAMILY SERVICES,
FRANKFORT, KY

Ms. Glisson. Good morning, Chairman Thompson, Ranking
Member McGovern, and Members of the Subcommittee.
Thank you for the opportunity to come and speak to you
today. I am Vickie Yates Glisson. I am Secretary of Kentucky's
Cabinet for Health and Family Services, and I have been invited
today to discuss Kentucky's experience in creating an
integrated benefits eligibility and enrollment system.
Prior to my tenure as Secretary, the Federal Government, as
you may know, strongly encouraged states through enhanced
funding to create an integrated modular system for eligibility
and enrollment. When I became Secretary, I inherited from the
former Administration the responsibility to implement what we
were led to believe was a completed, a vetted, and a ready IT
platform that would serve as an upgraded, integrated
eligibility and enrollment system for our health and human
service programs. Unfortunately, our experience was quite the
opposite.
In 2016, Kentucky became the first state to implement an
integrated eligibility and enrollment solution known as
benefind, and it was on the .NET platform, and that included
both Medicaid, the Qualified Health Benefit Plans, the advanced
premium tax credits, SNAP, and TANF.
Implementation of this experimental system was not without
significant challenges. We were only able to achieve our goal
of an integrated eligibility and enrollment system through
reactive changes to resolving issues as they arose. Hopefully,
by sharing our experience today and lessons learned, other
states may proactively address similar issues and avoid them
during their system implementation.
Almost immediately upon rollout, we realized some system
latency issues were caused and had caused increased processing
time. We upgraded server capacity within the first few days,
and processing did speed up and improved. As time went on
though, we realized that there were more serious issues. These
issues included system design issues, policy decisions that had
been made, and data quality. These issues snowballed with
nearly catastrophic results, causing a massive backlog with
some of our members who actually did temporarily lose their
benefits.
An example of how one issue can snowball into a larger
problem involves data quality that is used to support an
integrated eligibility and enrollment system. This new system,
as supported by the Federal Government, was designed to ping
the Federal incarceration database, for instance, to determine
whether a household member was currently incarcerated and
thereby ineligible for benefits. Our system was functioning as
it had been designed. During the transition to benefind, the
system sent a query to the Federal database, which responded
with requested data about a member's incarceration status. If
the query returned a match that someone was incarcerated, the
system automatically sent a notice to that member that
eligibility was being terminated unless documentation to the
contrary was provided. The problem, however, is that the data
was highly inaccurate, and resulted in tens of thousands of
erroneous letters being sent automatically to members. This
single issue snowballed enormously; first, because these
letters went out via mail. There was a time lag with the state
being able to get feedback that there were erroneous letters
out in the state. By the time this issue was identified, we had
already passed the point where returning to the former
eligibility and enrollment system; the legacy system, now was
no longer feasible. Further, these letters caused confusion and
panic among our members, who flooded our call centers and our
lobbies. Instead of performing their typical case management
duties, our caseworkers spent hours dealing with the fallout
from these erroneous letters.
This was on the top of the increased caseload associated
with the system conversion, and in addition to caseworkers now
getting used to a new eligibility and enrollment system. This
is just one example of a problem that could not have been
easily identified in the system testing before the system
performed, because it performed as designed.
Another complication is the lack of coordination between
Federal agencies to support an integrated eligibility and
enrollment system for benefits. FNS policies on who may access
data and assist with applications does not match up with CMS
policies. Remember, this is an integrated system. CMS allows
contractors to assist with applications, while FNS does not.
We have hundreds of contractors available in Kentucky who
can assist with Medicaid eligibility applications, give
information about Medicaid application status, but are
prohibited from using that exact same information to assist
with SNAP applications. Benefind automatically determines
eligibility for Medicaid and SNAP if all of the information is
entered and verified. Benefind is not permitted to use that
same information if entered by a contractor to determine SNAP
eligibility because FNS requires a state merit employee
caseworker only to process the SNAP eligibility. Benefind was
intended to determine eligibility for all services and benefits
with one application, including SNAP and Medicaid. FNS policy
permits only state merit employees to process SNAP
applications, which results in a duplication of efforts and has
impeded the efficiencies that are expected of this system. If
this policy were changed, then the system could be optimized
and truly be a one-stop shop with no wrong door in order to
enter the system. Issues with Federal databases, and
disconnected and uncoordinated policies between Federal
agencies could not have been foreseen prior to the rollout.
Last, benefind was implemented at the urging of the Federal
Government. We, therefore, urge the Federal Government to be
proactive and to address these issues. First, the inadequacies
of the Federal database, such as the Federal incarceration
database, must be addressed. These databases should be
accurate, they should be updated frequently, in order to avoid
erroneous decisions. And then last, we urge that the Federal
Government require better coordination between agencies to
allow the same authorized workers to work through the entire
process for both FNS and CMS benefit applications. Resolution
of these impediments will greatly enhance our experience and
cause the system to be much more efficient, as it was intended.
Thank you for your time.
[The prepared statement of Ms. Glisson follows:]

Prepared Statement of Vickie Yates Brown Glisson, J.D., Secretary,
Kentucky Cabinet for Health and Family Services, Frankfort, KY
Kentucky's Experience in Implementing an Integrated Eligibility and
Enrollment System
Introduction
Good morning. I am Vickie Yates Brown Glisson, Secretary of
Kentucky's Cabinet for Health and Family Services and I have been
invited to discuss Kentucky's experience in creating an integrated
benefits eligibility and enrollment system.
I became Secretary of Kentucky's Cabinet for Health and Family
Services on December 9, 2015. My Cabinet is responsible for the
administration of Kentucky's human services and health care programs,
including Medicaid, SNAP, TANF and foster care. When I became
Secretary, I inherited from the former Administration the
responsibility to implement what we were led to believe was a
completed, vetted and ready IT platform that would serve as an upgraded
integrated eligibility and enrollment system for our health and human
services programs. Unfortunately, our experience was quite the
opposite.
We experienced numerous challenges from the beginning that could
have been avoided and some that could not have been avoided. While the
ultimate outcome did result in an upgraded integrated eligibility
system, we only got there through reactive changes to resolving issues.
Hopefully, by sharing our experience and lessons learned other states
may proactively address similar issues and avoid them during their
system implementation.
Benefits of an Integrated Eligibility and Enrollment System
An Integrated Eligibility and Enrollment System housed within a
single Cabinet has many benefits. First, as alluded to above, the
Department for Medicaid Services, the Department for Community Based
Services (which oversees family support benefits such as SNAP and
TANF), and Information Technology staffs are all located within my
Cabinet. This alignment allows for a more streamlined and coordinated
project team and leadership. Because the agencies work together, our
Cabinet may better collaborate and plan while ensuring representation
of each program area's interests. We work together to determine how
those interests best fit into the new integrated system while also
supporting the no wrong door concept and maximizing the use of shared
services for eligibility determination and other core business
processes.
Another benefit of benefind, our integrated eligibility system, is
the modernized infrastructure. It allows for real-time eligibility and
enrollment processing for benefits. It was intended to improve workflow
and automation features, including appeals and complaints. It also
brought our eligibility system in line with new Federal guidelines and
policies.
Finally, benefind was designed to have system modularity. The
application architecture was designed in a way that allowed for
deployment of common services/functionalities to support integration of
additional HHS programs. For example, the Child Care Assistance Program
is scheduled for integration in September 2017.
In summary, the primary benefits of an integrated eligibility
system include: (1) Improved access--self-service portal, telephonic,
in person and paper/mail-in applications; (2) Improved efficiency and
effectiveness--one application for all benefits; information collected
one time in one system--Reduces duplication of effort; (3) Continuously
improved business operations, transparency and accountability through
data reports and performance information.
Background
Prior to my tenure, the Federal Government had strongly encouraged
states, through enhanced funding, to create an integrated modular
system for eligibility and enrollment. In 2011, the former Governor of
Kentucky requested and received approval from the Federal Government to
use a waiver to build an IT system to integrate eligibility and
enrollment determination functions for a health benefits exchange and
for all state-administered health and human services programs using an
integrated data base. In 2012, the former Administration entered into a
contract providing for a multi-stage production that was intended to
create a horizontal fully integrated Eligibility and Enrollment
platform with two doors.
The first door, therefore, was the state-run health benefits
exchange, which was used for Medicaid expansion eligibility
determinations and enrollment.
The second door is a one-stop shop for benefits, including SNAP,
TANF, K-TAP, Foster Care, Kinship Care, Medicaid and some waiver
programs, that was intended to work concurrently with the prior
release. The system was expected to streamline the application process
by using one application, along with Federal data, to determine
eligibility for all benefits. Release 5, known as benefind, was
initially scheduled by the former Governor for release on December 4,
2015. The former Administration delayed that release until December 29,
2015, because of suspected system issues.
Prior to December 29, 2015, the current Governor was inaugurated
and I became Secretary of the Cabinet. Rather than release the platform
without any review during the middle of QHP open enrollment, we delayed
the project and initiated a review of system readiness. That review
included written documentation from the vendor that 7,000 user test
cases had passed, 240 performance tests were satisfactorily completed,
and more than 200 testers had been employed across the Cabinet. We
received multiple assurances that benefind had been thoroughly tested
and piloted and that all necessary staff had been thoroughly trained.
Vendor testing predicted that no severe defects would exist upon roll-
out and that any minor issues would have a work-around. We were further
assured that all USDA technical and programmatic guidelines had been
met. The vendor assured us that the system was ready but that
contingency plans were in place to address any issues that might arise.
Kentucky also had an IV&V vendor who reviewed risk and contingencies,
and gave us no reason to delay further.
Roll-Out Brought Significant Issues to Light\1\
---------------------------------------------------------------------------
\1\A listing of post-launch issues and their resolutions is
attached to this presentation.
---------------------------------------------------------------------------
Kentucky was the first state to implement the integrated
eligibility and enrollment system on a .NET platform with the broad
spectrum of services. In consultation with CMS, we scheduled a go-live
date for February 29, 2016. Almost immediately, we realized some system
latency issues were causing longer than anticipated durations during
screens. Server capacity was upgraded within the first few days and
processing speed improved. As time went on, however, we realized there
were more serious issues. These included issues with system design,
policy decisions data quality, and system issues. While there was a
roll-back contingency in place in the event the system conversion was
not successful, it was no longer a feasible or prudent option, by the
time many of the issues were identified.
An example of how one issue can snowball into a larger problem
involves data quality. Our new system was designed to ping the Federal
Incarceration Database to determine whether a household member was
currently incarcerated and, therefore, ineligible for benefits. Our
system was functioning as designed. During the transition to benefind,
the system sent a query to the database, which responded with requested
data about a member's incarceration status. If the query returned a
match that someone was incarcerated, the system automatically sent a
notice to that member that eligibility was being terminated unless
documentation to the contrary was provided.
The problem, however, is that the data was highly inaccurate and
resulted in tens of thousands of erroneous letters being automatically
issued. This single issue snowballed enormously. First, because these
letters went out via mail, there was some delay in the state getting
feedback about the erroneous letters. By the time this issue was
identified, we had already passed the point where returning to the
legacy system was not feasible. Further, these letters great caused
confusion and panic among our members, who flooded our call centers and
our lobbies. Instead of performing their typical case management
duties, our caseworkers spent hours dealing with the fallout from these
erroneous letters. This was on top of the increased case load
associated with the system conversion, and on top of their getting used
to using a new system.
That is just one example of how one issue can cause big problems.
And it is one that could not have been easily identified in system
testing.
Another complication was the fact that FNS policies on who may
access data and assist with applications do not align with CMS
policies. CMS allows contractors to assist with applications while FNS
does not. We have hundreds of contractors available who can assist with
Medicaid eligibility applications and give information about Medicaid
application status but who are prohibited from using the exact same
information to assist with SNAP applicants. Benefind automatically
determines eligibility for Medicaid if all of the information is
entered and verified. Benefind is not permitted to use that same
information, if entered by a contractor, to determine SNAP eligibility
because a merit employee case worker is required to process the SNAP
eligibility. Benefind was intended to determine eligibility for all
services, including SNAP and Medicaid with one application. This FNS
policy, however, requires duplication of efforts and has impeded the
efficiencies expected of the system.
Additional complications included a decision on the part of the
former Administration to shift workload from our local caseworkers and
to replace the face-to-face model with a call-in center. This change in
workflow did not align well with our new system. Our shift to a
statewide model caused us to lose specialized expertise. This was then
compounded by a lack of adequately trained staff. All of these issues
snowballed with nearly catastrophic results causing an enormous
backlog, long wait times, full lobbies and for some members to be
dropped from receiving benefits.
Immediate Action Was Taken to Resolve the Issues
Because most of these issues were not evident prior to roll-out, we
had to combat the problems from behind. In order to avoid further
disruption to essential services, I employed an all-hands on deck
approach. I immediately empanelled a team comprised of senior
leadership, program policy experts, vendor management and programmers,
and representatives from field offices for daily meetings, including
meetings on weekends to address identified defects. As issues mounted,
we supplemented field operations with 120 additional IT staff to
provide technical assistance with case processing and targeted training
to improve worker efficiency. We distributed a daily targeted plan to
field supervisors with direction to prioritize cases based on due dates
to lessen impact on SNAP and Medicaid applicants and recipients. We
developed a Rapid Fire Team to improve customer service and to handle
critical cases escalated for possible loss in benefits, and a team
comprised of 100 field staff was located to Frankfort's technology
command center to provide centralized processing. This team enabled the
vendor to troubleshoot programming issues and identify solutions to
incorporate into future programming and facilitated hands-on system
training so users could serve as field mentors. We augmented staffing
within the Office of Ombudsman to address increased call volume and to
ensure that every individual who reported a concern received a follow-
up call within twenty-four hours of initial contact. We created a
cross-department team to review all auto-generated notification letters
programmed into the system to ensure accuracy. After each daily session
with the vendor and senior management, we identified specific
programming solutions for implementation and targeted a release date.
We also hosted telephonic and in-person conferences with Federal
Medicaid and United States Department of Agriculture partners and
received approval to extend coverage in an attempt to minimize a lapse
in benefits. Finally, we employed additional security in field offices
to assist with workflow and to ensure that client and employee safety
received the highest priority.
Importance of a Proactive Stance
Today, most of the issues have been fully resolved. Many of these
issues could have been avoided altogether had proper planning and
oversight procedures been enacted from the beginning. First, better
communication, coordination and oversight of the vendor, along with the
inclusion of performance metrics and sanctions for non-performance in
the contract, is essential to gaining full knowledge of the true status
of the system. Communication with the vendor was lacking initially, and
the testing was not as robust and inclusive as we believed. Had the
vendor been more closely monitored, we could have asked better
questions, we would not have had to rely on their assurances, testing
could have been more thorough and representative, and a better
contingency plan could have been developed including reversion to the
prior system. The inclusion of performance metrics and sanctions for
non-performance in the contract would have enhanced monitoring and
vendor communications. Next, comprehensive training and adequate
staffing should be in place and a workflow developed that is reflective
of the IT system should all be in place well prior to roll-out to
ensure that issues may be identified and handled as expeditiously as
possible.
Finally, if we are to have a truly integrated system, we need the
Federal Government to assist. Proactivity on the Federal Government's
part would be an enormous help in minimizing issues. Federal databases,
like the Federal Incarceration Database, should be accurate and updated
frequently to avoid erroneous decisions. The Federal Government should
also take an integrated approach to policies to ensure that they are
consistent and that they align with the IT design it has encouraged.
The FNS policy prohibiting anyone but merit employees to assist with
SNAP applications must be changed. Currently, CMS has determined that
contractors may assist with Medicaid eligibility applications.
Recently, CMS has further reduced burdens on the application process by
allowing insurers and brokers to access the Federal platform. This
disconnect prohibits us from using the contractors who have access to
the same information for Medicaid to assist with SNAP applications
which results in duplication of efforts and an impediment to the
efficiencies expected of the system.
Resolution of these impediments would greatly enhance our
experience and cause our system to be as efficient as intended. If
these issues were addressed, then the system could be optimized and
truly be a one-stop shop with no wrong door.
Conclusion
We continue to monitor our system and work with our vendor closely
to confirm that any future releases will result in a system that is
reliable and stable. We conduct frequent reviews of system operations
to ensure that any defects are quickly identified and resolved. We are
committed to facilitating the process for our population.
[Attachment]
Post Launch Issues and Resolutions
Issue: Significant costs associated with delaying rollout.

KY Response: Renegotiated additional costs associated with a
delayed roll-out down approximately 50%.

Issue: UAT testing needed more involvement of business
analysts in test scenario planning and for correspondence
generation.

KY Response: Enhanced testing of processes and software.

Issue: ``Go live'' did not include adequate roll back/
contingency plan.

KY Response: By the time the scope and magnitude of systematic
issues were fully identified the contingency plan, reversion
back to Kentucky Automated Management Eligibility System
(KAMES), was not feasible to implement. However, benefind
provides the ability for workers to override emergency cases.

Issue: Center for Medicare and Medicaid Services and Food
and Nutrition Services policies contradict each other in the
integrated system, and did not properly allow utilization of
kynectors/application assisters.

KY Response: Requested and received approval from FNS for
kynectors affiliated with nonprofits to assist with SNAP
applications. This change did little to solve the problem as
merit employees were still required to perform the interview
and eligibility determination for SNAP. Kentucky recommends
additional flexibility and better program eligibility policy
alignment across Federal eligibility programs.

Issue: Training was inadequate; no proficiency test for
staff prior to roll-out. Also, what training was performed was
done several months in advance of go-live. That lag resulted in
a system that has several changes between training and go live,
and high attrition meant many workers were not trained in
advance of roll-out.

KY Response: Proficiency thresholds and timeframes will be
established and verified prior to any future system roll-outs.
Will also ensure some training takes place in close proximity
to system rollout.

Issue: Pilot project was insufficient; not fully
representative of local offices.

KY Response: Future pilot programs will incorporate all special
populations and geographic areas.

Issue: Clear communication between vendor and CHFS was
lacking.

[KY Response:] Streamlined operations and communication by
requiring twice weekly meetings and implementing morning and
afternoon status reports.

Issue: 2013 DCBS workforce study recommended a statewide
structure that has proven inadequate for operating the benefind
system.

KY Response: Several specialized teams were created and some
shift of responsibilities back to local level has occurred.
CHFS is currently undergoing a formal examination of workflow
for more permanent and substantial changes to better align with
benefind system.

Issue: Long phone wait times and case review times
associated with benefind roll-out.

KY Response: Established a Rapid Response Team (RRT)--this group
of 10-20 vendor and CHFS staff gave us the ability to quickly
respond to cases that required immediate action. Additionally,
CHFS improved the phone system Interactive Voice Response
(IVR). Improvements made to the phone systems have greatly
decreased wait times by providing a specific queue for citizens
seeking benefits status or reporting changes.

Issue: Sizeable case backlog associated with benefind roll-
out.

KY Response: Established Operation Field to Frankfort (O.F.F.)--
this team of 60-100 employees from across the state, assisted
by 12-15 vendor employees, was consolidated in Frankfort to
address high volume of cases, specialized populations
experiencing issues, and to receive additional training. This
team has successfully processed hundreds of thousands of cases
and has been instrumental in identifying system issues
experienced during the benefind roll-out process.

Issue: Incorrect notifications mailed to constituents.

KY Response: Completed a detailed review of all possible system-
generated correspondences/notifications for accuracy and
software errors, and identified trigger threshold improvements.
CHFS and vendor continue to review policies associated with
notifications, in order to eliminate confusion.

Issue: Small populations saw a disproportionate volume off
errors during roll-out.

KY Response: Worked with community partners such as KY Center for
Equal Justice, KY Association of Health Care Facilities, KY
Refugee Ministries, and Catholic Charities to ensure we are
addressing citizens' concerns, while implementing changes to
the organizational processes in order to better serve the
citizens.

The Chairman. Secretary Glisson, thank you for your
testimony.
Ms. Aaronson, go ahead and proceed with your 5 minutes of
testimony when you are ready.

STATEMENT OF LAUREN AARONSON, ASSISTANT DEPUTY COMMISSIONER,
OFFICE OF BUSINESS PROCESS
INNOVATION, NEW YORK CITY HUMAN RESOURCES
ADMINISTRATION, NEW YORK, NY

Ms. Aaronson. Good morning. Thank you, Chairman Thompson,
Ranking Member McGovern, and Members of the Subcommittee, for
giving me the opportunity to testify today.
My name is Lauren Aaronson, and I lead the Office of
Business Process Innovation at New York City's Human Resources
Administration. I am pleased that you are recognizing the work
that Mayor Bill de Blasio and HRA have undertaken to modernize
the way New York City administers the SNAP program.
Today I will focus on our work to improve the client
experience, and the agency's ability to adapt to and
incorporate new and emerging technologies in its service
delivery model.
Currently, nearly 1.7 million New York City residents
receive SNAP benefits. HRA has invested in the creation of a
self-directed service model for our SNAP population. In
addition to providing an enhanced customer experience, this
lower-touch model frees up our eligibility workers' time, and
allows them to focus on those clients who truly need their
support. Some of these technologies include an innovative
online tool called ACCESS HRA, where residents can retrieve
benefit information and apply and recertify for SNAP. This
portal allows clients to create an account to gain real time
access to over 100 case-specific data points. Additionally,
clients can make limited changes, view e-notices, and opt into
text message and e-mail alerts. As of this month, there are
more than 300,000 HRA online accounts for SNAP households.
Using an USDA grant, HRA launched a self-service mobile app
to give clients the ability to use their mobile device to
better manage their cases on-the-go. The app allows clients to
utilize their mobile device to capture and submit images of
SNAP eligibility documents to the agency, and allows us to
leverage innate mobility tools such as push notifications,
mapping, and calendaring. HRA uses an iterative design approach
and techniques such as A/B testing as a way to put the user
first, and allow us to optimize the functionality of these
apps. Clients have downloaded this app over 112,000 times, and
uploaded over one million images. For those clients that prefer
to transact with us in our centers, we provide a suite of self-
service tools, including self-service check-in kiosks, PC banks
to use ACCESS HRA, and self-service scanning.
In an effort to simultaneously address improving the client
experience and increasing worker efficiency, in 2016 HRA
implemented a new call center for recertification eligibility
interviews. This new operation takes advantage of a waiver from
the USDA, and allows clients to conduct SNAP eligibility
interviews on an On-Demand basis, rather than waiting for a
scheduled interview. This is an improvement for our clients as
well as an efficiency improvement for workers, who no longer
call to schedule and reschedule interviews.
The clearest success of On-Demand is the increased number
of interviews taking place by phone. Before On-Demand, only 52
percent of SNAP recertification interviews were held by phone,
we can now report as high as 76 percent of interviews on the
phone. Each of these improvements represents a reduction or
elimination of a significant barrier. By mitigating the
barriers to access, we can ensure clients maintain benefits and
reduce the churn of clients at recertification, which can tax
our resources.
Technology has changed the way we communicate with each
other and our institutions. We recognize that our work to
improve the client experience must not stop at optimizing
digital systems and improving online communication efforts.
Through data analysis, client interviews, and research, we
identified certain behavioral patterns that lead to the churn
of clients at recertification. We crafted behaviorally-informed
notices, informing clients that they would lose their benefits
if they did not act, and we found that those clients who
received these notices were more likely to initiate their
recert application, and completed phone interviews earlier in
the recertification period; a low-cost approach to improving
outcomes. Over time, these collective investments will reduce
our physical footprint, and save on expensive lease costs,
while removing barriers to access and making it easier for
clients to apply for and maintain their benefits.
The de Blasio Administration will continue to work to
expand access and remove barriers to SNAP using online tools
and technology innovations. Our work has resulted in a better
customer experience and a more efficient operation for HRA.
Modernization of client and worker facing tools and
processes can only take us so far. There is a need to review
the underlying Federal regulations that guide SNAP, to help
jurisdictions take full advantage of the continuous technology
advances, changes in population needs, and shifts in the
workforce. There is an administrative burden on states and
Federal oversight that could benefit from building more
flexibility into the regulations so that every innovation does
not require a waiver.
We would also like to take this opportunity to work with
you to protect low-income and vulnerable Americans, as well as
Americans with disabilities, against any proposed Federal cuts
in the SNAP program. Not only would cuts to the SNAP program
reverse years of gains that cities and states like New York
have made in service delivery, it would also harm local
economies. In New York City, SNAP recipients purchase more than
$3 billion worth of food, generating about $5.4 billion of
economic activity largely within small businesses.
We look forward to continued collaboration with the
Committee as we continue to innovate and modernize the SNAP
program. For a detailed account of these efforts, I invite you
to review my submitted testimony.
Thank you. I look forward to your questions.
[The prepared statement of Ms. Aaronson follows:]

Prepared Statement of Lauren Aaronson, Assistant Deputy Commissioner,
Office of Business Process Innovation, New York City Human Resources
Administration, New York, NY
Good morning. Thank you, Chairperson Thompson and Members of the
House Agriculture Committee Subcommittee on Nutrition for giving us
this opportunity to testify and respond to Committee questions today.
My name is Lauren Aaronson and I am an Assistant Deputy
Commissioner of the Office of Business Process Innovation at the New
York City Human Resources Administration (HRA). I am pleased that you
have invited me here today to testify and that you are recognizing the
work that New York City Mayor Bill de Blasio and HRA have undertaken to
modernize the way New York City administers the SNAP program. We
believe we are well on our way to achieving the two primary and equal
goals of our modernization efforts--improved customer experience and
optimized operational efficiency. I will focus this testimony on the de
Blasio Administration's work to improve the client experience and the
Agency's ability to adapt to and incorporate new and emerging
technology in its service delivery model while addressing the needs of
the most vulnerable New Yorkers, including older New Yorkers and those
with limited sight, mobility and technology and broadband access. These
continuous efforts and reforms are helping the Administration to move
towards its goal of eliminating hunger in New York City and ensuring
that every New Yorker who is eligible for SNAP has unencumbered access
to this critical nutrition support while utilizing fewer administrative
resources.
As this Committee knows, SNAP is the nation's most important anti-
hunger program, assisting more than 45 million low-income Americans, 70
percent of whom are families with children and more than one in four
are households with seniors or individuals with disabilities.
Currently, nearly 1.7 million New York City residents receive SNAP,
including nearly 600,000 children (35%) and 415,000 seniors (25%).
Compared to 1 year ago, the SNAP caseload increased by 1,254 cases
(0.1%), which was a decrease of 7,269 recipients (^0.4%). Since Mayor
de Blasio took office in January 2014, we have worked to implement both
immediate and long-term measures to combat economic inequality and to
ensure that each New Yorker has access to, as well as, the resources
and supports they need to thrive and avoid hunger.
Over the past 3 years, HRA has invested in the creation of a self-
directed service model for our SNAP population. These self-service
tools are available to all SNAP enrollees, and a large segment of our
SNAP population is interested and able to take advantage of this model.
In this day and age, our clients are accustomed to using self-service
tools at train stations, banks, airports and supermarkets. In addition
to providing an enhanced customer experience, this lower-touch model
frees up our eligibility workers' time and allows them to focus on
those clients who truly need their support.
I will now spend a few minutes discussing some of these technology
improvements and other initiatives aimed at reducing barriers to access
and bringing our service delivery model further into the 21st century.
New and Improved Technology
The goal of our modernization effort is to create a self-directed
service model that allows applicants and clients to transact with the
Agency without the burden of having to physically come to an HRA
location. Over time these investments will help the City to reduce our
physical footprint and save on expensive lease costs while removing
real barriers to access, and making it easier for clients to apply for
and maintain their benefits. We know from national studies that the
point of recertification is where many eligible clients across the
country often lose their benefits.
Launched ACCESS HRA
To improve access to benefits and information on a pending or
active case, NYC developed an online portal available to New Yorkers
anywhere an Internet connection is available. ACCESS HRA is an
innovative tool that allows New York residents to retrieve benefit
information and apply and recertify for SNAP and other benefits. This
portal allows clients to create an ACCESS HRA account to gain access to
over 100 case-specific points of information in real-time, including
application and case statuses, upcoming appointments, account balances,
and documents requested for eligibility determinations. Additionally,
clients can make changes to contact information, view eligibility
notices electronically, and opt into text message and e-mail alerts. We
continue to improve this tool to add new functionality and will soon
allow recipients to submit their Periodic Report in addition to
reporting changes in circumstances. As of May 31, 2017 there are more
than 300,000 HRA online accounts for SNAP households, and we receive
over 33,000 submissions each month.
ACCESS HRA also allows clients to:

View E-notices that remain accessible for 365 days.

Go Paperless! Clients are able to opt-in to reduce the
number of paper notices sent from HRA.

Request an electronic budget letter from the Case Details
page, which will appear as an e-notice the next business day.

Recertify SNAP and Cash Assistance cases.

Document Reuse: Select documents on file at HRA for
identity, age, and other eligibility documents to re-use when
submitting an online application.

Opt into text message and e-mail alerts about their case.
For example, a client can now receive a text when their SNAP
recertification period begins.

After submitting a recertification form, track the date it
is received by HRA on the Case Details page.

HRA complies with NYC local laws by making ACCESS HRA available in
seven languages (English, Arabic, Chinese, Haitian Creole, Korean,
Russian and Spanish), and the tool was designed and tested to make its
content more accessible to people with disabilities, which means it is
compliant with WCAG 2.0 (Web Content Accessibility Guidelines), AA
standard. We have taken great pains in ensuring that we perform User
Acceptance Testing with a diverse cross section of users, including
those with disabilities.
Launched HRA Mobile App
In an effort to decrease the digital divide, HRA was awarded a U.S.
Department of Agriculture grant to launch a self-service mobile app to
give clients the ability to use their mobile device to better manage
their cases. Implementing mobility as a tool is significantly different
than designing an online web portal. Mobile devices are powerful tools
in their own right, and taking advantage of a phone's innate
capabilities is critical to successful implementation. Though the app
allows clients to utilize their mobile device to get access to much of
the same information that is available on the web portal, it also
allows clients to use the camera to capture and submit images of SNAP
and Cash Assistance eligibility documents to the Agency. In addition,
it allows us to use push notifications to remind clients about
important case milestones such as recertification, as well as access
integrated functions such as mapping and calendaring.
Designing for a mobile device has certain challenges including the
need to create a highly intuitive user interface. For this reason, HRA
uses an iterative approach to design that puts the user first and
allows us to optimize the functionality of the apps. Techniques such as
A/B testing, where we go directly to our clients in the HRA Centers to
test candidate designs to are utilized regularly. Since the
application's launch, clients have downloaded the mobile app 112,000
times, and uploaded over one million images. Not needing to return
documents at our centers saves clients and staff time, images are also
of significantly better quality and already connected to the pending
case action so that the eligibility worker does not have to waste time
searching.
On-Site Self-Service Tool
For those clients that prefer to transact with us inside of our
centers we have provided a suite of self-service tools. These tools
include self-service check-in kiosks and PC Banks to utilize ACCESS HRA
and self-service scanning.
The scale of our centers necessitates ticketing and routing for an
efficient client flow. Self-service check-in allows clients to identify
the purpose of their visit and automatically receive a ticket
appropriately routing them within the center.
Across NYC almost 80 percent of applicants that come to our centers
to apply for SNAP are interested in applying online in our PC Banks. In
some cases, applicants do not have access to a computer or feel more
comfortable submitting online with the assistance of a facilitator in
our offices. We have also been able to use the PC banks as a forum to
solicit client feedback on the usability of the ACCESS HRA tool, and
identify improvements to the application questions, communications with
clients, and efficiencies in our operation. This feedback loop allows
us to hear the ``voice of the client'' and adjust our technology and
processes to create a better overall client experience. The overall
impact of these usability adjustments have impacted the foot-traffic in
our centers, as close to 65% of our online applications are being
submitted on computers and mobile devices outside of an HRA location.
There are currently 15 SNAP centers and 103 community-based
organizations across the City where clients can quickly and easily scan
and submit documents electronically. Clients are able to use the self-
service areas to submit documentation in support of case changes such
as the addition or removal of a family member, and change in rent or
address. In addition, 12 Job Centers have scanners and ten Job centers
have self-service kiosks. The self-service document scanning option
allows clients to submit documents at locations convenient to them, not
only at our SNAP centers.
On-Demand Interviews
In an effort to simultaneously address improving the client
experience and increasing worker efficiency, at the beginning of 2016,
HRA implemented a new call center to handle recertification eligibility
interviews for SNAP. This new operation takes advantage of a waiver
from United States Department of Agriculture Food and Nutrition
Services (FNS) and allows clients to conduct their SNAP Eligibility
interviews on an On-demand basis at their convenience, rather than wait
for a call during a 4 hour window, or come into a center and wait for
an in-person interview. This is an improvement for the client, as well
as an efficiency improvement for the workers who no longer have to call
to schedule and reschedule interviews. The clearest success indicator
for On-Demand has been the channel shift of interviews taking place in-
person at centers, to interviews being over the phone at the clients'
convenience. In October 2015, before the implementation of the On-
Demand call center, only 52% of the completed SNAP recertification
interviews were held via telephone. We now have reached as high as 76%
of the interviews held by phone--a 24% increase. As we continue to
increase our capacity, we will begin to introduce on-demand telephone
interviews for new SNAP applicants by this Fall.
Each of these technological improvements alone represents a
reduction or elimination of a significant barrier. Together they
represent a wholesale change to the ways in which clients apply for and
recertify for benefits--ultimately reducing the number of clients who
do not receive this vital benefit because it is too hard to apply and
recertify or the investment of their time is too great. By mitigating
the barriers to access we can ensure clients maintain their benefits
and reduce the churn of clients at recertification, which can tax
resources across the system.
Behavioral Based Notification
Technology-from computers to mobile devices, to Facebook, Twitter
and Snapchat, to text messages--has become an important way for New
Yorkers to communicate with each other and institutions and to get the
information that they need. This is precisely why the de Blasio
Administration has committed to bringing every New Yorker affordable,
high-speed Internet access by 2025 and prompted the launch of LinkNYC,
the world's largest and fastest free municipal WiFi network with more
than one million users. Notwithstanding these incredible advances, the
de Blasio Administration remains laser focused on helping New Yorkers
overcome obstacles not necessarily related to technology and broadband
access.
At HRA, we recognize that our work to improve client experience
must not stop at optimizing our digital systems and improving our
online communication efforts. Through data analyses, client interviews,
and research, we were able to identify certain behavioral patterns that
lead to churn of clients at recertification. For example, SNAP notices
weren't catching clients' attention. In response to this, we crafted a
behaviorally-informed reminder notice to clients that they'd lose their
benefits if they didn't act in a timely manner. What we found was that
those clients who received the behaviorally-informed notice:

Were 5.5% less likely to miss the form submission step than
clients who did not;

Were more likely to submit recertification forms and
completed phone interviews earlier in the recertification
period; and

Were 12.9% more likely to have submitted a recertification
form than the control group.

Now I would like to briefly discuss how these low and high tech
innovations are allowing HRA to meet clients in the setting where they
feel most comfortable, both online and offline.
SNAP Outreach
SNAP Outreach Online
In April 2015, HRA launched an advertising campaign to encourage
New Yorkers struggling to afford food to seek help, especially
targeting low-income seniors and immigrants. Through FoodHelp.nyc,
potential clients are redirected to ACCESS HRA where they are able to
determine if they qualify for SNAP and other City, state, and Federal
benefits. In addition to the website, the campaign consists of print
advertisements in English and the six New York City Local Law languages
in locations throughout the City. The campaign also includes digital
advertisements and video testimonials of past and current SNAP clients.
Since the inception of the SNAP Helps campaign in April 2015,
FoodHelp.nyc has seen approximately 131,000 lifetime users with roughly
74% being new users. Additionally, there were approximately 58,000
click-throughs from FoodHelp.nyc to ACCESS HRA, representing 44% of
site visitors.
SNAP Outreach in the Community
HRA's SNAP Support Services unit manages out-stationed staff at
three community-based ``Paperless Office System'' sites providing
online access to benefits with an 88% approval rate for approved
applications. SNAP Support Services staff also provides technical
assistance to 103 community-based organizations that provide SNAP
facilitated enrollment and recertification services. Over the past
year, SNAP Support Services provided outreach services at more than
1,676 individual community events and prescreened more than 9,526
potentially eligible applicants.
Now I would like to briefly discuss how this Committee can help the
City and State of New York continue to leverage technology in pursuit
of improved program efficiencies and outcomes.
A-87 Cost Allocation Waiver
Families in need often require assistance from more than one
program, which can mean visiting multiple offices, completing multiple
applications, and providing the same documents to more than one
program. Improvements in technology can streamline the delivery of
programs, making the process more efficient for service providers, and
helping to ensure that families and individuals receive program
services in a more holistic manner. The current A-87 cost allocation
waiver provides incentives for states to streamline service delivery,
efforts towards which have begun in many states. In New York, these
efforts will create a ``no-wrong-door'' service system for families
that will help to ensure that they receive all the help they need, no
matter which program they approach first. This coordinated approach to
service delivery, will help families get back on their feet and off of
assistance more quickly. However, this work is not done, and the
expiration on December 31, 2018, of the increased Federal reimbursement
available under the A-87 cost allocation waiver threatens to slow or
halt this important work in New York and elsewhere. For this reason,
New York strongly recommends that this Committee work with the United
States Department of Health and Human Services' Centers for Medicare
and Medicaid Services and the U.S. Department of Agriculture to extend
or make permanent this waiver in order to incentivize states to
continue to develop the types of technological advances and outcomes
described in this testimony.
Conclusion
The Administration will continue to work to expand access and
remove barriers to SNAP by using online tools and technology
innovations. The results of these implementations have been multi-
faceted. For clients, it has resulted in shorter wait times to complete
their transaction, and a better customer experience for our low touch
population as well as for our clients in need of a more in depth worker
intervention. Our workers are spending time helping clients when
needed, rather than completing the scanning tasks, routing clients
manually, and data entry. Modernization of client and worker facing
tools and processes can only take us so far. We believe there is a need
to review the underlying Federal regulations that guide this program to
help states and local jurisdictions take full advantage of the
continuous technology advances, changes in our population needs, and
shifts in the workforce. There is administrative burden on both the
states and the Federal oversights that could benefit from building more
flexibility into the regulations so that every innovation does not
require a waiver.
We would also like to take this opportunity to work with you to
protect low-income and vulnerable Americans as well as Americans with
disabilities against any proposed Federal cuts to the SNAP program or
other safety net programs. Not only would cuts to the SNAP program
reverse years of gains that cities and states like New York have made
in service delivery it would also harm local economies. In New York
City, SNAP recipients purchase more than $3 billion in food, generating
about $5.4 billion of economic activity largely within small
businesses. We look forward to continued collaboration with you as we
continue to innovate and test and learn from new technology and tools
I look forward to your questions.
Thank you

The Chairman. Ms. Aaronson, thank you so much for your
testimony.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
I now recognize myself for 5 minutes of questioning.
Mr. Mathison, your testimony provides some encouraging news
about the security of SNAP EBT card technology, indicating that
the two-factor authentication provided by the use of a magnetic
strip card with a PIN is an effective method for preventing
fraud. However, you also indicated that there is still room for
innovation with regards to secure two-factor authentication in
situations where the card is not present, such as online
transactions; e-commerce.
My question is how might we accomplish this in SNAP so that
we can maintain both access for recipients and the integrity of
the program for different types of transactions?
Mr. Mathison. Yes. Thanks for the question, Mr. Chairman.
As we think about what is happening out in the retail
marketplace, as these physical grocers start to provide online
services; whether it is online shopping or providing remote
delivery in the home, where the cardholder and the benefit
recipient doesn't necessarily go to the physical location, the
card simply isn't present. As we try to facilitate these
transactions on an online basis there are technologies
available such as virtual PIN pads or secondary authentication
methods where something that the benefits holder would have,
like a fob or a token, or some other kind of administrative
function that would identify that as a legitimate benefits
holder, is paramount to making sure that, as these transactions
happen, there isn't an explosion of fraud. The reason I say
that is because as we think about what happens in the bank card
world, the difference between the fraud levels that happen at
the physical point of sale and the fraud that happens in the e-
commerce world is very different because of this
authentication. When you are in the store, I have the ability
to look a person in the eye, I have the ability to extract a
PIN from them that authenticates that they know that they are a
legitimate cardholder, but in the e-commerce space those two
ingredients are not necessarily available. I don't get to see
the person, and they don't actually have a credential that
authenticates that they are the person that is authorized to
use that card.
So making sure that these kind of second-factor
authentication technologies go along for the ride as we start
to deliver SNAP benefits into the e-commerce space is going to
be very important to make sure that fraud does not occur.
The Chairman. Thank you.
Secretary Glisson, you have been very frank about some of
the challenges your department faced in launching your
eligibility system, and the lessons you learned in the process.
It seems that there was a complex set of issues from
contracting, oversight, IT, to policy. With 20/20 hindsight,
what would you advise other states embarking on these projects
to prioritize at the outset to mitigate some of these
complications, and what can the Federal Government do to
support states in these efforts?
Ms. Glisson. Thank you. Thank you, Chairman Thompson. I
appreciate your question.
I think some of the things that I could say to the states,
and I will just note that we did try to make a list in our
written testimony that we provided, in our white paper, so I
would encourage folks to go and look at the white paper. I
think that there are things that I would remind them about that
we learned and they were tough lessons, one of those is around
the training aspect. We were told by the vendor that there had
been a lot of training, that had been done appropriately and so
forth, but training is essential. And we found out that
training needs to be done very close to the actual time of the
rollout. When you are doing a whole state-wide rollout, that
can be very difficult because it can encompass a lot of
training over a larger period of time. Maybe phasing in, if
that is possible, that was not something we could do, we had to
do a complete state rollout, but having training and having
training that is close to the time of the rollout can be very
helpful.
One of the things that was most beneficial is that we also
put together a team of individuals that came to Frankfort, and
they worked on some of the harder cases that we have to deal
with. These are cases that are more complex. The SNAP cases
generally are not quite as complex as some of the other cases
that are in an integrated system. But we brought a dedicated
group of workers that all they did was sit and work on cases.
This was like maybe upwards to 100 workers that came to
Frankfort and spent all day just working on particularly hard
cases. That was also very beneficial because once you were in
our local offices, we have 120 counties in Kentucky, we have a
local office where you can get your SNAP benefits in every one
of those 120 counties, those folks were being overwhelmed at
the time. Having a group of individuals that came and that was
all they did; they did not have to deal with the folks coming
in the door at a local office, that they could just work on the
issues around trying to work more difficult cases, that was
also very helpful.
I also think it is very important that there needs to be
really good communication between the vendor and the state. You
need to have the right kind of a team that can talk the
language and understand the language, make sure that you
understand what is going on. There needs to be adequate
testing. We were told that there was adequate testing, but that
testing had not been done on some of these more complex cases
that are part of an integrated system. You have to remember
that when you are having an integrated system, you have SNAP
cases, but now you have Medicaid and other benefits, and they
can be very complex, particularly around the Medicaid area and
long-term care cases. You may feel that the testing has been
adequate, but make sure that you've tested on all aspects of
the case, including those more difficult Medicaid, or maybe
what we call AMA cases for long-term care.
Also, make sure you have a backup plan. We had understood
that there was a backup plan, but that it is also helpful to
see if there is something that is kind of off-the-shelf, these
plans are all customized, very expensive, lots of money has
been spent on them just for that state. It would be helpful if
you truly have a backup plan, is there something that could be
purchased off-the-shelf, something that is out there that you
could look at, take, and it could fill in the gap until you can
get this thing back on its feet.
So make sure you have a backup plan. And be careful that
you have the right folks in the committees making decisions,
particularly around policy decisions. These policy decisions
are some of the earliest decisions that are made around these
integrated systems. A cabinet or those that are using these
integrated systems, you must make certain that you have the
right folks at the table, understanding when they make a policy
decision, like in Kentucky, that they are going to ping a
Federal database, and that these Federal databases are not
really adequate. They need to understand that. The vendor needs
to have an understanding of that, and there needs to be that
good communication, and you need to be very careful as you are
making these policy decisions about how you are going to be
verifying information.
Those are just some of the areas that I would suggest that,
if I had 20/20 vision, some of the things that could be helpful
for other states.
The Chairman. Very good. Thank you very much.
I now recognize the Ranking Member for 5 minutes.
Mr. McGovern. Well, thank you very much. And thank you all
for your testimony.
One of the things that bothers me is when I hear reports,
as I mentioned in my opening statement, of individuals who are
on SNAP who go to a grocery store or market and then cannot use
their benefit. Does anyone have any idea how many people we are
talking about who that happens to on a monthly or yearly basis?
These outages are not a rare occurrence.
Mr. Mathison. I guess the way I would try to benchmark that
for you is, let me give you an example of one that happened, it
was in the first week of May. There was an outage for the State
of Louisiana. It happened for 3 minutes over the lunch hour,
and there were 2,800 cardholders that were unable to get their
SNAP benefits as they went shopping over their lunch break.
From a frequency perspective, it really does vary. It can be
everywhere from sporadic, one or two a month, because you have
over 70 different jurisdictions, right?
Mr. McGovern. Right.
Mr. Mathison. Each one of them has their own ups and downs.
Mr. McGovern. Right.
Mr. Mathison. But on any given day, what I would say is, as
we process for over the 70 jurisdictions, there is very rarely
a day goes by that at least one of them doesn't have some kind
of an outage.
Mr. McGovern. Well, that is a problem. And so what happened
to those shoppers in Louisiana who went with their SNAP cards
and were told that they couldn't purchase their food?
Mr. Mathison. Yes, typically what happens is, if the outage
is short in a matter of minutes, they will usually just wait
and retry the transaction, because you have to think about the
lane experience, they are standing there in the checkout lane,
they have a shopping cart full of groceries and they are trying
to check-out. Usually they are just trying to stand there and
wait until the system comes back up, or sometimes they will go
over to the customer service desk and they will try to complete
their transaction over there when the system comes back online.
Mr. McGovern. And what happens if it is not a quick fix?
Mr. Mathison. Yes. Usually, what they do is they will
abandon the shopping cart and just leave.
Mr. McGovern. Yes, that is obviously unacceptable.
Typically we have people who are on SNAP who are working, who
have families, who are trying to juggle a million different
things.
Mr. Mathison, you mentioned the lack of redundancies in
SNAP systems in your testimony, is this the cause of outages
that prevent SNAP clients from being able to use their cards,
and how do we fix this?
Mr. Mathison. Yes, one of the things we do, I mentioned in
my testimony the idea that there are, in the bank card world,
there are actually legislative entities that manage the
integrity of the financial system. They have oversight over
Visa, MasterCard, they have oversight over the card issuers in
that world, and they actually have oversight of First Data.
While we are not a financial institution, per se, since we
process approximately ten percent of the GDP through our
systems on any given year, they do come in and they monitor us.
There is oversight around what are our risk management
policies, what are our oversight and controls over
redundancies, what are our business continuity programs. And so
we are required to have all those policies and procedures in
place, and be able to document what we are going to do in such
an outage.
What I would suggest is, with the different states all
contracting separately, each with a different contractor, find
out how their program runs, and if we have a disparity of how
that works across the different jurisdictions.
Mr. McGovern. Right.
Mr. Mathison. Each one probably has their own policy in
place, but they are necessarily not consistent.
Mr. McGovern. But to fix this, I assume it will cost money.
Mr. Mathison. Yes. At the end of the day it is going to
come down to, to the extent that there is not a secondary
system that can come online when the first one fails, for
example, there will probably be an investment needed to be
made.
Mr. McGovern. Right. The investment by the state and by the
Federal Government, who would pay for this?
Mr. Mathison. Typically, since the states have outsourced,
and perhaps Mr. Boswell could weigh-in on this as well, but
since the states tend to outsource that function to the
contractors, as part of that initial arrangement is where the
actual building and spending would happen.
Mr. McGovern. Right. But I would assume some of it would be
Federal money, right? Ms. Aaronson, I was pleased to learn
about the innovations in New York City and we certainly applaud
that, but you mentioned that you received a grant from USDA to
make some of those improvements. Would you have been as
successful in implementing these innovations without Federal
investment, and what can this Committee do to help New York
City and cities and states across the country to continue to
make technological progress to improve delivery and access to
services?
Ms. Aaronson. Thanks, Ranking Member McGovern. I think that
these innovations would not have been possible without--sorry.
Thanks, Ranking Member McGovern, for that question. I don't
think that these innovations would have been possible without
investment from the USDA, and without a very large budget to
invest.
Mr. McGovern. Right.
Ms. Aaronson. And it is important for us in the city, our
scale is quite large, and in order to manage a caseload the
size of ours we need the technical infrastructure in place to
do so, otherwise you would have ballooning headcount just to
handle the caseload. Technology helps us to increase
efficiencies and to make our customer experience better.
Mr. McGovern. Okay. And I guess my final point would just
simply be: we are all for moving ahead with new advancements
and technology. We want the experience for those who are the
clients to be better, and we certainly do not want to have
people show up at grocery stores and be told we can't take your
card. That is just unacceptable. But to do that and to do the
kinds of things that you guys did in New York City is going to
require continued investment. In the long-run it will certainly
benefit everybody. We are having this hearing in the context of
a budget proposal that would significantly slash budgets that
are designed to support these kind of innovations.
I thank you all for your testimony.
The Chairman. The gentleman yields back.
I now recognize the gentleman from Kansas, Mr. Marshall,
for 5 minutes.
Mr. Marshall. Yes, thank you, Mr. Chairman.
I guess I will start with Ms. Aaronson. How long have you
been working in New York City?
Ms. Aaronson. This is my 19th year with New York City.
Mr. Marshall. Compared to 19 years ago, what is our
efficiency like? In other words, if we have a Federal budget of
$80 billion in a year, and you spent $3 billion, how do you
measure efficiency over the past 19 years?
Ms. Aaronson. Well, I haven't always been in this
particular position, but I can say that the efficiencies that
we have gained through the investments that we have made in the
modernization that we have undergone recently can be seen in
the fact that we have shifted many of our workers from front
offices to back offices, where they are doing much more
eligibility-related tasks, rather than working on scanning
documents and data entering, they are actually determining
eligibility. We have decreased the number of in-person
transactions in our centers by 31 percent. And we can measure
churn by the fact that at the point of recertification, for
instance, we have decreased the number of failed-to-keep
interviews by ten percentage points since we implemented----
Mr. Marshall. Well, excuse me, do you measure just the cost
of administering this from year to year, since you introduced
all this technology?
Ms. Aaronson. It is really hard to specify specific costs.
We have just recently implemented these modernizations, and we
haven't yet determined what the ideal staffing model is. Moving
a system this large over time is difficult to do.
Mr. Marshall. You don't measure how much it costs from year
to year?
Ms. Aaronson. We certainly do measure that, and I can get
you more specific data, but I don't have----
[The information referred to is located on p. 1237.]
Mr. Marshall. Has there been improvement in it, do you
think?
Ms. Aaronson. Well, I have seen improvements in the
outcomes for our clients, and I have seen improvements in terms
of the number of transactions that we have needed to complete
in-center versus----
Mr. Marshall. But not the cost?
Secretary, how long have you been in your position?
Ms. Glisson. I have been in my position since December of
2015.
Mr. Marshall. December 2015. Do you have any idea if your
efficiencies improved anything? I mean just the cost to
administer the program, has it improved in the past 5 years and
10 years with all this technology we are introducing?
Ms. Glisson. I don't have the numbers in front of me about
whether we could quantify that for you, anecdotally, I would
say that there are some improvements that we have seen. We have
been able to cut down on our overtime. When I came into the
Cabinet, out in the counties most of those counties were on
overtime, so we have been able to slash the overtime that they
are using. We are seeing some reduction in staff. We are seeing
some efficiencies.
I will tell you that there are, and the Chairman asked me
this question, and I don't think I really quite got a chance to
answer that and follow up on your second part of that question,
which is how could you help us so we can get some of those
efficiencies. What I would suggest is that there is a way to
actually get efficiencies, because if we were able to work with
the Federal Government and get certified modules, remember,
this is an integrated eligibility and enrollment system. Many
of these states are not prepared to be able to understand all
of the different vendors that come to their doors, and you have
all of these vendors, and different vendors are working with
every state.
Mr. Marshall. Yes.
Ms. Glisson. If we were able to actually work more closely
with the Federal Government to identify certified modules,
whether it is through an app perhaps, or working with the
Federal Government to decide this has been successful in
certain states and we would suggest that you contract with
these particular vendors. That could be very helpful.
Mr. Marshall. Yes, my goal is that we would get the most
number of dollars that we spend, as many of them to the
customer as possible.
Ms. Glisson. Exactly.
Mr. Marshall. And I understand that.
State to state there is probably some variation, and I am
not sure if anyone, Mr. Boswell, Mr. Mathison, has much
experience from state to state. What is the cost to administer
this program? Does it vary much from state to state?
Mr. Boswell. The cost for administering the EBT side, I
can't really speak for the entire cost of administering the
integrated eligibility system, et cetera. From an EBT
perspective it is relative, and it is similar state to state.
It is primarily driven by the participant size of the entire
caseload by state, generally speaking, but for an EBT cost for
administration it is relatively the same.
Ms. Glisson. Okay. I would like to add that that has been a
challenge for our state. There was this enhanced funding to get
states to go ahead and implement these integrated systems. When
it comes to the management and the operation of the system,
this is to build and design the system, that Federal funding
then goes away, there is a substantial reduction in that
Federal funding. For states, that is another thing that states
need to be aware of because states are not prepared to take on
that additional management and operation funding that is going
to be needed to manage and to operate these very expensive,
high-level systems.
Another reason that I would suggest that the states and the
Federal Government work very closely together on these very
expensive systems to get more economies of scale.
Mr. Marshall. I yield back.
The Chairman. The gentleman yields back.
I now recognize the gentleman from Pennsylvania, Mr. Evans,
for 5 minutes of questioning.
Mr. Evans. Thank you, Mr. Chairman.
Research shows that SNAP plays a critical role in improving
dietary intake, particularly against obesity, removing food
insecurity and improving other nutritional-related health
outcomes. Therefore, as we head into consideration for the farm
bill, expiring next year, what would you set forth as the top
issues for our consideration for SNAP modernization as we move
towards the farm bill? And I will start with Ms. Aaronson from
New York, and then go down.
Ms. Aaronson. Thank you, Congressman. One of the most
important things to consider in the farm bill is allowing SNAP
to have access to the same Federal data hub sources that
Medicaid does. Increased third party data sources for
eligibility determination both results in efficiencies for the
agency, as well as for faster processing time for clients to
get their benefits.
Further investment in other innovations such as mobility
and online tools improve access to the program for folks who
are working and unable to get to centers during work hours.
I also think that there is a lot of rigidity in the
regulations that govern the program, and if we had more
flexibility to innovate it would be a more iterative and faster
approach that would benefit both efficiencies and clients.
Mr. Evans. Yes.
Ms. Glisson. Yes, sir. I also think that it would be
helpful if there was better alignment of policies. It goes to
some of my comments earlier. If we could have, since you have
many, particularly with integrated systems, you have both CMS
at this time and FNS that are involved. I must compliment the
FNS people, they worked very nicely with us and tried to help.
But, it would be helpful if we could have an alignment
particularly for programs that are now moving toward work
requirements. Medicaid may be looking toward a work
requirement, SNAP has a work requirement. We need alignment
around definitions, we need alignment around terms, whenever
you have two different agencies, two different entities working
together, it would allow us to be able to address these issues
more seamlessly.
If there are exceptions or if there are requirements that
could be required across the board for all of these benefit
programs, that then would allow us to be able to streamline
them for an integrated system. For instance, I will just use
the recertification issue as an example. For Medicaid, you go
back for recertification once a year. It is a passive
recertification every 6 months. But for SNAP you actually have
a stronger recertification process.
If we could have an alignment around the rules that are
impacting all of these benefits that are now going to be
offered on an integrated system, it would help tremendously.
And actually setting up a more formal collaboration between the
two agencies, both with FNS at the U.S. Department of
Agriculture, and CMS or HHS, because states are at a loss. We
work with Agriculture, we work with CMS, but we can't help
bring alignment. If there could actually be a group that
whenever you are looking at these integrated systems, and you
are going to have benefits that are going to be offered on one
system, a formal group that we could work with, that we could
go to, and they can then run those traps of working with both
of those systems and working out the issues that may affect
both agencies. States are at a loss to be able to do that on
their own.
Mr. Evans. Yes.
Mr. Mathison. Thanks for the question. I guess as we think
about the future and what is going to be happening in the next
farm bill, what comes to mind, I would just echo what I have
touched on in my prior comments, which is focusing on the
alignment of the performance and the system availability, is
going to be key. Making sure that cardholders and benefit
holders that need to redeem their SNAP benefits can redeem
them, seems paramount.
But also as you think about cybersecurity, and as the
marketplace is changing, how do we protect and maintain the
integrity of the program, how do we make sure that as these
benefit holders try to use their benefits in these new places
that they aren't disadvantaged and they can redeem their
benefits when they need them, where they need them, and how
they need them, and maintaining the security of that to prevent
fraud, is paramount.
Mr. Boswell. Thank you for the question. Re-emphasizing a
point from my oral statement, reviewing the restriction on non-
merit employees, the allowing of non-merit employees to
participate and assist the states in the end-to-end eligibility
process for things they are restricted from performing today is
a key item that should be considered in review of the next farm
bill.
I will give an example of some of those things where the
vendor community could step in and assist the state with today,
that they are not allowed to, but should be: basic telephone
inquiries, document scanning and indexing, application
submissions and registrations, et cetera. To give kind of a
simple example, there are a number of integrated eligibility
systems across the United States for Medicaid and SNAP. In many
of those instances, we have the opportunity, Conduent does, and
we are grateful for that, to be able to provide the customer
service or customer care component for the integrated
eligibility system. When a call is received by Conduent for
purposes of Medicaid, we are able to self-service that call,
help that individual, one call, one resolution in many cases.
But when that same phone call from that same recipient comes in
that is a Medicaid recipient, but also is a SNAP recipient,
seeking assistance, we are unable to, as a non-merit employee,
assist that individual to the fullest extent. We are often
having to transfer that particular call to a merit employee or
a state employee, or a state help desk, where they are, in many
instances, attempting to manage a large call volume themselves,
attempting to get to clients quickly. In those instances, the
vendor community could step in, assist those individuals with a
one-call resolution for starters, but also take off some of the
burden of states to have to maintain those infrastructures,
those capabilities to service large call centers, as just an
example.
Mr. Evans. Thank you, Mr. Chairman.
Ms. Glisson. And I strongly agree with Mr. Boswell's
comments. That was part of my testimony, part of our white
paper. If you can make that change, that would be very helpful
if we were able to use our contract entities that we are
particularly using with Medicaid, to be able to address the FNS
side of the equation. We would be very appreciative.
The Chairman. Very good. Thank you.
I now recognize the gentleman from New York, Mr. Faso, for
5 minutes of questioning.
Mr. Faso. Thank you, Mr. Chairman.
I apologize for being late. We were at a Transportation and
Infrastructure Committee hearing. And, Mr. Boswell, I noted
though in your testimony you talked about use of advanced fraud
analytics, and you say these are not commonly utilized in most
states. What states are using them, and are there any statutory
barriers to use of such fraud analytics with the SNAP program?
Mr. Boswell. Thank you, Congressman, for the question. From
Conduent's perspective and the states that we service, and we
service 25 states today as the EBT processor, we deliver a data
warehouse and business intelligence tool to approximately 12 of
those. Of the 12, two have made an investment into, or either
through their procurement process, required an advanced fraud
business intelligence tool, which Conduent provides.
To my knowledge, there are no restrictions or prohibitions
that would disallow a state from participating in the use of
that particular tool. But we find it extremely valuable, our
clients have found it to be extremely valuable, and the use of,
not necessarily suggesting that fraud is rampant or that there
is a program integrity issue, but assisting them in
investigation purposes, and assisting in providing weighted,
scored factors against certain transactions, and how
individuals are using and performing their card transactions to
further their investigative purposes.
Mr. Faso. Among the issues that you mentioned in your
testimony are odd hours of transactions and large amounts,
large percentage of a total availability of the benefit that is
on the card, address changes across large ZIP Code
differentials, et cetera. You mentioned there are two states
that are using the advanced analytics, which states are those?
Mr. Boswell. From Conduent's perspective, we have two that
use the advanced analytics, and that is the State of Ohio and
the Commonwealth of Massachusetts.
Mr. Faso. Okay.
Mr. Boswell. All of our participating states with our base
business intelligence tool can utilize some of the components
that you just spoke of.
Mr. Faso. Okay. And, Secretary Glisson and Ms. Aaronson, do
either of your agencies use such advanced analytics?
Ms. Glisson. No, we don't have a formal use of data
analytics. I can tell you that we do believe that because of
the integrated system it does allow us to have at least some
fraud control. In the old system, the way it was set up is that
you would go into a county, a caseworker would work one-on-one,
face-to-face, generally, with a SNAP recipient. A lot of the
information that was taken in was done based upon just the
information that they had. There was a lot of room for
misunderstanding. Under this system, all fields have to be
filled in by the caseworker, they will be dinging certain
databases. There is, we believe, less subjectivity that the
caseworker will have in this instance, and so hopefully, it
will be able to detect some fraud and that is our hope.
Mr. Faso. Okay. Ms. Aaronson, in terms of New York City,
and I guess by corollary, New York State?
Ms. Aaronson. Well, Congressman, I can speak to New York
City, not as well to New York State, but HRA does use data
analytics to identify eligibility and trafficking fraud. We
have a dedicated large unit of fraud investigators who
regularly receive tips from the USDA, from OTDA, from the
public, and we rigorously investigate all of those allegations.
Mr. Faso. Could you be so kind as also to provide for the
record to the Committee information as to the City of New York
and your ability to use these analytic systems to detect and
weed-out fraud in the system? I would appreciate if you could
send that.
Ms. Aaronson. Sure.
[The information referred to is located on p. 1237.]
Mr. Faso. And last, do our data systems regularly make it
available for merchants to restrict certain purchases? I know
you are not allowed to buy alcohol or cigarettes, for instance,
or paper products with EBT SNAP benefits. How easily would New
York City, for instance, from your vantage point, you sought a
few years ago to have a demonstration to restrict the use of
soda purchases with food stamps, and the Obama Administration
rejected that. How easily would you be able to implement such a
thing with your merchants in New York City if we gave you the
authority to do that?
Ms. Aaronson. Well, again, I can speak from New York City's
perspective. Of course, our state holds the contract for our
EBT provider, and so it is likely that they would need to
answer how easy it would be for them to implement that. I am
happy to follow up with them as well.
Mr. Faso. Very good. Thank you, Mr. Chairman.
The Chairman. The gentleman yields back.
I am pleased to recognize the gentlelady from North
Carolina, Ms. Adams, for 5 minutes.
Ms. Adams. Thank you, Mr. Chairman and Ranking Member
McGovern. And thank you to the witnesses for your testimony
today.
Food insecurity and poverty are persistent challenges for
many communities in North Carolina's 12th District that I
represent. SNAP is a vital part of the solution to many of
those issues. Last year, more than 142,000 people received SNAP
benefits in my district. States across the board, including
North Carolina, are implementing or considering new technology
for their SNAP programs, and these modernizations have huge
impacts on districts like the one I represent.
Ms. Glisson and Ms. Aaronson, the President's budget would
drastically limit funding for SNAP. I am very concerned about
that. It would also result in a decrease in the funding
available for technological improvements for SNAP. If these
budget cuts are implemented, what do you think the outcomes
will be for your programs and for other states like North
Carolina that have modernized their eligibility systems, or are
interested in doing so?
Ms. Glisson. As I mentioned, we have done an integrated
system. There will be maintenance and operation expenses tied
to the system. We are continuing to look at the system to see
if there are other options so that we can even use sort of off-
the-shelf options that could be used to be able to function in
a way to keep the system functional. Obviously, we will be
working within the constraints of whatever those parameters
are, we will work within those parameters. We are very
fortunate that our system is up and running. It is now
functioning much better, and it gives us the option, now we can
take a breather, and we can look at ways that we can make this
a much more cost-effective system, going forward, whether it is
looking at off-the-shelf options or something that is maybe not
quite as customizable.
Ms. Adams. Ms. Aaronson?
Ms. Aaronson. From New York City's perspective, I would say
that the cuts as proposed would be devastating to our ability
to continue to modernize and deliver benefits like SNAP to the
1.7 million New Yorkers that receive them.
Ms. Adams. Thank you very much for your answers.
Mr. Mathison, the protection of security and privacy for
recipients of SNAP is crucially important. You touched on these
subjects in your testimony, but would you address how are
current SNAP technology issues being addressed and ensuring
that recipients are protected? How do you think that is going
to happen?
Mr. Mathison. Yes, there are a couple of things there. As
you think about the security that revolves around the
transaction today, as I talked about in my testimony, there are
multiple kinds of fraud, there are frauds where perhaps people
are giving their cards to people inappropriately, there is
other kind of fraud that happens in place, but the type of
fraud that I am speaking about specifically that we can see and
know to be prevented and protected fairly well is this
counterfeit where people are taking cards and using them
inappropriately with copies. And we believe that the fact that
that card has a PIN is doing an outstanding job of doing that,
and we would very strongly urge that anybody that wants to
recommend or talk about eliminating, as that being not a very
good idea.
There are other technologies we talked about the things
that the processors and the states can do about monitoring live
transactions as they flow, whether it is velocity checks or
anomalies in the transaction, those kinds of things, and as
that technology continues to emerge, there will be some
benefits available there as well.
Ms. Adams. Thank you very much.
Ms. Aaronson, can you outline some of the benefits that
come from SNAP outreach, and why it should be recognized as an
important piece of reaching people in need, especially our
seniors?
Ms. Aaronson. New York City has been a leader in terms of
participating in SNAP outreach. We actively have built a
campaign around specifically reaching out to seniors and
limited English-speakers to try to identify those folks who are
eligible but not enrolled in SNAP today. We also are really
focused on making sure that folks who are receiving SNAP stay
on SNAP when they continue to be eligible, and not miss
benefits. A lot of our outreach is around making that very
clear to people who are up for recertification.
One of the most innovative things that we do for SNAP
outreach is to send our employees out to many CBOs to actually
enroll people in the SNAP program at those locations. In some
cases, people feel more comfortable in their community
locations than coming into a center, and we have been a leader
in developing those types of programs.
Ms. Adams. Thank you very much.
I am out of time. Mr. Chairman, I yield back.
The Chairman. The gentlelady yields back.
I now recognize the gentleman from Florida, Mr. Yoho, for 5
minutes.
Mr. Yoho. Thank you, Mr. Chairman.
I appreciate it. And I appreciate you guys being here, the
information. And as Mr. McGovern talked about in the beginning,
the cuts that the President has proposed are very drastic. And
as our nation, we are at $20 trillion in debt, and it is
growing.
Austerity measures are coming, and we want to make sure
that the programs that get cut that they are cut efficiently,
and we want to make sure that the programs are there for the
people that truly need the benefits from these nutritional
programs. That is our ultimate goal here. But, this is a sign
of some things coming, unfortunately. We saw what havoc the
sequestered cuts had on our nation and on our military
readiness. And so as we go forward, we want to get the most
efficient use of these programs into the hands of the people
that need them.
And I want to do a backdrop here on a question I want to
ask. A relatively new offering for SNAP benefit recipients is
the mobile apps to view program balances, transactions, and
enable cardholders alert. Mr. Boswell's company has a mobile
app available for both the Android and the iPhones, and it is
free to download in the respective app stores. Providing a
mobile app also helps to empower recipients to monitor their
account for potential fraudulent use by others that may have
access to their SNAP benefit cards. Additional the mobile app
can be a tool to convey important program information quickly
to recipients, or could be used to influence spending behavior
by offering incentives for healthy food products. That is your
program, right?
Mr. Boswell. Yes, sir.
Mr. Yoho. The question is, and this is for the group, this
question is for the group, what role do you think the mobile-
based technology will play in both reducing administrative
costs and improving provisions for the SNAP and preventing
fraudulent use? Do you want to take that first, Mr. Boswell?
Mr. Boswell. Sure. Excuse me. Wrong one. Absolutely. We
view the role of mobile and the SNAP, and especially the EBT
marketplace, to be a significant one, as the testimony
suggests. From a program delivery perspective, obviously, the
first step which we are trying to accomplish is balance
information, transactional data, helping the individual, the
consumer, learn to be responsible for that account. From a
delivery perspective ongoing, we see significant opportunity to
drive the message of healthy eating, nutritional purchases
through items such as offering coupons or incentives for making
healthy purchases in retail marketplaces, et cetera.
From a fraud perspective, if you look long-term, much of
the suspected fraud, if you will, in the EBT space is what we
would consider the hand-to-hand fraud; selling your card,
handing your card to someone else in return for some kind of
value. If we were able to, from the long-view perspective, move
from a card-based technology to more of a mobile payments
perspective where you are utilizing mobile wallets, things such
as Apple Pay, Google Pay, and instead of having to hand a card
and use your PIN, you have to be present with your mobile
device and a biometric fingerprint, if you will, to authorize
that transaction, you are in many ways helping to prevent that
hand-to-hand activity that could take place. That is a unique
view and opportunity from a technology perspective that could
assist mobile and fraud.
Mr. Yoho. One of the other questions I have, are there any
apps that allow the SNAP recipient to see what they purchased
on a nutritional content, and can they have running tabulation
of that, and is there a way a caseworker can look at that and
say, ``Well, you are buying these things and not these things,
and we need to move into this category?'' Because we see the
childhood obesity and we see them in the food deserts, and we
need to educate and help us work through that process.
Mr. Boswell. That is a great question. Currently, a
transaction that is processed for SNAP, the information
provided back to the processor, such as Conduent, and back to
the states is not at the product level. The product information
is not passed in that transaction. There are some advances, if
you will, that aren't necessarily providing product
information, but I will cite the Commonwealth of Massachusetts
in a healthy-eating initiative that they have undertaken
whereby they have engaged the retailer community and the
processors, just as Mr. Mathison at First Data, to identify the
amount of money that is spent, or amount of SNAP transaction
that is spent on a healthy food option. The grocer identifies
the amount that was spent on the healthy food----
Mr. Yoho. But every product has a barcode on there, so I
would think there should be a way to tabulate that eventually
with an app.
Mr. Boswell. There certainly is.
Mr. Yoho. Mr. Mathison.
Mr. Mathison. If you don't mind, what I would say is to
echo what Mr. Boswell is saying, there are other programs that
work similar to what you are suggesting. For example, the eWIC
program absolutely works at what we call the SKU level or the
barcode level.
Mr. Yoho. Right.
Mr. Mathison. The SNAP system doesn't currently work that
way, but there are models out there if they were enabled inside
the SNAP system could work similarly.
Mr. Yoho. All right, thank you.
Mr. Chairman, thank you.
Mr. McGovern. Just before you yield back.
Mr. Yoho. Yes.
Mr. McGovern. Yes, all this is very, very interesting too,
but not everybody has access to the technology that we are
talking about here today. While we are talking about moving
forward, everybody having a smart phone and all this, not
everybody does. The SNAP population is a very diverse
population. Again, it goes back to what I said before about not
only moving forward with advancements in technology, but making
sure that we don't have situations where the technology isn't
working, where people are denied their food benefit. IT should
not increase hunger, it should help alleviate it. We have to be
very, very careful how we move forward here with
generalizations.
Mr. Yoho. Mr. Chairman, can I ask him something?
The Chairman. Your time has expired, but go ahead.
Mr. Yoho. I would be happy to talk to you, and maybe that
is something we should look at incorporating to make sure
people have that, because the whole goal is to get people to
have the benefits there, and also to make sure they are eating
properly. And that may be something that could be incorporated.
Mr. McGovern. Okay, thank you.
The Chairman. The gentleman's time has expired.
I now recognize the other gentleman from Florida, Mr.
Lawson, for 5 minutes.
Mr. Lawson. Thank you, Mr. Chairman. Welcome to our
Committee.
Madam Secretary, the President's budget requires states to
pay 25 percent of the SNAP benefit by 2023. The cost shift will
be $9 billion to the State of Florida over the next decade. I
sent a letter, along with some of my colleagues, to the
Governor and asked him how would he handle the cost shift. As a
state legislator for almost 3 decades myself, I saw what the
state must do to make these programs work. Could you please
speak to the burden that it would place on the states to update
and maintain and implement the EBT technology if this kind of
budget proposal was implemented?
Ms. Glisson. Well, thank you for the question. And I will
go back to a prior answer that I gave, which is that we do have
our system up and going. I believe that we are now at a
maintenance and operation level, and that we now have, as you
said, some time to be able to look at options, particularly
options that may not be as customized as this was, but options
to be able to actually look for cost-effective ways to be able
to implement that kind of technology in Kentucky.
We are also looking for ways to align our benefits programs
even more effectively, so we think that there will be cost
savings from that, whether it is in Medicaid or otherwise. We
are looking for any number of ways to align benefits, align
workers to be able to implement these programs and implement
benefits, and we believe that we will be able to then assume
that responsibility.
Mr. Lawson. Okay. And a little bit of a follow-up question.
I have heard from many grocery store and farmers' markets and
small business owners who have noticed the application process
and equipment set up with the EBTs. It takes months and
sometimes it can be very expensive. In your experience, how can
the improvement increase the access of SNAP, because it takes
so long sometimes in order for the application process to go
through?
Ms. Glisson. Is this directed to me, sir?
Mr. Lawson. Yes.
Ms. Glisson. What we have found with our integrated system
is that it is very beneficial for the recipients because it
allows them to have a one-stop shop, so they can come into our
local offices in each county and they can then provide their
data that they need. It is a system that allows us to serve our
clients much more efficiently, and we can then work with them
more closely. It is essentially a one-stop shop that allows us
to deliver our services more efficiently.
Mr. Lawson. Okay, thank you.
And this question goes to Mr. Steve Mathison. In north
Florida, we have four Fresh Access Bucks markets where SNAP
families can earn extra money to buy fresh and healthy
products. Since these markets evolved, SNAP recipients have
been incentivized to purchase healthy and local products to the
tune of $20,462 in my district. However, in Fiscal Year 2015,
farmers' markets and direct farm only accounts were less than
one percent of all the SNAP purchases. Can you explain how
third-party processing fees prevent farmers' markets and
smaller grocery stores from offering SNAP and SNAP incentive
programs?
Mr. Mathison. Yes. I guess the way to kind of think about
that is as smaller and mid-sized businesses, as you are
referring to, try to engage in this space, we touched briefly
on the burden and the process to get enrolled and get up and
running. The idea that now it is kind of a pay-to-play scenario
where I have fees in order to become a SNAP recipient and
provide these benefits that I want to provide, can be a
barrier. There are plenty of other fees that they have, to tack
on some other ones seems to be a way to slow the process down
rather than speed it up, especially when they are trying to
make investments in their point of sale and register systems.
It is a new kind of program that they need to administer. There
are certainly a bunch of rules and administrative functions
that they need to implement. Whether they are the largest
retailer in the world or they are a small bodega, the rules are
basically the same. As the smaller businesses try to do that,
it can become a burden.
Mr. Lawson. Okay. And, Mr. Chairman, I yield back. My time
ran out.
The Chairman. I thank the gentleman. He yields back.
I now recognize the gentlelady from New Mexico, Ms. Lujan
Grisham, for 5 minutes.
Ms. Lujan Grisham. Thank you, Mr. Chairman. And thank you
to the panel.
Secretary Glisson, my series of questions are for you. And
I want to thank you for your service. I was a former Cabinet
Secretary for three different Governors in New Mexico, and they
are tough jobs.
Ms. Glisson. It is a tough job.
Ms. Lujan Grisham. It is. And it is a great job. And the
reality is that what we are talking about today, information
technology, and how to utilize it to streamline our application
processes, states have been looking at ways to do universal
applications given that the majority of these programs are all
Federal-related in some way. Each of them, even in the same
department, will have very separate unique applications.
Although SNAP is sort of that, if you qualify for SNAP you are
going to qualify for everything else. That has been the case
for a long time, and yet most states in the country still do
not have either universal or integrated application processes.
And we have changed technology systems since technology was
around for states in the 1990s, any number of times to try to
get at that. I applaud your efforts, and agree that that is
what we need to do, but I have some concerns. And as you are, I
am sure, aware that in your state, in Kentucky, 25,000
households wrongly received letters telling them they were no
longer eligible for SNAP, when you rolled out benefind. Rhode
Island had a similar problem when households were wrongly
denied of food assistance, and so much so that the ACLU filed a
law suit. And you may or may not know that as I highlighted
your state and Rhode Island, let me tell you about how New
Mexico is doing, and it is not something that is very positive.
In fact, the former Under Secretary, Kevin Concannon, said
that, ``New Mexico was the most fouled-up SNAP program in the
country.'' Now, I would really like in the context of this
hearing to disagree, but I cannot. Actually, he is very right
about that. And given that we rolled out a new technology
system called ASPEN that was really intended to help us process
faster, but also in an effective way. But, we have a backlog,
and in order to address the backlog the human services
department was adding assets so that you didn't have to meet
the enhanced timeline for folks who needed emergency
assistance. Now we have a consent decree and a court order, a
special master, it is going to be very expensive for New Mexico
to get out of that mess. And they need to. We want folks who
are clearly eligible not only for SNAP but for everything else,
to be eligible and get the benefits that they need. I talked
about, universal applications, that if the SNAP application
doesn't work, then I have trouble with Medicaid and general
assistance and LIHEAP and everything else.
What I am worried about is that while we are moving
forward, I am not sure that USDA or FNS really have the
resources to do both technical assistance and oversight. Are
you concerned that that may also be an issue as states should
be investing in enhanced information technology to streamline
and make more effective and make more reasonable our
application processes in general?
Ms. Glisson. Well, I want to make sure I understand your
question. If your question is, do the states need to work and
align more closely with the Federal Government before we roll
out these systems, I would agree. Part of the issue has been
that as states have been looking at if there was enhanced
funding encouraging states to do this, and there was not a lot
of collaboration, working together to get economies of scale,
the states and even the Federal Government were probably not in
a position to really think about how they were going to
contractually deal with the contractors that were out there,
and how that we could work together to get economies of scale,
making sure that those contractual provisions were going to be
protected.
Ms. Lujan Grisham. What about the accountability aspect?
Each of these rollouts, I have given you three, there are many
others as you are aware, and I would love to tell you when we
were rolling out new information technology, that it always
worked. It didn't, and we would deal with the glitches. But I
am worried about the accountability factor. And mostly in
Federal Government, Mr. Chairman, and, Madam Secretary, as you
know, the architecture platforms. The contractors, they don't
really have the expertise to tell you what things to look for
and when it goes wrong, or then to fix it, to help you both
with resources and, as I said, guidance.
Ms. Glisson. I would agree that there are times that they
learn from the states, and they are there on the job learning
from the states. I agree with the accountability piece. I put
that actually in our white paper. What we have done at our
Cabinet is that, maybe this is the health lawyer in me, we have
gone in, we have looked at our contracts, we have beefed up our
contracts. We now have very strict terms. What I would like to
be able to do is even to work closely with the Federal
Government so that we work together to come up with a template
contract as we are, because it has both Federal funds and state
funds into these integrated systems. But, we should be aligned
in what we expect to be able to get from the vendors. I would
like to work together to have template contracts. I think they
should be strengthened. These are very high level, complicated
contracts. For instance, I know that I was told that with our
Release 5 on our benefind, there were about five million lines
of code alone in that one release. States need to understand
how important that is whenever we are contracting for these
high-level services I would like to be able to work together.
Ms. Lujan Grisham. Secretary, I am way out of time, and the
Chairman is being very generous because it is just us guys
here, and what can he do. And I appreciate that. And maybe it
is an area, Mr. Chairman, now that I am completely out of
order, to think about in the farm bill. We need to think about
the resources and the tools to create effective partnerships so
that we implement correctly and there is accountability of the
states, like mine, who may not have intended to actually do it
right.
Ms. Glisson. I see these as partnerships. It is a
partnership. I brought up the issue a little earlier about even
trying to make sure that whenever this is a modular system, if
we understand what the Federal Government has in mind when they
are talking about what do you think is a certified modular
system that we could then integrate. I would welcome the
opportunity to work more closely together. I think that would
be helpful.
The Chairman. The gentlelady yields back.
We are going to take, for Members who are here, additional
time for questioning, if you have additional questions. And I
take the liberty of the next 5 minutes.
Ms. Aaronson, you had and Mr. Mathison talked about it, he
made comments about small amounts of counterfeit fraud within
his oral testimony. You had mentioned about having a large
group of fraud investigators, so I wanted to follow up on that
and just ask about, have you quantified with those processes
that you have compelled to put in place, have you quantified
the rate of fraud? Determinations, not the accusations, because
I know you mentioned they come from different places; consumers
and different places, but the rate of fraud determinations, and
as a result, any changes that you made based on any systemic
issues you have identified with fraud?
Ms. Aaronson. As I said, we get various referrals for fraud
and we investigate those referrals very vigorously. That said,
it is so important to take proper steps to limit these types of
improper payments, given that the volume of dollars that we are
spending is high. The research has shown that the more
automated the process, the harder it is for a mistake to be
made or fraud to be committed. Electronic identification
verification processes help make sure we know who the recipient
is, and that they are properly found eligible for use of these
benefits.
One of the things that the City has done is to aggregate
all the third-party data sources that we do have access to and
present them to our eligibility workers in an easily consumable
portal for them to refer to as they are doing their interviews,
so they can see what other data we have based on these third-
party sources and what the applicant has indicated. And this
helps in the eligibility determination process to make sure the
worker is aware of everything that we do know.
If we had access to sources that are in the Federal data
hub that are used for Medicaid we could even do a better job of
making sure that we are determining eligibility based on all
the facts that are out there.
The Chairman. Very good. And if there is something you
could submit for the record, if you have an opportunity to look
at what some of those incidental issues that your investigators
find, I think that is helpful as we work, because we want to
make this effective and efficient, and we certainly want to
make sure that we are putting the food resources in the
stomachs of the folks who need it, and to maximize that.
Obviously, fraud is an issue, though our hearings have shown
that the incidence of fraud has been relatively low, which is
very affirming. That is not to say we don't have a fiduciary
responsibility to always monitor and always being vigilant
with, well, with the taxpayer resources.
Ms. Aaronson. Absolutely. I would be happy to provide it.
[The information referred to is located on p. 1237.]
The Chairman. I appreciate that.
I want to follow up because I don't think your testimony
mentions behaviorally informed reminder notices. I love how
that sounds. I am not quite sure what it is, but having worked
in behavioral health, all things come to mind of what that
could be. Can you speak more to the development of these
notices, and more to what these notices include, and then also
what other examples of behavioral patterns leading to churn, a
word that I just recently learned, has HRA identified?
Ms. Aaronson. Well, thank you, Mr. Chairman. We have worked
really hard to identify what points of failure there are in the
process that clients fall off of our caseload. Clients missing
benefits because of failure to recertify is no good for them,
but it also causes them to come back to us and have us to
determine eligibility again. Specifically, we crafted a
behaviorally informed notice to remind people that they need to
call us for their On-Demand interview. And what we tried to do
there was to sort of reframe this eligibility moment as one of
loss; if you do not do this, you will lose your benefits. And
that incentivizes folks to action, as it turns out, more than
just your standard government notice saying it is time to
recertify. We also articulate the steps more clearly, and use
more clear iconography to sort of lay out the three easy steps
to recertify. And we have found it to be effective in
encouraging folks to take those actions.
We also use behavioral economics principles on our online
application instead of necessarily using the standard line, all
information needs to be provided as accurate or else punishable
by law, we randomly assign other types of statements to see if
we can encourage full and honest submission of data. For
instance, did you know that nine out of ten New Yorkers
receiving benefits also have earned income, to sort of
normalize the idea that you can have earned income and still
get food stamps. Those are some examples.
The Chairman. Very good.
Mr. Boswell, the state integrated eligibility systems and
EBT systems are closely linked, and both systems need to be
working properly for SNAP households to receive the right
amount of benefits at the right time each month. What happens
if one of those components fails, and are there failsafes in
place?
Mr. Boswell. Yes, sir. Thank you for the question.
Absolutely, is the answer if there are failsafes. I think on
both sides I can speak to a couple of them and maybe give a few
examples.
I would like to first kind of defer to the earlier
conversation about the availability of the system for the
individual, the user that is shopping and trying to purchase
foods and cannot. From Conduent's perspective as an EBT
processor, obviously, 100 percent availability of our services
is what we strive for on a daily basis. To measure that,
however, to ensure there is some accountability and some
oversight into that, each of our contracts are monitored
against a service level of availability of over 99.95 percent
availability, measured on a monthly basis. That being said, we
obviously strive for 100 percent.
From a systems unavailability perspective, as Mr. Mathison
referred to earlier, that can happen at any point downstream in
an EBT transaction. It does not necessarily indicate that the
processor itself was unavailable. It could be a local issue, a
phone line, if you will, if someone is still using a POP on a
cell device, et cetera.
But let me get to your question. I just wanted to clarify
that and understand that Conduent's commitment is 100 percent.
If there is a failed component, first I will give an
example from a state's eligibility side, and this is a very
simple one. States are very diligent in their contracts with
EBT processors to ensure that these components exist. One of
the requirements of many of our contracts with states and
commonwealths is that in the event of a disaster, if you will,
if benefits cannot be issued out of the eligibility system for
the participants, Conduent has to have the ability to reissue
the same amount of benefits to the same participants for the
same amount that was issued in the prior month. We have to have
that ability to go back and do that, in an emergency request,
so our system has that capability. That is one example of a
failed component.
From Conduent's perspective, if there was a failed
component, our infrastructure, if you will, is constructed as
such to allow for a primary and a secondary system that is
always replicating amongst itself, along with a tertiary or a
disaster system that is always replicating amongst itself. At
any given time we have three environments for every state EBT
process that we manage. In the event one fails, it
automatically fails to the second. If there is a major
catastrophe, such as a disaster, we are automatically able to
fail over to that disaster center.
I will say from an investment perspective and in the EBT
space, we have recently and are moving toward moving our data
centers into two new consolidated tier 3 data centers. Tier 3,
if you will, really puts a focus on system availability and
security. That is a Conduent investment into the EBT space,
along with modernizing our hardware that drives our EBT
processing platforms.
So there are components in place. They are tested annually,
along with the states and USDA for disaster certification to
ensure that in the event of a major failure, we are able to
stand in and continue services.
The Chairman. Very good, thank you.
Just in closing, I want to thank all of our witnesses for
bringing your extensive experience to this hearing today to
help us as we prepare and move forward. The technological, the
modernization aspects are incredibly important. It is the
processes and structures by which we make sure that those who
have needs that those needs are served.
I also want to thank the staff for helping to put this
great hearing together.
We are going to continue our efforts that we have sustained
over the past 30 months to prepare for reauthorization of the
farm bill, to include a nutrition title that serves as the
largest domestic hunger safety net, with effectiveness and
efficiency, that is our goal. I personally believe that the
values where food is largely grown and produced in rural
America includes taking care of neighbors in need. And since
farmers feed and nutrition matters, and hunger is not
acceptable, the nutrition title is a very important part of the
farm bill. We have an obligation to get the nutrition title
right. And I really appreciate the commitment of all the
Members of the Subcommittee to do this and to get this done.
And so under the Rules of the Committee, the record of
today's hearing will remain open for 10 calendar days to
receive additional material and supplementary written responses
from the witnesses to any questions posed by a Member.
This hearing of the Subcommittee on Nutrition is adjourned.
[Whereupon, at 11:36 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Supplementary Material Submitted by Lauren Aaronson, Assistant Deputy
Commissioner, Office of Business Process Innovation, New York City
Human Resources Administration
Insert 1
Mr. Marshall. Well, excuse me, do you measure just the cost
of administering this from year to year, since you introduced
all this technology?
Ms. Aaronson. It is really hard to specify specific costs. We
have just recently implemented these modernizations, and we
haven't yet determined what the ideal staffing model is. Moving
a system this large over time is difficult to do.
Mr. Marshall. You don't measure how much it costs from year
to year?
Ms. Aaronson. We certainly do measure that, and I can get you
more specific data, but I don't have----

Since the beginning of its efforts to modernize its service
delivery model in 2014 the Human Resources Administration (HRA) has
reduced SNAP administrative costs. For example:

In City Fiscal 2013 there were 1,600 staff administering the
SNAP program. Today, technology and business process
improvements are saving nearly $10 million a year in government
funds compared to 2013, due to staff shifting reductions.

The SNAP improvements have completely changed the way the
City of New York does business with clients--the program
requires less client facing space and we can optimize back
office operations since much of this work is no longer
location-specific. Technology also allows the City to
streamline aspects of other programs--for example public
assistance clients can use self-service options instead of
waiting in a center to drop off documents and Medicaid is
accessed on-line through the New York Health Exchange. This
combination of factors allows the City to reorganize space--
consolidating some large client sites and adding smaller
``express'' and self-service options in more locations.
Eliminating one large building in lower Manhattan alone and
consolidating core services into a nearby central location will
save 76,000\2\ and $8 million a year and realize another $18
million in cost avoidance annually.
Insert 2
Mr. Faso. Okay. And, Secretary Glisson and Ms. Aaronson, do
either of your agencies use such advanced analytics?
* * * * *
Mr. Faso. Okay. Ms. Aaronson, in terms of New York City, and
I guess by corollary, New York State?
Ms. Aaronson. Well, Congressman, I can speak to New York
City, not as well to New York State, but HRA does use data
analytics to identify eligibility and trafficking fraud. We
have a dedicated large unit of fraud investigators who
regularly receive tips from the USDA, from OTDA, from the
public, and we rigorously investigate all of those allegations.
Mr. Faso. Could you be so kind as also to provide for the
record to the Committee information as to the City of New York
and your ability to use these analytic systems to detect and
weed-out fraud in the system? I would appreciate if you could
send that.
Ms. Aaronson. Sure.

HRA verifies SNAP eligibility information against external data
sources as part of its application process. These automated data
matches are built into the application systems and they match up
against several third party sources including, bank account data, wage
data, unemployment data, [S]ocial [S]ecurity data, city employment
data, and child support information, as examples.
New York City has a data analytics unit that uses data to identify
fraud. There are a number of fraud indicators and fraud patterns that
HRA proactively monitors on a regular basis. These include various
matches and models to identify undisclosed income, concealed household
members, and benefit usage outside of New York City. Once there is an
indication of fraud/ineligibility, HRA's dedicated investigators
investigate these allegations and are able to take steps to pursue
Intentional Program Violations (IPVs), refer cases for closure, refer
cases for prosecution, and recover SNAP dollars, as necessary and
appropriate.
Insert 3
The Chairman. . . .
Ms. Aaronson, you had and Mr. Mathison talked about it, he
made comments about small amounts of counterfeit fraud within
his oral testimony. You had mentioned about having a large
group of fraud investigators, so I wanted to follow up on that
and just ask about, have you quantified with those processes
that you have compelled to put in place, have you quantified
the rate of fraud? Determinations, not the accusations, because
I know you mentioned they come from different places; consumers
and different places, but the rate of fraud determinations, and
as a result, any changes that you made based on any systemic
issues you have identified with fraud?
* * * * *
The Chairman. Very good. And if there is something you could
submit for the record, if you have an opportunity to look at
what some of those incidental issues that your investigators
find, I think that is helpful as we work, because we want to
make this effective and efficient, and we certainly want to
make sure that we are putting the food resources in the
stomachs of the folks who need it, and to maximize that.
Obviously, fraud is an issue, though our hearings have shown
that the incidence of fraud has been relatively low, which is
very affirming. That is not to say we don't have a fiduciary
responsibility to always monitor and always being vigilant
with, well, with the taxpayer resources.
Ms. Aaronson. Absolutely. I would be happy to provide it.

HRA has a professional fraud investigative unit, the Investigation,
Revenue and Enforcement Administration (IREA) that works on SNAP
ineligibility cases, as well as other public assistance fraud. This
unit includes a dedicated investigative squad that works with the local
district attorneys and other law enforcement on SNAP trafficking cases.
In calendar year 2016, IREA investigated 2,448 allegations of fraud
committed by SNAP participants. As a result of its investigations, IREA
affirmed 142 Intentional Program Violations (IPV) with the average
disqualification period of approximately 12 months. The IPVs we see
most frequently include undisclosed income and undisclosed mandatory
household member with income.
NYC had on average 1.6 million individuals in around nearly 950,000
SNAP households in CFY 2016 and the value of SNAP benefits issued was
just over $3 billion. In 2016, as a result of IREA's fraud prevention
and detection efforts, HRA recovered $1.6 million SNAP dollars and its
efforts resulted in $28.5 million in cost avoidance for CFY 2016.

THE NEXT FARM BILL

(UNIVERSITY RESEARCH)

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THURSDAY, JUNE 22, 2017

House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Committee met, pursuant to call, at 10:00 a.m., in Room
1300 of the Longworth House Office Building, Hon. K. Michael
Conaway [Chairman of the Committee] presiding.
Members present: Representatives Conaway, Thompson, Lucas,
Gibbs, Austin Scott of Georgia, Crawford, DesJarlais, Hartzler,
Davis, Yoho, Allen, Bost, Rouzer, Kelly, Comer, Marshall,
Bacon, Dunn, Arrington, Peterson, David Scott of Georgia,
Costa, Walz, McGovern, Vela, Kuster, Nolan, Bustos, Plaskett,
Adams, Evans, Lawson, O'Halleran, Panetta, and Blunt Rochester.
Staff present: Bart Fischer, Caleb Crosswhite, Matthew S.
Schertz, Rachel Millard, Stacy Revels, Stephanie Addison, Anne
Simmons, Keith Jones, Kellie Adesina, Troy Phillips, Nicole
Scott, and Carly Reedholm.

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

The Chairman. Good morning. This hearing will come to
order.
I have asked Bob Gibbs to open us with a prayer. Bob.
Mr. Gibbs. Thank you. Our Heavenly Father, thank you for
giving us the opportunity to serve here today. Also thank you
for bringing our witnesses here today, and all the good work
they do back at their universities to help agriculture and
provide food and fiber for Americans. And also we want to thank
you for helping us cope with the tragedy of last week and the
recovery of our good friend, Steve Scalise, and the others that
were injured, and just our prayers are with them and their
families. And thank you for bringing them back to us to serve
again. In Jesus' name we pray. Amen.
The Chairman. Thank you, Bob.
This hearing of the Committee on Agriculture entitled, The
Next Farm Bill: University Research, will come to order.
From the level of conversation before the hearing started,
apparently it is home week back there. Most of the witnesses
must know half the room.
As we continue working to craft the next farm bill, we turn
our attention to one of the primary drivers of innovation and
productivity in our 21st century agricultural economy, and that
is university research.
For more than 100 years, our producers have relied on
investments in agricultural research to drive efficiencies and
gains in productivity that have helped farmers and ranchers
soldier through the toughest of times. While our focus today is
on university research, I would be remiss if I didn't
acknowledge our world-class teaching and extension programs
that are responsible for disseminating the results of that
research throughout the countryside and around the globe. This
sustained investment, in part, has allowed the United States to
enjoy the safest, most affordable, and abundant food and fiber
supply in the world.
The U.S. has long been a leader in cutting-edge
agricultural research, but our current budget problems have us
scrutinizing every dollar, with public funding for agricultural
research declining as a share of overall public research
spending in the United States. While private-sector investments
have picked up some of the slack, results of privately funded
research are often not made publicly available. Importantly,
private-sector research often builds upon fundamental research
supported by our public investment.
While I recognize that our budget problems cannot be
ignored, it is important to note that the agriculture community
has repeatedly answered the call for reform and has done more
than its fair share to generate savings. The current farm bill
was expected to save $23 billion over 10 years, but the most
recent Congressional Budget Office projections show that the
2014 Farm Bill is now on target to save, or not spend, $104
billion; more than four times what was anticipated.
If the U.S. is going to remain competitive, going forward,
we cannot afford to rest on the success of our past and take a
back seat to the rest of the world. We must continue making key
investments in our agricultural research system in the most
efficient manner possible.
Finally, while I will do our witness introductions in a
second because we have several Members who want to introduce
their particular representative, I want to call attention to
Robert Duncan, the Chancellor from Texas Tech. Robert and I go
back a long way to his service in the Texas Senate, and I look
forward to hearing from him today. Jodey will also formally
introduce him here in a moment. We also look forward to hearing
Mr. Duncan and all of our witnesses about ways to streamline
and prioritize agricultural research in the next farm bill.
[The prepared statement of Mr. Conaway follows:]

Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
Good morning and thank you all for joining us.
As we continue working to craft the next farm bill, we turn our
attention to one of the primary drivers of innovation and productivity
in our 21st century agricultural economy--university research.
For more than 100 years, our producers have relied on investments
in agricultural research to drive efficiencies and gains in
productivity that have helped farmers and ranchers soldier through the
toughest of times. While our focus today is on university research, I
would be remiss if I didn't acknowledge our world-class teaching and
extension programs that are responsible for disseminating the results
of that research throughout the countryside and around the globe. This
sustained investment, in part, has allowed the U.S. to enjoy the
safest, most affordable, and most abundant food and fiber supply in the
world.
The U.S. has long been a leader in cutting-edge agricultural
research, but our current budget problems have us scrutinizing every
dollar, with public funding for agricultural research declining as a
share of overall public research spending in the United States. While
private-sector investments have picked up some of the slack, results of
privately-funded research are often not made publicly available.
Importantly, private-sector research often builds upon fundamental
research supported by public investment.
While I recognize our budget problems can't be ignored, it is
important to note that the agriculture community has repeatedly
answered the call for reform and has done more than its fair share to
help generate savings. The current farm bill was expected to save $23
billion over 10 years, but the most recent Congressional Budget Office
projections show that the 2014 Farm Bill is now on target to save $104
billion--more than four times what was anticipated.
If the U.S. is going to remain competitive, going forward, we
cannot afford to rest on the success of our past and take a back seat
to the rest of the world. We must continue making key investments in
our agricultural research system in the most efficient manner possible.
Finally, I'd like to welcome all of our witnesses today, but I want
to specifically welcome and thank Mr. Robert Duncan, Chancellor of the
Texas Tech University System based in Lubbock, for joining us today. I
look forward to hearing from Mr. Duncan and all of our witnesses about
ways to streamline and prioritize agricultural research programs in the
next farm bill.
With that, I yield to the Ranking Member, Mr. Peterson, for any
opening remarks he may have.

The Chairman. With that, I yield to the Ranking Member for
any comments he has.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Well, thank you, Mr. Chairman. As you said,
ag research is vital to our industry's future. The research
done by our land-grant universities and other institutions
invest in the next crop of agriculture scientists and
producers, while ensuring that our farmers can be competitive
and continue to meet the growing worldwide demands for our
products.
This can't be done, of course, without adequate funding for
agriculture research programs. But, I am frankly not quite sure
of the best way to go about that. What I do know is that we
need to continue to support the mandatory research programs
that were created in the 2008 Farm Bill. Overall, we still
haven't fully realized our ag research goals, so I will be
looking to hear our witnesses' thoughts today on how we can do
that.
I would like to see the next farm bill continue our
commitment to ag research in a way that allows for continued
advancement, but also recognizes our budget challenges, because
ag research is the foundation of continued innovation in
agriculture.
Along with increased productivity, ag research has led to
improvements in individual health and in the environment, along
with other benefits.
So with that, I welcome today's witnesses to the Committee,
and look forward to their testimony.
I thank the chair, and yield back.
The Chairman. Well, I thank my colleague.
The chair would request that other Members submit their
opening statements for the record so that our witnesses may
begin their testimony, and to ensure there is ample time for
questions.
With that, I would like to welcome the witnesses to the
table. Mr. Arrington, if you would introduce Chancellor Duncan.
Mr. Arrington. Thank you, Mr. Chairman. I just want to say
a few things. One, I am just so delighted that my dear long-
time friend, Chancellor Duncan, is here. He is the Chancellor
of the greatest agriculture school in the United States of
America, and just happens to be my alma mater, and I am just so
proud that he is here.
He grew up in a rural west Texas community, and his parents
were in the agriculture space. He was a legislator in Texas, a
state Representative and a state Senator for over 20 years, and
a tireless champion for rural America and agriculture. And I am
just so happy he is here, and I am proud of all the work he is
doing at my alma mater, and I look forward to hearing from him.
Thanks for being here.
The Chairman. With that, Mr. Yoho, would you introduce Dr.
Jackie Burns?
Mr. Yoho. Thank you, Mr. Chairman. I am thrilled to be able
to introduce Dr. Jacqueline Burns, Dean for Research and
Director of the University of Florida Institute of Food and
Agricultural Science, referred to as IFAS worldwide, the
Florida Ag Experiment Station in my hometown of Gainesville,
Florida. UF-IFAS does such phenomenal work that it is not just
important across Florida's Third Congressional District, but
which has a statewide, a nationwide, and, indeed, a global
impact. And it is my alma mater, I am a double-Gator, and it is
the real agricultural school. And I am happy that you are here
representing University of Florida.
And I just end the remarks by saying Go Gators. And there
is one other person that is a Gator that it will be self-
evident when he speaks. Thank you.
The Chairman. Thank you, Mr. Yoho.
We also have with us this morning Dr. Glenda Humiston, the
Vice President of Agriculture and Natural Resources at the
University of California, in Oakland, California.
Mr. Costa. Would the gentleman yield?
The Chairman. I would.
Mr. Costa. I just want to welcome all of the panel. And I
have worked for many years with Dr. Glenda Humiston, and she
does a terrific job. She was formerly with the USDA, and now is
with the University of California. We are very pleased that you
are here to testify.
The Chairman. Thank you, Mr. Costa.
We also have Dr. Walter Hill who is the Dean of the College
of Agriculture, Environment, and Nutrition Sciences and the
Vice Provost for the Land-Grant Affairs, Tuskegee University,
Tuskegee, Alabama. Dr. Hill, welcome.
Dr. Steven Tallant, if Mr. Vela would introduce him.
Mr. Vela. Thank you, Chairman Conaway and Ranking Member
Peterson, for hosting this hearing on university research.
Dr. Steve Tallant, who is a good friend of mine, is here
from the Texas A&M University of Kingsville, and he is the
President of that institution. Dr. Tallant has 20 years of
military service, and previously served as Chief of the U.S.
Air Force Family Research Program. Before being at the Texas
A&M Kingsville, I believe he was in Wisconsin, if I am not
mistaken. Thank you, Dr. Tallant, for being here, and feel free
to reply to Mr. Arrington.
The Chairman. And we also have Ms. Carrie Billy who is the
President and CEO at the American Indian Higher Education
Consortium in Alexandria, Virginia.
With that, Chancellor Duncan, please begin when you are
ready.

STATEMENT OF HON. ROBERT L. DUNCAN, J.D., CHANCELLOR, TEXAS
TECH UNIVERSITY SYSTEM, LUBBOCK, TX

Mr. Duncan. Thank you, Mr. Chairman, Ranking Member
Peterson, and Members of the Committee, Mr. Arrington, for your
kind introduction. It is a great honor to be here today. On
behalf of all the panel, we appreciate this hearing and this
ability for higher education to be heard as it relates to
research and the contributions that we can make to furthering
agriculture in this great country.
My name is Robert Duncan, I am Chancellor of the Texas Tech
University System. The Texas Tech University System has four
components. I will begin first with the two Health Science
Centers. Texas Tech Health Science Center that is headquartered
in Lubbock, but has campuses throughout west Texas and
Amarillo, Abilene, Midland-Odessa. While it only started in
1969, it now graduates more healthcare professionals in the
State of Texas than any other institution; nursing, pharmacy,
and public health, and allied health positions. And the
significance of that for agriculture is a lot of those people,
a lot of those professionals end up in rural Texas and rural
America, and there is a real emphasis there. And that is part
of agriculture, is having the opportunity to have great health
care.
In addition, we have a Health Science Center on the Texas
border in El Paso. The first and the only medical school, the
Health Science Center on the border. Our President can
literally hit, he says, the Mexican border with a three iron. I
don't know if that is true, we haven't tested it, but he says
he can do it.
I am here today to talk a little bit about our other two
institutions; our general academic institution, Texas Tech
University, which was created in 1923, but has had a strong
emphasis and core in agriculture, as well as our newest member
of our system, Angelo State University, which is a
comprehensive regional institution in San Angelo, Texas. Both
of these institutions are a significant part of the agriculture
production of this country, and neither one of them are land-
grant institutions.
Where I want to leave you today, when I step away and you
have listened to what I have had to say, is I want to talk a
little bit about capacity. In Texas, a group of us back in the
2000s saw that we needed more capacity in our non-land-grant
institutions, as well as those that were not funded by the
Permanent University Fund, which is a significant $18 billion
endowment for higher education. And that is about 26 or 27
institutions, including Texas Tech University, Angelo State,
Texas A&M at Kingsville, our partner down there. And so we
started looking at different ways and the importance of
capacity. And so to that extent, the Texas Legislature created
several different funds and opportunities for universities like
Texas Tech, University of Houston, A&M Kingsville, and other
institutions to start building capacity. And the importance of
capacity is, what we learned, is if you don't have continuous
predictable funding for faculty and for infrastructure, then
you will not be able to be competitive for private-public
research, as well research that is through the AFRI program and
the Federal competitive grant program. It takes funding that is
predictable so that you can support your faculty, and the
infrastructure necessary for the faculty.
I will give the example of Texas Tech University, in 1996
we got zero funding for capacity. As we started building these
programs, last year we are receiving about $20 million a year
in capacity for research. That is why Texas Tech University is
the number one research university, or non-land-grant
university in agriculture. The National Science Foundation
ranks us as 41 in the country, and number one in non-land-grant
agriculture research. And I attribute that to capacity.
The point that I am trying to get across here is that in
the 2008; and, again in 2014, this Committee and Congress
recognized the importance of non-land-grant institutions
competing for agriculture funds, and needing more capacity. The
appropriation was $5 million a year. Well, with 70 non-land-
grant institutions, you can see that $5 million a year doesn't
go very far, and help for institutions that are non-land-grant
would be significant. I will give you an example of the
importance of non-land-grant institutions often is their
regional location. You have a map in there of where your land-
grant institutions are located, in the Panhandle and South
Plains of Texas, the epicenter of food animal production,
dairy, beef, cotton, grain sorghum, there are no land-grant
institutions in that region.* The closest from Amarillo is
Texas A&M, which is 505 miles away. The regionalism is very
important.
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*The map referred to follows Mr. Duncan's prepared statement.
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Thank you, Mr. Chairman.
[The prepared statement of Mr. Duncan follows:]

Prepared Statement of Hon. Robert L. Duncan, J.D., Chancellor, Texas
Tech University System, Lubbock, TX
Importance of Agricultural Research: Non-Land-Grant Colleges of
Agriculture
Good morning, Chairman Conaway, Ranking Member Peterson, and the
Members of the Committee. Thank you for convening this hearing
addressing the continued importance and needs of agricultural research,
education and infrastructure. It is an honor to address this Committee
on this important subject matter. My name is Robert Duncan, and I am
the fourth chancellor of the Texas Tech University System, which
includes: Texas Tech University, Texas Tech University Health Sciences
Center, Angelo State University and Texas Tech University Health
Sciences Center El Paso. Our system includes two Non-Land-Grant
Colleges of Agriculture: Texas Tech University and Angelo State
University, both of which contribute valuable agricultural research to
the industries in our region.
Texas Tech University achieved Tier One designation and was listed
in the Highest Research Activity category by the Carnegie
Classification of Institutions of Higher Education in 2016. Texas Tech
is one of only 81 public institutions listed in this top tier. In 2015,
Texas Tech University was ranked No. 41 on the National Science
Foundation's rankings for higher education agricultural research and
development, which is the highest ranking of any Non-Land-Grant College
of Agriculture. Texas Tech University has a total enrollment of nearly
37,000 students and the College of Agricultural Sciences and Natural
Resources has 1,754 and 420 undergraduate and graduate students,
respectively. The college prides itself on having one of the highest
student retention rates at the university. We believe this is due to a
combination of factors, including faculty advising of students and
student involvement in extracurricular activities.
Every year since 2010, Angelo State University has been recognized
by The Princeton Review as one of the nation's ``Best Colleges.'' The
university is a Hispanic-Serving Institution and offers more than 100
majors and concentrations, and provides opportunities for both
undergraduate and graduate research. Angelo State University is able to
provide students with an economical education due to strong financial
aid programs, including the $130 million endowment for the Carr
Scholarship Program. Specific to the Department of Agriculture at ASU,
most of the labs are taught at the Management, Instruction and Research
(MIR) Center, a facility that consists of 6,000 acres of range and farm
land. The department's mission is to work directly with regional
commercial producers through development of seed stock in Angus Cattle,
Rambouillet Sheep, Suffolk Sheep, Meat Goats and Dorper Sheep through
breeding programs on the University Ranch. In 2015, ASU's graduate
agricultural education program was recognized as one of the top 25 in
the United States and recently received the Mirabeau B. Lamar Award.
Angelo State University's Department of Agriculture has a 100 percent
pass rate on the Secondary Teacher Education Exam for Agricultural
Education.
Executive Summary
Agricultural research will be required to address the complex issue
of producing more food with fewer resources while maintaining the
stewardship of the land and natural resources. Further, food security,
both under- and over-nutrition, will require a trans-disciplinary
approach and agricultural sciences will be a nexus for addressing this
complex subject. Unfortunately, research funds allocated for
agricultural research are disproportionately less when compared with
other Federal research programs and are not keeping pace with other
emerging countries. Investing in both foundational and innovative
research will be essential to keep the American farmer competitive in
this global economy.
The Non-Land-Grant Colleges of Agriculture educate approximately 50
percent of the future workforce in states where they are located.
Further, these public institutions provide excellent translational
research and outreach programs through their graduate studies and
associated research efforts. The funding model of the USDA allocates a
large portion of its annual budget to capacity building for the Land-
Grant Universities. Though they also fund competitive programs, many of
the Non-Land-Grant Colleges of Agriculture are less competitive because
they do not have the same capacity as their Land-Grant counterparts.
The 2008 Farm Bill authorized a competitive capacity-building program
for Non-Land-Grant Colleges of Agriculture, and that program has funded
projects since 2012 to purchase new research equipment, address
relevant and emerging research areas, and educate students that will be
the future workforce. The funding of this program at approximately $5
million per year is small in comparison, but it has had significant
impacts on improving research and education capacity in the
agricultural sciences and natural resources management. Increasing
capacity at the Non-Land-Grant Colleges of Agriculture will increase
output of trained workforce and support new and innovative research.
Increasing the funding of the competitive capacity-building program for
Non-Land-Grant Colleges of Agriculture and creating new funding
programs to incentivize the expansion of these institutions will be
important strategies to expand our agricultural education and research
efforts.
Importance of Agricultural Research and Education
Competitiveness and Sustainability of U.S. Agriculture
Previous investments into agriculture research have paid off more
than what was expected. Innovation increased agricultural outputs and
efficiencies beyond any other country and has allowed the American
farmer to be competitive in an ever more global economy. Population
growth is expected to increase, and agricultural outputs are going to
need to increase to keep pace. However, it is now well-accepted that
the increased outputs cannot come at the expense of natural resources
or the environment. Natural resources are limited, so the American
farmer is going to have to do more with less. The American farmer and
Agribusiness sector produces more food and fiber now with no more land
than they did a century ago. Continued investments into innovation are
required to meet and exceed the targeted needs for agricultural
products.
The importance of U.S. Agriculture is a nexus of our economic
viability, national security and human health. Recent USDA Economic
Research Service data indicate agriculture contributed $992 billion to
the U.S. GDP or about a 5.5 percent share. Additionally, agriculture
and its related industries provided 11 percent of the U.S. employment.
Food security in the U.S. is unprecedented, and food only accounts for
approximately 12 percent of household incomes. However, despite the
overall access to food, there continues to be food insecurity in every
county in the U.S. Further, one of the greatest security threats to the
U.S. is availability of nutritious food. High food prices and
restricted access to food are known to destabilize regions, which was
apparent in the Arab Spring of 2011. Food security is a complex issue
and associated with it is also the increasing amount of over-nutrition.
Over-weight and obesity rates in North America are reaching epidemic
proportions, and the estimated annual costs associated with this is
between $1 and $2 trillion. It is well-accepted that one of the
greatest risk factors for many non-communicable diseases is over-
nutrition. Food science, behavior economics, nutritional education
programs and arguably every aspect of Agribusiness sector are going to
be important in combating these complex issues.
Agriculture Is Under Funded Relative to Other Programs
As you will undoubtedly hear today, the annual USDA research budget
of $2.9 billion (2017 requested budget) is disproportionately less when
compared with other Federal research programs. Figure 1 shows a
comparison of the USDA's intramural and extramural research programs
with other leading Federal research funding agencies. The importance of
agricultural sciences is overlooked and often taken for granted. The
contributions of agricultural sciences research to the advancements of
the life sciences is meaningful and transects other disciplines like
human health, energy, and basic science. Most agricultural research
programs are trans-disciplinary in nature, and many of the most
important issues facing humankind such as human health, food
insecurity, environmental stewardship and economic viability arguably
will be best addressed by trans-disciplinary approaches such as
agricultural sciences research.
Figure 1 : Annual Research Budgets

Non-Land-Grant Colleges of Agriculture
Institutions, Education, Training and Research
Seventy institutions in 27 states have Non-Land-Grant Colleges of
Agriculture with long histories of successful programs educating and
preparing professionals in agricultural sciences and natural resources.
It was estimated in these 27 states that approximately \1/2\ the
baccalaureate degrees awarded each year in agricultural sciences and
natural resources are from one of these institutions. In fact, more
than 50,000 students on an annual basis are educated through one of
these Non-Land-Grant Colleges of Agriculture. Another important
characteristic of a large number of these institutions is they
accommodate many under-represented student groups including: first
generation students, minorities and rural students. Further, these
public institutions provide excellent translational research and
outreach programs through their graduate studies and associated
research efforts.
A 2015 report from Purdue University indicated that from 2015 to
2020 there will be a deficiency in the baccalaureate or higher degrees
needed to fill new agricultural-related positions [http://purdue.edu/
usda/employment]. They reported an expected annual need of 57,900
graduates and a growing workforce of only 35,400 new graduates with
expertise in food, agriculture, renewable natural resources or the
environment. Therefore, there is an expected 39 percent annual shortage
of graduates to fill these positions, and the difference must be made
up from other non-agricultural degree-based programs. Importantly, the
report also notes employers prefer to hire students from agricultural-
based degree programs.
Capacity Funding
The USDA has a unique but effective funding system with an annual
budget of approximately $850 million that is allocated to the Land-
Grant Institutions as capacity-building funds and an annual budget for
competitive grants of approximately $700 million. A recent report
funded by USDA evaluated the effectiveness of these two primary funding
streams and found that both were effective and offered distinct
benefits [http://nifa.usda.gov]. Importantly, it was noted in the
report that although Non-Land-Grant Universities can submit grants to
the competitive funding programs, they are likely at a disadvantage
because many of these institutions do not have the capacity to compete
with the Land-Grant Institutions because they do not have access to
those capacity-building funds.
To help support such a capacity, the 2008 Farm Bill authorized a
program to provide competitive grants to the Non-Land-Grant Colleges of
Agriculture. The program was re-authorized in the 2014 Farm Bill. The
first awards were allocated in FY12, and these grants have been
instrumental in developing academic, research and outreach capabilities
at the Non-Land-Grant institutions. Here are just a few examples to
give you an idea of the types of projects that were funded through this
program:

Fresno State, CA--``Expanding the research capacity in
agricultural sciences through modernization of
instrumentation''.

Chico State, CA--``Integrating agricultural education and
outreach to increase profitability through local food marketing
channels''.

Missouri State, MO--``Agriculture and food literacy
initiative at Northwest Missouri State''.

Montclair State College, NJ--``Bridging the gap between New
Jersey farmers and consumers through research, education, and
outreach''.

Texas Tech University, TX--``Developing a generation of
agricultural change agents in the battle for food security''.

University of Tennessee, Martin--``Building capacity for
climate change education & expanding research opportunities in
rural communities in TN & KY''.

Fort Hays State, KS--``Unmanned aerial systems and precision
agriculture: building capacity in emerging technology''.

University of Wisconsin, Platteville--``Incorporating dairy
livestock into agroecosystem research: grazing responsibly for
a sustainable tomorrow''.

As you can see from this non-exhaustive list, these competitive
funds for Non-Land-Grant Colleges of Agriculture are used to purchase
new research equipment, address relevant and emerging research areas,
and educate students that will be the future workforce. Another
important point is the regional diversity of the institutions that
received funds through this capacity-building program. As a result,
these funds are supporting increased research and educational capacity
in all regions of the U.S.
This competitive program has received approximately $5 million in
annual funding since 2012, which is comparatively small; but these
funds are going a long way at improving research and education in
agricultural sciences and natural resources management. Like the
American farmer, we know that non-land-grant colleges of agriculture
have to do more with less. These capacity-building funds do not require
state or private matching, which given the infancy of this program is
important. However, we also recognize the importance of leveraging
Federal dollars with both state and private funding. An example from my
time in the Texas State Legislature is a program our team of
legislators developed and funded known as TRIP the Texas Research
Incentive Program [http://thecb.state.tx.us]. It is a program where
emerging research universities are awarded matching funds from the
state based on how much an institution raises in private gifts and
endowments to enhance research activities. Since 2010, Texas Tech
University has received $103.4 million in matching funds through this
program and the program has awarded a total $291.3 million. These funds
were used to increase research capacity at Texas Tech University, like
in the case of a research gift from Bayer Crop Science that was matched
by the State of Texas. The gift was used in support of the construction
of a $15 million state-of-the-art teaching and research Bayer Plant
Science Building on the Texas Tech University campus. Undergraduate and
graduate enrollment increased by approximately 25 percent in plant and
soil sciences following construction. This is just one example of many
of how this type of program is able to leverage resources to build
research capacity at a non-land-grant college of agriculture. Further,
this is an example of leveraging dollars to invest in much needed
infrastructure in our Colleges of Agriculture at public universities.
In closing, I appreciate the opportunity to share the Texas Tech
University System's perspective of our two non-land-grant colleges of
agriculture: Texas Tech University and Angelo State University.
Investments in agricultural research and infrastructure build over time
and are long-term investments in the future well-being of our nation.
Research serves as the foundation of applied sciences to assist the
industry in solving problems that have a direct impact on all aspects
of our economy. As you continue your important work, we hope you will
continue supporting and increasing the funding for the non-land-grant
colleges of agriculture competitive capacity-building program. The
Texas Tech University System would like to work with the Committee to
explore additional research partnerships to increase agricultural
research investment opportunities for non-land-grant institutions with
a proven research track record. We appreciate the Committee's continued
support of agricultural research and look forward to working with the
Committee as you reauthorize the farm bill.
[Attachment]
NIFA Land-Grant Colleges and Universities
June 2014

*Central State University (CSU), in Ohio, has been designated
as an 1890 LGU. Under the law, CSU will be eligible to receive
certain capacity funds in October 2014 and others in Fiscal
Year 2016.
**College of the Muscogee Nation and Keweenaw Bay Ojibwa
Community College are designated as 1994 LGUs and will be
eligible to receive capacity funds in October 2014.

Alabama Maryland North Dakota State
University, Fargo
Alabama A&M University, University of Maryland, Sitting Bull College,
Normal College Park Fort Yates
Auburn University, University of Maryland Turtle Mountain
Auburn Eastern Shore, Community College,
Princess Anne Belcourt
Tuskegee University, Massachusetts United Tribes
Tuskegee Technical College,
Bismarck
Alaska University of Northern Marianas
Massachusetts, Amherst
Ilisagvik College, Michigan Northern Marianas
Barrow College, Saipan, CM
University of Alaska, Bay Mills Community Ohio
Fairbanks College, Brimely
American Samoa Keweenaw Bay Ojibwa Central State
Community College, University,
Baraga Wilberforce
American Samoa Michigan State Ohio State University,
Community College, University, East Columbus
Pago Pago Lansing
Arizona Saginaw Chippewa Tribal Oklahoma
College, Mount
Pleasant
Dine College, Tsaile Micronesia College of the
Muscogee Nation,
Okmulgee
Tohono O'Odham College of Micronesia, Langston University,
Community College, Kolonia, Pohnpei Langston
Sells
University of Arizona, Minnesota Oklahoma State
Tucson University,
Stillwater
Arkansas Fond du Lac Tribal & Oregon
Community College,
Cloquet
University of Arkansas, Leech Lake Tribal Oregon State
Fayetteville College, Cass Lake University, Corvallis
University of Arkansas University of Pennsylvania
at Pine Bluff, Pine Minnesota, St. Paul
Bluff
California White Earth Tribal and Pennsylvania State
Community College, University,
University Park
D-Q University, (Davis Mahnomen Puerto Rico
vicinity)
University of Mississippi University of Puerto
California System-- Alcorn State Rico, Mayaguez
Oakland as University, Lorman Rhode Island
Headquarters, Oakland
Colorado Mississippi State University of Rhode
University, Starkville Island, Kingston
Colorado State Missouri South Carolina
University, Fort
Collins
Connecticut Lincoln University, Clemson University,
Jefferson City Clemson
University of University of Missouri, South Carolina State
Connecticut, Storrs Columbia University,
Orangeburg
Delaware Montana South Dakota
Delaware State Blackfeet Community Oglala Lakota College,
University, Dover College, Browning Kyle
University of Delaware, Chief Dull Knife Si Tanka/Huron
Newark College, Lame Deer University, Eagle
Butte
District of Columbia Aaniiih Nakoda College, Sinte Gleska
Harlem University, Rosebud
University of the Fort Peck Community Sisseton Wahpeton
District of Columbia, College, Poplar College, Sisseton
Washington
Florida Little Big Horn South Dakota State
College, Crow Agency University, Brookings
Florida A&M University, Montana State Tennessee
Tallahassee University, Bozeman
University of Florida, Salish Kootenai Tennessee State
Gainesville College, Pablo University, Nashville
Georgia Stone Child College, University of
Box Elder Tennessee, Knoxville
Fort Valley State Nebraska Texas
University, Fort
Valley
University of Georgia, Little Priest Tribal Prairie View A&M
Athens College, Winnebago University, Prairie
View
Guam Nebraska Indian Texas A&M University,
Community College, College Station
Winnebago
University of Guam, University of Nebraska, Utah
Mangilao Lincoln
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Logan
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Honolulu Reno
Idaho New Hampshire University of Vermont,
Burlington
University of Idaho, University of New Virgin Islands
Moscow Hampshire, Durham
Illinois New Jersey University of the
Virgin Islands, St.
Croix
University of Illinois, Rutgers University, New Virginia
Urbana Brunswick
Indiana New Mexico Virginia State
University,
Petersburg
Purdue University, West Navajo Technical Virginia Tech,
Lafayette College, Crownpoint Blacksburg
Iowa Institute of American Washington
Indian and Alaska
Native Cul-
Iowa State University, ture and Arts Northwest Indian
Ames Development, Sante Fe College, Bellingham
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University, Las Cruces University, Pullman
Haskell Indian Nations Southwestern Indian West Virginia
University, Lawrence Polytechnic Institute, West Virginia State
Kansas State Albuquerque University, Institute
University, Manhattan
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University,
Morgantown
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University, Frankfort Ithaca College of Menominee
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Lexington
Louisiana North Carolina A&T Lac Courte Oreilles
State University, Ojibwa Community
Greensboro College, Hay-
Louisiana State North Carolina State ward
University, Baton University, Raleigh
Rouge
Southern University and North Dakota University of
A&M College, Baton Wisconsin, Madison
Rouge
Maine Cankdeska Cikana Wyoming
Community College,
Fort Totten
University of Maine, Fort Berthold Community University of Wyoming,
Orono College, New Town Laramie, WY

USDA is an equal opportunity provider and employer D June 2014.

The Chairman. Thank you, Chancellor.
Dr. Burns, 5 minutes.

STATEMENT OF JACQUELINE K. BURNS, Ph.D., DEAN FOR
RESEARCH AND DIRECTOR, FLORIDA AGRICULTURAL
EXPERIMENT STATION; PROFESSOR OF HORTICULTURE,
INSTITUTE OF FOOD AND AGRICULTURAL SCIENCES,
UNIVERSITY OF FLORIDA, GAINESVILLE, FL

Dr. Burns. Chairman Conaway, and Members of this
distinguished Committee on Agriculture, thank you for this
opportunity to speak with you today.
Agriculture is a major economic driver for the State of
Florida. Agricultural research conducted at the University of
Florida provides that knowledge, innovation, and tech transfer
that supports 2.2 million agriculture-related jobs, and direct
industry output of $148 billion in Florida.
Although Florida produces traditional row crops, such as
cotton, sugarcane, rice, and peanuts, Florida is primarily a
specialty crop state. It is first in production of oranges and
grapefruit, fresh market tomatoes, and many others. Livestock,
forestry, fisheries are also significant production outputs of
Florida's agricultural sector. Florida agriculture is diverse,
as is the requirement for research in all of these important ag
and natural resource systems.
Competitive research awards authorized by the farm bill
provide enormous opportunities for our faculty to support
agricultural enterprises in the region, in the state, the
nation, and the world. Programs such as NIFA, AFRI, Specialty
Crop Research Initiative, and its provision for block grants to
the states of agriculture that fund regional needs have been
effective, timely, and impactful. The Citrus Disease Research
and Extension program that was just recently authorized by the
recent farm bill has been exceptionally helpful in our
continued quest to solve the most devastating disease to citrus
worldwide; citrus greening.
Key issues we face include reduced funding that supports
research infrastructure, and the increasing need for longer-
term research support that solves our modern agricultural
challenges.
I appreciate the opportunity to share ideas for
streamlining farm bill competitive funding processes, expanding
the use of the letter of intent process, delaying the entry of
information at the submission stage that is not necessary for
evaluating the merits of the proposal, and providing larger
long-term awards, de-emphasizing smaller awards, when
applicable, reduces the number of awards handled and provides
sustaining opportunities for researchers.
I also appreciate the opportunity to share ideas for
prioritizing programs in the farm bill. First, invasive
species: Florida's geography means that it is often ground zero
for the introduction of costly, invasive species and diseases
within the continental United States through its many ports of
entry. Prioritizing expanding the scope of invasive species
programs to accommodate all threats to commercial ag lands,
production systems, and natural lands would greatly improve our
response to threats, and prioritizing more proactive research
to the extent possible would accelerate development of science-
based solutions before the full impact of invasive threat
develops.
Second, alternative crops: expanding and prioritizing
alternative crop breeding and management programs that focus on
sustainable production. This also gives our producers
opportunities to remain in agriculture and even diversify their
operations.
Precision agriculture and automation such as mechanical
harvesting, prioritizing these important programs would be
important.
Stakeholder engagement, finally, and prioritizing that
opportunity would help the whole process to prioritize the
program for national research investment.
Finally, a few words about research infrastructure and
deferred maintenance. High-quality research infrastructure is
essential to build and maintain research capacity. At the
University of Florida, with over $16 million in deferred
maintenance costs and reduced funding to maintain its existing
agricultural research infrastructure, the University of Florida
IFAS has fallen below the critical investment level needed to
prevent failures in building systems. The landscape of our
universities and IFAS agricultural infrastructure is a
patchwork of primarily decaying infrastructure, with an
occasional new facility built with opportunistic public and
private funds. What is needed is a principled approach to
agricultural research infrastructure investments that prevents
building systems failures, enhances our ability to conduct
world-class research, and emphasizes our world stature as a
premiere location for cutting-edge, fundamental, and applied
research. One way to do this would be to include provisions in
a new farm bill for university infrastructure investments that
could provide an opportunity for solutions to this critical
deferred maintenance problem. A principled approach that
requires matching funds from the university or state sources
would signal important contributions between Federal and state
agencies.
Thank you.
[The prepared statement of Dr. Burns follows:]

Prepared Statement of Jacqueline K. Burns, Ph.D., Dean for Research and
Director, Florida Agricultural Experiment Station; Professor of
Horticulture, Institute of Food and Agricultural Sciences, University
of Florida, Gainesville, FL
Chairman Conaway and Members of the U.S. House of Representatives
Committee on Agriculture, thank you for the opportunity to speak with
you today about (1) the importance of agricultural research programs to
our institution in meeting key challenges, (2) ways to streamline and
prioritize agricultural research programs through the next farm bill,
and (3) the need for deferred maintenance upgrades for our agricultural
research facilities.
My name is Jackie Burns, and I am the Dean for Research at the
University of Florida in the Institute of Food and Agricultural
Sciences (UF/IFAS) and Director of the Florida Agricultural Experiment
Station. The mission of UF/IFAS is ``to develop knowledge in
agricultural, human and natural resources and to make that knowledge
accessible to sustain and enhance the quality of life.'' Our scientists
seek to solve the challenges facing agriculture, natural resources, and
the interrelated life sciences with disciplinary and interdisciplinary
collaborative research. Through our research, we acknowledge the
inextricable link between agricultural production and the health and
biodiversity of natural resources.
1. Importance of Agricultural Research Programs and Challenges
Agriculture is a major economic driver for Florida. Agricultural
research conducted at the University of Florida provides knowledge,
innovation and technology transfer that supports 2.2 million
agriculture-related jobs and direct industry output of $148 billion in
Florida in 2014. Sponsored agricultural research awarded to UF/IFAS was
$140 million in FY 2016. Of this amount, over 70% was awarded by
Federal agencies. Research expenditures approached $168 million. These
dollars are used to conduct research that provides new cultivars,
diagnostic tools, disease management strategies, and other technologies
and products. Intellectual property from our research activities
significantly contributes to the value of University of Florida's
agricultural research to the state of Florida, the nation, and the
world. Technology is transferred, licensed, and royalties are
reinvested into our research programs.
Although Florida produces traditional row crops such as cotton,
peanuts, sugarcane and rice, Florida is primarily a specialty crop
state. Florida is first in production of orange, grapefruit, sweet
corn, snap beans, squash, fresh market tomatoes, and tropical foliage
plants. Livestock, forestry and fisheries are also significant
production outputs of Florida's agricultural sector. Florida's
agriculture is diverse, as are the requirements for research in plant,
animal, food, environment, and natural resource systems. Competitive
research awards authorized by the farm bill provide enormous
opportunities for UF/IFAS to support agricultural enterprises.
The financial support for agricultural research provided by these
programs and conducted by UF/IFAS scientists is crucial for developing
innovative solutions for the benefit of Florida's economy. Federal
investments in competitive USDA programs through farm bill
appropriations provide opportunities for UF/IFAS to conduct
agricultural research. Programs such as the NIFA AFRI, Specialty Crop
Research Initiative (SCRI), and its provision for block grants to
States of Agriculture that fund regional needs have been effective,
timely, and impactful. The NIFA SCRI Citrus Disease Research and
Extension program authorized by the 2014 Farm Bill has been
exceptionally helpful in our continued quest to solve the most
devastating disease of citrus worldwide, citrus greening.
Key issues we face include reduced funding that supports research
infrastructure and the increasing need for longer-term research support
to solve modern agricultural challenges that are fundamentally rooted
in a sustainable agricultural production system.
2. Streamlining and Prioritizing Agricultural Research Programs
I appreciate the opportunity to share ideas for streamlining farm
bill competitive funding processes. Reducing administrative burden for
sponsor and applicant organizations can improve efficiencies of
research.

Letters of Intent. Expand the use of letter of intent
processes to reduce the development of misguided proposals and
the number of fully developed grants that are handled.

Information requirements. Delay entry of information at the
submission stage that is not necessary for determining merits
of the proposal. To the extent possible, move entry of this
information to the post-award stage to improve the efficiency
of the submissions process.

Award periods. Provide larger, longer-term awards and de-
emphasize small award programs to reduce the number of awards
handled and to provide sustaining opportunities for
researchers.

I also appreciate the opportunity to share ideas for prioritizing
programs in the next farm bill.

Invasive species. Increasing global trade is affecting food
production and ecosystem service systems generated by
commercial and non-commercial working lands. Florida's
geography means it is often ``ground-zero'' for the
introduction of costly invasive species and diseases within the
continental U.S. through its many ports of entry. Prioritizing
and expanding the scope of invasive species programs to
accommodate all threats to commercial agricultural production
systems and natural lands would greatly improve our response to
threats. Prioritizing more proactive research, to the extent
possible, would accelerate the development of science-based
solutions before the full impact of the invasive threat
develops.

Alternative crops. Keeping agricultural lands in agriculture
production will be paramount to meeting the food, fiber and
feed needs of a growing population. Expanding and prioritizing
alternative crop breeding and management programs that focus on
sustainable, efficient and economical production can provide
opportunities for producers who seek to remain in agriculture
or diversify their operations.

Precision agriculture and automation. Prioritizing programs
in precision agriculture and automation technologies would
accelerate development of these and other technologies that
are, or will become, the future of agriculture. Every producer
will benefit from technologies that allow more efficient and
economical operations. Mechanical harvesting and other handling
automations, precision application of fertilizers and
pesticides, detection and surveillance of pests and diseases
through the use of unmanned aerial vehicles and sensing
technologies, and other techniques are critically needed to
advance and protect production systems.

Stakeholder engagement. Identifying needed research through
continued interaction with the National Agricultural Research,
Extension, Education, and Economics Advisory Board, and
prioritizing stakeholder involvement in regional or commodity-
based listening and planning sessions, are effective ways to
prioritize programs for national research investment.
3. Research Infrastructure and Deferred Maintenance
High quality research infrastructure is essential to build and
maintain research capacity. The UF/IFAS must hire and retain world-
class faculty to advance and support agriculture systems-related
research activities. Today, the UF/IFAS suffers from decaying
infrastructure that hampers our ability to attract and retain the best
and most talented research faculty. With over $16 million in deferred
maintenance costs and reduced funding to maintain existing
infrastructure, the UF/IFAS has fallen below the critical investment
level needed to prevent failures in building systems.
The landscape of our University's infrastructure is a patchwork of
primarily decaying infrastructure with an occasional new facility built
with opportunistic public or private funds. What is needed is a
principled approach to agriculture research infrastructure investments
that prevents building systems failures, enhances our ability to
conduct world-class research by world-class faculty, and emphasizes our
world stature as the premier location for cutting-edge fundamental and
applied research.
One way to provide funding for this need would be to include
provisions in a new farm bill for University infrastructure investments
that could provide an opportunity for solutions to this critical
deferred maintenance problem. A principled approach that requires
matching funds from University and/or state sources would signal
important partnerships between Federal and state agencies that
agricultural stakeholders would value.
Thank you for this opportunity to address the Committee and bring
the perspective of the UF/IFAS to research and support programs
appropriated in the next farm bill.
This concludes my formal statement and I am happy to answer any
questions.

The Chairman. Thank you, Dr. Burns.
Glenda, how do you pronounce your name? Mr. Costa and I
said it differently.
Dr. Humiston. It is Humiston. Thank you.
The Chairman. Humiston. All right, Dr. Humiston, you are
recognized for 5 minutes.

STATEMENT OF HON. GLENDA HUMISTON, Ph.D., VICE
PRESIDENT, AGRICULTURE AND NATURAL RESOURCES;
DIRECTOR, AGRICULTURAL EXPERIMENT STATION AND
COOPERATIVE EXTENSION SERVICE, UNIVERSITY OF
CALIFORNIA, OAKLAND, CA

Dr. Humiston. Great. Thank you very much.
Chairman Conaway, Ranking Member Peterson, and Members of
the Committee, it is an honor to be here today. Thank you for
the invitation to discuss research issues and opportunities in
the next farm bill.
As part of the University of California, we are quite
thrilled to have been there at its very beginnings in 1868. It
has grown into a ten campus system throughout the state. We
predominantly work with three of those campus; Berkeley, the
original one, Davis, and Riverside; however, we partner with
all ten, as well as our California State university system and
our community colleges increasingly on a variety of projects.
We have over several hundred academics scattered around the
state; many of them on those three campuses, a few on others,
and a few located with another partner, the USDA Agricultural
Research Service, at some of their facilities. We have over 200
of those actually scattered throughout the state in every
county, doing robust research programs along with delivering a
wide array of programs; many of these from capacity funds,
including our world-class 4-H Youth Development program, a
highly touted integrated pest management program, a statewide
nutrition policy institute, and a water research institute, as
well as several others.
We take great pride in the work we do, and the partnerships
we have with folks out in the field. Frankly, if it weren't for
the farmers and landowners out in the field we work with, as
well as the rural communities, and increasingly, urban
communities, we couldn't begin to do a fraction of the work we
do. And not only those partners, but our volunteer base, over
20,000 Californians volunteer for programs like 4-H, Master
Gardeners, California Naturalists, et cetera. Their labor is
valued at over $40 million a year, and they greatly help us
extend our programs.
You have heard from previous speakers here the importance
of the investment in our land-grant university. One thing I
would mention is recent studies that show that on average that
investment is 20 to 1. In other words, every $1 of Federal
expenditure has a payback of about $20 to the American public.
The statistics my number-crunchers give me tell me that that is
an annualized rate of return between nine and ten percent. I
don't know about you, but, frankly, I wish my portfolio on Wall
Street did nearly as well, consistently.
But it is important to understand that that kind of
consistent return and the great benefits it has provided to our
public and our nation, and food security, relies upon a key
bunch of infrastructure out there that we have to maintain and
invest in. I refer to several things. First, capacity funds:
without that long-term infrastructure and the people there, we
cannot make good use of the competitive grants that we are
constantly going after. Competitive grants are great and it is
important that we fund those, and perhaps increase funding in
those. That is a recommendation that several organizations have
put forward now. But the reality is to really solve
agricultural problems, we have to keep in mind the long-term
nature of those problems.
There was an article in The Washington Post this week about
mechanization and pursuit of that, but a key thing to remember
there is that tomato harvester developed at University of
California would not have worked without the plant genetics
program that made a tomato able to be machine-harvested. That
kind of work takes anywhere from 1 to 2 or more decades, and we
need to keep that in mind.
Another big issue that folks are focusing on right now is
our deferred maintenance. Our infrastructure is, frankly, a
mess. The systems I oversee, we have identified over $45
million in work just to get to functionally adequate. We have
roofs that are leaking, and that doesn't even count the
infrastructure on the three campuses we work with, that is just
our research extension centers and other facilities out in the
more rural parts of the state. We are stepping up to the plate
to deal with that. I will get our facilities up to at least
functionally adequate before I leave my tenure here, but it is
going to take help from the Federal Government, the state
government, and the private-sector to help us create the world-
class facilities that we all need.
Having said that though, I do want to insert a note of
caution because we know there is probably not much appetite for
this in the Federal farm bill, people are looking at the
potential of the infrastructure bill, but quite frankly, our
experience at UCSF Medical Center, which is a large research
facility, is that the kind of rates of return that the private-
sector wants in investing in these doesn't work well for
research facilities. It is an issue that really needs further
looking.
There are many other issues to look at. I provided those in
written testimony, and I look forward to your questions. Thank
you.
[The prepared statement of Dr. Humiston follows:]

Prepared Statement of Hon. Glenda Humiston, Ph.D., Vice President,
Agriculture and Natural Resources; Director, Agricultural Experiment
Station and Cooperative Extension Service, University of California,
Oakland, CA
Good morning, Chairman Conaway, Ranking Member Peterson, and
Members of the Committee. I am honored to have this opportunity to
discuss the importance of agricultural research and innovation as you
begin work on the next farm bill.
With the University of California (UC) Agriculture and Natural
Resources (ANR) serving as a vital partner, California continues to be
the nation's top agricultural state. For more than a century,
California's $47 billion agricultural sector has depended on UC ANR for
the stream of new technologies and research breakthroughs needed to
stay competitive and be responsible stewards of the land. We are proud
to be part of the Land-Grant partnership that was developed between the
states and the Federal Government with the 1862 Morrill Act, the 1887
Hatch and the 1914 Smith-Lever Act. That enterprise has, for over 130
years, advanced scientific knowledge in all aspects of food production,
and together with Cooperative Extension, has advanced production
capacity, profitability, and safety of the nation's food system.
The UC ANR Land-Grant mission is delivered through several hundred
academics conducting research on four campuses, nine Research and
Extension Centers and over fifty county offices throughout the state.
We work closely with a wide array of partners and volunteers to deliver
programs ranging from 4-H Youth Development to Master Gardeners to
Integrated Pest Management, and manage the Nutrition Policy Institute
and the Water Resources Institute for California. In the past fiscal
year, UC ANR has served over 1.4 million adults and youth directly,
published about 1,800 peer-reviewed journal articles and filed over 20
patents. Our 20,000 volunteers contributed the equivalent of over 700
FTE in public service--the equivalent of $40 million in donated time.
1,600 workshops and field days extended best practices and technologies
resulting in increased yield, reduced inputs, increased efficiency,
improved economic return, and/or conservation of important natural
resources.
A recent study examined the return on investment for Federal
funding of the public land-grant system; it showed that while benefit-
cost ratios vary by state, they are always in double digits--averaging
21:1 and corresponding to annual rates of return between 9-10%.\1\
However, returns from these investments is often realized only after
considerable lag time--in some cases decades. It takes at least 7 to 15
years of research and development to develop a new crop variety--longer
for trees/vines. Deploying and/or adapting new agricultural
technologies can be even longer. For example, when UC Davis engineer,
Coby Lorenzen, designed a machine to automate the harvest of tomatoes
in the 1960's, it also required agronomist, Jack Hanna, to develop a
less-delicate variety of tomato that ripened uniformly and could be
easily plucked from the plant, essential qualities that made machine
harvesting feasible.\2\
---------------------------------------------------------------------------
\1\Julian M. Alston, Matthew A. Andersen, Jennifer S. James, Philip
G. Pardey; The Economic Returns to U.S. Public Agricultural Research.
Am. J. Agric. Econ. 2011; 93 (5): 1257-1277. doi: 10.1093/ajae/aar044.
\2\Haspel, Tamar, ``One big reason some foods cost so much more
than others'', Perspective, Washington Post, June 19, 2017, https://
www.washingtonpost.com/lifestyle/food/the-biggest-reason-some-foods-
cost-so-much-more-than-others/2017/06/16/d3bda28e-5063-11e7-91eb-
9611861a988f_story.html?utm_term=.8fc5d6f5e6f6.
---------------------------------------------------------------------------
A vital component of Federal support for agricultural research has
been capacity funding specifically dedicated to supporting research and
Cooperative Extension programs at America's land-grant universities.
These capacity funds are available annually on a non-competitive basis
and require a match at the state and local levels; they include Hatch,
Smith-Lever, Evans-Allen, McIntire-Stennis, Animal Health and Disease
Research, Expanded Food and Nutrition Program, 4-H Youth Development,
Renewable Resources Extension Act, 1890 and 1994 Extension. We strongly
support ongoing funding of both capacity programs and competitive
funds, and urge Congress to authorize an additional $200 million toward
the suite of programs at the National Institute of Food and Agriculture
(NIFA). Further, we recommend that formulas for allocations of capacity
funds to each state be designed to ensure equitable distribution; in
particular, the current definition of ``rural'' needs serious
examination and re-engineering.
The current mix of Federal and state capacity funds is generally
leveraged many-fold by Federal competitive grants, grants from private
industry, and other types of unrestricted gifts and awards to faculty
conducting research at the nation's land-grant universities.
Competitive funding processes can elicit new ideas and speed up certain
research projects; however, they also encourage a shift from
programmatic research towards shorter-term project research. Failure to
invest in a well-balanced mix of capacity and competitive funds for
food and agriculture research could have very negative consequences for
decades to come--consequences that would take significant time to
reverse. Although progress is being made to incrementally increase
appropriations to the USDA AFRI program, it remains funded at
considerably less than the $700 million authorized in the previous two
farm bills--far less than funding levels at NIH or NSF. We support the
goal of achieving appropriations in AFRI equal to that authorized in
the last farm bill by 2020.
While both food security and political stability can be linked
directly to innovation driven by investment in agricultural research,
resources (people, time, dollars) are limited--we cannot afford to be
duplicative; nor can we afford limit our partnerships or methods. To
make even greater strides, transformative innovation is needed--moving
beyond just improving existing methods and processes to totally re-
thinking systems development. As part of our new strategic plan (http:/
/ucanr.edu/stratplan1.10.2017), UC ANR seeks to deliver research and
extension programs that have direct impacts on the lives of more
Californians by harnessing the power of the entire California system of
higher education, finding new ways to work with existing partners,
cultivating new partnerships, and engaging a much broader array of
stakeholders throughout California.
One new strategy is to expand collaborative efforts between experts
in soil sciences, plant pathology, biochemistry, entomology, and other
fields of sciences with technology experts in robotics, sensors,
artificial intelligence, materials, supply chain logistics, and energy
systems to solve the today's complex problems in agriculture. Much like
the biomedical revolution, it is the integration of multiple
disciplines into a single project that can lead to transformative
innovation that improves productivity, food safety, and ecosystem
services while also giving rise to new businesses. Examples of such
multidisciplinary projects include:

James Rogers studied flexible solar cells at UC Santa
Barbara and Lawrence Berkeley National Laboratory. A radio
program on world hunger gave the materials scientist his
``aha!'' moment in 2012. His work on thin-film polymers from
solar cells, coupled with information from UC Cooperative
Extension, led to an invisible, edible and tasteless barrier
that can protect food crops and dramatically improve longevity
of produce freshness--using waste plant parts often left on the
farm. Apeel Sciences now supports 71 employees and hits shelves
this summer, when some of the world's largest avocado producers
start using it.\3\
---------------------------------------------------------------------------
\3\http://apeelsciences.com/.

The European Grapevine Moth (EGVM) was first detected in a
Napa County in 2009, but quickly spread throughout the state,
leading to quarantine restrictions and a mass effort to
determine pest numbers through trapping. Quick collaboration
between University of California wine grape specialists, local
agricultural officials, state and Federal Government agencies,
and vineyard operators, helped identify the problem and
recommend a course of action leading to complete eradication.
Solutions included mating disruption techniques, vector
analysis and targeted insecticides to kill the insect. The last
EGVM detection in California was June 2014.\4\
---------------------------------------------------------------------------
\4\ Fitchette, Todd, ``California eradicates the European grapevine
moth'', Western Farm Press, August 18, 2016, http://
www.westernfarmpress.com/grapes/california-eradicates-european-
grapevine-moth.

Central Valley AgPLUS Food and Beverage Manufacturing
Consortium\5\ focuses on expanding opportunities along the
farm-to-fork supply chain, including initiatives to minimize
waste, improve distribution of foods, and contribute
significantly to increased trade, jobs and economic growth.
Multidisciplinary research at UC Davis has resulted in new
``smart'' technology for food-processing facilities. 90% of
water & chemicals from each cleaning cycle is captured and
processed for future use in the complex, eventually being used
as many as ten times.\6\
---------------------------------------------------------------------------
\5\http://cvagplus.org/.
\6\http://wineserver.ucdavis.edu/about/facilities/Jess-S-
Jackson.html.

CropManage\7\ is an UC ANR online database-driven tool that
assists growers and farm managers in determining water and
nitrogen fertilizer applications on a field-by-field basis. The
software automates steps required to calculate irrigation and
Nitrogen fertilizer needs. The web application also helps
growers track irrigation schedules and nitrogen fertilizer
applications on multiple fields and allows users from the same
farming operations to view and share data.
---------------------------------------------------------------------------
\7\http://ucanr.edu/blogs/cropmanage/
index.cfm?tagname=CropManage%203.0.

While these types of good news research projects are always
welcome, much of this accomplishment could not be achieved without the
underlying research infrastructure, provided through capacity funds,
being available to support projects funded by competitive grants. On a
different, but related subject, one potential solution to deepening
concerns over access to a trained workforce for the food and
agriculture sectors is a much broader utilization of 4-H programs. This
important youth development activity can serve as the beginning of a
pipeline directing both rural and urban youth to pursue higher
education with the potential for careers in food and agriculture--one
example of how capacity funding through Extension supports ongoing
programs that are interconnected to the workforce pipeline, as well as
other needs for the entire food system.
NIFA recently commissioned TEConomy Partners to conduct a national
survey on ``. . . whether capacity funding remains a productive model
for supporting academic institution-based research and Extension in the
21st century?'' The findings are strong and unequivocal in their
impact: financial leveraging through matching state and local funds of
at least $1.86 per $1 Federal sustains the specialized personnel and
scientific facilities and instruments, research station infrastructure,
and Extension operations needed for complex agricultural and associated
research programs; generates significantly higher volumes of
publications; provides flexibility to fund rapid response to
emergencies or emerging issues; allows long-term research, leading to
improved crop and livestock management; and provides a base of support
to successfully vie for competitive grants across all sizes of
institutions and Federal, state, and local agencies.\8\ For example,
about one in six patents in agriculture across the U.S. are based on
innovations resulting from Federal capacity funds.
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\8\National Evaluation of Capacity of Programs. Quantitative and
Qualitative Review of NIFA Capacity Funding. TEConomy Partners, LLC.
https://nifa.usda.gov/sites/default/files/resource/
NIFA%20Capacity%20Funding%20Review%20-%20TEConomy%20Final%20Report.pdf

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The infrastructure in most land-grant universities is aging,
inadequate, and, in many cases, obsolete. A national study of capital
facilities and deferred maintenance recently documented the magnitude
of the infrastructure problem that threatens to further erode the
United States' preeminent role in global food and agriculture. The
conclusions from this Sightlines LLC Study\9\ on the age of the
buildings, the lack of capital investment over time, and the levels of
deferred maintenance needs are sobering--the total deferred maintenance
cost is at least $8.4 billion. For the United States to remain a world
leader in food and agricultural research, this aging infrastructure
problem must be addressed.
---------------------------------------------------------------------------
\9\A National Study of Capital Infrastructure & Deferred
Maintenance at Schools of Agriculture. Sightlines, LLC. http://
www.aplu.org/projects-and-initiatives/agriculture-human-sciences-and-
naturalresources/DeferredMaintenance_SchoolsofAg.pdf.
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Given the size of the need, coupled with current goals to reduce
Federal domestic spending, many fear that there will be little appetite
to fund this issue within the 2018 Farm Bill. Given that, there is a
great deal of interest is seeing these research facilities included
within any infrastructure bill that the current Administration may
offer. However, it is difficult to anticipate what requirements might
be added to accommodate the interest in attracting private investment
to and federally-funded infrastructure projects. Typically, in these
models, the private investor requires strong assurance such as a
reliable revenue stream from tuition or bonds or some form of commerce
to leverage their risk. This is unlikely to be a model that will work
well for research facilities.
It will be important for Members of Congress to hear from leaders
in public agricultural colleges who request that research, teaching and
Extension facilities at public universities be included in the public
infrastructure projects eligible for any Federal program. Dealing with
the deferred maintenance of these facilities is of paramount need and
should be given strong consideration for new funding in the 2018 Farm
Bill. To stretch such dollars, it would be reasonable to require that
matching funds be required to receive Federal funds, similar to
language in the Research Facilities Act.\10\
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\10\Research Facilities Act [Act of July 22, 1963, Public Law 88-
74, 77 Stat. 90] [As Amended in P.L. 113-79, Enacted February 7, 2014].
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We are certainly willing to help carry a share of this load; as
example, UC ANR is currently pursuing $35 million in bonds to couple
with approximately $10 million from our reserves to deal with the
greatest needs at our facilities. This amount will bring us to a
functionally adequate level; it will not allow us to provide the 21st
century, state-of-the-art research facilities that are needed to truly
tackle the complex challenges we face today and in the future. To
pursue that need we are also:

Restructuring how our facilities are managed and ensuring
that recharge rates move closer to true cost accounting. This
allows reduced expenditure on updating and maintaining
equipment and can optimize use of the equipment.

Enhancing administrative collaboration between the campus
Deans and UC system-wide leadership to coordinate institutional
matches in support of major extramural grants.

Expanding the role of the Technology Management and
Corporate Relations division to provide additional support in a
variety of ways ranging from education and outreach programs to
commercialization through patenting, licensing and
entrepreneurship. These commercial partnerships can assist in
augmenting research funds and opportunities.

Reinvesting indirect funds into the research enterprise to
update facilities and equipment as able and thereby improve
competitive advantage for research contract and grants and
exceptional research recruitments.

In addition to these initiatives, we are also expanding and
formalizing partnerships to better connect the state's farmers with
each other and with science-based information sources to assure the
sustainability of the state's agricultural systems. To leverage
existing resources and better develop synergies among technical
assistance providers, representatives of UC ANR, UC Davis, the
California Department of Food and Agriculture, California Farm Bureau
Federation, California Association of Resource Conservation Districts,
and USDA Natural Resources Conservation Service (NRCS) recently signed
a formal agreement to form the California Farm Demonstration Network.
One early action from this partnership is that UC ANR and USDA NRCS are
developing shared positions to ensure coverage on agronomic sciences in
key crops. We are also exploring how to ensure that science developed
by UC ANR can be quickly adopted into the USDA NRCS Field Office
Technical guide, making it much more available for implementation by
farmers and landowners. One way the 2018 Farm Bill can assist this
partnership is to include provisions in the Conservation Title that
encourage preference of Cooperative Extension to serve as Technical
Service Providers.
In closing, there are several specific recommendations on various
farm bill provisions that we will offer as the legislative process
unfolds. However, I would be remiss not to mention four programs
especially important to California. Those include:
Specialty Crop Research Initiative (SCRI) 7 U.S.C. 7632
Congress provided $55 million in mandatory funding each fiscal year
for non-citrus research for FYs 2014-2018. SCRI is important to
California's agricultural research enterprise as nearly all of
California's crops are specialty crops and over 50 percent of the
nation's fruits and vegetables are grown here. Additionally, the 2014
Farm Bill created the SCRI Citrus Disease Research and Extension (CDRE)
program to combat Huanglongbing (HLB), which is a bacterial disease
spread by the Asian Citrus Psyllid (ACP). HLB is currently ravaging
Florida's citrus industry and has the potential to devastate Texas's
and California's citrus industries as well. Congress provided $25
million per year for FYs 2014-2018, for a total of $125 million. Our
recommendations are:

Reauthorize CDRE and maintain mandatory funding level of $25
million per fiscal year.

Reauthorize SCRI and maintain mandatory funding level for
SCRI at $55 million per fiscal year.

Within 7 U.S.C. 7632(h), strike the preference for ``multi-
state'' in how grants are prioritized. Many of the specialty
crops grown in California, such as tree nuts, dates, and
avocados, are not grown in any other state. Partnering with
institutions in other states is rarely feasible and often
impossible. This ``multi-state'' language can similarly harm
other states with similar circumstances and is fundamentally
unfair.
Education Grants for Hispanic-Serving Institutions 7 U.S.C. 3241
These competitive grants support STEM education programs in the
food and agricultural sciences at institutions with at least 25 percent
Hispanic enrollment. The farm bill has authorized the program at $40
million per fiscal year, but historically it has received
appropriations of $9-$10 million each fiscal year. This rapidly growing
segment of the U.S. population will be vital to efforts to fill
workforce needs in every aspect of the food and agricultural sectors.
Our recommendation:

Reauthorize the program and at $40 million per fiscal year
and work with appropriators to increase annual appropriations.
Sec. 10007 & National Clean Plant Network (NCPN) 7 U.S.C. 7721
The goal of the Sec. 10007 Farm Bill program is to ``prevent the
introduction or spread of plant pests and disease that threaten U.S.
agriculture and the environment [ . . . ] [the Animal and Plant Health
Inspection Service] APHIS provides funding to strengthen the nation's
infrastructure for pest detection and surveillance, identification, and
threat mitigation, while working to safeguard the nursery production
system.'' The 2014 Farm Bill significantly increased mandatory funding
for Sec. 10007, providing $62.5 million in FYs 2014-2017 and $75
million in FY 2018 for a total of $325 million. Our recommendations:

Reauthorize NCPN and increase mandatory funding levels from
$5 million per fiscal year to $6.5 million. UCR is home to the
Citrus Clonal Protection Program (CCPP), which is part of NCPN.
Since 2010, CCPP received over $4.4 million in NCPN funding
from FY 2010-2016.

Reauthorize Sec. 10007 and maintain mandatory funding level
of $75 million per fiscal year.
Specialty Crop Block Grants 7 U.S.C. 1621
The Agricultural Marketing Service (AMS) Specialty Crop Block Grant
Program (SCBGP) is designed to enhance the competitiveness of specialty
crops. Each year, the state Departments of Food and Agriculture submit
proposals to AMS to receive allocated pass-through funding ($22.4
million in FY 2016) for which land-grant universities are eligible to
apply. Our recommendation:

Reauthorize SCBGP and maintain mandatory funding of $85
million per fiscal year.

Faculty and staff at land-grant universities across the nation
recognize that their work takes place on behalf of a greater good, a
broader goal, and a common vision that is much bigger than their
individual achievements. Members of this House Committee on Agriculture
can be confident that every dollar of Federal investment authorized by
the 2018 Farm Bill and expended at land-grant universities will be a
wise investment. That investment is guaranteed to be leveraged further,
and to spawn innovation and discovery that will be translated into
solutions to improve the lives of U.S. citizens. I thank you for this
opportunity to provide testimony.

The Chairman. Thank you. Doctor.
Dr. Hill, 5 minutes.

STATEMENT OF WALTER H. HILL, Ph.D., DEAN, COLLEGE OF
AGRICULTURE, ENVIRONMENT AND NUTRITION SCIENCES; VICE PROVOST
FOR LAND-GRANT UNIVERSITY AFFAIRS;
RESEARCH DIRECTOR, USDA EVANS-ALLEN RESEARCH AND DIRECTOR,
GEORGE W. CARVER AGRICULTURAL
EXPERIMENT STATION; ADMINISTRATOR, TUSKEGEE
UNIVERSITY COOPERATIVE EXTENSION, TUSKEGEE
UNIVERSITY, TUSKEGEE, AL

Dr. Hill. Yes, and good morning. Chairman Conaway, Ranking
Member Peterson, and Members of the Committee, I come before
you today on behalf of the entire land-grant university system,
and we thank you for the opportunity to speak before you on
food and agriculture at 1890 land-grant universities.
August 30, 2015, Congress recognized the 125th anniversary
of the signing of the second Morrill Act, which created the
historically black land-grant universities. Today, these
universities are an integral part of the Board on Agriculture
Assembly of the Association of APLU, and we endorse the APLU
farm bill recommendations and budget priorities.
I want to say that we boldly assert that men and women of
talent and ability, regardless of their socioeconomic
condition, can contribute to the common good through hard work
and the opportunity to develop and prosper. In this regard, we
want to point to several budget items.
First of all, the 1890 land-grant university capacity
funding, and 1862 capacity funding, we fully support that, and
we want you to take note of the fact that the legislation
requires the 1890s have 30 percent of what the 1862s have for
research, and 20 percent for extension. We have not made that,
so please take a look at that in the coming year to get us to
full partners based on what Congress has done and said before.
The second one is the 1890 Capacity Building Grant Program.
For 100 years, the 1890s received minimum or no funding after
having been established for research or research facilities.
The Capacity Building Grants Program is trying to make up for
that. It actually was conceived in brilliance because it is
competitive. It brings out the best of us, it addresses the
nation's priorities, and critical is that it brings in the
partners; so other universities, producers, private-sector are
integral as we do that, get better in our competitiveness. We
are finding ourselves becoming more competitive in the overall
competitive grants program, not only with USDA but also NSF and
NIH. So that is one we want to keep and actually strengthen.
Then the 1890 Facilities Program, again, after 100 years,
you are in a race with 100 laps, and you begin and the other
partner is already 100 laps ahead. This is critical that we
have this small investment. It is really a tiny amount of
money, but it goes an extremely long way in refining our labs,
and what does that do. When I go and partner with California or
Texas, or Davis or Ohio, Illinois, Minnesota, those scientists
now partner well with us because we have better facilities, it
also attracts better scientists.
In terms of the APLU Deferred Maintenance and
Infrastructure program, we are 100 percent in support of that
program. There is one issue around that. Not even all of the
1890s have state matching funds, most 1862s have substantially
more. When it comes to facilities, it looks like this
initiative, as my colleagues have said, is going to require
state matching, private matching. For the 1890s to be in that
ball game, we are going to have to figure out a formula where
we might partner and leverage so that we can all benefit and
have cutting-edge facilities in that regard. And we can do it.
We have done some great things in Alabama partnering, and we
could even exemplify that across the nation if need be.
The 1890 Centers of Excellence, just want to say after 125
years we all came together. It has been a critical time as
scientists, came up with three excellent concepts, received $2
million to fund those for all 18 states, and we would just
challenge you to look at the record of what we accomplished
with that small amount of money. Had we received the $35
million we requested, or have some section more than that, we
would be magnificent. And the results are national in scope,
not just regional.
Congressman Scott has requested through H.R. 51, a $19
million scholarships for these schools.
Now, let me just say, in terms of farmers, aggressive,
technology-savvy farmers coming out, African American, other
minorities, in terms of all the career areas where the private
industry is crying because they don't have the diversity, this
would be some of your best-spent dollars, because you already
have the dynamic going. Now that we have funds to attract the
engineers, the students who have different capabilities and
interests to focus in on agricultural problems.
I just want to close by saying that Congressman Justin
Morrill, one of the founders of the Republican Party, and the
father of the land-grant institutions, established the second
Morrill Act and included conditions that former slaves, African
Americans, would not be discriminated against and be included
in the U.S. land-grant university higher education system.
Let's keep that going and improve on it.
Thank you.
[The prepared statement of Dr. Hill follows:]

Prepared Statement of Walter H. Hill, Ph.D., Dean, College of
Agriculture, Environment and Nutrition Sciences; Vice Provost for Land-
Grant
University Affairs; Research Director, USDA Evans-Allen Research and
Director, George W. Carver Agricultural Experiment Station;
Administrator, Tuskegee University Cooperative Extension, Tuskegee
University, Tuskegee, AL
Chairman Conaway, Ranking Member Peterson, and Members of the
Committee, on behalf of Dr. Kent J. Smith, Jr., President, Langston
University and chair of the 1890 Council of Presidents; Moses A. Kairo,
Chairperson of the Association of 1890 Research Directors (ARD) and Dr.
Carolyn Williams, Chairperson of the Association of 1890 Extension
Administrators (AEA) and the entire 1890 Land-Grant Community, I would
like to thank you for this opportunity to speak about research in food
and agriculture at the 1890 land-grant universities.
I am Dr. Walter A. Hill, the Vice Provost and Dean of the College
of Agriculture, Environment and Nutrition Sciences at the historic
Tuskegee University in Tuskegee, Alabama. Within the educational and
race equity context of the Morrill Acts of 1862, 1890 and the 1994
expansion; I serve local, regional, national and international
communities; I have been committed to the mission of the 1890 land-
grant universities for 37 years. I have taught and continue to teach
undergraduate and graduate students from the rural deep American South,
Black Belt, urban centers and international students from South
America, Africa, the Middle East and the Caribbean to engage in
research, agricultural, nutrition and science projects. My passion for
improving plant-environment relationships for sustainable agriculture
and advanced life support systems and aiding small and historically
disadvantaged farmers and rural communities also comprise collaborating
with residents, farmers, students and building integrated academic
research and consumer-community-building coalitions.
In addition, my career in agriculture education includes working as
the Director of the 1890 Land-Grant Research and Extension Programs,
the George Washington Carver Agricultural Experiment Station, founder
and director of the Carver Integrative Sustainability Center and
project director of the Wal-Mart Foundation-sponsored Sustainable
Agriculture Consortium for Historically Disadvantaged Farmers. I am
also the former Principal Investigator for the 1890 Land-Grant
University 125th Anniversary Center for Innovative and Sustainable
Small Farms, Ranches and Forest Lands.
There are three 1890 land-grant universities in the state of
Alabama from whence I live and work; Alabama Agricultural and
Mechanical University, Auburn University and Tuskegee University. It is
important to note, August 30, 2015, the United States Senate recognized
the 125th Anniversary of the signing of the Second Morrill Act which
created 19 historically Black land-grant universities. These
historically Black institutions are Lincoln University, Alabama
Agricultural and Mechanical University, Alcorn State University, the
University of Arkansas at Pine Bluff, Alabama Agricultural & Mechanical
University, Prairie View Agricultural & Technical University, Southern
University, Virginia State University, Kentucky State University, the
University of Maryland-Eastern Shore, Florida Agricultural and
Mechanical University, Delaware State University, North Carolina
Agricultural and Technical University, Fort Valley State University,
South Carolina State University, Langston University, Tennessee State
University, Central State University, West Virginia State University
and Tuskegee University.
I have intentionally shared the list of historically Black land-
grant universities and my work experience with this distinguished
Committee, only to emphasize the critical importance for U.S.
universities to teach agriculture, engineering, science, and nutrition
to its citizens. Within the context of the history of former slave
states and equitable education for all citizens of the United States,
it is an honor for me to represent the 1890 land-grant universities and
in particular the 19 historically Black institutions because--today in
the 21st century, there is a dire necessity for all U.S. institutions
of higher learning, to work in unity for the purpose of achieving
educational progress, agricultural assets and digital footprints for
agribusinesses, especially in rural and small communities.
Today, 1890 land-grant universities are proactive members of the
Board on Agriculture Assembly of the Association of Public and Land[-
g]rant Universities (APLU) and we have consistent hands on role in the
development of the APLU Board's proposed farm bill recommendations. We
endorse APLU's budget priorities, concerning funding needs and the
necessity to better integrate science and education programs into all
action and policy activities of the United States Department of
Agriculture (USDA). I will take this collegial occasion to emphasize
research result oriented information and data provided by historically
Black land-grant universities and introduce additional issues of
concern specific to 1890 land-grant universities in the new 2018 Farm
Bill rewrite legislation.
The Second Morrill Act passed by the Fifty-First U. S. Congress
served the educational needs of African American communities and
established the 1890 Land-Grant Universities. Although the Second
Morrill Act became law during times of great suffering and struggle for
African Americans, the 1890 Land-Grant Universities survived and were
productive; despite overwhelming odds, due to the commitment and vision
of many African American leaders within higher education and some white
visionary supporters. The same spirit of sacrifice and concern for
students and communities, exhibited by African Americans leaders of the
1890 Land-Grant Universities, embraces the faculty and administrators
today in 2017. This spirit, derived from the demographic philosophy of
these institutions and the conditions of their founding, is respected
worldwide. The general philosophy of the 1890 land-grant universities'
administrators boldly asserts, ``. . . men and women of talent and
ability, regardless of their socioeconomic condition, can contribute to
the common good through hard work and the opportunity to develop and
prosper.''
At the onset, I would like to thank you and the Committee for your
dedication and support to America's farmers and ranchers. Your support
of the 1890 land-grant universities promotes the equity, opportunity,
productivity and profitability of our farmers and the health and safety
of all Americans.
Key Issues for the 1890 Land-Grant Universities
On behalf of my 1890 land-grant universities colleagues, I am
honored to present the following key issues to you:

1. The critical need for increased investments; and

2. Appropriate funding mechanisms.
The Critical Need for Increased Investments
I am deeply heartened by the recent calls to increase
significantly, the investment in agricultural research, extension and
education. It is remarkable that so many diverse interests are coming
together with an understanding of an urgent need to reinvest in the
science and education base serving our farmers and our communities. It
is important to note, over the last several decades, according to USDA/
Economic Research Service, the U.S. agricultural sector has sustained
impressive productivity growth. Our nation's agricultural research
system, including Federal-state public research as well as, private-
sector research, has been the key driver of this growth. Economic
analysis finds strong and consistent evidence that investment in
agricultural research has yield high returns per dollar spent. These
returns included benefits not only to the farm sector, but also to the
food industry and consumers in the form of more abundant commodities at
lower prices. There is consensus that the payoff from the government's
investment in agricultural research is high. We know, the return on
investment in agricultural research is $20 for every $1 spent.
The 1890 land-grant universities look forward to working with all
the farm and interest groups who are working to enhance our abilities
to serve their needs. As we support critically needed investments in
agricultural research, extension and teaching, it is essential that the
specific funding needs facing the 1890 land-grant university community
also be addressed. Now, I would like to convey some of our specific
recommendations to meet the unique needs of the 1890 land-grant
universities and the communities we serve.
The 1890 Cooperative Extension programs are comprised of a broad
range of science based educational efforts, which have been proven to:

1. Strengthen the food and agricultural industry, particularly small
and limited resource farmers, by developing agricultural
production systems that are efficient, sustainable and
highly competitive in the global economy.

2. Enhance the health of families through diet and nutrition and
food safety education and their economic well-being through
practical financial education.

3. Enhance youth skills in science, technology, math, citizenship
and leadership.

4. Foster strong, stable communities through leadership development
efforts and encouraging entrepreneurship.

103 years ago the Smith Lever Act established the effective
Cooperative Extension Service. For the more than a century, the
Cooperative Extension has developed transformation programs that have
improved the economic viability of small-scale agriculture and reduced
the decline of small minority-owned farms from century to century,
including today in the 21st century.
Programs emphasizing agricultural diversification, marketing
strategies and risk management have been of paramount importance to
this client group. Many of the small farmers have diversified their
operations to include vegetable production, fruits, specialty crops and
animals to increase their cash flow. For example, the 1890 land-grant
university, North Carolina Agricultural and Technical University (North
Carolina A&T) developed the Natural Hog Growers Association and
increased its association's membership hog-sale income by nearly a
million dollars in North Carolina and signed a contract with the Whole
Food Market. In addition, 1890 land-grant university, Florida
Agricultural and Mechanical University's (Florida A&M) development of
the Master Meat Goat Herdsman Program has saved producers over $16,250,
annually, in the state of Florida's veterinarian and production costs.
In Alabama, farmers participating in a comprehensive program in
record keeping, fiscal management, production management and farm
planning have become producers that are more efficient. It was reported
that 13 farmers acquired USDA farm ownership loans in the amount of
$2.6 million and ten acquired operating loans for nearly $1.0 million.
Without this training, the farmers would not have qualified for the
loans. Programs of this nature enabled the limited-resource farmers in
Kentucky to increase their net farm income by $4,500.00.
Increase the Funding Base of 1890 Land-Grant University Capacity
Funding
We fully support the reauthorization of capacity programs funding
for both 1862 and 1890 land-grant institutions. The amount of capacity
funds available to Second Morrill Act 1890 land-grant universities is
lesser than the amount of funds made available to our colleagues
categorized under the auspices of the First Morrill Act 1862 land-grant
universities. Currently, the legislation requires that the funding base
of the 1890 land-grant university formula research funding (Section
1445) should be set at an amount equivalent to but not less than 30% of
the 1862 land-grant university capacity funding (The Hatch Act of
1887). The 1890 land-grant universities' research program (Evans-Allen)
currently received 22% of the 1862 land-grant universities' capacity
funding.
Therefore, it is within the context of educational equity, that we
are requesting the authorized amount of 30 percent. Similarly, the 1890
Cooperative Extension formula funding (Section 1444) is currently set
at an amount equivalent to but not less than 20% of the 1862
Cooperative Extension formula funding (Smith Lever Act signed May 18,
1914). Within the historical context of the purpose of Smith Lever
which established the USDA Cooperative Extension Service; for us, the
1890 Second Morrill Act land-grant institutions to be able to implement
what was written in the 125th 1890 Land-Grant University Anniversary
Resolution announced by U.S. Senator Sherrod Brown to ``disseminate
information about agriculture and economics.'' We are requesting to
receive the authorized amount of 20 percent because the funding will
financially help the 1890 land-grant universities fulfil their duty to
help the United States train agricultural leaders and enhance
agricultural development for the nation.
As an example of the importance of capacity funding, USDA/NIFA
(National Institute of Food and Agriculture)-funded researchers at
land-grant university Prairie View Agricultural & Mechanical University
(Prairie View A&M) has created an agricultural robot capable of carry
multiple sensors, including one that can detect crop height, a multi-
spectral camera, and hyperspectral radiometer for processing
information from across the electromagnetic spectrum. Robots in
agriculture including self-driving tractors, drones and other machines
that perform tasks such as precision weeding and spraying, pruning
vines in the wine industry, and herding cattle. Agricultural engineers,
such as the ones at Prairie View A&M, with robotics knowledge are in
high demand because of advanced robotics unmanned agricultural vehicles
are becoming widely used in precision agriculture.
NIFA-funded researchers at North Carolina A&T State University
(N.C. A&T) have developed a safe, relatively simple technology for
deactivating the allergenic proteins in whole roasted peanuts. The
patented technology relies on treating whole roasted peanuts with
various food-grade enzymes. Repeated laboratory trials using extracts
from treated peanuts at N.C. A&T, as well as an initial clinical trial
using skin-prick tests at the University of North Carolina at Chapel
Hill, have shown promising results. Laboratory tests indicate
allergenic proteins can be reduced by up to 98 percent. Researchers
have also worked on applying the technology to wheat protein allergens.
One of the greatest advantages of this technology is its potential to
produce peanut products that can reduce the severity of allergic
reaction in the case of accidental exposure.
Estimates vary as to the numbers of people who suffer from peanut
allergy, but health officials agree it is one of the most severe and
prevalent food allergies. A report from the National Institute of
Allergy and Infectious Diseases in 2010 reported that the numerous
studies on the issue, some based on self-reports, estimate the
prevalence of peanut allergy in the United States population ranges
from 0.6 percent to 1.3 percent (2-4 million people). According to the
American College of Allergy, Asthma and Immunology approximately
400,000 children in the U.S. suffer from the allergy. Making matters
worse for them, peanut allergy is rarely outgrown, unlike many other
food allergies.
Reauthorize the 1890 Capacity Building Grant Program
The 1890 Capacity Building Grants Program has played a critical
role in helping us build our capacities in research, extension and
teaching. This program has allowed us to attract new faculty, enhance
our ability to conduct quality research, has enabled us to carry out
needed curriculum development programs, and has permitted us to enhance
the delivery of our extension and engagement programs. We also
recommend that the authorized funding level for this program be
continued.
A $150,000 grant from NIFA's 1890 Capacity Building program helped
Fort Valley State University create a bioinformatics curriculum where
students learn to transform biological research into informational
science. In this program, science, technology, engineering and
mathematics (STEM) majors join with computer science majors to become
competent bioinformatics programmers and gain hands-on experiences in
writing algorithms and coding for biological problems.
Bioinformaticians use computers to store, organize and analyze the vast
amounts of data generated by scientific research.
Reauthorize the 1890 Facilities Grant Program
We outstandingly recommend reauthorizing the 1890 Facilities Grant
Program (Section 1447) at the authorized funding level. The 1890 land-
grant universities have a clear and immediate need to improve their
academic, research and extension physical facilities. There is also an
urgent need to adequately equip these facilities with 21st century
state-of-the-art equipment. Years of limited resources have taken their
toll on the institutions and needed improvements cannot be delayed.
Meanwhile, modern technologies require updated and additional resources
and modifications to existing facilities. Without the needed
improvements and technology upgrades, it becomes more and more
difficult to recruit and train the highest quality scientists and other
educational professionals for the future. We therefore, urge your
support of authorization for the 1890 Facilities Grant program.
APLU Deferred Maintenance and Infrastructure Program
A recent Association of Public and Land-Grant Universities (APLU)
audit (inclusive of 1862, 1890 and 1994 land-grant institutions and
Hispanic-serving institutions) estimated $8.9 billion in deferred
maintenance of mission-critical buildings, including classrooms and
laboratories, animal and plant research houses/farms, greenhouses, and
pilot facilities with a $29 million replacement value. Investments in
academic research infrastructure would immediately create local jobs,
conserve energy, and realize savings over time, in addition to
improving research, education and extension outcomes. For the U.S. to
remain the world leader in food and agricultural research, the aging
infrastructure and deferred maintenance problem must be addressed.
Requested is an infrastructure program that leverages, Federal, state
and private-sector funds and benefits local, state, regional and
national interests, as recommended by APLU.
Change the Carryover Provision for 1890 Extension Funding
The 1890 land-grant universities can only carryover 20 percent of
its Extension funding after 1 year while other capacity programs can
carryover their funding at 100 percent for 1 or more years. The 20
percent carry-over provision limits the flexibility needed for planning
and expending the funding based on identified priorities. We are
requesting that the carryover provision for 1890 Extension be changed
from 20 percent to a carryover level that would be consistent with the
carryover provision for other capacity programs such as Smith-Lever.
This will provide the same carryover opportunity for Extension capacity
funds for both 1890 and 1862 institutions.
Increase the Funding Base for McIntire-Stennis (Forestry) funding
We recommend increased funding targeted to forestry issues
(McIntire-Stennis) at the authorized level. Many of our institutions
abide in states where forestry is a major agricultural industry and
these institutions have forestry and natural resource programs that are
germane to the forestry industry and applicable to the current program
eligibility guidelines. For example, Tuskegee University offers the
Pre-college Summer Program in Forestry, National Resources and Related
STEM Areas for 7th and 8th graders and high school students. Each
program creates an awareness of the educational and career
opportunities that are available in Science, Technology, Engineering,
Agriculture and Mathematics.
Nutrition Education Program (Expanded Food and Nutrition Education
Program)
Nutrition education is important to the health and well-being of
all families, but there is a tremendous need for this program for
persons with limited income. EFNEP help individuals to improve their
diets and change their food buying behavior. It is recommended that
EFNEP be reauthorized at its current level of $90 million. 1890 land-
grant university, Southern University and Agricultural & Mechanical's
(Southern University and A&M) Food Desert Project takes a critical look
at the dual food issues of obesity and lack of access to nutritious
food as issues being addressed through innovative programs at Southern
University and A&M. Obesity and correlated health conditions have a
$100 billion a year impact on the U.S. health care system, and Southern
University and A&M is responding with an Extension-based initiative,
``Eradicating Food Deserts in Neighborhoods through the Development of
School Gardens.'' Three area schools and 500 students have been
reached. The Nutrition Education Program is critical to all communities
especially vulnerable people who live in the most economically
impoverished rural, urban regions and neighborhoods which comprise the
geographic locations of the 1890 land-grant universities.
Authorize the 1890 Centers of Excellence
We recommend authorization of the 1890 Centers of Excellence at a
funding level of $35 million per year. These Centers were developed and
initiated in 2015 in recognition of the 125th Anniversary of the Second
Morrill Act of 1890. They include: (1) Center for Innovative and
Sustainable Small Farms, Ranches and Landowners (CISFRL), (2) Center of
Excellence for International Engagement and Development (CEIIED), and
(3) Virtual Center to Motivate and Educate for Achievement (MEA).
In recognition of the 125th Anniversary of the Second Morrill Act
of 1890, several USDA agencies committed $2 million to the 1890 land-
grant universities to support the former two centers. The goals of the
Anniversary Centers are to substantially increase diversity in the STEM
pipeline, increase profitability and jobs in under-served farming
communities and enhance talent preparation related to global food
security. The 1890 land-grant universities are working in an
integrative fashion across multi-disciplines and in partnership with
the private-sector, government and community-based organizations to
make a difference and obtain measurable impacts on the lives of under-
served youth, farmers and developing communities who hold enormous
potential. Although the funds from these USDA agencies were used
prudently to support under-served small farmers and students at our
institutions, these funds were woefully inadequate.
Through the years, the 1890 land-grant universities have struggled
with inadequate funding resources to meet the especially challenging
needs of under-served communities. The proposed Centers of Excellence
would be utilized to help address historical inequities of resources
and to allow our institutions the opportunity to work collaboratively
and synergistically to help our stakeholders while concurrently
effectively competing for other funding resources. These Centers of
Excellence would jump-start new initiatives on the 1890 land-grant
campuses, particularly developing resources to provide practical
solutions to improve job opportunities and the quality of life of
citizens in the 1890 land-grant universities' regions and beyond.
As I mentioned earlier, the Center for Innovative and Sustainable
Small Farms, Ranches and Forest Lands (CISFRL) was initiated in 2015 as
an outcome of the 125th Anniversary of the 1890 Land-Grant
Universities. In its first year of operation, approximately 70 farmer
clusters or cooperatives, including five or more owners, were created
or operationalized in the seven states that initiated the CISFRL, based
on competitive proposals. These clusters and cooperatives included
hundreds of farmers, ranchers, and landowners. CISFRL has catalyzed
farmers, ranchers and landowners working together with universities and
the private-sector and state governments to leverage their strengths
and resources by working with like-minded producers. Among their
successes has been to obtain new markets (including large commercial
retailers), who require larger quantities of produce delivered on a
consistent basis than a small farmer can supply alone. The cluster
approach (farmers working together) has enhanced GAP and food safety
certifications, soil testing, pest management, irrigation, other
sustainability practices and improved partnering with USDA agencies.
Specific achievements after the first year of operation include:

Increased marketing of vegetables to large commercial
retailers (Wal-Mart, Kroger);

Increased irrigation capacity for vegetable production;

Joint purchase of equipment for crop spraying and animal
pregnancy testing;

Joint purchasing of coolers to increase the shelf life of
fresh produce and refrigerated trucks for transporting fresh
produce;

Access to modern packing and shipping facilities;

Conducted collectively over 80 workshops and conferences in
partnership with USDA agencies, community based organizations
for farmer training on FSA, NRCS, FS and APHIS programs and
modern technologies; and

Trained and provided information to small and limited-
resource land owners on forest health, pests, invasive species
and fire and disease control, and assisted in developing
management plans for 422 landowners.
Reauthorize the Outreach and Technical Assistance for Socially
Disadvantaged Farmers
We recommend reauthorizing the Socially Disadvantaged Initiative
(Section 2501) Program at a level not less than $20 million per year.
This program allows the 1890 land-grant universities and other
Community Based Organizations to work cooperatively directly in a
sustained way with small farmers. We have had tremendous success
providing training in risk management, record keeping, farm management
environmental stewardship, and alternative enterprises and market
development. We train small farmers to access new and alternative
markets for their crops and animal commodities. This program has made a
dramatic impact on increasing the economic viability and sustainability
of these small and limited resource farmers. This critical program
should be sustained and strengthened and other small farm programs
should be established as a safety net for all such farmers in this
category. Comparatively, this group of farming clientele has been
vertically ignored in terms of specially targeted programs. We
therefore, ask the Committee to rectify this oversight by providing
sufficient funding for this program to provide sustained impact.
Authorize Student Scholarships for the 1890 Land-Grant Universities
As introduced by Representative David Scott of Georgia, we request
support for H.[R]. 51 to amend the National Agricultural Research,
Extension, and Teaching Policy Act of 1977 to direct the Secretary of
Agriculture to establish a grant program under which the Secretary will
award $19 million per year ($1 million to each institution) for student
scholarships. This scholarship program is needed to increase the number
of young African American individuals seeking a career in the food and
agricultural sciences and shall be provided with the caveat that such
scholarship students shall commit to pursue a career in the food and
agricultural sciences, including agribusiness, food production,
distribution, and retailing, the clothing industries, energy and
renewable fuels, and farming marketing, finance, and distribution.
Agriculture critically needs a steady supply of diverse individuals
with modern agricultural and scientific knowledge and training to
support the agricultural industry and R&D enterprise. This requires an
ability to translate complex technical knowledge to end-users,
particularly farmers and livestock producers, while recognizing the
local needs and constraints. According to a recent Purdue University
study, the employment opportunities are tremendous for college
graduates in food, agriculture, renewable natural resources and the
environment; the demand for these graduates exceeds the supply by 39
percent.
Appropriate Funding Mechanisms
We would like to commend the leadership of USDA/NIFA and the Land-
Grant University community in the development of the new AFRI
competitive grants program, America's flagship competitive grants
program for the agricultural sciences. The Department staff and others
went the extra mile to make sure that our institutions were fully aware
of the new program and gave us the opportunity to compete as equal
partners in the process. The 1890 Land-Grant Universities achieved some
success, however, with enhanced support to increase our competitiveness
we will do even better in the future.
We recommend increased funding at a level of $418 million per year.
While we support competitive grants, many of the programs that we
provide need to be sustained over time. Short-term competitively
awarded projects do not adequately serve the longer-term needs of the
under-served populations that we serve. Long-term capacity funding
funds provide the necessary sustained funding that is required to truly
build capacity. Again, we support competitive grants, but it is not the
only funding tool and it is not always the most effective mechanism to
meet our needs and the needs of the people we serve in rural and urban
communities.
Small Farms/Specialty Crops
The researchers and extension specialists have focused their
efforts of helping improve the quality of life and increasing the
income/profitability levels of small and undeserved farm operators in
the 1890 land-grant universities' regions and beyond, including an
emphasis to increase the competitiveness of specialty crops and organic
crops. Small farms make up 90 percent of the farm count and operate
nearly half of the farmland, but only account for 24 percent of the
production. The largest share of farm production, however, occurs on
the large-scale family farms. According to the Economic Research
Service and other researchers, specialty crops typically account for 30
to 40 percent of the total value of U.S. crops, not an insignificant
value.
Even before the increased attention given to specialty crop issues
in the 2008 Farm Bill, the 1890 land-grant universities have been
assisting specialty crop producers to increase the quality of these
products and to develop a market niche.
Specialty crop issues often vary depending on the type of crop
involved and the type of market in which they are sold. Among the crops
important to producers that the 1890 land-grant universities'
researchers and extension specialists have focused on include, but are
not limited to, ethnic crops such as Brassica rapa cv. Bosai Chinensis
(Bok choy), Amaranthus viridis Linn (Amaranth or Callaloo), and
Hibiscus sabdariffa L. (Hibiscus or Jamaican Sorrel); energy beets;
ginger; carrots; kale; specialty peanuts; grapes; watermelon;
blueberries: vegetable soybeans (edamame); Indian, Chinese and Hispanic
vegetable crops; sweet potatoes, southern peas, squash, and eggplant;
mushrooms; and herbs.
Among the issues important to producers that the 1890 land-grant
universities' researchers and extension specialists have focused on
include, but are not limited to, sustainable production practices,
planting flexibility restrictions, irrigation programs, labor, food
safety, marketing and trade patterns, integrative pest management, and
risk management.
With NIFA funding, researchers at Delaware State University have
focused on the sweet potato as an alternative agriculture enterprise in
Delaware. Sweet potato has become a popular crop for millions of people
in Africa, Latin America and south-East Asia. It is a cheap source of
carbohydrate and vitamins including vitamin A. In the USA, Louisiana
and North Carolina are the largest producers of sweet potato. However,
it is becoming popular in other parts of the country including
Delaware. To develop suitable varieties in Delaware climate and soil,
Delaware State University researchers started varietal trial during
2012 and 2013 growing season at SORC. There were four varieties planted
on sandy loam soil with pH 5-6.5 on the tilled bed of 3 width covered
with black plastic. All varieties did well during 120 days of growing
period in the state of Delaware. This research has demonstrated that
sweet potato can be grown as alternative agriculture enterprises in
Delaware. These four varieties are characteristically different for
skin color, flesh color, taste and everyone can pick which they like.
With NIFA funding, researchers at Florida A&M University have
focused on ``biochar technology'' and its potential for sustainable
agriculture and carbon sequestration, including small and specialty
crop farms. Mitigating the anthropogenic increased atmospheric
CO2 and environmental pollution are also major concerns of
our society. Finding an economic and ecological feasible solution to
those major problems is certainly not an easy task. However, the
development of biochar technology may provide a promising means that
contribute to the solutions of those global problems. Biochar
technology turns portion of the plant materials produced every year
into a ``charcoal'' form and a soil amendment. Biochar enhances soil
water and nutrient holding capacity, reduces fertilizer use and its
pollution to the environment. Biochar probably is the only viable
technology so far that can significantly sequester atmospheric carbon
and mitigates the anthropogenic effect on climate change. The findings
revealed that showed that biochar as a soil amendment can increase soil
productivity and sequester carbon to various degrees depending on the
properties of the biochar and the soil receiving the treatment.
Additional research is needed to fully realize the optimal use of the
technology in various field conditions. The researchers at Florida A&M
University have also initiated a design of a low-cost biochar
production system that can facilitate the wide spread usage of the
technology. Their research, education and outreach efforts revealed the
benefits of biochar technology in enhancing agricultural productivity
without increasing fertilizer use and in the meantime, sequestering
carbon from the atmosphere.
With NIFA funding, researchers at land-grant university, Tuskegee
University are leading a consortium of universities that is addressing
development of organic farming in southeastern states through
education; conducting of research, and development of extension
materials for farmers in the region; testing organic pesticides against
major pests of southern peas, squash, sweet potato, and tomato; and
providing site specific recommendations to organic growers through
organized advanced multi-location, multi-state on-farm trials.
Tuskegee University's Integrated Research and Extension programs
with small farmer clusters and small farmer cooperatives have
facilitated production and marketing vegetables to large commercial
retailers to increase profitability and jobs. Successes have included
adaptive irrigation and solar energy technologies to enhance production
efficiencies, and partnering of small farmer clusters with medium sized
farmers for consistency in produce quantity and quality delivered.
Conclusion: Investing in the Future
In conclusion, I would like to thank the Committee for the
opportunity to submit my testimony today on behalf of the Second
Morrill Act and Smith Lever Act 1890 land-grant universities. The First
Morrill Act was established in 1862, 1 year before President Abraham
Lincoln issued the Executive Order of the Emancipation Proclamation
(January 1, 1863) which changed the Federal legal status of enslaved
Black people from slave to freed persons. Congressman Justin Morrill,
one of the founders of the Republican Party and the Father of Land-
Grant Institutions established the First Morrill Act (1862) to create
public colleges and universities and to provide quality education for
all citizens of the United States. In fact, the Second Morrill Act
(1890) included the condition that former slaves, African Americans
would not be discriminated against and would be included in the U.S.
Land-Grant University Higher Education System. Congressman Morrill
said, quote:

``Having emancipated a whole race, shall it be said that
there our duty ends, leaving the race as cumberers of the
ground, to live or to wilt and perish? They are members of the
American family, and their advancement concerns us all. While
swiftly forgetting all they ever knew as slaves, shall they
have no opportunity to learn anything as freemen?''

Within the historical context of Congressman Justin Morrill's
concern, belief and vision for higher education in the United States,
as well as, our collective institutions' contributions to educational
development and leadership; we are looking forward to working with the
U.S. House Committee on Agriculture and our colleagues in the
university community, as we move through the reauthorizing of the 2018
Farm Bill. Please, we urge you, to use this historic moment, this
significant opportunity, to invest in the nation's 1890 land-grant
universities and in the future of all farmers, communities and people
we serve.

The Chairman. Thank you, Dr. Hill.
Dr. Tallant, 5 minutes.

STATEMENT OF STEVEN H. TALLANT, Ph.D., PRESIDENT, TEXAS A&M
UNIVERSITY-KINGSVILLE, KINGSVILLE, TX

Dr. Tallant. Good morning. I am Steven Tallant, President
of Texas A&M University-Kingsville, and here today on behalf of
the Hispanic Association of Colleges and Universities. Chairman
Conaway, Ranking Member Peterson, my good friend and fellow
south Texan, the Honorable Filemon Vela, and fellow Members of
the House Agriculture Committee, thank you for the opportunity
to speak with you today.
The scarcity of Hispanic participation in agriculture-
related academic programs and professional ranks within the
industry is made worse by the relatively low level of Federal
agricultural investments in HSIs. This Committee recognized
this disparity and included the Hispanic-serving agricultural
colleges and universities authorizations in the previous farm
bill. And I will refer to those as HSACUs from now on.
A&M-Kingsville's enrollment has been over 60 percent
Hispanic since the formation of the HSIs, and over 50 percent
of our graduates in agriculture are Hispanic. A&M-Kingsville's
agricultural students consistently win state and national
awards. These awards reflect the commitment of our faculty, the
excellence of our academic programs, and the diligence of our
students to constantly strive for success. However, one area of
concern is our aging agricultural research infrastructure. This
problem has been highlighted at universities doing agricultural
research across the United States.
A&M-Kingsville has been working with the agricultural
community since 1948. We have three agricultural centers of
expertise; the Citrus Center, the Caesar Kleberg Wildlife
Research Institute, and the King Range Institute for Ranch
Management. Our Citrus Center has helped the industry recover
from devastating freezes, and deal with multiple disease
threats like greening and phytophthora. The other centers help
our livestock and wildlife industries deal with cattle tick
fever and other issues. These industries represent over $5
billion in Texas. Our alumni have gone on to manage
multimillion dollar agricultural enterprises and Federal
agencies to help advance agriculture.
Today, our faculty and students participate in over $12
million in annual agricultural research expenditures. This
includes over $5 million from USDA programs, and we leverage
these funds to attract an additional $7 million annually. These
research dollars have made dramatic improvement on our
retention, graduation rates, and participation in graduate and
other professional degrees. We have actively participated in
competitive grant programs, including USDA grants, and ten
percent of our student participants in these programs have gone
on to complete graduate and professional degrees.
I would like to include one example. Veronica Acuna was one
of our master students, funded by you through an HSI grant. She
went on to complete her Ph.D., and today, Dr. Acuna is a
faculty member at our Citrus Center where she researches
critical issues like Citrus Greening and water use. Last year,
she was awarded the Rising Star Award by our alumni
association. All of this is possible because of your
investments in HSIs.
This Committee has long supported the value of agricultural
research through the development of the land-grant system and
minority-serving agricultural research programs. They have also
recognized the potential value that HSACUs can contribute to
agricultural research. We need this cooperative approach, and
we ask the Committee to maintain the authorizations and funding
level for the six HSACU programs included in the 2014 Farm
Bill. To truly achieve the objective of increasing Hispanics in
agriculture, we also urge Members of this Committee to work
with your colleagues, particularly those on the Appropriations
Committees, to provide the funding needed to carry out these
programs effectively. Given the low number of Hispanics in
agriculture-related careers, the creation of a pipeline of
researchers and research at HSACUs at all levels would
strengthen the research capacity of these institutions and help
meet employer demands. Hispanic-serving institutions are the
most important pipeline for increasing Hispanic success in
higher education and the involvement in agricultural research
opportunities. HSACUs can better serve the nation if the
necessary investments are made. This was the intent of this
Committee when HSACUs were authorized in 2008, and I believe
this should be a priority in the next reauthorization of the
farm bill.
Thank you.
[The prepared statement of Dr. Tallant follows:]

Prepared Statement of Steven H. Tallant, Ph.D., President, Texas A&M
University-Kingsville, Kingsville, TX
Introduction
Chairman Conaway, Ranking Member Peterson, our Representative, the
Honorable Vela of Texas' 34th Congressional District, and fellow
Members of the House Agriculture Committee thank you for the
opportunity to speak with you today about Hispanic-Serving Institutions
(HSIs), the unique opportunities offered by Hispanic-Serving
Agricultural Colleges and Universities (HSACUs), and ways to streamline
and prioritize agricultural research programs as part of the next
reauthorization of the farm bill.
My name is Steven H. Tallant and I serve as President Texas A&M
University-Kingsville (A&M-Kingsville). Prior to joining A&M Kingsville
in 2008, I served as provost and vice chancellor for academic affairs
at the University of Wisconsin-Eau Claire. Before my academic career, I
served twenty years in the military with a stint as the Chief of Air
Force Family Research based at the Pentagon.
Texas A&M University-Kingsville
A&M-Kingsville, chartered in 1917 but not opened until 1925 because
of America's entry into World War I, the University is the oldest
continuously operating public institution of higher learning in South
Texas. After years of growth and expansion, the University became a
member of the Texas A&M University System in 1989. Most of A&M-
Kingsville's approximately 9,200 students come from South Texas, but
there is wide diversity in the population, with students from more than
35 states and more than 43 countries. Seventy-four percent of students
are undergraduates. Ethnically, the campus reflects the demographics of
the area, with 62 percent of the students Hispanic, 27 percent white,
and five percent African American.
With a focus on teaching and research, A&M-Kingsville boasts
several renowned research centers that evolved from the natural
environment of the region. The Caesar Kleberg Wildlife Research
Institute, Citrus Center, King Ranch Institute for Ranch Management and
National Natural Toxins Research Center are well-known throughout the
world. In the past 6 years, new centers such as the Eagle Ford Center
for Research, Education and Outreach and the Institute of Architectural
Engineering Heritage were created in response to regional needs and are
well on their way to achieving widespread recognition.
A&M-Kingsville is a member of The Texas A&M University System,
although an independent campus and not part of Texas A&M University
land-grant status. The A&M System is one of the largest systems of
higher education in the nation, with a budget of $3.8 billion. Through
a statewide network of 11 universities, seven state agencies. The A&M
System educates more than 131,000 students and makes more than 22
million additional educational contacts through service and outreach
programs each year. Externally funded research expenditures exceed $820
million and help drive the state's economy.
As President of A&M-Kingsville and as a long-standing member of the
USDA/Hispanic Association of Colleges and Universities (HACU)
Leadership Group, I have had the opportunity to develop a working
relationship with the Department of Agriculture (USDA). The Leadership
Group is a national body of USDA and HSI leaders appointed by the U.S.
Secretary of Agriculture and the President and CEO of HACU. Its purpose
is to recommend policies and programs to strengthen USDA partnerships
with HSIs and provide leadership and strategic direction to the USDA
Hispanic-Serving Institutions National Program Office.
Hispanic-Serving Institutions
HSIs are defined in Title V, Part A of the Higher Education Act, as
amended, as accredited, degree-granting, public or private nonprofit
institutions of higher education with 25% or more total undergraduate
Hispanic full-time equivalent (FTE) student enrollment. In addition,
over 50% of the students must qualify for Federal aid.
A&M-Kingsville is one of 472 HSIs in 19 states and Puerto Rico as
of the 2015-2016 academic year. HSIs are 13.8 percent of the total
nonprofit colleges and universities, yet enroll 23.4 percent of all
students and 62.3 percent of all Hispanic students in higher education.
The number of HSIs is rapidly growing, from 137 institutions in 1990,
to 229 in 2000, 311 in 2010 and 435 in 2014.
The continued growth in the number of HSIs can be projected from
the 323 ``emerging'' HSIs, institutions with enrollments that are 15-
24.9 percent Hispanic. This is up from 2014-2015 when 310 institutions
met this criteria in 34 states, including Washington, D.C. Due to rapid
Hispanic population growth and the increasing number of Hispanics in
post-secondary education, most of these emerging HSIs are expected to
become HSIs within the next decade.
Role of Research in Agriculture and HSIs
For many decades, the United States has been the world leader in
the sciences, but it is currently experiencing shortages of scientists,
and this has allowed other countries to challenge its economic strength
and leadership in science.\1\ Hispanic Americans and other minority
groups represent an untapped pool of talent that could be used to fill
this shortage in science, if adequate funds are applied to train these
promising domestic undergraduate and graduate students.
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\1\http://ehrweb.aaas.org/mge/Reports/Report1/AGEP/index.htm.
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Agricultural research plays an incredibly important part of our
food and agricultural economies. The need for research in this area is
well documented. The complexity needed to be successful and competitive
has also increased. Related socioeconomic research is also critical to
the strategic advancement of U.S. agriculture and it plays a key role
in the planning and development of new curricula and degree programs,
as well as in the strengthening of current ones.
While Hispanics represent more than 18 percent of the U.S.
population or over 57 million individuals, Hispanic students make up
less than eight percent of agriculture majors in institutions of higher
education.\2\ By comparison, Hispanics make up 29 percent of those
working in the agriculture industry, where overwhelmingly, those 2.5
million Hispanics labor as farmworkers cultivating and harvesting
crops, raising and tending livestock and doing other work that does not
require a college degree.
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\2\http://www.pewhispanic.org/2016/04/19/statistical-portrait-of-
hispanics-in-the-united-states-key-charts/.
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In 2015, only 15.5 percent of Hispanic adults held a bachelor's
degree compared to 26.2 of non-Hispanic whites. In 2014, the median
household income of Hispanics was $42,491, whereas the median household
income of non-Hispanic whites was $60,256. Bearing in mind these
educational and income disparities facing the U.S. Hispanic population,
and the low percentage of Hispanic agriculture majors, it's likely that
very few are occupying executive, management, or research positions
within the sector.\3\
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\3\https://dl.sciencesocieties.org/publications/sh/articles/54/3/
sh2013-54-3-rc.
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The scarcity of Hispanic participation in agriculture-related
academic programs and professional ranks within the industry is made
worse by the relatively low level of Federal investments and allocation
of resources to HSIs. There are over 100 HSIs that awarded at least 15%
of their degrees in agriculture-related fields over the 2 most recent
academic years. However, they receive no dedicated funding to promote
or sustain the enrollment of Hispanics in agriculture-related academic
programs, as well as the development and maintenance of the required
research infrastructure. These institutions can earn the designation of
HSACUs.
Hispanic-Serving Agricultural Colleges and Universities (HSACUs)
The HSACUs cohort was established as part of the 2008 Farm Bill in
response to the low number of Hispanics in agriculture related fields.
HSACUs are defined as:

(1) Colleges or universities that qualify as HSIs;

(2) Offer associate, bachelors, or other accredited degree programs
in agriculture-related fields; and

(3) Hispanic students must receive at least 15 percent of the
degrees awarded in agriculture-related programs over the 2
most recent completed academic years.

A&M-Kingsville enrollment has been over 60% Hispanic since the
formation of the HSIs and over 50% of our graduates in agriculture are
Hispanic. We have had a long history working with our agricultural
industries for over 60 years.
To date, 116 HSACUs have been designated by USDA.
The 2008 Farm Bill established five HSACU programs listed below
along with their corresponding funding authorization levels:

(1) The HSACU Endowment Grant Program ($80 million)--This program is
designed to distribute 60 percent of the interest accrued
in the fund among HSACUs prorated based on their Hispanic
enrollment. The other 40 percent is equally distributed
among HSACUs.

(2) The HSACU Equity Grants Program ($20 million)--This formula-
based grant program is designed to help HSACUs build
capacity for faculty training and infrastructure to compete
for grant open to 1862, 1890 and 1994 land-grant
institutions.

(3) The HSACU Institutional Capacity-Building Grants Program ($40
million)--The competitive grant program is designed for
institutional-capacity (not including alteration, repair,
renovation, or construction of buildings) allows HSACUs the
flexibility to best determine how to increase their
capacity.

(4) The HSACU Fundamental and Applied Research Grants Program [(]$40
million)--The grant program funds fundamental and applied
research in agriculture, human nutrition, food science,
bioenergy and environmental science.

(5) The HSACU Extension Grants Program ($40 million)--The program is
designed to ensure that HSACUs will have access to two
major extension grant programs (406 and AFRI). In addition,
HSA[CU]s without the research and outreach capacity of 1862
and 1994 institutions will have access to funding for
cooperative extension work through special competitive
grant program.

The reauthorization of the farm bill in 2014 kept the HSACU
programs mentioned above, and added a new competitive grants program in
support of Hispanic agricultural workers and youth. However, as the
Committee is aware, none of these HSACU programs originally authorized
in 2008 have ever been funded by Congress. Consequently, I believe the
Committee's intent has never been realized.
A&M-Kingsville, along with several other HSIs raised the funding
issue to USDA. As a result, USDA allowed HSACUs to submit a declaration
of intent to not be considered an HSACU in order to be eligible for
Non-Land-Grant College of Agriculture funding (NLGCA). HSACUs who did
not make this declaration remain designated as HSACUs until September
2018. The net effect is to have no funding as HSACUs and no eligibility
for the NLGCA.
Agriculture Research at A&M-Kingsville
A&M-Kingsville agricultural students consistently win state,
regional and national awards in their respective agricultural fields.
These awards reflect the commitment of our faculty, the excellence of
our academic programs and the diligence of our students to constantly
strive for success. We take great pride in providing all our students
with the guidance, services and education they need to reach their
goals. However, an area of concern to continue to provide this quality
opportunity is the aging agricultural research infrastructure at A&M-
Kingsville. It has been highlighted as a problem at our universities
across the United States doing agricultural research.
A&M-Kingsville has been working with our agriculture community for
many years. Our Citrus Research Center started with the support of our
local industry in 1948. We have three agriculture centers of expertise:
the Citrus Center, Caesar Kleberg Wildlife Research Institute and the
King Ranch Institute for Ranch Management. Our students have gone on to
manage multi-million dollar agricultural enterprises and direct Federal
agencies to help advance agriculture. Today our faculty and students
participate in over $12 million in agricultural research. This includes
over $5 million from USDA programs. These USDA funds help us leverage
our capabilities to attract the additional $7 million in non-Federal
funding. These research funds have shown to dramatically improve our
retention, graduation rates and participation in graduate and other
professional degrees. This has helped us increase our student retention
from 58 percent to 72 percent just this year. While we are proud of the
increases we have made this is not enough. We can do better but it will
take resources to do so.
We have actively participated in competitive grant programs. This
includes the USDA/NIFA/HSI grant program which resulted in ten percent
of the students participants in these programs have completed their DVM
or MS and/or Ph.D.'s in agricultural fields. One of our student
successes has been Veronica Acuna. She completed her Ph.D. and did
Postdoctoral research at University of Illinois. Today Dr. Acuna is a
faculty member at our Citrus Center helping the citrus industry adjust
to the new era of urban agriculture interface, citrus greening and
increased competition for available water.
Recommendations for the Next Farm Bill Reauthorization
This Committee has long supported the value of agricultural
research through the development of the land-grant system and minority-
serving agricultural research programs. They have also recognized in
past farm bills, the potential value that HSACUs can contribute to
agricultural research.

We need to continue this cooperative approach and ask the
Committee to maintain the authorizations and funding levels for
the six HSACU programs included in the 2014 Farm Bill.
Implementation of these program authorizations are critically
important to advancing Hispanic participation in the
agriculture sector. To actually achieve the objectives of the
Committee to increase Hispanics in agriculture, we also urge
Members of this Committee to work with your colleagues,
particularly those on the Appropriations Committee, to provide
the funding needed to carry out these programs effectively.

Given the low numbers of Hispanics in agriculture-related
careers, the creation of a pipeline of researchers and research
at HSACUs at all levels would strengthen the research capacity
of these institutions and help meet employer demands.
Conclusion
Hispanic-Serving Institutions are the most important educational
pipeline for increasing Hispanic success in higher education and their
involvement in research opportunities. HSIs and HSACUs can better serve
the nation if the necessary investments are made in their
infrastructure, faculty and students. This was the intent of this
Committee when HSACUs were initially created in 2008, and I believe
this should be a priority in the next reauthorization of the farm bill.
Thank you.

The Chairman. Thank you, Dr. Tallant.
Ms. Billy, 5 minutes.

STATEMENT OF CARRIE L. BILLY, J.D., PRESIDENT AND CHIEF
EXECUTIVE OFFICER, AMERICAN INDIAN HIGHER
EDUCATION CONSORTIUM, ALEXANDRIA, VA

Ms. Billy. Mr. Chairman, Ranking Member, and Members of the
Committee, on behalf of the nation's 34 Tribal colleges and
universities, the 1994 land-grants, thank you for this
opportunity to testify.
Indian Country includes some of the most isolated and
economically challenged regions of the nation, but our lands
are rich in natural resources, and our people are among the
most resilient in the world. Within this context, Tribal
colleges are planting seeds of hope. They are working to
strengthen Tribal economies, revitalize our language, and
protect, restore, and sustainably use our lands, waters, and
traditional foods.
In 1994, Tribal colleges received Federal land-grant
status. Today, the 1994s epitomize the intent of the first
Morrill Act. We truly are community-based institutions, and we
are defined by place. Our stories, songs, and land come from
the land, mountains, water, and wind. Most of our land, the
remaining Tribal lands in this country, are forested or
agriculture lands.
Research conducted by the 1994s touches on big global
challenges, but in a way that is related to our land and our
place. Most of our research is conducted with scientists and
researchers from other land-grant institutions and Federal
research centers. First, because our legislation requires it,
but second, because we benefit from it. We leverage their
expertise, equipment, and connections to maximize our small
grants.
Dr. Kerry Hartman at Nueta Hidatsa Sahnish College in North
Dakota and his students are working with the Tribal Game and
Fish biologists and South Dakota State University to figure out
how to develop and maintain an environment that will support
native pollinators of juneberries and other traditional plants.
Juneberries are an ancient plant. Their high levels of protein,
calcium, and antioxidants sustained generations of Native
people throughout the northern plains and woodlands until they
fell victim to westward expansion. If we can restore the
juneberry's native habitat, we could sustainably cultivate
crops for local use and small farm commercial production,
helping us to grow our reservation economies and improve the
health status of our people. We will also be restoring the
cultural identity of the Mandan, Hidatsa, and Arikara people.
This project would not happen without USDA's support for
specialty crop research. The need for research into emerging
technologies for small farmers, invasive species management,
sustainable growth, and food security is essential to Indian
Country.
Dr. Steve Dalberg at White Earth Tribal and Community
College in Mahnomen, Minnesota, is conducting research on land
use, water quality, and wild rice productivity. This research
is important because wild rice is one of the key cultural,
economic, and nutritional resources of the Anishinaabeg people,
but they face challenges in protecting it. Some of the
challenges are genetic, but many are connected to water quality
and land use.
Tribal resource departments face more challenges. They lack
the personnel and resources to comprehensively monitor water
quality and study its impact on wild rice. The colleges are
working to determine whether satellite data can be a cost-
effective predictor of wildlife productivity. The key is to
find satellite data that correlates with biochemical water
quality parameters and rice stands productivity. The college
can then share this data with the Tribe, who can then use it to
identify areas for further monitoring, making data-driven
decisions and targeting limited resources in the most effective
way. At the same time, Tribal college students are building
research skills that could sustain their Tribal identity and
culture and economy. To do this, White Earth is leveraging 1994
research funding with resources from NASA, the U.S. Geological
Service EROS Data Center, and the local Agricultural Research
Service Lab. According to Dr. Dalberg, the USDA funding is the
grease that makes those relationships happen.
As you work to reauthorize the farm bill, we have four
quick recommendations. One, acknowledge the value of
undergraduate place-based research and education. The farm bill
research provision should acknowledge that diversity matters.
Students and faculty at 1994s and other minority and small
institutions can enhance cultural competency and research
capacity for the next generation of scientists and agriculture
practitioners. Two, resist efforts to consolidate Federal STEM
programs. History demonstrates that small and poor
institutions, even those with great ideas, have a difficult
time competing against Research I institutions. Three,
establish McIntire-Stennis eligibility for 1994s. This is a
matter of equity. In 2008, the McIntire-Stennis Act was amended
to include Tribal lands in the formula for state forestry
programs, but Tribal land-grant institutions were excluded.
Please amend the McIntire-Stennis formula to include 1994s with
forestry programs. And fourth, let Tribal colleges compete in
all the land-grant programs. The 2000 Farm Bill was opened up
the Smith-Lever 3(d) Programs to all land-grants except the
1994s: 1994s can't participate in the Children Youth and
Families at Risk Program, or the federally recognized Tribal
Extension Program, yet ironically, we are the only land-grants
that are actually chartered by federally recognized Indian
Tribes. Please open up the 3(d) programs so that we can compete
with other land-grant institutions.
Thank you.
[The prepared statement of Ms. Billy follows:]

Prepared Statement of Carrie L. Billy, J.D., President and Chief
Executive Officer, American Indian Higher Education Consortium,
Alexandria, VA
Chairman Conaway, Ranking Member Peterson, and Members of the
Committee, on behalf of the nation's 37 Tribal Colleges and
Universities (TCUs), which collectively are the American Indian Higher
Education Consortium (AIHEC), thank you for the opportunity to testify
today and share a few recommendations on the topic of agricultural
research in preparation for the next reauthorization of the farm bill.
Background on Tribal Colleges
American Indian Tribal Colleges are public institutions of higher
education that are young and geographically isolated--primarily located
on Federal trust land. Tribal Colleges are tribally or federally
chartered and they have been established for two reasons: (1) the near
complete failure of the U.S. higher education system to address the
needs of--or even include--American Indians; and (2) the need to
preserve our culture, our language, our lands, and our sovereignty.
Collectively, Tribal Colleges have grown from one institution in
1968 to 37 today, operating 75 sites in 16 states and serving
approximately 160,000 American Indians, Alaska Natives, and other rural
residents each year in academic and community-based programs. They are
located in some of the most economically impoverished regions of the
country, yet our homelands are rich in natural resources and our people
are among the most resilient in the world. Within this context, Tribal
Colleges are planting seeds of hope for the future; nurturing
languages, cultures, and traditions; helping to strengthen Tribal
economies and governments; and working to sustain and revitalize our
lands, waters, environments, and traditional foods.
TCUS as Land-Grant Institutions
In 1994, the Tribal Colleges took a significant step toward greater
participation in the American higher education system when American
Indian reservations became the last lands under the American flag to
receive Federal land-grant status, and with that designation, to
participate in vital agriculture and natural resource programs operated
by the U.S. Department of Agriculture (USDA). This historic--and long
overdue--recognition occurred with the passage of the Equity in
Educational Land-Grant Status Act of 1994.
As place-based institutions of higher education whose collective
mission is to meet the needs of our Tribes and Tribal communities--and
most important, to preserve, strengthen and sustain our Tribal lands,
languages, and cultures--Tribal Colleges are proud to be part of this
nation's land-grant family. It is important to remember that over 155
years ago, the first Morrill Act was enacted specifically to bring
education to the people. Today, the 1994 Institutions--more so than
many other institutions of higher education--epitomize the original
intent of the first land-grant legislation: we truly are place- and
community-based institutions. All of the 1994 institutions offer place-
based agriculture and natural resource management programs and train a
significant number of our Tribal natural resource research and
management professionals and small farmers and ranchers. Of the 37
Tribal Colleges, 34 currently are 1994 land-grant institutions, and
another--Red Lake Nation College in Minnesota--is expected to join our
ranks as a 1994 land-grant institution when the farm bill is next
reauthorized.
Being part of the land-grant system is important to us because, as
I mentioned earlier, we are people of a place. Place defines who we
are. Our stories, songs, and language come from the land, waters,
mountains, and wind. Most of our land--the remaining Tribal land in
North America--is forest or agricultural land. In fact, of the 55.7
million acres that compose American Indians reservations, more than 75
percent are agricultural and forestry holdings.
The National Institute of Food and Nutrition (NIFA) administers
four modest programs for the 1994 institutions: a $3.4 million
(formula) agriculture education equity program, which has enabled the
thirty-four 1994 institutions to develop and offer small foundational
agriculture or natural resource education programs; an endowment
program, from which the 1994 institutions share annual interest
payments of approximately $5 million (total) each year; a $4.4 million
competitive extension program, which supports 1994 outreach activities
such as community gardening, youth summer science and nature camps,
agriculture technical assistance, and financial literacy programs; and
a competitive research program, authorized in 1998 and first funded in
FY 2000 at $500,000. The current appropriation for this program, and
its high watermark, is $1.8 million for all 34 institutions. As the
NIFA website states, our institutions often serve as the primary
institution of scientific inquiry, knowledge, and learning for our
Tribal communities. This modest funding assists us in our efforts to
protect our reservation forests, woodlands, grasslands, and crops, and
monitor the quality of our soil, water, and other environmental
factors. Projects range from studying bison herd productivity to
efforts focused on the connection between traditional plants and their
role in managing diabetes, controlling invasive species, and
revitalizing Native species. Each of the 1994 programs, though small,
is critically important to the 1994 institutions and the communities
they serve.
Under the NIFA-1994 research program, partnerships are required
with other Federal land-grant institutions schools of agriculture, or
Agriculture Research Service stations. These partnerships assist us in
carrying out the grant's primary emphasis, which is training students
in science.
Three types of funding are available through the research program:
``New Discovery'' supports basic and applied scientific inquiry that
could be published in a peer-reviewed journal. ``Capacity level''
grants support local, applied research. ``Student Inquiry'' funding
allows a Tribal College student to build a research project and present
the results under the guidance of a 1994 Land-Grant faculty member.
1994 faculty may also receive a grant to study optimal ways to teach
Native American students in sciences as they relate to health,
conservation and agriculture, and there is a special funding initiative
that allows the 1994s to develop scientific capacity throughout the
entire 1994 Land-Grant system.
Key benefits of the USDA-NIFA Tribal College Research Grants
Program are the collaboration and long-term relationships that the
grants help us build with top faculty and scientists at state
universities, agencies, Tribal organizations, and research centers.
Through a 1994 research grant, scientists, researchers, professors, and
career professionals from multiple institutions, agencies, and
businesses become readily available sources of support for TCUs, able
to respond to questions, suggest methodologies, and share equipment,
resources, and facilities. Conversely, the 1994s are a unique resource
to their partners. These communities of practice are similar to
learning communities; through and within, the 1994s find camaraderie,
communication networks, and resources that strengthen our individual
research and education projects and serve as laboratories for
innovation, technology transfer, and ongoing regional (and national)
economic and community development.
1994 Research Examples
Through the 1994 Tribal College research program, White Earth
Tribal and Community College in Mahnomen, Minnesota is conducting
research on land use and land cover on water quality and wild rice
productivity. This research is important because wild rice is one of
the key cultural, economic, and nutritional resources of the
Anishinaabeg people. The White Earth Band and other Anishinaabeg people
are facing many challenges in protecting this resource for future
generations. Some of these are genetic, but many are connected to water
quality and, in particular, how changes in land use such as
agriculture, development, and mining may impact wild rice. Tribal
natural resource departments face additional challenges: the lack of
personnel and resources to comprehensively monitor water quality and
adequately study its impacts on wild rice productivity. The WETCC wild
rice research project includes in [situ] research in existing rice beds
and waterways, comprehensive statistical analysis using remote data,
and the construction of an online data portal--all three engaging
undergraduate student researchers--as well as an innovative and
longstanding partnership of institutions and organizations.
Led by Dr. Steve Dalberg, WETCC is working to determine whether
satellite data can be useful as a cost-effective predictor related to
wild rice productivity. The key is to find satellite data that
correlates strongly enough with important biochemical water quality
parameters and the productivity of rice stands to be useful. Then, the
college will make those data available to Tribal resource managers so
they can use them to identify ``hot spots'' that need further
monitoring. This will enable the managers to make informed, data-driven
decisions, targeting their limited resources in the most effective way.
At the same time, TCU students build important research skills, working
with scientists and natural resources practitioners while they learn to
manage large, complex datasets that ultimately, could help sustain
their Tribal culture and economy for generations to come.
The success of this project has been fundamentally tied to the
strength of the WETCC team, which includes many of the principals from
the college's long-standing collaboration with NASA, the U.S. Geologic
Service EROS Data Center, and Dr. Abdullah Jaradat and his staff from
the USDA Agricultural Research Service Lab in Morris, MN. These
partners provide the range of expertise that Dr. Steve Dalberg, the
sole scientist on the WETCC's staff cannot begin to duplicate. Without
the committed and capable partnerships forged through opportunities
from both the USDA-NIFA TCU research program and NASA, this project
would not be possible. As with most things in Indian Country, the long-
standing relationships we develop are the key factors in our success.
According to Dr. Dalberg, ``it goes without saying that Federal dollars
are the grease that makes these relationships possible.''
Since 2001, Dr. Kerry Hartman and his undergraduate students have
been conducting culturally and economically relevant research at Nueta
Hidatsa Sahnish College, on the Fort Belknap reservation in North
Dakota, through the USDA-TCU research program. The goal of Dr.
Hartman's current NIFA research project, conducted with Tribal Game and
Fish biologists and South Dakota State University, is to figure out how
to develop and maintain an environment that will support native
pollinators of Amerlanchier cultivars, or juneberries, and other
traditional plants. Juneberries are an ancient plant. Their high levels
of protein, calcium, and antioxidants sustained generations of Native
peoples throughout the northern plains and woodlands, until native
pollinators and juneberry stands fell victim to westward expansion. If
NHSC can restore the juneberries' native habitat, they could
sustainably cultivate crops for local use and small farm commercial
production, helping to grow the reservation economy and improve the
health status of their people. They will also be restoring identity and
cultural pride within the Mandan, Hidatsa, and Arikara people.
It is important to note that research such as this would not be
possible without a focus at USDA on specialty crop research. In rural
America and Indian Country, specialty crop research is critically
important to building and sustaining a local economy: locally grown,
locally produced, locally packaged, and locally consumed. Whether
through a separate specialty crop program or the NIFA-TCU research
program, we believe this type of research is the most relevant and will
yield the largest return in many of our communities. The need for more
ongoing research into new and emerging technology uses and impacts;
pest and invasive species management; sustainable growth; and food
safety/security are essential in Indian Country, as NHSC's juneberry
research attests.
Other TCUs are also doing important research. Salish Kootenai
College, in Pablo, Montana, conducts extensive research and offers an
accredited bachelor's degree program in the Science of Hydrology to
address a dearth of American Indian water management scientists. This
is particularly relevant to people of the Flathead Indian Reservation
because their primary body of water, Flathead Lake, is the nation's
largest freshwater lake west of the Mississippi and it is fed by
several rivers and streams flowing from the glaciers of northern
Montana and Canada.
Ilisagvik College in Barrow, Alaska, is located on the northern-
most point of the United States where ``the sea is the way of life.''
Ilisagvik offers a unique Marine Mammal Observer Stewardship degree
that combines Inupiaq traditional knowledge, Western science research,
and industry standards into a program that is recognized by the Alaska
Federation of Natives as ``the training center for Alaska Natives on
Marine Mammal Observation.''
United Tribes Technical College, in Bismarck, North Dakota is
currently conducting a wide variety of research related to the land,
wildlife, and traditional plants of the grasslands and northern
prairie. Under the USDA-NIFA TCU research program, UTTC is conducting a
small study on new methods to control invasive Kentucky Bluegrass, in
partnership with the local Agriculture Research Service station. In
partnership with North Dakota State University, the college is engaged
in its second student research project on bat ecology in the state of
North Dakota. More specifically, this grant supports research on bat
foraging ecology habitat structure and distribution across the state.
UTTC is also integrating its research programs with extension and
outreach activities, conducting significant research on nutrition,
health, and native/traditional plants. Under an optimal gardening
research effort aimed at boosting production of small farmers, they are
studying management strategies and inputs to ascertain cost
effectiveness for growers on reservations, given limited access to
water and soil inputs. Faculty and students have also conducted
important research on healthy eating habits, juneberries, corn
varieties, and seed sovereignty among Tribal nations.
These are just a few examples but they demonstrate our fundamental
connection to the 1994 legislation: We are people of a Place.
Tragically, due to misuse, exploitation, and lack of expertise and
training, millions of Tribal acres are fallow, under-used, or are being
developed through methods that could render resources non-renewable.
For this reason, agriculture and forestry research, in particular, is
critically important to the 1994 institutions and our Tribal
communities.
The Need To Grow TCU (1994) Agriculture & Forestry Research Programs
The Production Challenge
The agriculture challenges we face as a nation and world today are
well established: constantly and rapidly changing technologies;
population growth and predicted food shortages; environmental changes
and competition over water and land access and use; obesity and health
status; and more. A common thread adding another layer of complexity to
each of these challenges is the aging agriculture workforce in the U.S.
The average age of farmers and producers in the U.S. is 60 years of age
and continues to rise each year. Among Native American farm operators,
more than 30 percent are 65 years or older. But for American Indians
and Alaska Natives (AI/AN), the issue goes far beyond age. The 2012
Agricultural Census reports less than 38,000 Native American-operated
farms, representing only 1.8 percent of the approximately 2.1 million
farms in the U.S. Of these Native farms, only eight percent had a
market value of $50,000 or more, in comparison 25 percent of all U.S.
farms were worth $50,000 or more. The bottom line is that Native
farmers and ranchers are already under-represented in the U.S., and
their numbers will likely decline even further as today's farmers and
ranchers retire.
As a nation, we must do more to increase the number of young people
seeking careers in the food and agricultural sciences, including
agriculture research, agribusiness, food production, energy and
renewable fuels, and farming marketing, innovation, and distribution.
The need is particularly acute in Indian Country, as the numbers cited
herein attest. For Native farmers and ranchers, access to land is not
the primary issue, as it is for most potential farmers in the country.
(As noted previously, 75 percent of the remaining lands in Indian
Country are forested or agriculture lands.) Access to capital,
agriculture education and research, and technical assistance are the
major barriers for most Native farmers and ranchers. Outreach,
technical assistance, and innovative research opportunities through
traditional Cooperative Extension and education programs are limited in
many Tribal communities, often due to the rural settings and funding
limitations. Tribal Colleges often lack the funding they need, as well
as critical support from the mainstream land-grant system, to develop
and deliver appropriate agricultural programming and research
opportunities. Yet, with adequate funding, TCUs can provide relevant,
locally and place-based higher and technical/career education that is
innovative and which includes important tribally driven experiential
learning and community-based research opportunities to aspiring and
beginning farmers, ranchers, and agriculture/forestry researchers and
students throughout Indian Country.
The Research Challenge
I would like to respectfully suggest that USDA's research portfolio
has not benefited in any significant way from the unique value that
1994 institutions can contribute in helping to meet the challenges we
face as a nation. The USDA research portfolio is heavily oriented to
large capacity and Research I institutions. In 2013, the Government
[Accountability] Office issued a report on the participation by
Minority Serving Institutions--including the 1994 institutions--in
USDA's research programs. The report concluded that MSIs received about
two percent of all research funding. (For a copy of the report, please
see: http://www.gao.gov/products/GAO-03-541.) We believe that the
disparity described in the report has probably expanded in recent
years, as the program in question was a predecessor to the Agriculture
and Food Research Initiative (AFRI). We know it is the case for the
1994 institutions.
Research and experiential learning are critical components of
higher education in the classroom, the lab, and for students' careers.
Without being able to participate in USDA's flagship research program,
AFRI, 1994 institutions are losing out in ways that are almost
immeasurable. We strongly urge this Committee to rectify this serious
problem in the next reauthorization of the farm bill, and further, to
take a look at USDA's overall commitment to research, including
facilities at the 1994 institutions.
NIFA Research Programs

In Fiscal Year 2016, the 1994 institutions competed against one
another for $1.8 million in research funding. That same year, the 1862
land-grant institutions (state) received $236 million in formula funds,
even though ten states are smaller than some of the reservations with a
1994. The 1890 institutions (17 historically black colleges and
universities) received $51 million, with a guarantee of at least $1
million each.
We are told that nothing can be done--the Federal budget situation
is too dire. We disagree. We believe that this Administration and
Congress could begin to correct these inequities. We are not asking for
handout. We are asking for an investment--a proven investment in Tribal
Colleges, which would help our people become--once again--significant
contributors to the agricultural base of the nation and the world.
Recommendations for Consideration During the Farm Bill Reauthorization
The 1994 institutions are confident that they have the potential of
becoming significant contributors to the agricultural base of the
nation and the world once again. More and more AI/AN Tribes and 1994
institutions are beginning to re-assert sovereignty over our food,
agriculture, livestock, and fisheries systems. Working with key
partners, we are defining policies that are ecologically, socially, and
culturally appropriate to our unique circumstances.
Due in large part to our land-grant activities, leveraged with
other federally funded STEM programs, our students are involved to some
degree in cutting-edge and community-relevant research, particularly
research related to the preservation of our natural resources and the
exploration of the linkages between nutritional patterns and disease.
Much of this research is conducted with other land-gran[t]
institutions, resulting in both good science and solid partnerships.
1. Acknowledge the Value of Place-Based, Traditional Research and
Education
The 1994 Institutions, along with other Minority-Serving
Institutions (MSIs), are uniquely positioned to provide the next
generation of technically and culturally competent agricultural
scientists and researchers. We believe that our Native American
students represent a unique competitive advantage in an increasingly
culturally diverse global agriculture science world. Tribal College and
other MSI students can succeed in cross-cultural contexts better than
anyone, and these types of people will be successful as agriculture
scientists working in places that are culturally different from the
U.S., such as the Middle East, South America, and Africa. American
Indians and Alaska Natives are a unique and important component of any
student pipeline that leads to a new generation of agriculture
scientists.
The research provision of the farm bill should specifically
acknowledge that students and faculty of the 1994 institutions and
other MSIs can enhance the cultural competency of the next generation
of agricultural scientists, researchers, and practitioners. The
cultural competency needed to meet global agricultural challenges will
often be as important as scientific and technical competency.
Agricultural scientists and researchers working in cross-cultural,
international settings will need to be sensitive and respectful of
cultural and social norms and values. In many countries, cultural
competency facilitates the initial access to local populations before
technical and scientific activities can proceed. Indigenous peoples are
especially vulnerable to exploitation of cultural and natural assets,
such as traditional ecological knowledge and natural resources.
More broadly, research and education provisions of the farm bill
must specifically include under-served students at the undergraduate
level. The vast majority of the USDA current ``education'' and research
funding supports graduate-level research. More resources need to be
devoted to student success, faculty development, curriculum innovation,
international development, facilities development, and critically
needed infrastructure support at the community college and early
undergraduate level.
2. Resist Efforts To Consolidate STEM Research Programs
As you are aware, the President's Fiscal Year 2018 budget request
proposes the consolidation of many Federal STEM higher education and
research programs. We expect that other proposals along these lines
will be put forth in the months ahead. We believe that the research
programs supported by NIFA are important and unique. Consolidation of
these programs with other Federal STEM research and education programs
is simply a bad idea, particularly for Indian Country. Not only would
the agriculture and natural resource focus become lost--which is so
important to us for the reasons noted earlier--but also lost will be
the multicultural, diversity of thought focus of America's education
programs. Under proposals to consolidate and homogenize Federal
programs, we stand to lose some important USDA programs, and history
clearly demonstrates that small and under-resourced institutions, such
as the 1994 land-grant institutions, would fair very poorly in
competitions with well-resourced major Research I institutions and
large land-grant universities.
3. McIntire-Stennis Amendment To Establish Participation Eligibility
for 1994 Institutions With Baccalaureate Degree Programs in
Forestry
The McIntire-Stennis Act of 1962 (16 U.S.C. 582a, et seq., Public
Law 87-788) should be amended to allow Tribal Colleges (1994
institutions) that offer a bachelor's degree in forestry to receive a
share of McIntire-Stennis Act formula funding that flows to a state in
which a relevant 1994 institution is located.
Justification: In 2008, the McIntire-Stennis Act was amended to
include Tribal lands in the formula calculation for funding of state
forestry programs, which are centered on forestry research and
management. However, the 1994 institutions were not included in the
funding formula, nor were states required to include them in funding
distributions. This oversight is significant because, as noted earlier,
75 percent of Tribal land in the U.S. is either forest or agriculture
holding. In response to the severe under-representation of American
Indian professionals in the forestry workforce to conduct research on
the AI/AN forestry holdings in Montana and across the United States,
Salish Kootenai College (SKC) launched a forestry baccalaureate degree
program in 2005.
In 2013, SKC became the first Tribal college land-grant to join the
National Association of University Forest Resource Programs, a
consortium of 85 forestry schools, the vast majority of which receive
McIntire-Stennis funding. However, when SKC recently sought specialty
accreditation for its program, the college was told that it was ``one
forestry researcher short'' of the optimum number needed. Participation
in the McIntire-Stennis program, even with the required 1:1 match,
would help SKC secure the researcher it needs to gain accreditation.
Yet, it cannot participate in the program. Once again, TCU land-grants
are prohibited from participating as full partners in the land-grant
system. And although currently, only SKC has a baccalaureate degree in
forestry, considering the wealth of forested land on American Indian
reservations, others such programs could arise at the nation's other
Tribal land-grant institutions, to further the effort to grow Native
researchers in this essential area.
Conclusion
In closing, Mr. Chairman and Mr. Ranking Member, I want to
reiterate that the 1994 Institutions have proven to be efficient and
effective vehicles for bringing education and research opportunities to
American Indians/Alaska Natives and the promise of self-sufficiency to
some of this nation's poorest and most under-served regions. The
extremely small Federal investment in the 1994 Institutions has already
paid great dividends in terms of increased employment, access to higher
education and research opportunities, and economic development.
Continuation of and significant growth in this investment makes sound
moral and fiscal sense. As stated earlier, no institutions better
exemplify the original intent of Senator Morrill's land-grant concept
than the 1994 Institutions. I am honored to have this opportunity to
share our story and a few recommendations with the Committee today.
Thank you.

The Chairman. Well, I am not sure we have ever had our
witnesses stick so religiously to their own 5 minutes.
Congratulations. You are the best panel ever.
The chair would remind Members they will be recognized for
questioning in order of seniority for Members who were here at
the start of the hearing. After that, Members will be
recognized in order of arrival. I appreciate Members'
understanding.
I recognize myself for 5 minutes.
First of all, I thank the witnesses for rescheduling. I had
a conflict yesterday, and you were very accommodating to that,
so thank you very much.
It is rare an institution doesn't have an aggressive
building program going, and yet most of you mentioned a lack of
labs and greenhouses, and $8.4 billion in deferred maintenance.
Can you help us understand the disconnect between how ag
research competes within your own universities and within the
state systems to get dollars to create the infrastructure that
then can be used to compete for the grants? Can you walk us
through some of that? And anyone who wants to start, I
appreciate hearing from anybody who has an idea.
Mr. Duncan. I will begin. I know that at Texas Tech
University we have multiple disciplines on the campus, and so
even though we do have significant infrastructure support from
the State of Texas, that is a competing thing with engineering
and other health-science issues that are on the campus. It is
just like anything else, the infrastructure related to
agriculture is going to be competing with all of the other
disciplines on the campus for those different funds. There is
not a specific state infrastructure fund for agriculture, it
basically goes to the institutions and it is allocated in that
way. The State of Texas has been good though.
And going back to the capacity issue that I talked about,
there has been some success in providing infrastructure for
institutions through tuition revenue bonds as well as through
HEAF funding. And that capacity has helped Texas Tech be able
to compete in all of our disciplines, but there is still
competition, obviously, and no specific allocation of funds for
agricultural loan.
Dr. Humiston. I would offer two thoughts. One is, that we
as research institutions are equally guilty as the public at
large, in that when we have to make choices, hard choices, we
tend to go after the researchers because at the end of the day,
it is our people that are really getting a lot of the research
done.
And we have all got some world-class academic researchers
in both ag experiment stations and cooperative extension, and
as we have dealt with cuts and increased costs over the past
few decades, I believe I know for myself, and some of the
others here too, it has been easy to say we could put off
fixing that roof or put off buying that new piece of equipment
a few more years if we can keep those researchers doing their
work. That is one issue that has contributed to this.
Unfortunately, that has been going on for decades rather than a
few years, and that is why it has gotten so critical at this
point.
The other thing, the general public, and in particular
large funders, tend to not view agriculture as a particularly
sexy topic. We have done such a great job for over 150 years of
providing a safe, secure, wonderful, bountiful food supply,
people take it for granted. When we are out there trying to do
capital campaigns and funds development for our facilities, we
are competing against the moonshot on cancer and similar things
like that, and quite frankly, it is a challenge to compete
against curing cancer or finding new stem cell uses, or
anything like that. I think that has been a factor for all of
us.
So those two things in particular.
The Chairman. A couple of you mentioned the idea about
return on investment. If you have thoughts, I don't expect you
to necessarily have them this morning, on a way that we could
from the Federal standpoint help augment what appears to be
return on investment that would allow you to be more
competitive. I would be interested in hearing those thoughts as
we develop the farm bill. Anyone else have a thought on the
challenge of competing against the other legitimate needs that
are on every one of your campuses for facilities?
Dr. Burns. I would just add that in our institution, it is
a matter of prioritization; which is the highest priority with
respect to our mission with our stakeholders, and so forth, and
often agriculture is not high on the list. In general, we fund
deferred maintenance with a cost to landline use in Florida,
and as you can imagine that fund is decreasing exponentially.
The Chairman. Dr. Hill?
Dr. Hill. Yes. I am going to say take a lesson from when
you required the states to one-to-one match for 1890s, I am
going to get to infrastructure, what happened there was the
three land-grants in Alabama got together, went to the
legislature together, formed an alliance, the Alabama
Agriculture Land-Grant Alliance, and we made a breakthrough
that no one expected would happen, and we have been really
moving in a good direction ever since. So that was 1999. What
catalyzed that was what came out of from you all, because the
legislatures see that, so if you put together an infrastructure
dynamic that encourages, incentivizes the states, and you also
incentivize them to work together, then we can do the creative
side on our end. I think that would benefit the public. It sure
has in Alabama.
The Chairman. Yes, real quickly, Dr. Tallant. Real quick.
Dr. Tallant. Yes, real quick. I just want to echo what
everybody said. The Texas funds as well, but in my case, I have
a university of 10,000 students, \1/3\ of my students major in
engineering. I have 20 engineering degree programs, and it is a
matter of priority, and as what was said before, agriculture,
it doesn't always go there. As a result, my College of
Agriculture today has deferred maintenance of $12 million. That
is a lot of money from my campus. And what would help would be
dedicated money, matching or how we did it, but dedicated for
agriculture, because there are other competing needs.
The Chairman. I appreciate that.
Mr. Peterson, 5 minutes.
Mr. Peterson. Well, thank you, Mr. Chairman.
There was a recent editorial about the creation of the
Foundation for Food and Agriculture Research. The article,
mentioned that China has an advantage of 2:1 over us in ag
research, which ought to make people nervous. From what I can
tell this new initiative of the 2014 Farm Bill, FFAR has been
successful, and it has been a quicker model and it has
responded quicker, and brought some private resources to the
table for agricultural research. But what I am concerned about,
and my experience over the years of having to try to advocate
for smaller crops in the whole research area, and back when we
had earmarks we were able to do that. Now that we don't have
earmarks, we really are falling short with some of these
smaller crops that don't have the checkoffs, don't have the
resources. It is a good idea to maybe bring private money in,
but I kind of worry about this whole private-public thing
because it is going to maybe allow people to jump the line in
the case of some projects. In some rural areas, in Minnesota,
we are not going to attract any private money of any kind, for
any kind of project. I just wonder if any of you have
experienced a situation where this is maybe an advantage to
somebody over another because they have the money and somebody
else doesn't have the money. Is that an issue that you think we
need to worry about? Any of you that want to jump in.
Dr. Burns. Thank you. Let me comment. Yes, we are losing
our edge. We still have very good people, and our international
colleagues seek to send others over here to learn what we have
to offer. But the fact of the matter is that, because of our
infrastructure, because of the decaying nature of it and our
ability to invest in it, we simply cannot keep up with making
those world-class investments for those facilities, and to keep
our people from jumping ship and going to China and other
places. It is really important to understand the value of
sustained investments for those projects, that are regional in
nature. Sometimes we thought that the capacity funds would have
been very good for that, because it allows us to make those
quick decisions about those needs right away, without the
involvement of a longer competitive process. Capacity funds are
very, very important in us meeting those kinds of needs and
keeping us competitive.
Dr. Humiston. Yes, if I could augment that for a second. We
actually are working very closely with the Foundation for Food
and Ag Research, FFAR, which you mentioned, and that was a
particularly good article. I think the concept of FFAR is
excellent. The idea of leveraging public dollars with private
dollars, I am a big fan of that myself. And FFAR has done an
amazing job in a short amount of time, standing up a lot of
research, getting a lot of dollars out the door. But the very
fact that they have been able to do such an excellent job so
quickly is its own testimony to the need for capacity funds.
They would have never been able to do such an outstanding job
if we didn't already have infrastructure in place, researchers
hired, researchers with labs able to step up and say, okay, I
can make good use of that money and start solving agriculture's
problems today, not a year or 2 from now.
Mr. Peterson. Anybody else?
Dr. Hill. Yes, I want to add a human dimension to that. I
want to invoke the name of George Washington Carver. And where
I am coming from is, when you have an outstanding scientist who
loves people, who loves agriculture, and spends time with the
farmers on the farm, in the lab, and with their students, you
get a different product. You get the science changes and it
becomes more usable, the results to the farmer in the shorter-
term. That is what we need. We need more scientists like that.
We have our bench scientists doing all the fancy stuff that
goes quickly, but that takes time to reach the people who we
are trying to reach now. Capacity funds help, as a matter of
fact, that may be the edge for why capacity funds may need to
be strengthened, because now you are dealing with both research
and the people at the same time, and the majority of the
farmers, 80 to 95 percent, are the small and medium sized.
Mr. Peterson. Thank you.
Thank you, Mr. Chairman. I yield back.
The Chairman. The gentleman yields back.
Mr. Gibbs, 5 minutes.
Mr. Gibbs. Thank you, Mr. Chairman.
I will follow the Ranking Member's questions a little bit.
In agriculture, when you are talking about the challenge of
funding, competition, competitive grants, and all that, where
the industry has gone, the science of agriculture, I guess can
you relate to me how the interaction between the different
disciplines are? For example, agriculture has a lot of
interaction with engineering, obviously, department of
engineering, medicine, so that interaction there are
partnerships. Are there hurdles to do more partnerships or
long-term contracts, even, with the private-sector to do basic
research to help bring in additional funds and long-term
arrangements, or is that happening? That was two things, how
you interact with the different disciplines, and then how do
you interact with the private-sector on long-term research
projects? Anybody who wants to jump in can go first.
Dr. Humiston. I am trying to make sure I am not hogging the
microphone up here. I included a couple of examples in my
written testimony, but one I might highlight specific to your
question, I am a big fan of collaboration and partnerships. It
gives all of us a chance to leverage each other's resources,
and in particular, not reinvent the wheel, not duplicate. That
is a strategy we are pursuing in California extremely
aggressively right now. And one example that shows very high
promise is efforts in our central coast. Congressman Panetta,
who left already, it is in his region. But we are bringing
together our University of California Santa Cruz with our CSU
Monterey Bay with three community colleges, a USDA agricultural
research facility, and Western Growers, an organization of
private farmers. Two or three things happening there, Western
Growers has an incubation center they are supporting in
Salinas. Hartnell Community College has a couple hundred acres
that they use to teach their community college kids various
types of workforce issues related to ag and ag-related jobs.
USDA is adjacent to that. We have about 300 acres there.
We are actually pursuing a partnership right now to
formalize a brand new research and extension center that will
be jointly community college, University of California, USDA,
in a way that really hasn't been done before, and have the
private-sector deeply engaged. I am quite optimistic about our
ability to do that. We are looking at similar partnerships
throughout the state. Not to say that each of us individually
don't need to have the ability to bring our own funding to the
table, but that kind of partnership really can stretch, as well
as the ability to get the multi-disciplinary----
Mr. Gibbs. Do you see a willingness from in the private
industry sector wanting to put resources in to----
Dr. Humiston. Well, absolutely, Western Growers, which is a
private industry, have put several million dollars in their
incubation, ag tech-related----
Mr. Gibbs. Anybody else, maybe Texas, want to comment?
Ms. Billy. Well, I would like to comment on that. For the
Tribal colleges, and other small rural institutions conducting
research, getting the private-sector involved is very
difficult. We actually have a challenge getting the private-
sector to even come onto Tribal land. With the American Indian
institutions there is a challenge of not only having to deal
with the state regulatory rules, but also the Federal rules on
Tribal lands. We can't do bonding and things like that that
make it more difficult for private-sector to come onto the
reservations, which makes the partnerships with the Federal
Government and other Federal entities even more important. And
that is one thing that is under-resourced institutions, Tribal
colleges do very well mixing using funding from USDA, National
Science Foundation, NASA, and other agencies, in a way that is
increasing STEM teaching and learning, but also research
opportunities.
Mr. Gibbs. Okay.
Dr. Hill. I will give you two examples. One is, one day we
looked around and saw biology, chemistry, veterinary medicine,
all the ag science, and realized we had a powerhouse that
created a Ph.D. in integrated bioscientists, and have never
looked back. We didn't even know what we had. Now the private-
sector became interested. We have money to help with one
laboratory where the future looks good. Another example is we
recently had a scientist who had won a NIFA competitive grant
in organic farming, and he has four 1862s as his partner. And I
was there when they came to campus and kind of blown away. They
are really going to do a master piece of work across the South
together.
So that is the future.
Mr. Gibbs. Yes. Okay, thank you, Mr. Chairman. I yield
back.
The Chairman. Mr. David Scott from Georgia.
Mr. David Scott of Georgia. Thank you very much, Mr.
Chairman.
Dr. Hill, let me start off by thanking you, and each of the
19 African American land-grant universities, first, for
mentioning our legislation, House Resolution 51. For folks who
may not know, H.R. 51 is a very, very strong bipartisan effort
to provide our 1890 universities with student scholarships in
the amount of $1 million for each of the 5 years, $95 million
for all of the 1890s over the 5 year period of the farm bill.
This is so important.
And, Dr. Hill, your testimony in touching upon the road.
The road that the African American community has had to travel
in this country has been a tough road, and it is our dear hope
that the Chairman of our Committee will give a schedule to
bring up this bill, a bipartisan bill, so we can get it out of
this Committee onto the floor and over to the Senate where we
have already got Senators lined up to get it on over to the
White House for the President's signature. We are at that
moment now, and I am sure that we will have an opportunity to
get that bill called up and passed. It is the first step. It is
bipartisan.
The other thing is 1890s designation was started by
Republicans. What a strong bipartisan effort it would be to
lift up the 1890s with this bill and give a shining light out
of the darkness. Dr. Hill, you mentioned the one-to-one match
for the 1890s institutions' research funding, and that the
institution must request a waiver to get the Federal funds
without the state match. And while, to my knowledge, no waiver
application has ever been denied, that leaves the African
American 1890s institutions with \1/2\ as much money as
Congress intended. That is like giving you something with one
hand and slapping you in the face with the other, and that has
to stop. Most states that have both 1862s and 1890 institutions
submit a joint plan of agriculture research, so we know USDA
has the information.
Let me ask you, Dr. Hill, do states currently fund and
match all land-grant colleges at the same level?
Dr. Hill. No.
Mr. David Scott of Georgia. All right. The final question
is, what can we here in Congress do to encourage states to
match each institution in the state at an equivalent amount up
to 100 percent? Why not do that? That is what Merrill, the
Republican Congressman, said, ``Separate but equal.'' We are
separate all right, but we have never been equal. But this
year's farm bill, with this money for scholarships, and with us
getting some equality in this matching, what a powerful,
powerful message that would send. Republicans and Democrats
working together to lift up our 1890s African American
institutions.
Dr. Hill. I would just respond briefly. I might be the old-
timer here, having 40 years in as Dean at Tuskegee, and having
worked the legislature in Alabama and worked with Auburn and
A&M and all the system. I would just say this, and I recently
talked with Sonny Ramaswamy, the new plan of work provides you
with an opportunity because the first thing you see on that
plan of work is how the funds are distributed for each state.
And my recommendation to him was that we do a report card for
each state, because they do a summary write-up of how the
states do when they send in those reports. I challenge you all
to look at your plan of work reports and results for your
particular states, and look at those first few pages, that will
tell the whole story. And then if we had a report card we can
put on there points, and one of the points would be matching,
and a state that did everything right but didn't do the
matching would not get a good grade on that one. And it would
stand out and we would share that with our legislatures, we
would have a good conversation.
Mr. David Scott of Georgia. Thank you very much, doctor.
The Chairman. Thank you, Mr. Scott. The gentleman's time
has expired.
Mr. Crawford, 5 minutes.
Mr. Crawford. Thank you, Mr. Chairman.
Chancellor Duncan, you represent a non-land-grant
university, but you are still very much engaged in agriculture.
And I am a graduate of a very similar system; Arkansas State
University is very similar to Texas Tech in that regard.
As you mentioned in your testimony, the Competitive
Capacity Building Program for non-land-grant institutions,
first authorized in the 2008 Farm Bill, has made some
significant impacts for a small, $5 million of the fund. How
has Texas Tech used Federal funding such as this to advance ag
research?
Mr. Duncan. Well, it is obviously in infrastructure and
improving our labs, and being able to maintain the faculty that
we have, combined with a state investment in capacity. One of
the points I am trying to make here today is that Texas has
invested in the capacity, and since that initiative was started
in 2007 we have had five institutions in the State of Texas
advance to the highest research category in the Carnegie
Classification. And so it is a combination of the funds that
the Federal program provides us certainly allow us to augment
that infrastructure, but it is still so small, while it moves
the needle, it doesn't move the needle enough.
Texas Tech has been in the agricultural research arena for
a long, long time, obviously; where it is, where it is located
in the epicenter of all these different agricultural
activities, but at the same time the capacity has been growing
slowly until the state infused that. The point I am trying to
make is the Federal investment in capacity to the non-land-
grant institutions can make a significant difference in the
regional types of research that occur for the better of
agriculture. For example, one thing we have talked about is the
combination, or the cross-disciplinary aspect of human health
and animal health, those are the types of things that with the
proper infrastructure, the proper investment in the health
science centers, into veterinary medicine, into the colleges of
ag sciences and their food nutrition programs, food safety
programs, we can really move the needle on food safety, and on
one health, which is the health of all of us as it relates to
agriculture.
Mr. Crawford. You mentioned the importance of leveraging
Federal dollars with state and private dollars. Talk about
that, about your plant science department's partnership with
Bayer, and some of the examples of public-private partnerships
related to your ag activity on campus.
Mr. Duncan. Yes. Bayer has been a very significant player
in, of course, the cotton world, which we now have one of their
greenhouses on our campus, as well as they invested in one of
our labs and plant soil science labs on the campus. We were
able to get their investment in that by a program called TRIP.
It is a state infrastructure program, it is a matching program.
For example, for anything above $2 million up to $10 million,
the state matches it 100 percent. You can imagine the return on
that investment is significant, and is very attractive to
private partnerships whenever you can leverage a gift such as
that.
Not too long ago, using the TRIP match, we also received a
grant from Teys in Australia and Cargill of $2 million, which
will be matched with $2 million in the state TRIP program.
It is those types of infrastructure programs that really
move the needle for the types of research that we need in
agriculture to keep moving us forward, and the growth of our
population and also the complexity of agriculture as it exists
today.
Mr. Crawford. You also mentioned the importance of non-
land-grant universities and the education of underrepresented
groups. Does Texas Tech offer scholarships or special programs
that seek to engage groups such as first-generation college
students, first-generation farmers, minority and rural students
in university research?
Mr. Duncan. Yes, sir. We have significant programs along
that line. Our border regions, and in particular, Angelo State
University in our system has achieved Hispanic-serving
institution status several years ago. Texas Tech University,
which is about 37,000 now, we are on the very cusp of about
24.3 percent Hispanic students, and we will be a Hispanic-
serving institution, at least according to our board's
predictions as well as their priorities, probably in a year.
And those programs really do help us to be able to be
attractive to Hispanic students. We are in a great place in
Texas as it relates to recruiting and retaining students of
Hispanic culture, and it has been an exciting thing. But we do
have programs, and that is a very strong priority of our border
regions.
Mr. Crawford. Excellent.
I yield back.
The Chairman. The gentleman yields back.
Mr. Costa, 5 minutes.
Mr. Costa. Thank you very much, Mr. Chairman, for holding
this hearing. And I concur with my colleague from Texas who has
talked about the non-land-grant universities, and the fact that
in 2008 we did put money aside for research purposes, but it is
not nearly enough. And I commit to work with you and work with
Members of this Committee to figure out ways that we can expand
those efforts, because you, as many of us do, represent a host
of universities around this country. Fresno State is one of the
premiere ag universities in the West, and clearly does a whole
lot of good work, and they work in conjunction with other
universities, but clearly they don't have the opportunities
that the land-grant universities do. And not to say that we
shouldn't be doing more there.
Dr. Humiston, you made in your comments a statement about
food security, and I want to tell all of you that are
testifying here this morning, each and every one of you play a
critical role in food security. And it is something that I
continue to come back to, because Americans take our food
security, generally speaking, I believe, for granted, period.
The fact of the matter is that American farmers, ranchers,
dairymen and women, none do it better in terms of our yield,
our quality, and our nutritious values of the food products, at
a more cost-effective way, so well, in fact, that less than
three percent of the nation's population is directly involved,
and yet we can also export those food products to people who
are hungry around the world.
One of the factors that is attributed to that is our
research that all of you are part of in ensuring that food
security, and clearly, that must continue.
We use many words here, or we overuse words here, like
unique, but truly, the relationship that has existed for over
100 years with land-grant universities and others in terms of
this partnership is unique. It is one of the reasons there is
far more acceptance on biotechnology efforts as it relates to
food safety here in the United States than in other parts of
the world.
Having said that, Dr. Humiston, you mentioned in your
written testimony that the Specialty Crop Research Initiative
requires research proposals be multi-state, and, of course,
this is difficult in California because we have such a
diversity of crops that aren't grown elsewhere. How do you
think, with these existing requirements that it is impacting
our agriculture, what changes would you recommend? And I have a
couple of other questions, so be quick, please. And thank you
again for your good work.
Dr. Humiston. Thank you. The really quick answer is either
get rid of the requirement or the preference for multi-state,
or significantly reduce its weighting factor. I don't believe
we are the only state with this problem.
Mr. Costa. Other states have a lot of diversity as well. We
worked very hard in the farm bill, in 2008, to address
specialty crops through programs like SCRI and OREI. We wanted
to ensure specialty crops were properly sized and prioritized
within the NIFA research portfolio. What changes do you think
we should make there?
Dr. Humiston. Well, that is a great question, and the fact
that Amazon just bought Whole Foods, for all of us means that
the demand for organic is about to skyrocket. Over 82 percent
of American households already buy organic. And the problem is
our U.S. farmers are having a hard time dealing with that
demand, and largely it is because of the lack of research that
has been done on organics. We have to step up to the plate or
our farmers are going to have a really hard time meeting market
demands that are hitting them very soon.
Mr. Costa. Well, this is something where it would be
helpful for all of you to provide additional input to the
Committee as we are try to reformulate the farm bill later this
year or next year.
I have some other questions but time is running out. Let me
mention the citrus industry in California. You are very
familiar with the disease research efforts and the extension of
both SCRI and the CDRE has been. Can you talk about how the
program is vital to not only California's multibillion dollar
citrus industry, but Florida as well?
Dr. Humiston. And Texas. In fact, I am sure----
Mr. Costa. And Texas.
Dr. Humiston. I am sure the other disease out there----
Mr. Costa. I would not forget Texas, Mr. Chairman, ever.
Dr. Humiston. I am sure the other diseases out there are
quite jealous that you have the three states here that are
actually dealing with citrus greening. It is a huge problem.
And the good news is we are finding some resolutions to it.
They are not a fix, there is a long way to go, but
multidisciplinary efforts at vector control, quick assessment,
being able to jump on it quick, proper pesticide use, et
cetera, is getting us there.
Mr. Costa. And those universities in the three states all
collaborate?
Dr. Humiston. We are sharing a great deal of information,
and we have multi-state grants that we collaborate on.
Mr. Costa. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
Mr. Costa. Thanks.
The Chairman. What appears to be soon Second Lieutenant
Rodney Davis is recognized for 5 minutes.
Mr. Davis. Thank you, Mr. Chairman. I am actually grateful
that Chairman Conaway has given me the opportunity to once
again chair the Subcommittee on Biotechnology, Horticulture,
and Research, which is why I am so thankful that each and every
one of you are here today to address this very important issue.
As you are all aware, by 2050, the world's population is
going to grow to nine billion people, and it is predicted that
our farmers will need to double their production to meet the
demands of this growth. Now more than ever it is imperative
that we have to invest in ag research. I really, truly
appreciate all of your testimony.
Many of our country's universities, the greatest obviously
being in the State of Illinois, Jodey has gone to witness that.
I represent the University of Illinois, our land-grant
institution, but also other ag research institutions like
Illinois State University and Southern Illinois University at
Edwardsville, and all of those institutions and others are at
the forefront of ag research. But if we are to feed the world
in 2050, we have to answer how do we keep on the cutting-edge
of ag research and competition so that our producers will meet
that demand?
And with that, Dr. Burns, I would like to ask you a quick
question. Can you touch on some of the research your
university, the University of Florida, is doing to achieve this
goal of feeding the world in 2050?
Dr. Burns. Thank you. That is a very broad question, and
let me attempt to provide at least some insight into what we
are doing.
First of all, in terms of biotechnology, we are using some
of the most cutting-edge tools, like many of our colleagues
here are, to try to advance solutions and provide alternatives.
Some of our biggest problems are ones that can't be solved by
conventional means, those that continue to be problematic and
we continue to throw money and effort in, simply can't be
solved by our conventional means and modes. Biotechnology plays
a critical role, but it is the acceptance of these tools and
techniques and the products that they deliver have been quite
problematic.
So in the future, it is hoped that, and I hate to bring
this up, but citrus greening is a very important problem in our
three states and worldwide, technology, gene-editing
technology, CRISPR-9 technologies and so forth, are going to be
so, so important in solving those problems. Will it take an
existential threat, and a takedown of an industry, to see and
prove that these are going to be viable technologies, and safe
for the consumer.
Mr. Davis. You believe biotechnology and some of the
biotechnological advances we already have in this country are
completely safe, right?
Dr. Burns. Yes, I do.
Mr. Davis. Yes. Thank you. And you believe biotechnology is
the key to us being able to grow more food on less land for a
much higher population in 2050?
Dr. Burns. I do think that biotechnology is a tool that we
can use to not only produce more food, but importantly, produce
more nutritious food.
Mr. Davis. And keep being able to produce the foods that we
enjoy now, a la fighting citrus greening and others?
Dr. Burns. And others, yes.
Mr. Davis. Okay. Thank you very much for your comments.
Dr. Burns. Thank you.
Mr. Davis. It was 25 years ago, or a little longer than
that, I have lost count, when I was in college, I listened to a
gentleman named Paul Ehrlich tell me about the population
explosion, and how by about this time in our world history we
would be experiencing massive amounts of starvation. Now, there
are areas of the globe that still are much hungrier than we are
here in the United States, but obviously, through technological
advances and through ag research that many of your institutions
and other facilities have done over the years, we have stopped
that from happening. It is up to each and every one of you to
continue that trend.
Chancellor Duncan, I have never been to Texas Tech, but
Jodey says it is awesome. You are a non-land-grant institution.
Illinois State University in my district is a non-land-grant
institution that has an ag research facility too. From my
visits there, it appears that the institutions in your non-
land-grant category offer some great opportunities for research
in the future too. Do you feel that you need more resources?
What resources are the USDA bringing to the table to help
institutions like yours, and how can we move ahead in the
future?
Mr. Duncan. There are two things there that are involved.
The capacity is really the significant issue, as we have talked
about, but as well as additional money for competitive grants.
Professors get disheartened when they produce grants that
should be funded, but there is just not enough money. Texas
Tech had 12 proposals at one point in time and won two. You
have to keep your faculty interested.
But the other thing is, if you look at the total amount of
appropriations for the different programs, USDA gets $2.9
billion for this, but if you look at NSF it is $8 billion, NASA
gets $10 billion, DOE gets $12.6, and NIH gets $33.1. We eat
food every day, and food safety, food security, and the ability
to produce high-quality food at a low price, which we have been
used to for all of our lives, is going to be significant, and
the investment in research in that area would benefit this
country greatly.
Mr. Davis. Thank you.
My time has expired.
The Chairman. The gentleman's time has expired.
Mr. Walz, 5 minutes.
Mr. Walz. Well, thank you, Mr. Chairman. And thank you all
for being here. This is a critically important discussion. I
know we are preaching a little bit to the choir on this, and
that might ring to the heart of some of my questions.
And we certainly, in Minnesota, know the importance of this
with the work of Norman Borlaug at the University of Minnesota,
which many of us tie back to. But, we have all hit on this
important piece of talking to the public; the interesting
discussion on citrus greening, and we say it, GMOs and the
labeling issue that came up, and talking to the public on the
disconnect between where the research is and where the public
is at. It is going to be critically important so that they
understand.
Dr. Tallant, I had the opportunity to watch and see some of
your researchers working on deer research down at your
Kingsville station. Fascinating things out there; young,
enthusiastic researchers trying to make a difference. But, it
is that trying to get the public and build these new coalitions
that is important. Mr. Duncan, I align right with you. We need
to be clear that we are not pitting our land-grant universities
against our non-land-grant. There is critical importance there
and both serve a purpose.
I represent Minnesota State University, Mankato. They have
come up with a really unique partnership with the greater
Mankato growth, the Chamber of Commerce, and GreenSeam. They
are branding themselves, because they are at the center of
medical research with the Mayo Clinic, with the Hormel
Institute, and what they are doing with ag research. They are
tying those things together, and explaining to the public that
they are one and the same.
Dr. Humiston, you mentioned research may not be the hot
topic in agriculture. We need to make it that. We need to show
them where it intersects. If you want to talk healthcare costs,
the Hormel Institute is working on omega 3 fatty acids and how
our food supply impacts that. Now all of a sudden, healthcare
costs, healthcare bills, insurance costs are ag issues, and we
are seen as the people who can solve that.
I ask all of you, how do you think we talk about this
differently? What do you think you are seeing that makes a
difference? Because in my part of the world, people now
recognize the economy is doing well, ag is at the heart of
that, and when ag struggles, we struggle, but the research
piece has to remain constant.
I will just throw it to you on that.
Dr. Humiston. Well, that is an excellent question. We are
doing two things right now in California, and other states are
similarly doing the same. One is we are trying to engage more
of our citizenry throughout the state in citizen science so
they start understanding the role science and research plays in
their everyday life, and that is crucial. We are tying in 4-H
and other programs to that.
But second, and perhaps more importantly, I am a firm
believer that most people really care about their pocketbooks.
Mr. Walz. Yes.
Dr. Humiston. And all too often, what happens is that the
agricultural sector gets credit for its raw farmgate, which in
California is almost $50 billion. It is a significant number,
but when you compare it to the overall economy of California, I
can't tell you how many times I get angry every month; at least
three or four, when somebody makes the incredibly stupid
statement, ag is less than two percent of the GDP of
California, why should we even care about it?
Mr. Walz. Yes.
Dr. Humiston. To combat that, we are updating a study that
was done about 5 years ago looking at the value of our working
landscapes, which includes agriculture, forestry, fisheries,
mining, open space recreation, renewable energy, the whole
gamut of it, and we are looking at the full gamut of direct
sales and multiplier. That study 5 years ago showed that
working landscapes in California were over $300 billion in
direct sales alone, and they really didn't even look at
recreation on rural landscapes. We are updating that, and quite
frankly, it is going to show that our working landscapes in
California are well over \1/3\, approaching \1/2\ the state's
economy. People have to pay attention then.
Mr. Walz. We have to do a better job of messaging it. I
know it too. My time is running out, but I did want to mention
in segue, I am trying to figure out this ratio between
competitive grants, matching funds, and everything else,
because I too, like Mr. Costa and others Mr. Peterson
mentioned, worry about the organics because it is a huge growth
industry. The market is starting to show, that is what people
want. The research is going to have to keep pace with that, and
I don't know if the system now disincentivizes that type of
research as opposed to some of the mainstream research, and
that is what we need to focus on. But you have our commitment.
It is a critical role, more so than ever. You are hearing it
from all the Members up here who understand it. Now we need to
figure out how to engage the public, because that is really
where the will to get this done comes from. So thank you all.
It is incredible work you are doing, and we are very supportive
of it.
I yield back.
The Chairman. The gentleman yields back.
Mr. Yoho, 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman, I appreciate it. And I
appreciate you all sitting here and going through this, and
educating us and giving us good information.
Dr. Humiston, you were talking about getting the facilities
up-to-date, and it is going to take a combination of local,
state, and Federal. We talk a lot about, and seeing the picture
up here, we are heading into some tough times financially if we
don't change some things up here. And, of course, that is our
goal, but austerity measures are coming and we need to prepare
for that. And we had the University of Florida up here
yesterday, the researchers. Knowing that, and I know this
question has been asked about the coordination of research, and
if we can belabor citrus greening again, one of the cures is
going to be a GMO, one is going to be using an antibacterial.
Are you guys coordinating that or other types of research to
where, if you are working on a transgenic type of tree, are you
guys coordinating that, say, this university is doing that, we
don't need to do that, we can stay in touch with them, we are
working on, say, a transgenic vector for the psyllid that is
spreading that, and somebody else is working on this. Do you
guys coordinate to that degree so that we are not duplicating,
so that we are getting more research done with less resources?
Dr. Humiston. Absolutely.
Mr. Yoho. Okay.
Dr. Humiston. In fact, I included an example in my written
testimony of how a researcher at UC Santa Barbara looking at
thin cell solar technology has now adapted that to an entirely
new way to deal with food safety issues.
Mr. Yoho. Okay.
Dr. Humiston. Down in the Los Angeles/San Diego area, which
is one of the great aerospace sectors of the U.S., we are
partnering up with them; NASA, Lawrence Livermore National Lab,
to look at things like controlled environment agriculture.
Increasingly, we are bringing together these very diverse,
multidisciplinary entities and collaborating.
Mr. Yoho. Okay. And, Dr. Burns, knowing one of the cures is
going to be a GMO, and, Dr. Humiston, you were also talking
about that you guys developed the machine-harvesting of
tomatoes, but first you had to make a plant that was more
adaptable. I assume that was some kind of transgenic type of
modification, or just plant selection. Was it a GMO type?
Dr. Humiston. There were both.
Mr. Yoho. Okay. I want to ask the whole panel this. Knowing
we are putting money into research and development into the GMO
technology, knowing that the narrative on the Internet is they
are bad, but we know the Nobel laureate scientists, over 100 of
them, have done a retrospective study, talking about the safety
of those. Are you guys doing any coordinated research or
coordinating marketing efforts as you do the research to show
the public that they are safe?
Dr. Burns. Well, I know we have with the University of
California, especially as it relates to the transgenic
technologies for the Asian citrus psyllid, we have coordinated
our marketing efforts in a proposed way to try to get the word
out about the safety of this as well as the synergies that
could develop in other areas with developing such a technology,
highlighting the screwworm and some of the successes that we
have had in those areas. I do think that there is a lot of
coordination that goes on that is funded a lot by the USDA,
NIFA, SCRI, and so forth.
It is really, really important to emphasize that
competitive funding helps make that happen, but in order for us
to survive as an industry we must coordinate our efforts, and
that is what we have done.
Mr. Yoho. And we had a group of researchers come up
yesterday from the University of Florida, and one of the things
they were talking about is the cutbacks in this new budget, and
they were talking about how much money, and I would like to ask
all of you if you have time, how much money of your research
dollar goes into research versus plant facilities, like the
buildings, things like that, if you were to take a percentage
of that $1 you get for a research project, how much goes into
research itself? Any idea?
Ms. Billy. Well, I can answer that for the Tribal colleges.
Mr. Yoho. Yes, ma'am.
Ms. Billy. Our entire research program at USDA is $1.8
million for our 34 institutions. It is a competitive program.
All of our money goes into research, and a lot of it by
undergraduate students. We are growing that pipeline. And we
are able to do that through really strong partnerships with the
state land-grants, and the agriculture research centers. That
is another area where the agriculture research centers are
probably in older facilities that also need to be upgraded and
sustained.
Mr. Yoho. All right. I thank you for your answer.
I am out of time. Thank you, Mr. Chairman.
Mr. Thompson [presiding.] The gentleman's time has expired.
I now recognize the gentleman from Massachusetts, Mr.
McGovern, for 5 minutes.
Mr. McGovern. Well, thank you very much. And thank you for
being here, and thank you for all the incredible work that you
do. It is nice to witness this bipartisan chorus in support of
agricultural university research. I just hope the budget that
we enact reflects our rhetoric; because, as you are pointing
out, the research that goes on at your institutions is
incredibly important, but we need to do more than talk the
talk, I mean we need to make sure that the funds are there. I
think that is a primary responsibility of government.
I come from Massachusetts. I represent the University of
Massachusetts-Amherst. There is incredible research that goes
on at that campus. But I support agriculture university
research at every level, including basic research.
USDA ARS programs and facilities, for example, are
critically important resources for the nation and local
economies. They advance cutting-edge research that benefits the
national population, while supporting thousands of jobs in
their respective communities. A major key to ARS success has
been collaborations with universities, and a prime example of
one of those collaborations is the ARS Jean Mayer Human
Nutrition Research Center on Aging at Tufts University in
Boston, Massachusetts, which I am very familiar with. The HNRCA
is advancing the country's scientific knowledge on nutrition,
food safety and quality, and research that focuses on solving
problems that affect everyday Americans. And the current
research that goes on at this facility is investigating the
role that nutrition plays in cancer and heart disease,
infectious disease, and Alzheimer's. It is research to find
ways to continue to improve health care and save lives, and
generate economic growth for the nation. And one of the things
that they have learned there is that diet-related disease has
become America's largest single cause of premature death and
disability. And as the baby boomer population continues to age,
the research at this facility, for example, will become even
more important to the nation's health.
Now, USDA Economic Research Service estimated that for
every $1 invested in agricultural research, there is an
estimated $17 worth of economic impact. You may be reading
about this horrible healthcare bill that is making its way
forward, that is going to throw millions of people off of
health care, I assume that the supporters are backing it
because they think healthcare costs are out of control. Well,
some of the research that we are talking about here will
control healthcare costs. We can avoid healthcare costs if we
get this right at the nutrition level. And every single
Presidential Administration that I can find has appreciated the
importance of HNRCA since the center's inception in 1979, and
has always supported it with a robust funding level. However,
we go back to this budget question, in the Fiscal Year 2018
budget request, it is proposed that the total termination of
this facility at Tufts, along with 16 other ARS laboratories,
locations, and worksites. It would also cut ARS overall by 22
percent, targeting human nutrition research for a 50 percent
reduction compared to the current enacted levels.
I just want to point out that last week before the Senate
Agriculture, Forestry, and Nutrition Committee, ARS
Administrator, Chavonda Jacobs-Young, testified that the key to
ARS success is strong partnerships and collaborations with
university researchers.
My quick question to anybody here, because I am really
concerned that we are going to eliminate important research
facilities that are vital to so many of the causes that we all
say we care about, and it is important that we have to raise
our voices in defense of some of these research dollars. Can
any of you talk a little bit more about the collaboration
between ARS facilities and academic researchers, and why it is
so important, and specifically, how do these collaborations
support the USDA's capacity to conduct research on national and
regional agricultural nutritional priorities?
Dr. Burns. Thank you. Those programs are specifically
important, very, very important to having us continue to
provide the knowledge it is going to take to create the next
solution that is going to be transferred through technology. It
is going to come from who knows where. But these partnerships
cannot be dissolved, they have to be funded, they have to be
encouraged, they have to be continued, because from that you
never know where the next solution is going to come from.
In terms of the University of Florida and its partnership
with its sister institutions, as well as with USDA, we have
multiple, multiple projects that go on that, without this
partnership, they would be half of what they are. The USDA
depends on us to do that extension sort of outreach to our
constituents, and we depend on them to help us with the
cutting-edge research that is moving forward.
So in all of those cases, and especially in the private-
sector, they are extremely important.
Mr. McGovern. Yes. I have to tell you, I just want to say
it is important that we not only talk the talk, but walk the
walk. This research is incredibly important, and we need to
make sure it is funded.
Dr. Humiston. If I could add real quickly. We view the
partnership so importantly. We have placed, and currently have
cooperative extension specialists actually functioning in ARS
facilities, and they are a key partner in our statewide
innovation and entrepreneurship initiative as well.
Mr. McGovern. Thank you.
The Chairman [presiding.] The gentleman's time has expired.
Mr. Comer, 5 minutes.
Mr. Comer. Thank you, Mr. Chairman. It is great to see so
many agriculture institutions represented here today. I have an
agriculture degree, and I am proud of that, and it is great to
hear the good work that you are doing with the agriculture
research. I strongly support funding agriculture research. As a
farmer, I understand how important it as we continue to grow
and expand our industry.
One question I have, with respect to land-grant funding for
extension programs like 4-H and the agriculture extension
agents, how has that been affected in your states, the ones
that represent the land-grant universities? I know in Kentucky
we have seen some cuts to those programs that are vitally
important in the district that I represent. Have those over the
last few years been affected much?
Dr. Humiston. Clearly, it is a challenge. The Federal
funding typically for us goes into the research aspects, and as
you said, the county cooperative extension advisors, but we
have been real fortunate in California to work closely with our
county governments, who have frequently stepped up to the plate
providing----
Mr. Comer. Right. With taxing districts right?
Dr. Humiston. Pardon?
Mr. Comer. With taxing districts and things to fund that.
Dr. Humiston. No, no, just via the county government
funding itself.
Mr. Comer. I see. All right.
Dr. Humiston. We work in very close partnership with our
actual county governments.
Mr. Comer. Okay.
Dr. Humiston. In fact, in some counties, it varies a great
deal county by county, but in some of them we are a department,
the 4-H and cooperative extension is considered a department
within county government. In other ones it is more like a joint
powers agreement.
Mr. Comer. I see.
Dr. Humiston. It really varies.
Mr. Comer. Okay.
Dr. Burns, I am curious, what are some of the types of
research that you are doing through the Specialty Crop Research
Initiative and the Agriculture and Food Research Initiative at
Florida?
Dr. Burns. With the SCRI we have done pest and disease
research that is providing strategies, and importantly, tactics
to help our farmers survive, especially not in Florida but also
in the Southeast that have the same kind of pest pressures,
things like the Strawberry Program that is really very
impactful within the Southeast. Food initiative programs and
food safety programs that not only do the research, but also
provide the critical training across these regions that help
train our growers and partners and help them be productive. So
those are a couple of important projects.
The other important project that I would like to highlight,
on the AFRI side, is our work, again, with citrus, identifying
the genetic makeup of citrus, but importantly, some of the
genes that are responsible for inferring resistance in things
like citrus canker and other important invasive diseases of
citrus, that can be used later on downstream in genome editing
type of approach to create citrus that is resistant to citrus
canker. These are the kinds of things that we like to highlight
because they are so very important, built on previous capacity
funds and previous work, but also strengthened and accelerated
with funds from SCRI and AFRI.
Mr. Comer. Good deal. Good deal.
I am curious, Dr. Tallant, what type of outreach does your
university do to recruit top students for science-focused
academic programs like agriculture research?
Dr. Tallant. We have a number of outreach programs that we
are doing. I will just name one very quickly. We have a NIFA
grant where our citrus center brings in promising high school
kids in the valley, they come work at our citrus center for a
whole year, encouraging them to get interested in agriculture
and hoping they come to our university, but we are glad if they
go to any university.
Mr. Comer. Right. Okay, good deal.
Thank you, Mr. Chairman. I yield back.
The Chairman. The gentleman yields back.
Ms. Adams, 5 minutes.
Ms. Adams. Thank you, Mr. Chairman. Thank you, Ranking
Member Peterson. And to all of the witnesses, I want to thank
you for your testimony today. It is good to have you back here
to discuss this important topic. I am especially pleased to see
an old friend, Dr. Alton Thompson, here, North Carolina A&T.
And, Dr. Hill, we spent some time together in February
during our bipartisan HBCU caucus with the 1890s roundtable,
and you have been a great resource, and it is good to see you
again. I am a proud graduate of the North Carolina A&T State
University, and know not only it to be a fine school, but also
our 1890s. In hopes of driving home the important issues that
face our HBCUs, I am going to direct my questions to you, Dr.
Hill.
Our 1890 land-grants are HBCUs established by the Second
Morrill Act, which has also been mentioned here. But,
unfortunately, states have under-funded 1890s, and North
Carolina is no exception. I served in the North Carolina House
over 20 years, and we continued to talk about this issue, and
so it has created a number of challenges for our schools. The
current state funding for North Carolina A&T is approximately
$1.11 million less than the school's Federal allocation. In
other words, they do not receive a 1:1 match from the state. It
is a disparity that not only prevents A&T, but many other HBCUs
from being able to expand their research and agricultural
projects at the same rate and the level of the 1862, which
receive above-matching funding in some cases.
You mentioned that, in your state, your schools work
together with your legislature. I think that is a great thing.
It is probably an example that we all need to follow. But let
me ask you if you could describe some of the capacity
challenges that Tuskegee has encountered in applying for
competitive grants at USDA.
Dr. Hill. Well, thank you for that perspective, and an
opportunity to respond.
First, I want to go back to what we did in Alabama just for
a second here, because what really allowed the movement to
occur were the three deans, and those three deans went to ALFA,
the Agricultural Leadership, the forestry commodity, poultry
commodity, and all of us got together and we decided we wanted
to do something different. So that dean at Auburn was a
critical person.
Ms. Adams. Yes.
Dr. Hill. And they have a new dean now at Auburn. And so it
is a human-human thing, even research, it is the researcher
working with the researcher. That is something we just kind of
shoot at people, but if we get people in closed doors and work
that piece.
The other thing is incentive. Again, like when the
legislature came through with the 1:1, Tuskegee went from zero
match to some match. We have about 90 percent now. I mean that
is awesome. It is a matter of working those pieces.
The other thing we could do is among the land-grant
leadership, because my colleagues here, we have our own places
where we meet. If my colleagues, and I have some strong ones
sitting here to my right in our group, decided they were going
to speak up among their colleagues and push this, I believe we
could do it, because we have done some other things here.
Really, we need to look in the mirror, and we need to go ahead
and do that.
What difference does it make? A big difference. Like you
say, the $1 million that North Carolina A&T would be able to
utilize in terms of keeping those scientists, helping some
students, and taking on challenges. And let me make this point:
sometimes the 1890s will take on a problem that the big farmers
in the state need help. That is what Carver used to do. What we
shouldn't do is assume the 1890s are only going to be dealing
with small and minority farmers, but what we have to do is
leverage the best two scientists, because you have a Carver at
North Carolina A&T and you have one at North Carolina State,
and they put those two heads together, then you have that
breakthrough. We can do that a lot better. I think you all need
to incentivize us a little bit more.
Ms. Adams. Okay. Well, thank you very much. I am interested
also in what you are doing in terms of partnerships as it
relates to STEM. I am just about out of time, but if you could
give me a quick answer.
Dr. Hill. Yes. Well, STEM, again, at our school,
engineering, mathematics, chemistry, we all work together. We
have kids there right now all summer long coming, learning,
whatever, and then we pipeline them through. What we need to do
at the 1890s is look beyond ag into our other science and
engineering, get tight, like I know A&T is doing there, and
really push the threshold. We should lead the nation in that.
We are small enough, we are smart enough, it is time to do it.
And California and Florida will come behind us if we did it the
right way.
Ms. Adams. All right. Thank you, sir.
Thank you very much. I am out of time.
The Chairman. The gentlelady's time has expired.
Mr. Marshall, 5 minutes.
Mr. Marshall. Yes. Thank you, Mr. Chairman. It truly is
great to be here and talk about agriculture research. While Dr.
Humiston stated that only two percent of the California income
is agriculture, in my district agriculture represents 60
percent of our economy. It certainly is very, very important. I
am a proud alumnus of a land-grant institution, my alma mater,
Kansas State University. I have invested time and energy in
understanding what they are doing there for research, and I am
very proud of their Wheat Innovation Center, as well as their
Biosecurity Research Institute.
As we go forward, one of the things that my professors back
home talk about is facilities, and that we have been
underfunding or deferring maintenance.
I will go to Dr. Hill first. You guys have quite a bit of
deferred maintenance issues going on? Can you just briefly
speak to that? And how is it impacting current research?
Dr. Hill. Briefly, yes, yes. I mean serious issues, we just
did a master plan, and all the 1890s would have the same
dynamics. We have to do selection, we have to figure out which
buildings we are going to tear down, which new ones we need to
do, which ones we are going to do renovation. All campuses are
making those kinds of selections. This is a highly critical and
important issue.
Mr. Marshall. Chancellor Duncan, I will kind of follow up
with you. The follow-up part of that, if there was
infrastructure dollars available, how would you prioritize them
at Texas Tech?
Mr. Duncan. At Texas Tech, we would prioritize improving
the labs. Labs are a continuous obsolescence issue, and as you
go forward and research, you can buy a piece of equipment 5
years ago and it is obsolete. And so that is the continuing
challenge as it relates to expanding research, and that is
across our campus but in particular with the agricultural
research that we are doing. Cutting-edge things come across and
are developed every week, and so keeping up with that is very
significant, and you have to do that in order to be
competitive.
Mr. Marshall. Okay. I am going to go to Ms. Billy next. One
of your facilities is Haskell College in my state, and I am
just curious, are you familiar with any particular work, or are
you working with Kansas State University or KU, how are those
relationships going?
Ms. Billy. Well, Haskell Indian Nations University has
partnerships with both Kansas State and, of course, KU, because
KU is right there in Lawrence, Kansas. They are actually doing
a lot of research, a lot of STEM-related research, agriculture
research, research into not just crops but also range
management, climate-related research, and then agriculture-
related research related to cows, cattle production, and
actually doing some international research in that area. Those
partnerships are very, very strong. The larger universities
sometimes share their faculty with Haskell and their students
often transfer. And the faculty and researchers at the
mainstream, the larger state institutions, are actually the
mentors for the Haskell students, so it is a really strong,
great partnership. And they share their lab facilities as well.
Mr. Marshall. Good. I am glad to hear that there is a
positive relationship.
I am sure most of you know that NBAF, the National Bio and
Agro Research Facility, will someday be in Manhattan, and for
the past 2 years we have been pouring concrete there, and it
looks like we are now coming out of the ground. I am certainly
excited about that. Just curious if any of your facilities are
currently working with Plum Island, the animal disease center
there, any relationships with any of them, because I would
anticipate that someday that will grow into a relationship with
Kansas State University as well?
Dr. Hill. Yes.
Mr. Marshall. Yes, Dr. Hill?
Dr. Hill. Yes, well, our vets go, and I even visited Plum
Island some time ago, but our scientists, because of veterinary
connection, have integral relationships with Plum Island.
Mr. Marshall. Great. Dr. Humiston?
Dr. Humiston. I was just going to say the same thing for
our veterinary school, as well as some of our cooperative
extension researchers are working very closely.
Mr. Marshall. Good. Anybody else working with Plum Island?
Okay.
Mr. Chairman, I yield back the remainder of my time. Thank
you.
The Chairman. The gentleman yields back.
Mr. O'Halleran, 5 minutes.
Mr. O'Halleran. Thank you, Mr. Chairman.
University of Arizona is our land-grant institution, and I
have a number of their research facilities within my district.
After having visited them, it is not only that their research
is involving the importance of drought management and soil
management, but also the insect issues that relate, in my area
especially, to cotton. But over and above that, my wife, who is
in the business area, tells me that if you start to pull back
on research, you start to pull back on your ability to work
well into the future. And I just can't imagine how we as an
institution can start to look out into the future and say
whether it is here in agriculture or National Institutes of
Health, or other areas that we are going to pull back, and
away, from what I believe is an important feature of public
safety to the American people.
As far as collaboration, in Arizona everybody knows about
the extension services. They help us out so much in dealing
with our water issues and erosion issues, and throughout the
entire perspective of what the state natural resources process
is, and farming process and ranching.
But I also have a number of Native American Tribes in my
district, and I look back at the Hopi, and one of the things
that the U. of A. is working on and many institutions is how to
deal with drought management and soil management. And you look
back in their history and their heritage and talk about dry
farming, they know all about dry farming. And I don't
understand how we can only be looking at institutions, the 1994
is at $1.8 million. We have to understand that this history and
this ability to use that historical perspective is important to
the entire process moving out into the future.
And so my question is going to be for Ms. Billy. And what I
would like to know is what is the role of the--I have another
question that is better. What are the greatest barriers for the
1994s in conducting agriculture research, because you had
mentioned in your written testimony that they have a unique
value that 1994 institutions can contribute. Could you please
elaborate on that?
Ms. Billy. Yes. Thank you very much. I think that Native
world view, any different cultural world view, bringing that
into research is really important. And as you said there is
actually some really exciting research at Dine College in
Arizona that the students are doing on testing different
grasslands, some grasses that have grown in Africa and other
arid environments, and possibly seeing how they can genetically
modify them to work in the Southwest, that are very low-water-
requiring and very high protein, which could really change the
shape of range management, for example, in the Southwest.
But the biggest challenges are capacity, two parts of
capacity. Not having the faculty, because they are small
institutions, so those big partnerships with the University of
Arizona and other institutions are very important. Not being
able to attract the faculty. And then facilities, which
everyone has talked about. Sort of ironically, I guess, we
actually don't even have in many cases the facilities to be
dilapidated because we don't have the funding to actually even
build the facilities. We would like to get to that point where
we have that, but facilities, even constructing new facilities
and then rebuilding the labs that they have is a serious
challenge.
And another barrier is that in some instances, and
researchers across the United States see this, it is easier to
apply in some cases for funding from the National Science
Foundation and NASA, and other science agencies, in a lot of
cases than it is to apply and compete at USDA. The small
programs that we have, a lot of times they are applying to
other Federal agencies, which is hurting our agriculture
research around the world.
Mr. O'Halleran. Thank you. And I will be giving you a call
soon.
And I thank you, Mr. Chairman, and I yield back.
The Chairman. The gentleman yields back.
Mr. Arrington, 5 minutes.
Mr. Arrington. Thank you, Mr. Chairman.
I am very supportive of R&D and America's investment in
R&D. It is incredibly important. I agree with Mr. McGovern. I
might disagree with him on health care, but I will find common
ground with him on R&D, and what it has meant to this economy.
We are the envy of the world for a lot of reasons, but one of
them is because we have led an innovation, and it is noteworthy
to know that GDP growth, some people say upwards of 70 percent
of GDP growth is innovation. What you guys do at your
institutions is the seed corn for new technologies and startup
companies and venture capital flowing to our country from all
over the world. And so thank you for what you all do. We need
to help you.
And as a Member of the Budget Committee, the only
Republican from Texas on the Budget Committee, I want to fight
for R&D. I want to solve the budget crisis, the debt crisis, I
just think that we can cut the discretionary domestic
investment in infrastructure, R&D, and other things, to the
point of diminishing returns. We have to get after some
mandatory spending cuts. Nobody wants to talk about that, but
that is what we have to do. And we have to stave off some of
these deeper cuts that we have tried to balance the budget on
the backs of some of these programs that I think have been very
useful.
As a former Vice Chancellor at Texas Tech for research and
technology commercialization, I saw firsthand the value to the
educational experience. We want to put the best and brightest
in the marketplace. Discovery is a big part of that, right? I
have seen the importance to our economy; startups, all the
things we mentioned, but I have also seen, and let's take some
language out of the Constitution in our mission, the general
welfare of the public. The public benefits, CT scan, seatbelts,
rocket fuel, on and on, Google, Stamford, and I have witnessed
firsthand the practical application and the value of that in
the marketplace solving problems for our producers, for our
farmers and ranchers, et cetera.
My question is, broadly, how do we maximize the impact of
Federal R&D? Isn't that the question we should ask as stewards
of taxpayer monies? How do we get the best return on
investment? Here are three things that come to mind, I would
love for you to comment on them. One is the importance of
public-private partnerships, and leveraging private monies, and
combining Federal dollars to enhance graduate student
experience, but also focus on real problems that need to be
solved. Dr. Hill, you mentioned, we have to get it out of the
lab, into the field, to really make a difference. People
understand that. The public gets it when you put it in those
terms. I am not against fundamental research, but we have to do
more translational research, in my opinion.
Tech transfer, we haven't talked about that yet. How do we
translate this into a marketable, patentable product? It is
revenue stream back into evergreen some of these research
projects, and it is public good, it is products and services
that are enhancing the quality of life for Americans, right?
What do we do to make that process easier for you guys, and how
do we encourage you to do more of it? I will just stop there on
that one. I will open it up to anybody. Would you start, Mr.
Chancellor?
Mr. Duncan. Sure, I will begin. This infrastructure funding
is very necessary, as you know, your experience with transfer
of technology and commercialization is important as well. You
can start these projects, but you have to provide opportunities
for your professors to be able, and for your institutions to be
able to move these products into the market.
At Tech, we have some demonstration projects on water
conservation.
We have scarce resources of water, and they are getting
scarcer, and Texas Tech has worked with private industry as
well to be able to demonstrate different sorts of technology
that have been developed at our ARS Lab there at the Plant
Stress and Soil Moisture Lab, and those sorts of
demonstrations, getting those things out.
But if you look at the endgame, the overall investment by
this country in agriculture we are low compared to the other
areas. And I went through that a while ago, but I do think that
that is a significant issue that hopefully Congress can look at
and investment more for the future, because food security, food
safety is going to be a significant issue, going forward.
Mr. Arrington. Absolutely.
We changed our tenure and promotion policy. We put metrics
for tech transfer in tenure and promotion. What are the other
universities doing with tech transfer, and do you think it is
important, and what can the Federal Government do to
incentivize more of this? Dr. Hill, any comments, for anybody
on the panel?
And I yield back.
Dr. Hill. I want to mention one thing. I hope it touches on
your point. I am a state committee chair for FSA, and have
worked with R&D for a long time. If there was a way we could
get university research better connected with what they do with
producers and R&D with communities and businesses, it would get
at what you are trying to do, those entrepreneurs, the business
partners, all that. We already have extension people working in
those areas, but your question now just made me think about
that and where there is a big gap. If anybody knows how FSA and
the problem they are having getting those microloans and the
big loans to the farmers, what happens afterward, our research
could be there working through that, and extension people
helping to minimize the gap and pain for both the government
side and the farmer and community side. And the entrepreneur
piece with R&D, since this is being restructured and
reorganized, maybe somebody needs to say something at this
point before it gets all structured, to get a university voice
in there, and let's start trying some things.
The Chairman. The gentleman's time has expired.
The long-suffering and patient gentlelady from Delaware,
who I skipped, Ms. Blunt Rochester, 5 minutes.
Ms. Blunt Rochester. Thank you, Mr. Chairman. And I want to
thank the panel. This is really interesting to me. I come from
Delaware where we have two great land-grant institutions;
University of Delaware, which I am a graduate, and also
Delaware State University, which is a great HBCU. But I also
wear the hat of having been a former senior research fellow at
the University of Massachusetts, Boston, and worked on a grant
that focused on building the capacity of minority-serving
institutions, so I know many of the challenges that you face.
But I am on the Subcommittee on Biotechnology, Horticulture,
and Research, and so I want to focus my first question on that,
and it is to the entire panel.
The United States is currently being outpaced by China in
regards to our investment in agricultural research, and Brazil
and India are not too far behind. What are the potential
implications on the United States food supply and availability
of qualified agricultural scientists and researchers? For the
whole panel.
Dr. Humiston. Well, I will throw a very quick answer out
there, because there is a slide available in a report that the
Supporting Our Ag Research Group put out recently that very
clearly shows as investment in our ag research has gone down,
our productivity has. And as investment in Chinese ag research
has gone up, their productivity in agriculture has. It is
virtually a direct co-relationship.
Ms. Blunt Rochester. Yes. Anyone else on the panel?
Mr. Duncan. Well, as we discussed earlier, and I think that
Federal and state investment in infrastructure and capacity
that is how you do it.
Ms. Blunt Rochester. Yes.
Mr. Duncan. You have to have continuity, long-term
commitment, and predictability of funding so that scientists
can develop, programs can develop, and again, biosecurity, food
safety, those sorts of issues are the types of things that we
have to start really investing in, and the capacity to do that
is going to be very important.
Ms. Blunt Rochester. Dr. Humiston, you actually started
talking about the fastest-growing agriculture sectors in
farming being organics. For the panel, I am curious, and
American farmers are struggling in this area to meet the
consumer demand, how are your universities helping organic
farmers address challenges and meet the booming demand for
organic products?
Dr. Humiston. Two things there: One is organics is booming,
there is no doubt about it, but almost equally booming is
local. There are some people that would prefer to buy a local
food product than an organic food product. But both sectors are
rapidly growing, and not just in the coastal areas, throughout
the nation.
We are doing a variety of things. We have taken the steps
to create some of our research facilities having organically
certified land so that we could conduct research there.
Ms. Blunt Rochester. Yes.
Dr. Humiston. Frankly, we have had a hard time attracting
researchers because of the lack of funding for organic
research. But, more importantly, we are trying to make sure
that all of our programs, all of our research aims at a triple
bottom line sort of sustainability; people, planet, and
prosperity. And that ends up being things like integrated pest
management, where hopefully if you do everything right, you are
organic. But, there is still that once in a rare time you need
to use a product, and you use it appropriately and very
targeted in a way that is safe for the environment and people.
We are very proud of our world-class integrated pest
management program.
Ms. Blunt Rochester. Yes.
Dr. Humiston. Something that we actually manage for the
western states too. I think more support for that, more open-
ended would be fine, but clearly, organics and specialty crops,
which is related in some cases, and frankly, sustainable ag
research extension, which helps with all these, they need more
focus and we need to understand the needs of them more out in
the public.
Ms. Blunt Rochester. Great. Yes, Dr. Hill?
Dr. Hill. Okay, yes. The project I alluded to earlier
about, we have a scientist with a $2 million project with four
of the universities, all 1862s. They are testing organic
pesticides against major vegetable pests, they are doing on-
site, advanced, multi-location, multi-state, on-farm trials,
and they have some really sharp people. North Carolina is
involved, Alabama, and Pennsylvania. So that now, $2 million
over a 3, 4 year period is nothing to actually deal with a
regional project. Somebody should be looking at that and say,
``Okay, let's reward that diversity and the scientists and
quality, and let's give them a boost, tell them to bring four
more schools in,'' Texas, and who do we have, Arizona, and
Florida.
Ms. Blunt Rochester. Thank you. My time has expired.
Dr. Hill. Sorry.
Ms. Blunt Rochester. But hopefully, if all of you could
think of any adjustments that we need to also make to the grant
criteria, related to Ms. Billy's comments also about the
challenges of applying for agricultural grants.
Thank you, Mr. Chairman.
The Chairman. The gentlelady's time has expired.
Mr. Dunn, 5 minutes.
Mr. Dunn. Thank you, Mr. Chairman.
I would like to direct my first question to Dr. Burns from
the great State of Florida.
In recent weeks, the proposals have resurfaced about
imposing a cap, nominally ten percent suggested, on the amount
of facilities and administrative reimbursement related to the
competitive Federal grants. Could you speculate for us how the
University of Florida would utilize, how does that impact your
institution's capacity to perform research, going forward?
Dr. Burns. Well, we depend on our indirect cost recovery to
help us with all things related to research, especially as it
relates to infrastructure improvements, building capacity and
research, doing the administrative side of a research program
is tremendous. This indirect cost recovery is very, very
important. Cutting that would be detrimental to the research
enterprise at the University of Florida.
Mr. Dunn. Can you give, is there a program, is there
something immediate that this research is going to go unfunded?
Is there a program like that?
Dr. Burns. Are you asking me if----
Mr. Dunn. Because of the cap. Would you be----
Dr. Burns. Because of the cap. We would have to strategize
and prioritize research programs based on the amount of
indirect costs that would come in. It is really important to
once again emphasize the importance of full and direct cost
recovery on our Federal grants because they are so important to
maintain the capacity of research, the administrative side of
research, that really is not visible to our stakeholders and to
our funding agencies that we all know is really important to
sustaining our research programs.
Mr. Dunn. We are going to be down at the University of
Florida this weekend, I believe. I hope you will be there and
you will be able to make some specific points.
Dr. Burns. Great.
Mr. Dunn. Let me cast out to the panel also a question on
GMOs. It is a recurring theme in the question is GMOs, and all
of us with a science background know that GMOs are not
inherently bad, and I wonder where the undercurrent comes in
our nation at large and our culture that is so anti-GMO, and
where can we start this educational process? Is it high school,
is it middle school? I toss that out, because I am at a loss to
understand it.
Dr. Burns. Well, I will just throw out some thoughts here.
I think that our children and our young adults know where food
comes from because we started their education about where it
actually comes from early. Educating the public, especially as
early as possible, about the benefits and the risks involved in
all the things that we do in agriculture is extremely
important. Starting people early with education. It has to be
balanced, it has to be fair, it has to be honest, and that is
one of the main criteria for success is in keeping our
population sort of in-the-know about the benefits and potential
risks of any of our technologies, including GMOs.
Mr. Dunn. Thank you very much for your comments.
Dr. Humiston. I was just going to add, this is something I
mentioned earlier, trying to get our citizens more engaged in
citizen science. Part of that is a larger effort to just combat
the general scientific illiteracy amongst our general
population.
And you bring up GMOs, but quite frankly, it leads to lack
of understanding over the value of vaccination, over the lack
of understanding about the effects of climate change, and a
host of other issues. GMOs is just one topic among many that we
have really got to start improving STEM education and getting
our citizenry more involved in science so that they understand
it and are participating in it, and can believe what is coming
out of science.
Mr. Dunn. Thank you very much.
Mr. Chairman, I yield back.
The Chairman. The gentleman yields back.
Mr. Lawson, 5 minutes.
Mr. Lawson. I was beginning to wonder whether I was still
here, Mr. Chairman.
And as a follow-up, I won't go into how much I wanted to
talk about the 1890 institutions, because Congressman Scott
from Georgia did a very good job, but I would like to ask Dr.
Burns, last week Governor Scott signed a bill to allow the
University of Florida and Florida A&M University to start an
industrial hemp pilot program. What type of support do the two
schools need from USDA to make the program work?
Dr. Burns. As you know, the legislation does not allow for
any funding to come to these programs, but it mandates that
these programs should occur, and it also implores us to go out
and get private investments for these. It does request that we
go and we work with our state agencies to provide the rules and
the regulations that are going to be important to maintain the
Federal balance as well as the state balance in growing
industrial hemp. I would say that there are enormous
opportunities for researchers to get involved with the private
enterprise to do that kind of research, but there are some
restrictions on the research as there are in many of the states
that are conducting industrial hemp programs.
Mr. Lawson. Okay, thank you. And during your discussion you
talked about alternative crops, which was interesting to me.
What can we do in north Florida with alternative crops such as
we have now in olives and peaches?
Dr. Burns. Yes, so we have olives and peaches. Pomegranates
are also alternative crops that we are looking at that would be
beneficial and maybe adaptable to our conditions. Blackberries
are another one. Crossing over into the row crops, we have
Carinata, which is a new, for us anyway in Florida, an energy
crop that can be directly converted into jet fuel. That is an
enormous potential for us because it grows so well in Florida
environments. Sesame is another alternative crop for us that
has enormous potential. There are some issues and drawbacks
with intellectual property and so forth with the companies; but
overall, wow, is there a great potential for alternative crops
in Florida. Even the Californians are coming with their crops
because they want to take advantage of the resources available
in Florida, the water, and the humid environment, which are so
great for pests, by the way.
Mr. Lawson. And I am interested in those. Congressman Dunn
represents an area that I used to represent in the Senate,
which is in Jackson County, and we are going to teach him a
little bit more about farming, coming from the medical area. I
represented him for 10 years, so I have to look out for him.
But, Dr. Hill, I feel like I grew up on Tuskegee campus,
for two or three reasons. My father-in-law finished from
Tuskegee, E.T. Brooks, and Henry Brooks, who was very active,
is my brother-in-law, and so I really have been on that campus
a great deal and I see the kind of research and so forth that
is going on there. But my question, if I don't run out of time
is, your testimony, you talked about 1890 institutions centers
of excellence. Can you talk about how these centers would help
propel the 1890 institutions through the partnerships with the
private-sector? We talked about the other universities, but how
through the private-sector?
Dr. Hill. Thank you for that. Real quick. You cluster the
farmers. You cluster small farmers. You co-op or cluster five
or six, you get a contract with a Wal-Mart or Kroger, whatever.
The university comes in and leverages their expertise. They
market. They make money. It is not like the big farmer. If you
run into other problems, you get a middle-sized farmer who has
the right mentality, wants to work with them, we get a larger
farmer join. So the research is different. It is not just
technology, irrigation, solar, et cetera, but it is social
interaction among humans. And if you can work those pieces,
then really the sky is the limit because the buyer wants that,
the public wants that, all of the supporting commodity groups
in the state want that, our state legislature likes that. All
of a sudden you have friends all over the place because you
brought people together and they are making a profit. Here,
land-grant puts their eye on the profit in a supporting role,
with all their economists, all their other people, and you get
a different dynamic. It was new for us to do it that way, but
it is great.
Mr. Lawson. Well, thank you.
Mr. Chairman, I yield back.
The Chairman. The gentleman's time has expired.
Mr. Thompson, 5 minutes.
Mr. Thompson. Thank you, Mr. Chairman. Thank you to
everyone on the panel that is here.
I am going to just throw this out there. Can you elaborate
on the impact of extension and the relationships that extension
has with those that they serve in the field and urban areas
across America? Is extension adequately funded, is it focused
in the right direction? I know it has to with the different
things that it addresses.
Dr. Burns. I can make some general statements in extension,
although I am not responsible for the extension programs. The
urban sector is growing in Florida by leaps and bounds, as is
the requirement and the need and the desire of our urban
constituents to engage in some kind of agriculture. Our
extension service has been very important at extending some of
those agricultural knowledge bases to our urban society.
Having said that, there is some friction between our rural
and urban sectors, as I am sure there are in other locations,
and some of our rural constituents think that we might be
spending too much time in one area than the other, and vice
versa.
I think that extension continues to be important as we
transfer knowledge from the research side into a more applied
setting where it can be useful to our constituents.
Dr. Humiston. I do oversee extension for the State of
California, and I can say very clearly we have far, far more
demand than we have resources to make available, both urban and
rural.
One thing we are trying to do, again, I have mentioned
several times earlier leveraging collaboration, but to Dr.
Hill's point, we are trying to help catalyze large regional
efforts along the entire farm-to-fork food chain, and use that
as economic development opportunities both in urban areas and
tied to rural. I mean the reality is we don't want our food
processing facilities on our ag land. They belong in cities and
rural communities. And there is a partnership to be had there,
and that is typical of some of the types of community and
economic development cooperative extension can be very
excellent at.
Mr. Thompson. The National Institute of Food and
Agriculture's Competitive Grant Program, which is the
Agriculture and Food Research Initiative, provides funding to
support research education extension activities in six farm
bill priority areas; plant health and production and plant
products; animal safety, production in animal products; food
safety, nutrition, and health; bioenergy, natural resources,
environment, agriculture systems and technologies; and
agriculture economics and rural communities. It is my
understanding that AFRI's funding rate for AFRI applications is
13 percent in a 3 year rolling average. Should the next farm
bill authorize AFRI at a higher level?
Dr. Humiston. Actually, most of us would be thrilled if it
was authorized at the same level, but appropriated up to the
full level. It has rarely gotten more than \1/2\, if that, of
what has been authorized. It really needs to be a partnership
with the appropriators to get the funds in the field.
Mr. Thompson. Okay. And my last question is, obviously,
biosecurity has come up a number of times in this hearing, and
it is crucial to protecting the almost $1 trillion agricultural
industry that contributes to the U.S. GDP in 2015. How can NIFA
programs at USDA continue to protect the integrity,
reliability, sustainability, and profitability of U.S. food and
agriculture systems against threats from pests, diseases,
contaminants, and disasters?
Dr. Humiston. I did offer at least a few points in my
written testimony that I will share an example of, and that is,
again, partnership. NIFA is a wonderful, wonderful
organization, but it can't do everything. No one agency can.
Within USDA for California, a very key agency is APHIS, our
Animal and Plant Health Inspection Service. Given the wide
array of specialty crops we have, as well as Florida, it often
feels like we are getting a new pest of some sort every week,
APHIS is crucial to us, as is Agricultural Marketing Service,
which funds the specialty crop block grants. NRCS, Natural
Resources Conservation Service: we just signed an MOU a few
weeks ago to greatly improve how cooperative extension, NRCS,
our State Department of Food and Ag, and our resource
conservation districts can collaborate to deliver on a variety
of programs.
So this is where you see some of that crosscutting between
titles.
Mr. Thompson. Yes.
Dr. Humiston. Even though we are the research title, we
actually work with quite a few of the others.
One thing I did recommend is that preference be given for
cooperative extension to serve as technical service providers
within the conservation title. And you could find several other
examples like that.
Mr. Thompson. Okay, thank you.
The Chairman. The gentleman's time has expired.
I want to thank our witnesses for being here today. Each of
you has presented a compelling case as to why research is
important and why it ought to be a high priority. All of you
are really familiar with the struggle of setting priorities and
making hard choices between the good stuff. It is rare that you
have to make a choice between a good and a bad. We just all
have to make choices between the good. And having your input in
the public record as a part of the farm bill work that we will
do late this winter and early next year, will really be
terrific in laying that marker down as to why it is important.
The research dollars you have already been getting you are
using effectively. And you all presented good ideas on terms of
cross-pollinization among institutions and/or the public- and
private-sector. And I for one appreciate the time you spent
this morning helping to educate not only Members, but also
those millions and millions of folks watching on CSPAN this
morning that also heard the testimony as well. Again, thank you
very much. And this will be a good part of what we look at when
we look at the hard decisions that the Committee and I will
have to make when we do the 2018 Farm Bill.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Committee of Agriculture is adjourned.
Thank you.
[Whereupon, at 12:21 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by American Society for Horticultural Science
The American Society for Horticultural Science (ASHS), consisting
of 2,500 members in all 50 states and 60 countries, is the nation's
premier professional society for horticulture research. Our mission
promotes and encourages national and international interest for all
forms of specialty crops through research, teaching, extension, and
collaborative projects between states, regions, and other nations.
Supporting capacity and competitive grants, as well as intramural
research within the U.S. Department of Agriculture (USDA), we have been
actively involved with both title VII (Research) and title X
(Horticulture) in the 2008 and 2014 Farm Bills. With Specialty Crops
comprising \1/2\ of all ``farm gate'' value in the U.S., plus its
foundation for healthy diets and environmental stewardship for all
Americans, ASHS looks forward to backing continued public-private
investments for research programs in new farm bill legislation.
Congressional funding for the research and horticulture titles have
made great strides in the past 10 years. Measurable increases enshrined
in law for programs under USDA's National Institute of Food &
Agriculture (NIFA) range from formula and extension funding for Land-
Grant institutions, to the all-important Specialty Crop Research
Initiative (SCRI), the Organic Agriculture Research & Education
Initiative (OREI), the Agriculture & Food Research Initiative (AFRI),
Sustainable Agriculture Research & Education (SARE), and Plant Pest &
Disease Management mitigation, whose budget includes the successful
National Clean Plant Network. The Agricultural Research Service (ARS),
USDA's in-house research agency also conducts groundbreaking research,
and in recent years, has increased its collaboration with competitive
program initiatives. The 2008 and 2014 Farm Bills have also facilitated
transition practices from conventional to organic farming, and
increased decision making authority at the state level for research
allotments via Specialty Crop Block Grants, a program administered by
USDA's Agriculture Marketing Service.
As the Senate Agriculture, Nutrition, & Forestry Committee reviews
these and other farm bill provisions, we hope this hearing will
highlight agriculture research's many contributions to America's
economy, and its vital role for maintaining affordable, safe, and
abundant food and fiber sources. For our domestic economy, horticulture
(fruits, vegetables, and nursery/ornamentals) generates approximately
$60 billion annually, while an additional $55 billion comes from
landscape services and $20 billion from specialty crop exports. None of
this could be sustained without wide-ranging scientific analysis and
discovery. Yet these activities cannot be achieved in a vacuum.
Accordingly, we hope Congress will accord increased focus in the next
farm bill toward the urgent need of upgrading facilities at our
historic land-grant colleges and universities. ASHS views knowledge and
extension infrastructure on par with roads, bridges, railways, and
airports to ensure that our nation remains competitive and productive
for the 21st Century. Forged in the crucible of civil war, our land-
grant system rose to become a bedrock of American innovation and
economic progress. We must not abandon this exemplary model for
educating and training future generations of agriculture scientists.

For more information on ASHS and its policy positions, please
contact Dr. Thomas Bjorkman, ASHS National Issues Committee
Chair, at [Redacted], or Dr. John Dole, ASHS President, at
[Redacted].
______

Submitted Statement by National Coalition for Food and Agricultural
Research
Chairman Conaway, Ranking Member Peterson and Members of the
Committee:

The National Coalition for Food and Agricultural Research (NCFAR)
is pleased to submit this testimony for the June 22 hearing record.
NCFAR is a nonprofit, nonpartisan, consensus-based and customer-led
coalition that brings food, agriculture, nutrition, conservation, and
natural resource stakeholders together with the food and agriculture
research and extension community. NCFAR serves as a forum and a unified
voice in support of sustaining and increasing public investment at the
national level in food and agricultural science as a top national
priority. A membership list is attached as Exhibit 1. More information
about NCFAR is available at http://www.ncfar.org.
NCFAR's support encompasses the entire U.S. Department of
Agriculture (USDA) research, extension and education (REE) mission
area, including extramural programs in the National Institute of Food
and Agriculture (NIFA)--such as the Agriculture and Food Research
Initiative (AFRI), and capacity funds to support Experiment Stations
and Cooperative Extension--and intramural programs in the Agricultural
Research Service (ARS), Economic Research Service (ERS), and National
Agricultural Statistics Service (NASS), as well as the U.S. Forest
Service research program.
NCFAR urges a balanced portfolio, as the various programs serve
important and complementary roles. NCFAR supports mandatory programs in
the farm bill that provide funding for research. It is important to
include investments in both fundamental and applied research, as well
as translational education. In addition, publicly funded research
serves critically important objectives that private-sector research
cannot fulfill in a number of areas. For example, the results of
publicly funded research are available to the public, including policy
makers.
Companies are often unable to fund fundamental research that lays
the foundation for much of our nation's applied research.
NCFAR applauds the House Agriculture Committee for its bipartisan
leadership in establishing the Foundation for Food and Agriculture
Research (FFAR) in the 2014 Farm Bill and strongly encourages your
continued support for FFAR in the next farm bill.
A group letter to the Committee signed by over 60 organizations
supporting FFAR is attached as Exhibit 2.
The initial investment of $200 million in mandatory funding through
the Commodity Credit Corporation has been instrumental in helping the
U.S. agricultural research enterprise foster continued innovation.
FFAR's emergence as a cutting-edge research institution, leveraging
funds to contribute to the long-term competitiveness of our nation's
food and agricultural system is well timed considering the many
challenges confronting the U.S. food and agricultural system.
FFAR matches every program dollar with outside funding, multiplying
value for American taxpayers and growing the food and agriculture
funding pool. NCFAR understands that every Federal dollar invested by
FFAR has been more than doubled by its diverse funding partners, and
the U.S. government's $200 million investment in FFAR is on track to
deliver more than $400 million in vital food and agriculture research
programming.
Very much in line with NCFAR's unified and customer-led approach to
research policy, FFAR takes advantage of the unique partnership model
conceived by this Committee to convene diverse groups that might not
otherwise collaborate around common challenges of national and
international significance. NCFAR is pleased that FFAR has formed
partnerships with farmer and commodity groups, retail and other
companies, the public health sector, and leading foundations.
With the farm bill reauthorization process in its early stages,
NCFAR has several activities underway with the objective of better
informing our leadership, other stakeholders, the Congress, and the
Administration in laying the groundwork for a strong research title and
supporting funding.
One longstanding initiative is NCFAR's signature `LunchNLearn'
seminar series in which our team works to inform hill staff and other
stakeholders by featuring the publicly funded work of leading-edge
scientists on a diverse array of disciplines and timely topics. Over
the past decade, NCFAR has convened 130 seminars, connecting with over
8,300 attendees. A document providing highlights of the seminar series
is attached as Exhibit 3. More detail is available at http://
www.ncfar.org/Hill_Seminar_Series.asp. NCFAR thanks the Committee for
providing a host location for many of these seminars on the House side.
NCFAR is taking additional action on several fronts to inform the
current farm bill reauthorization process and be a more effective voice
for a strong research title.
First, NCFAR's Research Outreach Committee has convened a farm bill
task force, which is in the early stages of developing recommendations
on the reauthorization of the farm bill research title for our Board to
consider. NCFAR is also collaboratively engaging allied groups with the
objective of providing timely recommendations to this Committee and the
Congress.
Second, NCFAR is involved in planning for a Summit on Integrated
Research, Education, and Extension Priorities to Advance American
Agriculture. The aim of the Summit is to engage stakeholders in
developing a vision for what the food and agricultural research,
extension and education enterprise should look like to best serve the
needs of the food and agricultural system in the 21st century and
capitalize on the robust potential of the agricultural, food, and
resource sectors to fuel further growth in the United States economy.
The summit will focus on four critical areas; fueling growth in the
agricultural economy through rapid adoption of innovations; harnessing
the power of big ag data in research and extension; advancing the
health of U.S. consumers and environmental quality; and assuring the
security of U.S. agriculture and food systems. Additional information
will be provided in the near future.
Third, NCFAR is actively involved in other collaborative efforts
intended to inform and support the reauthorization of a strong farm
bill research title, including (1) the unified messaging effort led by
the Riley Memorial Foundation, and (2) the Breakthroughs 2030 study,
initiated by the SoAR Foundation with major funding support from the
Foundation for Food and Agriculture Research and being conducted by the
National Academies of Science (NAS), to produce a 10 year agenda for
food and agricultural research.
NCFAR is ``customer-led''--meaning the diverse stakeholders who
need and benefit from the scientific outcomes that are produced by our
nation's publicly funded research, extension and education system in
our own work.
Research is an important means to critical ends--providing science-
based information and tools that help those in the food and
agricultural system do their jobs for the ultimate benefit of
consumers, the nation's economy, and the world.
The same holds true for a myriad of other ``customers''--such as
farmers and ranchers across the nation; the agricultural input
industry; food processors; professionals in the fields of nutrition and
health; natural resources and environment; rural communities; and
ultimately all consumers of food and natural fiber around the world.
Furthermore, this Committee and other Members of Congress and
policy makers at all levels of government are important ``customers''
of research, extension and education made possible through the research
title of the farm bill.
The research title of the farm bill represents the nation's
signature Federal investment in the future of the food and agricultural
sector. In fact, the success of every other title in the farm bill and
those who are charged with carrying out their respective missions is
arguably dependent in significant part on scientific outcomes and tools
generated by programs authorized through the research title, and then
funded by Congress.
Research is not an end in itself--rather it is a vital means to
help achieve many national priorities. The research title is critical
in providing advancements in food and agricultural research, extension
and education that help provide the tools needed to sustain and
strengthen America's food and agricultural sector, rural communities,
and the national economy.
Public investment in food and agricultural research, extension and
education today and in the future must simultaneously satisfy a range
of needs, including food quality and quantity, resource conservation,
producer profitability, and food safety and security, and helping to
improve health.
At the risk of oversimplification, Federal funding is the fuel for
USDA's REE engine and determines how effectively the important goals of
the research title are realized. NCFAR respectfully submits that our
nation is not investing enough in in publicly funded research to permit
discovery necessary to regain and then maintain our nation's place as
the leader in agricultural research.
Investment in food and agricultural science is not only good
business, it's good for business. By any measure, publicly funded food
and agricultural science represents an outstanding investment. Public
and private investments in U.S. agricultural research and practical
application of results have paid huge dividends to the United States
and the world, especially in the latter part of the 20th century. The
CARD report entitled ``Measuring Public Agricultural Research and
Extension and Estimating their Impacts on Agricultural Productivity:
New Insights from U.S. Evidence'' (Jin & Huffman, 2016) presents a
summary of the most recent returns on investment of agricultural
research dollars to have a rate of return of approximately 67 percent.
However, the unparalleled success story in the food and
agricultural system is in large part the product of past investments in
food and agricultural research and extension. Federal funding for food
and agricultural research, extension and education has been essentially
flat for over 20 years despite much greater demonstrated needs, and has
reportedly declined by about 25 percent in real terms since 2003. At
the same time support for other Federal research has increased
substantially. Our nation's competitiveness in global markets is at
risk, as investments in food and agricultural science by our global
competitors have been growing rapidly.
The 2008 and 2014 Farm Bills recommitted to an authorized level of
$700 million annually for AFRI. Yet 8 years later, FY17 appropriations
for AFRI are about $375 million. NCFAR is on record in support of
funding AFRI at the fully authorized level as soon as practicable.
Increases in AFRI should represent an addition to funding for REE
programs and not come at the expense of other REE programs.
Increased Federal investments in the USDA, REE mission area will
lead to advances and breakthroughs in agricultural productivity,
improved animal, plant and soil health, and nutrition and lead to
healthier citizens, a healthier agricultural economy, and a stronger
and more globally competitive America.
Tools provided through publicly funded research, extension and
education are needed to help achieve safer, more nutritious, convenient
and affordable foods delivered to sustain a well-nourished, healthy
population; more efficient and environmentally friendly food, fiber and
forest production; improved water quality, land conservation, wildlife
and other environmental conditions; less dependence on non-renewable
sources of energy; expanded global markets and improved balance of
trade; and more jobs and sustainable rural economic development.
Societal demands and expectations placed upon the food and
agricultural system are ever-changing and growing. Examples of current
and future needs include addressing biosecurity; food-linked health
costs; development of vaccines and diagnostics, antibiotics, de-
wormers, antifungals and parasiticides, antimicrobial use strategies,
control and therapy for diseases and infections, transboundary disease
and foreign animal disease; environment and conservation; water
quality; farm income and rural revitalization; biofuels and climate
change; the increasing world demand for food and fiber and improved
diets; and needed advances in biotechnology and genetic resources
research. A United Nations report projects that we will need to double
food production to feed nine billion people by 2050, and that 70
percent of the increase must come through research developing new
technologies and increased productivity.
NCFAR appreciates the longstanding support this Committee and its
Members have demonstrated over the years to authorize and oversee
implementation of a strong research title that can compete more
effectively in the funding process, both within the Administration and
in the Congress.
NCFAR looks forward to working as a customer-led coalition with
this Committee, Congress, the Administration, and other stakeholders to
help ensure that the USDA REE mission moves forward as envisioned and
receives the resources and funding needed to achieve scientific
outcomes that are necessary for the food and agricultural system to
address multiple demands, challenges and expectations.

Attachments (3):

Exhibit 1--NCFAR Member List.*
---------------------------------------------------------------------------
Editor's note: the documents referred to entitled NCFAR Member
List, and `LunchNLearn' Hill Seminar Series Highlights, (as updated)
follow the prepared statement of Mr. Wilkins (located on p. 489),
published in the March 16, 2017, The Next Farm Bill: Agricultural
Research, Biotechnology, Horticulture, and Research Subcommittee
hearing. For purposes of this publication they are not reprinted here.

Exhibit 3--`LunchNLearn' Hill Seminar Series Highlights.*
exhibit 2

Hon. [K.] Michael Conway, Hon. Collin C. Peterson,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.

RE: Support for Foundation for Food and Agriculture Research (FFAR)

Dear Chairman Conaway and Ranking Member Peterson:

The undersigned wish to thank the Members of the House Committee on
Agriculture for their bipartisan support in establishing the Foundation
for Food and Agriculture Research (FFAR) in the Agricultural Act of
2014, also known as the 2014 Farm Bill. We strongly encourage your
continued support for FFAR in the next farm bill. The initial
investment of $200 million in mandatory funding through the Commodity
Credit Corporation has been instrumental in helping the U.S.
agricultural research enterprise foster continued innovation. FFAR's
emergence as a cutting-edge research institution contributing to the
long-term competitiveness of our nation's food and agriculture sector
is well timed considering the many challenges confronting the U.S. food
and agricultural system.
The need for advanced solutions remains imperative if we are to
continue to lead the world in food and agricultural innovation. Your
work in 2014 to create a new institution for leveraged, public-private
partnerships and investments through FFAR was as an inspiration. We
urge your continued support of FFAR in the next farm bill.
Thank you for your consideration and for your leadership on food
and agricultural research, extension and education.
Respectfully Submitted,

National Coalition for FASS Rural Sociological
Food and Agricultural Global Harvest Society
Research (NCFAR) Initiative Society for Range
Management
Academy of Nutrition International Alliance Soil Health Institute
and Dietetics for Phytobiomes
Research
Agricultural Retailers Iowa Corn Growers Soil Science Society
Association Association of America
American Farm Bureau Irrigation Association Southern Agricultural
Federation Economics Association
American Feed Industry Marrone Bio Innovations Southern Weed Science
Association Society
American Seed Trade Michigan Tree Fruit Supporters of
Association Commission Agricultural Research
Foundation
American Society for Mississippi State Syngenta
Horticultural Science University
American Society for National Association of Taylor Shellfish Farms
Nutrition Plant Breeders
American Society of National Association of The American
Agronomy State Departments of Phytopathological
American Society of Agriculture Society
Animal Science The Fertilizer
Institute
American Society of National Association of United Egg Producers
Plant Biologists Wheat Growers
American Veterinary National Corn Growers Universities Council
Medical Association Association on Water Resources
APLU Committee on National Cotton Council University of Delaware
Legislation and Policy National Pork Producers College of
Aquatic Plant Council Agriculture and
Management Society Natural Resources
Association of American North American Millers University of Nebraska
Veterinary Medical Association
Colleges
Cherry Marketing North Central Regional University of
Institute Inc. Association of Tennessee Institute
CoBank Agricultural of Agriculture
Experiment Station Veterinary Regional
Directors Referral Hospital, pc
Cornell University North Central Weed Wade Water LLC
College of Agriculture Science Society Weed Science Society
and Life Sciences Northeastern of America
Council for Agricultural and Western Association of
Agricultural Science Resource Economics Agricultural
and Technology (CAST) Association Experiment Stations
Northeastern Weed
Science Society
Crop Science Society of PepsiCo Western Society of
America Weed Science
Experiment Station Pollinator Partnership
Committee on Purdue University
Organization and College of Agriculture
Policy
Farm Journal Foundation

______

Submitted Statement by National Turfgrass Federation
The National Turfgrass Federation (NTF), formed in 2007 to
coordinate and support turfgrass research within the Federal
Government, submits this statement to the Senate Committee on
Agriculture, Nutrition, & Forestry to review past, current, and
hopefully future successes of farm bill legislation. Dedicated to
promoting the value and necessity of turfgrass for society, NTF
believes this hearing will help assess successful activities of the
2014 Farm Bill, and explore new and innovative possibilities for its
successor in 2018.
Comprising approximately 65 million acres nationwide, turfgrass is
America's third largest crop behind corn and soybeans, and the largest,
most visible, and diverse of the horticulture crops. Turfgrass forms
the foundation for the greening of rural and urban America through
parks, recreation and athletic fields, residential lawn care, natural
grasslands, roadside and highway medians, commercial and historic
properties, golf courses and ornamental gardens--just to name a few!
Turfgrass provides excellent buffer zones that filter pollutant water
runoff before entering surface and groundwater systems. The importance
of turfgrass cannot be underestimated for the preservation and
enhancement of a variety of ecosystems. In many arid regions of our
nation, especially in the West, new drought-tolerant turfgrass
varieties are being discovered, developed and tested which will use
less water and fertilizer, thus providing energy and water savings to
states, municipalities, and residential homeowners.
Turf has covered a lot of ground in recent farm bills. Courtesy of
the 2008 Food, Conservation, & Energy Act, turf and sod were designated
as specialty crops. This expanded turf's opportunity for competitive
research funding, as well as extension outreach initiatives. Turf
furthered its research involvement in the Agricultural Act of 2014 with
programs such as the Specialty Crop Research Initiative (SCRI), and
Specialty Crop Block Grants. The latter program is especially popular
with NTF members as it facilitates cooperative decision making among
scientists and their respective State Departments of Agriculture.
Imagine landscapes devoid of green grass, farms and waterways
without protective grasslands, or no viable protection for soil
erosion. As urban populations expand, maintaining an abundance of
turfgrass varieties, that are adaptable to many climates while using
sustainable, sensible management that provides environmental protection
ultimately relies on quality and adequately funded research. This
exploration, analysis, and applications for public use is predicated on
continuing vital research programs embodied in title VII (Research) and
title X (Horticulture) of this current farm bill. With research
accounting for just two percent (2%) of USDA's annual budget, NTF hopes
Congress will consider increased funding for these titles wherever
feasible. This funding is notably important for land-grant colleges and
universities--the foundation of education and training for future
generations of agriculture scientists--as well as competitive grants,
which build upon regional collaboration for innovative discoveries that
provide dividends for American taxpayers and their respective
communities.

For more information on turf research's utilization of farm
bill programs, contact Kevin Morris, NTF Executive Director at
[Redacted], or Jonathan Moore, NTF Policy Consultant at
[Redacted].
______

Submitted Questions
Response from Hon. Robert L. Duncan, J.D., Chancellor, Texas Tech
University System*
---------------------------------------------------------------------------
*There was no response from the witness by the time this hearing
was published.
---------------------------------------------------------------------------
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress
from New Hampshire
Question 1. My first question for the entire panel touches on the
organic research being done at UNH. Organic farming is one of the
fastest growing agriculture sectors in American, accounting for over 5%
of total retail food sales.
How are your Universities helping organic farmers address
challenges, and meet the booming demand for organic products?
Answer.

Question 2. Because of the unique requirements for organic
agriculture, how is your university ensuring that organic agriculture
gets a fair share of dedicated research investment and support at your
university?
Answer.

Question 3. If Congress were to devote more research funds toward
organic research to help expand our domestic organic production to keep
pace with demand, how would that affect the research activities of your
institutions?
Answer.

Question 4. Eighty percent of seafood consumed in the United States
is imported, resulting in a roughly $11 billion trade deficit for
seafood industry. The U.S. has an opportunity to increase aquaculture
production and become a world leader in providing safe, sustainable and
environmentally friendly seafood through state-of-the-art approaches to
farm the ocean.
Beyond a huge economic incentive for the country, this is a food
security issue. Agricultural research at the country's land-grant
institutions plays a critical role in advancing local economics and the
nation in burgeoning markets. Can you describe how increased
authorization levels for NIFA Capacity Funds and extramural programs,
including AFRI, would boost this type of agricultural research?
Answer.

Question 4a. How can increased authorization levels advance
innovative aquaculture practices that will increase food production and
security across the country?
Answer.

Question 5. Industrial-scale composting is growing rapidly as
states and municipalities increase restrictions on disposal of organic
wastes in landfills and work to achieve sustainable waste management
systems. As business opportunities increase with the demand for
composting, a number of innovations in this ancient technique of
organic waste management have been developed and applied. This project
demonstrates the significance of Federal agricultural research programs
at NIFA as a means to achieve economically sustainable agriculture and
food industries--directly impacting farm lands that remain in operation
in New Hampshire--and serving as a model for communities across the
country.
As a university researcher, can you expand on how increased
authorization levels for NIFA in the next farm bill will ensure
research continues to advance innovative composting methods and
resources for sustainable food systems?
Answer.
Response from Jacqueline K. Burns, Ph.D., Dean for Research and
Director, Florida Agricultural Experiment Station; Professor of
Horticulture, Institute of Food and Agricultural Sciences,
University of Florida
Questions Submitted by Hon. Stacey E. Plaskett, a Delegate in Congress
from Virgin Islands
Question 1. I understand that the University of Florida used to
receive special research grants under the Tropical and Subtropical
Agricultural Research program (or ``T-STAR'' program) until it was
phased out several years ago when a lot of special research grants were
done away with.
How is the more general competitive grant program approach, like
the flagship Agriculture and Food Research Initiative, meeting your
needs and ability to continue the research that was started under T-
STAR?
Answer. The loss of the T-STAR program was devastating to programs
designed to meet the regional needs of tropical and subtropical
agriculture systems. Many of these needs are not adequately covered
through AFRI but are crucial to the Caribbean and related regions. This
program allowed researchers to conduct more proactive programs that
could and would impact regional agriculture systems in the future. Such
programs included mitigation strategies for invasive pests and diseases
that could negatively impact subtropical and tropical regions and/or
travel into the U.S. heartland.

Question 2. How do you see research in tropical agriculture
developing since T-STAR was ended?
Answer. There is a void that is difficult to cover with existing
programs. In some cases, local industries have developed research
priorities that are funded. But the programs have not been sustainable
due to downturns or challenges to these industries that require a
redirect of funding. A sustainable national program is needed.

Question 3. What can replace the previous program, and how would
that benefit agriculture in the Caribbean region?
Answer. Reinstating a version of the T-STAR program for tropical
and subtropical agriculture systems would benefit the Caribbean and
related regions. It should be competitive, managed by the subtropical
and tropical institutions and stakeholders, and directed at the
challenges tropical and subtropical regions face.

Thank You.
Response from Hon. Glenda Humiston, Ph.D., Vice President, Agriculture
and Natural Resources; Director, Agricultural Experiment
Station and Cooperative Extension Service, University of
California*
---------------------------------------------------------------------------
*There was no response from the witness by the time this hearing
was published.
---------------------------------------------------------------------------
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress
from New Hampshire
Question 1. My first question for the entire panel touches on the
organic research being done at UNH. Organic farming is one of the
fastest growing agriculture sectors in American, accounting for over 5%
of total retail food sales.
How are your Universities helping organic farmers address
challenges, and meet the booming demand for organic products?
Answer.

Question 4a. How can increased authorization levels advance
innovative aquaculture practices that will increase food production and
security across the country?
Answer.

Question 5. Industrial-scale composting is growing rapidly as
states and municipalities increase restrictions on disposal of organic
wastes in landfills and work to achieve sustainable waste management
systems. As business opportunities increase with the demand for
composting, a number of innovations in this ancient technique of
organic waste management have been developed and applied. This project
demonstrates the significance of Federal agricultural research programs
at NIFA as a means to achieve economically sustainable agriculture and
food industries--directly impacting farm lands that remain in operation
in New Hampshire--and serving as a model for communities across the
country.
As a university researcher, can you expand on how increased
authorization levels for NIFA in the next farm bill will ensure
research continues to advance innovative composting methods and
resources for sustainable food systems?
Answer.
Response from Walter H. Hill, Ph.D., Dean, College of Agriculture,
Environment and Nutrition Sciences; Vice Provost for Land-Grant
University Affairs; Research Director, USDA Evans-Allen
Research and Director, George W. Carver Agricultural Experiment
Station; Administrator, Tuskegee University Cooperative
Extension, Tuskegee University*
---------------------------------------------------------------------------
*There was no response from the witness by the time this hearing
was published.
---------------------------------------------------------------------------
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress
from New Hampshire
Question 1. My first question for the entire panel touches on the
organic research being done at UNH. Organic farming is one of the
fastest growing agriculture sectors in American, accounting for over 5%
of total retail food sales.
How are your Universities helping organic farmers address
challenges, and meet the booming demand for organic products?
Answer.

Question 4a. How can increased authorization levels advance
innovative aquaculture practices that will increase food production and
security across the country?
Answer.

Question 5. Industrial-scale composting is growing rapidly as
states and municipalities increase restrictions on disposal of organic
wastes in landfills and work to achieve sustainable waste management
systems. As business opportunities increase with the demand for
composting, a number of innovations in this ancient technique of
organic waste management have been developed and applied. This project
demonstrates the significance of Federal agricultural research programs
at NIFA as a means to achieve economically sustainable agriculture and
food industries--directly impacting farm lands that remain in operation
in New Hampshire--and serving as a model for communities across the
country.
As a university researcher, can you expand on how increased
authorization levels for NIFA in the next farm bill will ensure
research continues to advance innovative composting methods and
resources for sustainable food systems?
Answer.
Response from Carrie L. Billy, J.D., President and Chief Executive
Officer, American Indian Higher Education Consortium*
---------------------------------------------------------------------------
*There was no response from the witness by the time this hearing
was published.
---------------------------------------------------------------------------
Questions Submitted by Hon. Ann M. Kuster, a Representative in Congress
from New Hampshire
Question 1. My first question for the entire panel touches on the
organic research being done at UNH. Organic farming is one of the
fastest growing agriculture sectors in American, accounting for over 5%
of total retail food sales.
How are your Universities helping organic farmers address
challenges, and meet the booming demand for organic products?
Answer.

Question 4a. How can increased authorization levels advance
innovative aquaculture practices that will increase food production and
security across the country?
Answer.

THE NEXT FARM BILL

(TECHNOLOGY AND INNOVATION IN SPECIALTY CROPS)

----------

WEDNESDAY, JULY 12, 2017

House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Committee met, pursuant to call, at 10:00 a.m., in Room
1300 of the Longworth House Office Building, Hon. K. Michael
Conaway [Chairman of the Committee] presiding.
Members present: Representatives Conaway, Thompson, Lucas,
Rogers, Gibbs, Austin Scott of Georgia, Crawford, Hartzler,
Denham, LaMalfa, Davis, Yoho, Allen, Rouzer, Kelly, Comer,
Bacon, Faso, Dunn, Arrington, Peterson, David Scott of Georgia,
Costa, Walz, McGovern, Vela, Lujan Grisham, Kuster, Nolan,
Maloney, Plaskett, Adams, Evans, Lawson, O'Halleran, Panetta,
Soto, and Blunt Rochester.
Staff present: Mollie Wilken, Patricia Straughn, Rachel
Millard, Stacy Revels, Keith Jones, Kellie Adesina, Troy
Phillips, Nicole Scott, and Carly Reedholm.

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

The Chairman. Good morning. This hearing of the Committee
on Agriculture entitled, The Next Farm Bill: Technology and
Innovation in Specialty Crops, will come to order.
I have asked Trent Kelly to offer our prayer. Trent, over
here.
Mr. Kelly. Bow your heads. Dear Lord, we just thank you
this day for each and everything that you have given all of us.
Dear Lord, we just thank you for those that you have blessed
with the farms and the land and the resources and the
technology to create the greatness of this nation through our
farmers who, first and foremost, feed and provide for not only
this nation but for the entire world. And we just thank you and
ask that all we do in this Committee honor you, and help those
farmers to produce. In Jesus' name we pray. Amen.
The Chairman. Thank you, Trent.
Good morning, and again, thank you all for joining us.
Specialty crops play an important role in the success of
U.S. agriculture and are an essential component of our national
food policy: the farm bill. Diversity among crops, ranging from
fruits, vegetables, tree nuts, and nursery crops to
floriculture, makes the task of developing the specialty crop
safety net particularly challenging. Despite those challenges,
significant investments, including those made in the 2014 Farm
Bill to support the various sectors, have positively impacted
our specialty crop producers. It baffles me when farm bill
detractors question our commitment to specialty crops, implying
that our country lacks a national food policy just because we
treat specialty crops differently than traditional commodities.
Over the years, those of us who work on farm policy have
worked closely with producers to develop programs tailored to
meet the needs of our specialty crop producers. We recognize
that the challenges of a citrus producer in California look
much different than those of a cotton farmer in west Texas, and
we believe our agricultural policies should reflect those
differences. The notion that we don't invest in specialty crops
simply isn't based in fact. Let me give you a few examples.
The Specialty Crop Block Grant Program helps enhance the
competitiveness of specialty crops by facilitating partnerships
between USDA and the State Departments of Agriculture to
provide funding. The Plant Pest and Disease Prevention Program
provides early plant pest detection and surveillance and funds
a system of clean plant centers to safely distribute disease-
free plant material to producers of nursery stock. The
Specialty Crop Research Initiative sets aside mandatory funding
to ensure that specialty crops are not sidelined for research
funding. And the Market Access Program aids the development,
expansion, and maintenance of foreign markets for U.S.
agricultural products. In fact, \1/2\ of the participating
organizations in Fiscal Year 2017 were focused exclusively on
specialty crops. The Food Insecurity Nutrition Incentive Grant
Program aims to increase the purchase of fruits and vegetables
among participants in the Supplemental Nutrition Assistance
Program by providing incentives at the point of purchase. And
finally, we have made significant strides over the past several
years in expanding crop insurance coverage to a variety of
specialty crops, including the Whole Farm Revenue Protection
policy that was developed with specialty crops in mind.
The United States has long had an interest in ensuring
stable production of our staple commodities, which is one of
the reasons we continue to enjoy the safest, most abundant and
affordable food supply in the world. But when you pull all of
the pieces of the farm bill together, it is clear we have made
huge investments to aid specialty crop producers as well.
Looking forward, our goal is to maintain these advancements
and address improvements needed in the next farm bill. As we do
that, I am particularly interested in the role that technology
plays in those advancements.
To that end, I would like to welcome all of our witnesses
today, and I look forward to hearing from all of you about ways
we can build our public-private partnerships and innovation to
benefit specialty crop producers.
[The prepared statement of Mr. Conaway follows:]

Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
Good morning and thank you all for joining us.
Specialty crops play an important role in the success of U.S.
agriculture and are an essential component of our national food
policy--the farm bill. Diversity among the crops--ranging from fruits
and vegetables, to tree nuts, to nursery crops and floriculture--makes
the task of developing the specialty crop safety net particularly
challenging. Despite those challenges, significant investments,
including those made in the 2014 Farm Bill to support the various
sectors, have positively impacted our specialty crop producers.
So it baffles me when farm bill detractors question our commitment
to specialty crops, implying our country lacks a national food policy
because we treat specialty crops differently than traditional
commodities.
Over the years, those of us who work on farm policy have worked
closely with producers to develop programs tailored to meet the needs
of specialty crop producers. We recognize that the challenges of a
citrus producer in California look much different than those of a
cotton farmer in west Texas, and we believe our agricultural policies
should reflect those differences. The notion that we don't invest in
specialty crops simply isn't based in fact. Let me give you a few
examples.

The Specialty Crop Block Grant Program helps enhance the
competitiveness of specialty crops by facilitating partnerships
between USDA and the State Departments of Agriculture to
provide funding.

The Plant Pest and Disease Prevention Program provides early
plant pest detection and surveillance and funds a system of
``clean plant centers'' to safely distribute disease-free plant
material to producers of nursery stock.

The Specialty Crop Research Initiative sets aside mandatory
funding to ensure specialty crops are not sidelined for
research funding.

The Market Access Program aids the development, expansion
and maintenance of foreign markets for U.S. agricultural
products. In fact, \1/2\ of the participating organizations in
FY 2017 were focused exclusively on specialty crops.

The Food Insecurity Nutrition Incentive (FINI) Grant Program
aims to increase the purchase of fruits and vegetables among
participants in the Supplemental Nutrition Assistance Program
by providing incentives at the point of purchase.

And, finally, we have made significant strides over the past
several years in expanding crop insurance coverage to a variety
of specialty crops, including the Whole Farm Revenue Protection
policy that was developed with specialty crop producers in
mind.

Yes, the United States has long had an interest in ensuring stable
production of our staple commodities, which is one of the reasons we
continue to enjoy the safest, most abundant, and most affordable food
supply in the world. But when you pull all of the pieces of the farm
bill together, it's clear we've made huge investments to aid specialty
crop producers as well.
Looking forward, our goal is to maintain these advancements and
address improvements needed in the next farm bill. As we do that, I'm
particularly interested in the role that technology plays.
To that end, I'd like to welcome all of our witnesses today. I look
forward to hearing from all of you about ways to build upon public-
private partnerships and innovation to benefit specialty crop
producers.
With that, I yield to the Ranking Member for any opening remarks he
may have.

The Chairman. With that, I yield to the Ranking Member for
any comments he might have.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA

Mr. Peterson. Thank you, Mr. Chairman. And thank you to our
panel of witnesses for joining us today at this hearing on
technology and innovation in specialty crop production. I am
looking forward to hearing your testimony on the opportunities
and challenges the specialty crop sector has and the impact of
farm bill programs on your productivity and profitability.
Since the 2008 Farm Bill, I have been particularly
interested in the role specialty crop production has in the
healthy ag economy and in providing healthy foods to consumers.
It is really amazing to see the amount of money that you have
invested just to produce your crops. And while hundreds of
acres of corn may be worth several hundred thousand dollars,
that same number of acres planted in strawberries may be worth
several million dollars. Folks in my area, we don't understand
how you guys do it, but hats off to you.
We have tried to address some of these production
differences through the farm bill, and I am proud that the 2008
Farm Bill was the first to acknowledge the growing demand for
fresh fruits and vegetables, local foods and organic
production, and I am also proud that we were able to continue
and build on these investments in the 2014 Farm Bill, and I
hope this trend continues into the next farm bill.
I believe the specialty crop area is in a very unique
position. Consumer demand is increasing but natural resources
remain fixed, and the labor supply is shrinking. It seems to me
that the key to being successful will be through the wise use
of technology and with the optimum regulatory structure that
allows innovation to flourish.
Again, I look forward to the hearing, to hearing from the
witnesses, and I thank the chair and yield back.
The Chairman. I thank the gentleman.
The chair would request that other Members submit their
opening statements for the record so our witnesses may begin
their testimony, and to ensure there is ample time for
questions.
And I would like to welcome our witnesses to the table.
First off, we have Mr. Paul Wenger, President of the California
Farm Bureau Federation, Sacramento, California. We have Mr.
Paul Heller, Vice President, Wonderful Citrus--Texas Division,
Mission, Texas. We have Mr. Gary Wishnatzki. Is that close?
Mr. Wishnatzki. Yes.
The Chairman. All right. Owner of Wish Farms in Plant City,
Florida. And I turn to Mr. Panetta to introduce our next
witness.
Mr. Panetta. Thank you, Mr. Chairman. I appreciate that. It
is my absolute honor to introduce my friend and constituent,
Kevin Murphy. Kevin is the CEO of Driscoll's, based in
Watsonville, on the Central Coast of California. My district,
the Central Coast of California, proudly produces over 100
specialty crops, with companies like Driscoll's leading the
industry. Operating for over a century, Driscoll's produces
fresh strawberries, raspberries, blueberries, and blackberries
for both domestic and international consumers. Kevin's company
has proven adaptive with both conventional and organic
production, and will continue to innovate as a way to address
challenges with water, labor, and food safety, moving forward.
I personally have witnessed Kevin's and the past CEO and
Chairman, Miles Reiter's, ability to not only think outside the
box, but to also contribute to our community. And I have no
doubt that under Kevin's leadership Driscoll's will continue to
build upon the company's history of success. And that is why,
Kevin, it is an honor to have you here. I look forward to your
testimony.
The Chairman. And then we also have Mr. Andrew LaVigne,
President and CEO, American Seed Trade Association in
Alexandria, Virginia.
Mr. Wenger, before you begin, Mr. Costa has asked to say
something about you.
Mr. Costa. Thank you, Mr. Chairman.
President Paul Wenger of the California Farm Bureau
Federation is no stranger to the halls here in Washington or
Sacramento. More importantly, Paul and his family reflect what
is so good about America and California agriculture. Paul and
his family have been doing this for generations. We are honored
to have him here given his expertise and his advocacy on the
subject of this morning's hearing.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Wenger, you are recognized for 5 minutes.

STATEMENT OF PAUL J. WENGER, PRESIDENT, CALIFORNIA FARM BUREAU
FEDERATION, SACRAMENTO, CA

Mr. Wenger. Thank you, Mr. Chairman, and thank you, Mr.
Costa, for those kind words, but thank you, Chairman Conaway
and Ranking Member Peterson, for the opportunity to testify
here today.
I am a third-generation California farmer, we grown a
variety of crops, with almonds and walnuts being our principle
commodities. At the outset, Mr. Chairman, I would like to thank
you for your efforts to bring the Committee to my home town of
Modesto in August for a listening session. We really appreciate
that.
California is blessed with the unique geography,
microclimates, and water resources, which allows us to be the
nation's largest agricultural production and exporting state,
growing more than \1/3\ of our nation's vegetables, and \2/3\
of our nation's fruits and nuts. Of those, we grow more than 99
percent of the nation's almonds, artichokes, dates, dried
plums, figs, garlic, kiwi fruit, olives and olive oil,
pistachios, raisins, table grapes, and walnuts.
Considering that specialty crop programs receive one
percent of the total farm bill funding and four percent of the
non-nutrition title funding, it is vital that increased
consideration is given to the most critical needs of specialty
crops. California specialty crop growers have long led the way
in adopting and embracing new technologies and innovation in
order to remain competitive and profitable. Until laws and
regulations on labor, immigration, taxes, the environment, food
safety, crop production, crop protection, and trade better
reflect real-world realities of family farming, the best bet
for future success growing specialty crops can be summed up in
one word: innovation.
The most significant innovation that can be achieved on the
farm is increased mechanization. This need arises as the pool
of available workers dramatically declines. Specialized
equipment, robotics, and other tools can help offset the
growing labor shortage. If we don't aggressively invest in
development of new technologies, the consequence will be to
lose a large share of our nation's specialty crop production.
As such, there has never been a greater need for accelerated
leaps of innovation for specialty crops.
Of all farm bill research funds, about 15 percent are
directed to specialty crops. Mechanization is already in place
for a number of specialty crops, such as nuts, wine grapes, and
processing tomatoes; however, the production of fresh fruits
and vegetables is still predominantly done by people working in
the field, and mostly done by hand.
Our land-grant university system was integral to the
development of labor-saving, mechanical technologies. When the
University of California, Davis, developed the field harvester
for processing tomatoes, just in time for the labor crisis of
the 1960s, the process from the initial vision to complete
commercial acceptance and utilization took over 2 decades in
order to design and build the harvester, and the plant breeding
involved to develop a tomato suitable to mechanical harvesting.
We no longer have the luxury to wait decades for similar
innovations. Significant investment in plant breeding,
mechanical engineering, and broadband is required today. The
University of California has estimated an investment of $10 to
$20 million will be needed to research and develop critical
technologies for each of the specialty crops.
There are several examples of advanced mechanization
already underway. Olive growers have been challenged by labor
shortages for a crop that can only be handpicked. They have
allocated hundreds of thousands of dollars over decades toward
developing mechanical harvesting tools to assist the industry
with labor-saving options. Grimmway Farms is exploring a
concept of utilizing robots and planting in pots, moving the
pots to the field, and then returning the pots to a central
location to harvest, relieving the need for hand crews. Ongoing
research and design of robotic strawberry and lettuce pickers
are still years from being field-ready, which has resulted in
the production of these and other labor-intensive crops being
relocated to other countries.
There are many reasons for optimism as we look to the
future, but we must also be realistic. The challenges facing
the agricultural production foundation of our country are real
and standing pat is not an option. The specialty crops by
virtue of their limited relative acres and scope, high-input
costs and vulnerability to foreign competition are lacking the
same safety net afforded to other growers.
Ronald Reagan, Governor of California and past President,
once said about government and business, if it moves, tax it.
If it keeps moving, regulate it. When it stops moving,
subsidize it.
Mr. Chairman, as your Committee confronts the funding
challenges as you develop a new and improved farm bill, I would
ask that you would seek to include novel innovations that would
leverage the investment of the American taxpayer. Public-
private partnerships and developing and installing critical
infrastructure that allows rural America the same access to
critical communication capabilities and regulatory reform,
looking for opportunities to develop, implement, and realize
benefits from creative new technologies and innovations, as we
seek to provide food and agricultural products for a growing
world population. Unfortunately, overly zealous regulations
often limit, discourage, and prevent the American ingenuity
that has helped us be the most productive farmers in the world.
We look forward to working with you to protect, promote,
and advance the critical foundation of the United States called
agriculture.
[The prepared statement of Mr. Wenger follows:]

Prepared Statement of Paul J. Wenger, President, California Farm Bureau
Federation, Sacramento, CA
Thank you, Mr. Chairman, for the opportunity to testify before the
full House Committee on Agriculture to discuss the role of farm policy
for specialty crop producers, with an emphasis on technology and
innovation. I am Paul Wenger, a third-generation California farmer,
where my farm includes ground my grandfather purchased in 1910.
Originally a dairy operation, we raised cattle for beef for over forty
years, before converting to predominantly orchards, planted to almonds
and walnuts.
For twenty years, I have served as an officer of the California
Farm Bureau Federation (CFBF), the last 8 of which I have led the
organization as its President. I am here representing more than 28,000
agricultural members in 53 county Farm Bureaus with members who produce
over 400 commodities in our incredibly diverse agricultural state.
Due to California's unique geography, microclimates, and water
resources, we are the nation's largest agricultural production and
exporting state growing more than \1/3\ of our nation's vegetables and
\2/3\ of our nation's fruits and nuts grow in California. Of those, our
state grows more than 99% of the nation's almonds, artichokes, dates,
dried plums, figs, garlic, kiwifruit, olives and olive oil, pistachios,
raisins, table grapes, and walnuts.\1\
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\1\https://www.cdfa.ca.gov/Statistics.
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Considering that specialty crop programs currently receive 1% of
total farm bill funding and 4% of non-nutrition title funding, it's
vital that increased consideration is given to the most critical needs
of specialty crops.\2\ In my testimony I will share some history of
California's specialty crop industry and how the farm bill might
address current labor challenges.
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\2\CRS Report R43632, Renee Johnson, Specialty Crop Provisions in
the 2014 Farm Bill, Table 2 shows specialty crop spending levels as
$773 million in mandatory and $302 million discretionary funding in
each year from FY14-FY18. The Congressional Budget Office projected the
total cost of the new farm bill to be $489 billion over 5 years, or
$97.8 billion per fiscal year. This puts mandatory specialty crop
spending at 0.79% of total farm bill funding. Mandatory plus
discretionary spending for specialty crops puts the total at 1.1% of
total. Since nutrition spending is 80% of total farm bill outlays, the
total spent on all non-nutrition title farm programs is $19.56 billion
per year. Of that total, mandatory specialty crop is 3.95% and
mandatory plus discretionary spending is 5.5%. Numbers cited use the
mandatory specialty crop figures.
---------------------------------------------------------------------------
I appreciate the opportunity to address this Committee. I commend
Chairman Conaway and the Committee for taking time to review the
interests of specialty crop growers in California.
Farm Bureau and the Farm Bill
While this hearing's focus is on the Federal Government's role with
respect to specialty crops and the need for continuous technology and
innovation, it is important to reflect on how we got to where we are in
the first place, and so I will begin by going back to the early days of
farming in California and providing a brief history of the Farm Bureau
organization.
In the mid to late-19th century, a census of California agriculture
would have shown that the state was much like the rest of the nation at
the time, consisting mainly of wheat and livestock. By 1890, poor soil
conditions prompted farmers of that era to join together to improve
farming conditions and tackle the many obstacles that stood in their
way.\3\
---------------------------------------------------------------------------
\3\``The Evolution of California Agriculture: 1850-2000,'' Olmstead
and Rhode. California Agriculture: Dimensions and Issues, Jerry
Siebert, editor, 2003. https://s.giannini.ucop.edu/uploads/
giannini_public/4e/a8/4ea8b9cc-df88-4146-b1ae-e5467736e104/
escholarship_uc_
item_9145n8m1.pdf.
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As farmers embraced new technologies for that era, California
production began to diversify into grapes, citrus, and other specialty
crops, creating the foundation for the cornucopia of crops grown in
California today. By the early 20th century, those who lived in my
grandfather's generation led the nation in steam and then gas-operated
tractors and were among the first in the nation to utilize
electrification both for tools and pumping water.\4\ They worked with
academic institutions and the government to address and solve the
problems they faced on the farm. This united coalition of farmers
became known as the Farm Bureau, and CFBF is about to celebrate 99
years as a state organization.
---------------------------------------------------------------------------
\4\Olmstead and Rhode, p. 12-13.
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Within 2 decades of the Farm Bureau's existence, the Great
Depression hit and U.S. farm policy began taking shape as the
government intervened in agricultural supply and price for that era's
largest crops like corn, wheat, cotton, and rice, which eventually
became known as ``program crops'' in what became known as the farm
bill. Conservation efforts and crop insurance were also incorporated
into the bill. In subsequent decades, each farm bill reauthorization
would make tweaks to price and supply calculations for the program
crops, while growers of other crops such as fruits and vegetables, were
strictly subjected to the whims of the market with little to no
government intervention, including access to adequate crop insurance
products. These non-program crops came to be known as ``specialty
crops,'' which are now officially defined as fruits, vegetables, tree
nuts, dried fruits, horticulture and nursery crops (including
floriculture).\5\
---------------------------------------------------------------------------
\5\``What is a Specialty Crop?'' USDA-AMS. https://
www.ams.usda.gov/services/grants/scbgp/specialty-crop.
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As a statewide organization that represents both program and
specialty crop producers, we have evolved with the changing needs of
all farmers and ranchers. In the last few decades, there has been a
marked shift in Farm Bureau's mission to identify solutions to the
problems faced by farmers. Originally focused on a balance between
research and policy, the primary concerns today, especially in
California, are almost centrally squared on policy and regulation. At
times, burdensome regulations overshadow the everyday problems of
farming that can be overcome through technology and innovation.
Despite the regulatory challenges, farmers are willing to embrace
technology and implement new innovations to enhance and advance the
profitability of their farms. Today's agriculture is built upon the
many technological advances developed over the last 150 years.
California farmers and consumers alike have benefitted from the
unique system of canals moving water from Northern California into the
Central Valley or lifting it over the Tehachapi mountains into Los
Angeles and the growing region of Palmdale in Los Angeles County.
Innovation in our universities and scientific laboratories have
continued to develop new crop protection tools that are focused on
treating specific problems, as well as reaching major strides in
biotechnology. Farmers have been quick to adapt to the utilization of
broadband, GPS guidance, lasers and drones, to become the most cutting
edge farmers on [E]arth.
With the many great technological innovations of our day, our
success is fragile. Producing specialty crops requires great expense
and risk with no real safety net. As a nation, it should be in our
interest to protect the specialty crop industry and allow it to thrive
so that we do not lose out to competitors.
While specialty crop growers have been remarkably resilient when
faced with inclement weather, hostile markets conditions, pests and
diseases, labor shortages, or other obstacles to their success, access
to effective risk management tools have gone largely unmet.
As crop insurance has broad and generally predictable application
among the major farm commodities, there are unique issues within
specialty crops that deserve the attention of Congress. For most
specialty crops, viable crop insurance programs are still lacking. To
encourage maximum producer participation, Congress should pursue risk
management programs that meet the needs of every commodity, small and
large, in the most efficient and cost effective manner possible.
We strongly support the Whole Farm Revenue Protection (WFRP)
program, an insurance policy created as a pilot in the 2014 Farm Bill
to build on the successes of the AGR and AGR-Lite policies, that has
offered the first insurable product to growers of commodities that have
never received support. As the WFRP remains as a pilot program, we will
seek improvements to make it more accessible.
Aside from conservation programs like the Environmental Quality
Incentives Program (EQIP), which are available to all commodities, it
is inequitable that Federal farm policy would focus on a narrow set of
crops. The health and economic benefits of ensuring a vibrant domestic
specialty crop sector became the impetus for the collective industry
uniting to support a new program.
Specialty crop growers were unsuccessful in their bid to be
included in the 2002 Farm Bill for assistance in maintaining domestic
production, as global competitors didn't face the same burden and cost
of regulations as did our domestically produced specialty crop growers.
The resulting passage of the Specialty Crops Competitiveness Act of
2004 led to inclusion of a specialty crops title (known officially as
the ``horticulture title'') in the 2008 Farm Bill, which became the
first official acknowledgement of specialty crops in the farm bill.
The centerpiece of this almost decade-old title is the Specialty
Crop Block Grant, a state administered program that partners with
organizations on a cost-share basis to enhance the competitiveness of
these agricultural products. California has benefitted tremendously
from this program, with hundreds of grants awarded to address a large
variety of industry needs. It has also created new opportunities for
specialty crop growers that didn't previously exist. These funds don't
go directly to growers, but provide financial support to segments of
the industry in need of solutions to perplexing problems.
Overall, we support a farm bill that provides a safety net to
growers, protects the specialty crops programs, prioritizes working
lands programs, and ensures scientific progress in research. We also
support a unified bill that combines the nutrition title with the other
farm bill titles.
We have been involved as a member of an American Farm Bureau
Federation (AFBF) led committee of 16 states that developed vast
resources on the farm bill for Farm Bureau members, policymakers, and
the general public that are available at http://www.fb.org.
With regard to specialty crops, AFBF policy supports the inclusion
of a specialty crops title in future farm bills, additional research
into harvest and cultural practices, expanded disease and pest research
programs, improved pest exclusion programs, and funding to promote
market expansion of U.S.-produced specialty crops. AFBF policy also
adopts as a principle for the next farm bill, expansion of the Fresh
Fruit and Vegetable Program and maintaining adequate funding for the
specialty crop industry with emphasis on fundamental research,
marketing and promotions, and pest management programs.
Barriers to Success & Solutions
California specialty crop growers have long led the way in adopting
and embracing new technologies and innovation in order to remain
competitive and profitable. Until laws and regulations on labor,
immigration, taxes, the environment, food safety, crop protection and
trade better reflect real-world realities of family farming, the best
bet for future success growing specialty crops can be summed up by one
word: innovation.
The most significant innovation that can be achieved on the farm is
increased mechanization. The need arises as the pool of available
workers dramatically declines. Equipment, robotics, and other tools can
help offset the growing labor shortage. If we don't aggressively invest
in the development of new technologies, the consequence will be to lose
a large share of our nation's specialty crop production.
While it is outside the jurisdiction of this Committee, we ask
first and foremost that Congress move rapidly toward allowing a legal
workforce in the United States to guarantee that future immigrants who
desire to work in American agriculture be allowed entry. We strongly
oppose a mandatory E-Verify on employers until a satisfactory
immigration path for agriculture is realized. We also caution Members
that fixes around the edges of H-2A won't alleviate the current labor
shortage.
There has never been greater need for accelerated leaps of
innovation for specialty crop production. In the past 3 decades, of all
farm bill research funds, only 15% have been directed to specialty
crops.\6\ To get the most bang for the buck, public-private
partnerships in the farm bill should be emphasized that address
mechanization.
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\6\Helena Bottemiller Evich, Politico, ``The vegetable technology
gap: Washington spends millions on crop research. Why doesn't more go
toward the foods we're actually supposed to eat?'' March 8, 2017.
http://www.politico.com/agenda/story/2017/03/fruits-and-vegtables-
technology-000337.
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The development and adoption of on-farm mechanization has a storied
history. From tillage to planting to harvest, most operations conducted
on the farm today are done by machine. For less fragile or perishable
crops, like grains, nuts, or fiber crops like cotton, their harvest is
completely accomplished by machine. Mechanized machinery for the
harvest of a small set of specialty crops such as nuts, wine grapes,
and processing tomatoes have been commercialized and are in widespread
use. However, the farm operations for fleshy specialty crops (e.g.,
fresh fruits and vegetables), beyond tillage and fertilization are
mostly done by people working in the field. Many vegetable crops (e.g.,
tomato, or celery) are transplanted, where people manually feed
individual seedlings into a mechanism for placement in the soil, while
the weeding and thinning of vegetable crops and the thinning of fruit
crops is mostly done by hand.
Our land-grant university system was integral to the development of
labor saving mechanical technologies. UC Davis' Department of
Biological and Agricultural Engineering has a long history of
innovation for the mechanization of various specialty crops, such as
the development of the field harvester for processing tomatoes. It is
important to note that the process from the initial vision to complete
commercial acceptance and utilization took over 2 decades.
The innovation traces back to the 1940s when a new type of tomato
plant was developed. It produced fruit with a uniform ripening ability
(so all fruit ripened at about the same time), the fruit detached
easily from the plant, and it produced a flesh and skin that were
resistant to the mechanical rigors of machine harvest. About a decade
after the breeding work began, a new type of machine was developed that
automatically harvested the new type of tomato.
By the end of the Bracero farm labor program in 1964 the UC team
had successfully created both the machine as well as the tomato it
could harvest. With the ensuing farm labor shortage caused by the
termination of the Bracero program, the processing tomato industry
successfully made the transformation from an entirely manual harvest in
1961 to 95% machine harvested fruit in 1968. The entire process
required a dedicated effort spanning a period of 25 years. The initial
labor savings due to the use of mechanized processing tomato harvest
was about 50%. As technological enhancements were made to the machine,
such as automatic color sorters to remove immature green tomatoes, and
improved farming practices were made to better facilitate machine
harvest, the labor savings increased to the point where we have
achieved a 90% labor savings compared to hand harvest of processing
tomatoes today.\7\
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\7\http://ucanr.edu/sites/Postharvest_Technology_Center_/files/
231316.PDF.
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To advance the progress for mechanization of specialty crops, a
significant investment in plant breeding and mechanical engineering is
required. According to the University of California, funding on the
order of $10M to $20M per specialty crop is required to support the
integrated multidisciplinary teams of biologists and engineers required
to develop prototype smart machines and robotic systems needed to
mechanize specialty crops and to simultaneously develop the next
generation of machine harvestable specialty crop plants.
We believe it is important to address the need for mechanization in
the next farm bill through a dedicated allocation within the Specialty
Crop Research Initiative (SCRI), as well as funding through the
Agriculture and Food Research Initiative (AFRI) that has previously
assisted mechanization research by promoting and enabling collaboration
between land-grant universities and top robotic engineering
departments.
There are tremendous opportunities for public-private partnerships
in advancing mechanization for additional specialty crops in the
future. A great example to highlight is the olive industry's efforts.
The California Olive Committee continues to be committed to developing
a mechanical harvesting machine suitable for the olive industry, and
has been dedicating resources to perform research, cost studies, and
experimental testing of both new and existing technologies. Currently,
olives are handpicked and due to this, cost as well as availability of
adequate labor have been some of the greatest challenges for our olive
growers.
Over the past several decades, the olive industry has allocated
hundreds of thousands of dollars toward developing mechanical
harvesting tools to assist the industry with labor-saving options.
Currently, the California olive industry provides over $400 million
into the California economy, according to a report commissioned by the
California Olive Committee and conducted by Dennis H. Tootelian, Ph.D.,
Tootelian & Associates.\8\ However, due to new California state laws
creating further restrictions and mandates on labor, and an increase in
California wages and workers' compensation rates, table olive growers
are looking at all available tools to reduce costs. By lowering these
costs, the California olive industry will be able to compete against
other countries who are currently providing subsidies for their olive
industries.
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\8\http://calolive.org.
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The American Olive Oil Producer Association, an SCRI participant,
recently wrote House Appropriations with concerns that SCRI funds would
be cut. Olive oil has already achieved mechanized harvesting, but
improvements can be made in orchard installation, management,
harvesting and milling. The industry continues to seek for advancements
that can result in the highest quality crop with the best yields and
highest rate of extraction of extra virgin olive oil. Technological
advances and innovation are imperative to a nascent domestic industry
that is competing with traditional ``old world'' producers.\9\
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\9\http://aaopa.org.
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Similarly, California-based Grimmway Farms, the largest carrot
grower in the world, is exploring a concept of robots planting in pots,
moving the pots to the field, and then returning the pots to harvest,
relieving the need for a large crew.\10\
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\10\http://www.growingproduce.com/vegetables/robots-container-
production-and-the-future-of-vegetable-growing/ and http://
grimmway.com.
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Ongoing research and design of robotic strawberry and lettuce
pickers are still years from being field ready, which has resulted in
the production of these and other labor intensive crops being relocated
to other countries.
The opportunity for increased mechanization of specialty crops will
be driven largely by the availability of an adequate and affordable
labor supply, as well as other cost-benefit considerations, including
the international competitiveness of the U.S. industry. Ongoing
research and design of robotic strawberry and lettuce pickers are still
years from being field ready, which has resulted in the production of
these and other labor intensive crops being relocated to other
countries.
Just as mechanization helped early California farmers to displace
labor, more advances are needed to maintain existing production in
light of a diminishing pool of available workers. These advances can
only come through equipment, robotics, and other tools that will help
offset the growing labor shortage. It will take time and additional
funding to get to the point where robotics plant, thin, prune, pick and
process every crop, but there are commodities raised in California that
must achieve a greater reliance on mechanization or the consequence
will be to lose our domestic production of those crops.
Dedicated funding for advancements in technology and mechanization
would be widely supported in the farm bill, though we reiterate that
this is not an immediate substitute and remedy for the need to enact
immigration reform laws that would protect and promote domestic
agriculture and ensure the competitiveness of specialty crops.
Conclusion
The bottom line for California agriculture is continual innovation
in order to stay competitive. With an uncertain labor situation,
additional production costs, and unpredictable weather, California
agriculture continues to find ways to adapt to the challenges.
Research and new technologies will be key to helping our specialty
crop producers compete, whether it's in improved production which
includes mechanization, or more effective and affordable pest and
disease protection. CFBF encourages Congress to support research for
new technologies in the next farm bill.
I'm reminded by Ronald Reagan's famous quote about government's
view of the economy: ``If it moves, tax it. If it keeps moving,
regulate it. And if it stops moving, subsidize it.'' Specialty crop
producers are already taxed and regulated. Let's all hope we never get
to the point where our specialty crop production stops moving.

The Chairman. Thank you, sir.
Mr. Heller, 5 minutes.

STATEMENT OF PAUL HELLER, VICE PRESIDENT, WONDERFUL CITRUS,
TEXAS DIVISION, MISSION, TX

Mr. Heller. Thank you, Chairman Conaway, Ranking Member
Peterson, and other Members of the Committee. I thank everyone
here today for the opportunity to come before you to discuss
the critical role farm bill funding plays in the continued
success of the specialty crop industry; citrus in particular.
My name is Paul Heller, I am the Vice President of
Wonderful Citrus' Texas Division. Wonderful Citrus is the
largest vertically integrated grower, packer, and shipper of
fresh citrus in the United States. In connection with our
grower-partners, we farm and process near 60,000 acres of fresh
citrus varietals throughout Texas, California, and Mexico,
including Texas red grapefruit from the Rio Grande Valley. I am
also here representing thousands of small growers who make up
the backbone of our industry; myself proudly one of them.
The farm bill has been instrumental in maintaining the
health of the specialty crop industry. Among the most critical
are crop insurance and the specialty crop provisions which
include programs to respond to pest and disease issues. While I
will only briefly touch on a few key points here today, I
wanted to stress just how critical it is for these programs to
continue under the 2018 Farm Bill. Farming is an inherently
risky business, as you all know, and tree crops like citrus
carry an even greater risk as they require multiple years of
growth to reach fruit-bearing maturity. Unlike annual row
crops, citrus trees cannot simply be removed from the ground in
order to wait out a natural disaster. As such, the farm bill's
crop insurance programs have become a vital risk-management
tool for specialty crop producers. For example, south Texas was
hit especially hard by tree-killing freezes in 1983, and again
in 1989. The primary reason the industry was able to bounce
back after these events is because of the protections provided
by crop insurance, and the resilience and foresight of the
growers that participate in these newly developed insurance
programs. Today, growers still depend on the stability of crop
insurance, and make serious business decisions based upon these
programs. It is absolutely critical that these programs
continue to receive the support they need from Congress.
Having some protections against unforeseen disasters is
extremely important to growers; however, learning how to
mitigate these catastrophes is key. As such, pest and disease
issues remain a key priority for Wonderful, and the citrus
industry at large. This is especially true as we continue to
fight the devastating disease known as citrus greening, or
Huanglongbing, also known as HLB. With no known cure for HLB,
it is absolutely necessary that the citrus industry take every
possible precaution to prevent the spread of the disease, while
continuing to search for a treatment protocol. The Federal
Government has been a crucial partner in this fight. The citrus
industry has been fortunate to have the support of the pest and
disease research programs in the farm bill, like USDA Citrus
Health Response Program, which has proven instrumental in the
battle against not only HLB but fruit flies, canker, and other
issues that have come up.
One of the most important aspects of the farm bill overall
is industry's ability to leverage public-private partnerships
to bring innovation and technology into our businesses. For
example, red grapefruit, the basis of our grapefruit industry
in Texas, was discovered as a natural mutation on a pink
grapefruit tree. It wasn't until the 1970s, through innovative
work of researchers like Dr. Richard Hensz at Texas A&I
Kingsville Citrus Center, where new varieties of red grapefruit
were developed that are the basis of our industry today. This
work was made possible in part through Federal funding for the
research center, and a successful partnership between growers,
industry, and other government institutions. Today, Dr. Eliezer
Louzada is continuing this research using advanced
biotechnology techniques and plant cell and tissue culture. The
citrus center that we depend on today is a lasting example of
these partnerships and the benefits they bring to specialty
crop producers.
While advances in technology have historically been made on
the production side of the citrus business, such as fruit
sizing and sorting, our Texas operation uses advanced
technologies in many ways. For instance, we are currently
piloting new technology that grades the amount of decay that is
present on individual pieces of fruit. We also have started
using high-resolution surveys of our orchards to count for
missing trees, and are looking at ways to advance that
technology to conduct surveys for pests and disease.
There are numerous benefits to bolstering public-private
partnerships, especially in research and development. The next
farm bill should promote these types of relationships, and
leverage the knowledge and inspiration of the private-sector to
move the needle on innovative farming practices in the United
States.
Once again, I would like to thank the Committee for
inviting me to testify before you today on the priorities for
the citrus industry in the next farm bill. I am happy to answer
any questions at a later time.
[The prepared statement of Mr. Heller follows:]

Prepared Statement of Paul Heller, Vice President, Wonderful Citrus,
Texas Division, Mission, TX
Chairman Conaway, Ranking Member Peterson, and other Members of the
Committee, thank you for the opportunity to appear before you today to
discuss the critical role farm bill funding plays in the continued
success of the specialty crop industry, particularly citrus.
My name is Paul Heller, and I am the Vice President of Wonderful
Citrus' Texas Division. Wonderful Citrus is the largest vertically
integrated grower, packer, and shipper of fresh citrus in the United
States. In connection with our grower partners, we farm and process a
number of citrus varietals across Texas, California and Mexico,
including Texas Red Grapefruit, and Valencia and Navel Oranges in the
southern Rio Grande Valley in Texas. Wonderful Citrus owns, cultivates
and harvests nearly 60,000 acres of fresh citrus and ships around the
world to ensure a year-round supply. With multiple packing facilities
and state-of-the-art grading and packing equipment, Wonderful Citrus is
able to ensure quality produce on a global scale. Our citrus can be
found across all channels of distribution, with our products most
visible in the produce department of grocery stores throughout America
under the flagship consumer brands of Wonderful Halos mandarins and
Wonderful Sweet Scarletts Texas Red grapefruit.
The farm bill contains many programs that are important to the
citrus industry, with the crop insurance program and specialty crop
provisions--including programs to respond to pest and disease threats--
among the most critical.
Crop Insurance
Farming is an inherently risky business, and tree crops--like
citrus--carry an even greater risk as they require multiple years of
growth to reach fruit-bearing maturity. Every year, growers face an
increasingly long list of uncertainties, including pest and disease
issues, devastating drought, floods, heat or frost that can destroy an
entire crop. Unlike annual row crops, citrus trees cannot simply be
removed from the ground to wait out a natural disaster. As such, the
farm bill's crop insurance program has become a vital risk management
tool for specialty crop producers to mitigate some of the risks that
come with producing high quality fruit for market.
For example, the south Texas citrus industry remains in existence
today because of the support of crop insurance programs put into place
in the 1980s. It was because of these programs that the industry was
able to recover after two severe tree killing freezes in 1983 and again
in 1989. Today, growers still depend on the stability of crop insurance
and make serious business decisions based upon these programs. Over the
years, industry has worked side by side with underwriters and
developers to enhance the safety net provided by these programs, while
also ensuring that they provide adequate coverage without incentivizing
abuse.
Pest and Disease Funding
Pest and disease issues remain a key priority area for Wonderful
and the citrus industry at large. This is especially true as we
continue to fight the devastating disease known as citrus greening or
Huanglongbing (HLB). With no known cure for HLB, it is critical that
the citrus industry take every possible action to prevent the spread of
the disease while continuing to search for a treatment or other
solution. The citrus industry has been fortunate to have the support of
the pest and disease research programs in the farm bill to help advance
our understanding of disease management and pest mitigation tools. For
example, the USDA's Citrus Health Response Program (CHRP) has been an
integral part of the battle against Mexican fruit flies and citrus
canker while continuing to make strides in controlling the spread of
HLB.
Another example of an essential research program is the HLB Multi-
Agency Coordinating Committee (HLB-MAC). The HLB-MAC Fund has been
integral in supporting ``shovel-ready'' short-term projects looking at
early detection and treatment methods for HLB and the Asian Citrus
Psyllid. While the HLB-MAC Fund is currently supported through the
annual appropriations process, it would be preferable if the program
were authorized in the farm bill. Regardless, it is essential that
programs like CHRP and the HLB-MAC Fund remain intact and receive
adequate funding to support the research necessary to advance the U.S.
specialty crop industry into the future.
While pest and disease research is critical to the success of our
industry, specialty crop block grant funding--money that goes directly
into state departments of agriculture--has become an integral part of
our ability to combat immediate threats at the local and state level.
In south Texas, this funding has been especially important. Recent
citrus canker surveys, fruit fly programs, and HLB outreach programs
have been critical in raising awareness within not only the farming
community, but with the general public as well. The specialty crop
block grant program has provided South Texas citrus producers with key
programs and invaluable information on various pests and diseases.
Technical Assistance for Specialty Crops
The future of U.S. specialty crops are also dependent on our
ability to promote our products overseas. Programs designed to open new
markets or further develop existing ones are important to specialty
crop producers and keep U.S. commodities competitive in the global
market. For instance, the Technical Assistance for Specialty Crops
(TASC) program that provides funding to U.S. organizations for projects
that address sanitary, phytosanitary, and technical barriers that
prohibit or threaten the export of U.S. specialty crops, is integral in
maintaining the presence of U.S. agriculture abroad. We fully support
preserving the funding for these types of programs in the 2018 Farm
Bill.
Importance of Private-Public Partnerships
One of the most valuable aspects of the farm bill for Texas citrus
producers, and specialty crop producers in general, is our ability to
leverage public-private partnerships (and funding) that bring
innovation and technology to the entire chain of operations.
For example, red grapefruit, the basis of our grapefruit operation
in South Texas, was discovered on a pink grapefruit tree. It wasn't
until the 1960s, through the innovative work of Dr. Richard Hensz at
the Texas A&M Kingsville Citrus Center, that we had the first true red
grapefruit in South Texas. Dr. Hensz's work was made possible through
Federal funding for the research center and the cooperation of
industry, higher education, and state level support. Today, Dr. Eliezer
Louzada continues to build upon Dr. Hensz' research using advanced
biotechnology in plant cell and tissue culture.
The Kingsville Citrus Center, which was founded in the late 1940s
through the result of public-private partnerships, is also home to our
Texas Budwood program. The Budwood program is primarily focused on
ensuring the availability of clean plant material to the citrus
industry, as well as homeowners and hobbyists across the state. This
effort is funded by industry, budwood sales, Federal grants and state
higher education funding through classes and degree programs. Our Texas
Citrus Center is an example of how public-private partnerships can work
to create lasting institutions that support specialty crop producers as
well as the general public.
While advances in technology have historically been made on the
production side of the citrus business, such as fruit sorting and
sizing, our Texas operations use technology to assist in new ways. For
instance, we are currently piloting new technology that grades the
amount of decay present on an individual piece of fruit. We have also
started using high resolution surveys of our orchards to count missing
trees and are looking at ways to advance that technology to conduct
surveys of pests and disease.
There are numerous benefits to bolstering private-public
partnership when it comes to research and development. The next farm
bill should promote these types of relationships and leverage the
knowledge and inspiration of the private-sector to move the needle on
innovative farming practices in the U.S.
Immigration and Stable Workforce
While all of these programs enhance the competitiveness of
specialty crops, their value is undermined if fresh produce providers
cannot cultivate and harvest their crops. Simply put, much of the
agriculture industry relies on foreign-born labor to get specialty
crops from the fields to the marketplace. Should anyone still believe
the myth that foreign workers who harvest specialty crops are taking
jobs from Americans, I invite them to talk to growers across the
country and learn the simple truth. Americans by and large will not do
these jobs. But, fortunately for consumers and other workers in the
production chain, there are individuals from other countries willing to
come to the United States to do these crucial on-farm jobs. We should
not punish them for providing an essential service, nor should we
penalize the employers in our industry who are doing everything they
can to make sure America has an adequate supply of healthy and fresh
food.
The only Federal program that provides a legal agriculture
workforce, H-2A, is both overburdened and under-performing in providing
workers in a timely manner. It's easy to say that the H-2A visa program
is badly in need of reform. While specialty crop providers understand
why Congress and the Administration have both chosen to focus on
policies to strengthen immigration enforcement, we urge you to keep the
needs of agriculture in mind when considering any immigration policy.
Enforcement-first or enforcement-only policies will be devastating to
our industry. It is critically important for the specialty crop
industry that any enhanced enforcement is done in a way that supports a
workable agriculture guestworker program.
Once again, I would like to thank the Committee for inviting me to
testify before you today on the priorities of the citrus industry for
the next farm bill.

The Chairman. Thank you, sir.
Mr. Wishnatzki for 5 minutes.

STATEMENT OF GARY E. WISHNATZKI, OWNER AND CHIEF EXECUTIVE
OFFICER, WISH FARMS, PLANT CITY, FL

Mr. Wishnatzki. Thank you, Chairman Conaway, Ranking Member
Peterson, Members of the Committee, and a special note of
appreciation to our four distinguished Members from Florida. I
thank all of you for your efforts to strengthen agriculture
throughout our nation.
I am Gary Wishnatzki, Owner of Wish Farms. My family has
been marketing berries for family farms since 1922, and since
1987, we have also been farming.
As a fourth-generation family company, I am proud of our
family's legacy of producing strawberries and blueberries. I am
also Cofounder of Harvest CROO Robotics, a startup to develop
harvest technology. It is a collaborative effort with eight
other strawberry companies, both from Florida and California
have invested. I serve on the Executive Board of the Florida
Fruit and Vegetable Association, the Board of Produce Marketing
Association, and I am a member of United Fresh Produce
Association as well as the Florida Strawberry Growers
Association.
As the Chairman has acknowledged, specialty crop production
is a pivotal and growing sector of the agricultural industry.
Toward that end, innovation and technology are essential for
farmers to continue producing more food for our nation.
In recent years, the industry, as well as others in the
specialty crop sector, have been facing serious challenges.
Most growers will agree that the availability of labor is the
greatest of these challenges. I believe an impending crisis is
at hand. Innovation can play a key role in solving this. The
primary reason for the shrinking labor supply is simple
demographics. The majority of farmworkers come from other
countries, particularly Mexico. In the 1960s the fertility rate
in Mexico was 6.7. People were coming here because there were
no opportunities for them at home. Twenty years ago it had
dropped to 2.9. That shrinking birth rate mirrors the declining
labor force. The current fertility rate in Mexico is near 2.1.
There are more opportunities for workers to stay in Mexico. The
Pew Research Center published a paper in 2015 that concluded
there are more people going back to Mexico than are coming to
the U.S. Our workforce is shrinking and aging.
According to University of Florida economics study, the
total cost of producing strawberries in Florida had risen 30
percent over a 5 year period ending in 2015. Labor costs were
estimated at $8,400 per acre, while the cost of labor
production for Mexican growers was a mere $3,800 per acre. The
study concluded: ``These challenges are not likely to narrow
down in the foreseeable future without a major technological
breakthrough, such as mechanization of strawberry harvesting.''
This study was based on industry costs from 2 seasons ago. Our
farm's labor cost this past season was over $13,000 per acre.
Many of the current farm bill programs provide the tools to
enhance innovation and technology; however, there is a greater
role for the private-sector to play, and I encourage the
adoption of policies that recognize and enhance private
industries' involvement in vital research in farm bill
programs.
Currently, in Florida, there is no private access to
agricultural research funds. We will eventually harvest a
significant portion of our nation's fruits and vegetables using
automation, but depending on the crop, it may take between 5
and 10 years for technology to be perfected to the point that
they can be utilized on a large scale. Until that time, our
industry has to rely on foreign labor. The current Federal
Guest Worker Program, H-2A, has serious problems. The program
is in need of a major overhaul, and I believe there is a very
simple way to fix it. To be clear, employers in our industry
support enforcement of our nation's immigration policies, but
those policies must reflect the reality of how vital a foreign-
born workforce is to our nation's ability to ensure an abundant
supply of fresh fruits and vegetables.
Innovation will be the key to maintaining our nation's
ability to feed itself, and this Committee should fight for
investments in technology and research for the specialty crop
sector. Please consider though that automation is a long-range
solution, and we still depend on foreign workers to bridge the
gap.
Thank you for the opportunity to testify, and I look
forward to answering your questions.
[The prepared statement of Mr. Wishnatzki follows:]

Prepared Statement of Gary E. Wishnatzki, Owner and Chief Executive
Officer, Wish Farms, Plant City, FL
Thank you, Chairman Conaway, Ranking Member Peterson, and Members
of the Committee for the opportunity to share my perspective on the
important topic of the impact and potential of technology and
innovation in the specialty crop sector.
I am the owner of Wish Farms. My family has been marketing berries
for family farms since 1922 and since 1987 we have also been farming.
As a 4th generation family company, I am proud of our family's legacy
of producing strawberries and blueberries. I am also a co-founder of
Harvest CROO Robotics, a start-up to develop harvesting technology. It
is a collaborative effort with eight other strawberry companies from
Florida and California invested. I serve on the Executive Board of
Florida Fruit and Vegetable Association, the Board of the Produce
Marketing Association, and I am a member of United Fresh Produce
Association, as well as the Florida Strawberry Growers Association.
I want to thank this Committee for the support you have shown the
fresh fruit and vegetable industry through effective policies that
address key policy priorities in the farm bill. As you know, United
Fresh coordinates the work of the Specialty Crop Farm Bill Alliance, a
coalition of nearly 130 specialty crop organizations across the
country, who come together during each farm bill reauthorization cycle
to provide recommendations to Congress about specialty crop policy
needs. I, and many other fresh produce providers, are grateful that you
and your colleagues incorporated the Alliance's recommendations for the
2014 Farm Bill, including:

$75 million annually for the Animal Plant Health Inspection
Service (APHIS) Section 10201 program to prevent the
introduction or spread of plant pests and diseases that
threaten U.S. agriculture and the environment, as well as
ensure the availability of a healthy supply of clean plant
stock;

$184 million for the Fresh Fruit and Vegetable Program,
which provides a fresh fruit or vegetable snack to four million
low-income elementary school students in all 50 states. As the
Members of the Subcommittee may be aware, FFVP has been
evaluated by outside experts and found to be highly effective
at increasing students' fresh fruit and vegetable consumption;

$75 million annually for the Specialty Crop Block Grant
program to enhance the competitiveness of specialty crops; the
2014 Farm Bill also authorized funding for multi-state block
grants; [and]

$80 million in annual funding for the Specialty Crop
Research Initiative to develop and disseminate science-based
tools to address the needs of specific crops and their regions.

As the Chairman has acknowledged, specialty crop production is a
pivotal and growing sector of our agriculture industry. Toward that
end, and given the current state of the farm economy, innovation and
technology are essential for farmers to continue producing more food
for our nation and building upon public-private partnerships top
priorities to remain competitive in the marketplace.
Florida is the second largest producer of specialty crops in the
nation growing a wide variety of produce as the nation's primary
provider in the winter months. We are also the second largest
strawberry producing state, with a farm gate value of approximately
$300 million. However, in recent years, the industry as well as others
in the specialty crop sector has been facing serious challenges. Most
specialty crop growers will agree that the availability of labor is the
greatest challenge that we are facing. The cost of rising labor is a
secondary problem. I believe an impending crisis is at hand. Innovation
can play a key role in solving this problem.
Strawberries, unlike most other fruits, do not ripen after being
picked. They also do not ripen all at one time. In Florida and
California, strawberries normally require picking every 3 to 4 days. If
they are not picked on time, fruit becomes overripe and unmarketable.
In Florida the harvest season lasts about 5 months and we typically
pick a field 40 times. In California the season lasts even longer,
requiring more passes over a field. The importance of picking
strawberries on a strict harvest schedule, makes having a dependable
way to do so of prime concern to growers. In recent seasons, my farm
has had to abandon acreage for lack of labor. Labor shortages have cost
us millions of dollars in lost opportunities. Having to walk away from
a crop, after it is made is very painful.
Rising costs have been eroding the competitiveness of Florida
strawberries and squeezing growers' profit margins over the years.
According to a University of Florida economic study, the total cost of
producing strawberries in Florida had risen 30% over a 5 year period,
ending in 2015. Labor costs were estimated at $8,432 per acre while the
cost of labor production for Mexican growers was a mere $3,842 per
acre. The study concluded, ``These challenges are not likely to narrow
down in the foreseeable future without a major technological
breakthrough, such as mechanization of strawberry harvesting. Given the
wage differences and the dwindling migrant labor supply, it is
imperative for the U.S. (and Florida) industry to develop labor-saving
technologies and production systems''. This study was based on industry
costs from 2 seasons ago. Our farm's labor costs this past season were
over $13,000 per acre. That is more than 50% higher than the costs
illustrated in this UF study. Our farm's labor cost are not dissimilar
to other producers in Florida.
In California, labor availability and costs are rising at an even
more alarming rate. Some of our affiliated farms are reporting paying
workers piece rates that convert to over $35 per hour. Strawberries are
primarily grown close to the coast because of the cooler microclimates.
Housing costs in those coastal communities are expensive compared to
housing further inland. Finding affordable H-2A housing is difficult.
It should be noted that primary reason for the shrinking supply of
farm labor is simple demographics. The majority of farmworkers come
from other countries, particularly Mexico.
Throughout the history of our country, the jobs that Americans do
not want to do have been filled by newly arrived immigrants. It is only
the newcomers that are willing to do the hard jobs. Understandably,
most workers eventually move into other occupations that are not as
tedious. Furthermore, most harvesting jobs are not conducive to older
people. Workers certainly are looking for a better life for their
children and it is rare that the second generation stays on the farm.
For years, American farms have depended on the newly arrived
immigrants. Today growers are turning to H-2A because the people are no
longer coming in the numbers that they once did. Here is why; in the
1960's the fertility rate in Mexico was 6.7. People were coming here
because there were no opportunities at home. Twenty years ago it had
dropped to 2.9. That shrinking birthrate mirrors the declining farm
labor force we have seen over the last 10 years. Today, our 20 year old
workers are represented by the 2.9% fertility rate of 1997. What should
really scare growers is that the current fertility rate in Mexico is
estimated to be at 2.1. That is a preview of what the next 20 years
looks like. It is easy to extrapolate that the trend of a shrinking and
aging labor force is going to continue, based on these demographics.
The fact is there are many more opportunities for workers to stay in
Mexico. They simply are not coming anymore. The Pew Research Center
publish[ed] a paper in 2015 that concluded there are more people going
back to Mexico than are coming to the U.S. The group of workers that we
have is shrinking, aging, and becoming less productive.
The other point to conclude from these demographics is that Mexico
could soon be short on agricultural labor, as well. Their specialty
crop industry is expanding at a rapid pace. Before long, Mexican
growers will probably be short workers too. Mexico could eventually be
one of the countries that is importing labor itself. When I first
founded Harvest CROO Robotics, I did not believe that there was a need
to prosecute patents in Mexico, because their labor costs were so low.
Based on the current trend, I now believe that will change within the
next 10 years. All of our patents have now been filed in Mexico.
It is also important to note that the farm labor shortage is a
global problem. Every developed country in the world that is growing
strawberries is importing labor from another less-advantaged country. I
have had inquiries about our robotic harvester from growers in Canada,
Mexico, the United Kingdom, Australia, Hungary, and Switzerland.
Currently our industry has no other option but to rely on foreign-
born labor to do the essential jobs needed to get our commodities to
the marketplace. The current Federal program for agricultural
guestworkers, known as H-2A, has serious problems; too often, the
program does not provide work authorizations for the necessary number
of workers in a timely manner. To be clear: employers in our industry
support appropriate, necessary enforcement of our nation's immigration
policies. But, those policies must reflect the reality of how vital a
foreign-born workforce is to our nation's ability to produce crops in
this country and ensure an abundant supply of nutritious fresh fruits
and vegetables for all Americans. H-2A is viewed by most growers as a
means of last resort and is badly in need of a major overhaul.
In my opinion, I believe that there is a very simple way to fix H-
2A as outlined here.

USDA establishes quotas for the total number of workers
needed monthly for all crops in the U.S.

Agricultural work visas are issued to workers with
agricultural work experience.

The visas stipulates agriculture as the industry that they
are allowed to work in and it stipulates the time they are
allowed to stay.

Workers are not tied to a specific employer and can freely
move from farm to farm. This helps ensure fair treatment of
workers, because they are not tied to one grower.

E-verify is implemented.

USDA establishes a clearinghouse to point workers to areas
and farms where they are needed.

H-2A workers would find their own housing, the same as
domestic workers do.

Guest workers are paid the same wages as domestic workers,
with one catch. There is a heavy amount of withholding from
their wages that they only receive upon their return to their
home country. While in the U.S., they would only receive a
stipend to live on. This should ensure that workers do not
overstay their visas.

This plan would eliminate costly and time consuming burdens growers
are currently facing.
Many of the current farm bill programs provide the tools to enhance
innovation and technology.
However, there is a greater role for the private-sector to play and
I encourage the adoption of polices that recognize and enhance private
industry involvement in vital research and farm bill programs.
Currently in Florida there is no private access to research funds,
without partnering with a university. This usually involves giving up
intellectual property rights. This is problematic to our outside
financial investors. We did apply for and receive a phase one grant
from the National Science Foundation under SBIR. That program does not
have strings attached. Collaborative private-sector technology startups
could advance at a faster pace, if given direct access to agricultural
research funds.
I want to thank this Committee for the support shown to the fresh
fruit and vegetable industry through effective policies that address
key policy priorities in the farm bill. One common thread that runs
through this set of priorities is the need to promote ingenuity and
development. Innovation holds the promise of providing answers to our
industry's most persistent and fundamental challenge: securing an
adequate labor force to bring crops from the fields to consumers.
Through innovation, we will eventually be able to harvest a significant
portion of our nation's fruits and vegetables by automation, but such a
time is not going to be reached for a number of years; depending on the
commodity, it may take anywhere from 5 to 10 years for automation
technologies to be perfected to the point they can be utilized
effectively in the field on a large scale.
The bottom line is this: Innovation will be the key to maintaining
our nation's ability to feed itself and this Committee should fight for
investments in technology and research for the specialty crop sector.
Please consider that automation is a long range solution and we still
depend on foreign workers to bridge the gap.
* * * * *
References
Comparison of Labor Costs between Florida and Mexican Strawberry
Industries--Feng Wu, Zhengfei Guan, and Melvin Garcia-Nazariega.
Fertility Rates--World Bank data via Google.
More Mexicans Leaving Than Coming to the U.S.--Net Loss of 140,000
from 2009 to 2014; Family Reunification Top Reason for Return, By Ana
Gonzalez-Barrera--Pew Research Center.
Florida Department of Agriculture and Consumer Services website,
http://www.freshfromflorida.com/Business-Services/Grant-Opportunities/
2017-Florida-Specialty-Crop-Block-Grant-Program-Farm-Bill-SCBGP-FB.

The Chairman. Thank you, sir.
Mr. Murphy, 5 minutes.

STATEMENT OF KEVIN MURPHY, CHIEF EXECUTIVE OFFICER, DRISCOLL'S,
INC., WATSONVILLE, CA

Mr. Murphy. Thank you, Mr. Chairman, Ranking Member
Peterson, and Members of the Committee, for this opportunity to
appear before you.
I am Kevin Murphy, the Chief Executive Officer of
Driscoll's. Driscoll's is a family-owned company headquartered
in California that markets fresh strawberries, raspberries,
blueberries, and blackberries that independent family farmers
have produced using Driscoll's patented berry varieties. In
addition to California, we have growers in Washington, Oregon,
Florida, New Jersey, and Georgia.
With over 25 years in the produce industry, I am honored to
address the topic of technology and innovation in specialty
crops. I have been very fortunate that my career has spanned
both the fruit and vegetable industries, and more importantly,
given the companies that I have worked for, I have been at the
heart of much of the innovation during this time period.
This farm bill comes at a critical time for U.S. specialty
crops. As we scan ahead, there are five very powerful forces at
play that will have a profound impact on our existing methods
of production. First, there is too much food waste in the
system. Roughly 30 percent of all berries produced are not
consumed. This waste throughout the supply chain is
unacceptable, and we will need new thinking and innovation to
resolve. Second, the effects of climate change coupled with
diminishing availability of key resources. Lack of water and
labor are the largest issues facing the industry today, and are
the primary drivers of the need for technology and innovation.
Sustained drought conditions make more efficient use of water
an absolute necessity, while the lack of farm labor threatens
the very future of our industry. Third, the push to eliminate
fumigants and pesticides driven by societal and consumer
concerns will require, if these tools are eliminated, different
forms of production. Fourth, food safety issues related to food
products grown close to the soil continues to impact consumer
confidence. And finally, new technologies already in use in
adjacent industries are migrating to agriculture and will
impact future methods of production.
The results of all these forces will be a move towards a
more controlled, automated environment. This will require
technology and innovation at a pace and scale unseen in our
industry to date. The question, in my opinion, is not if this
will happen, but when and how. I believe the next farm bill
should prioritize research that addresses these issues with a
special emphasis on water and labor. To this end, I applaud the
formation of the Congressional Agricultural Research Caucus
that Representatives Davis and Panetta, my home Congressmen,
have formed and led.
As a way of example, I offer some illustrations of the
innovation we are working on at the company to resolve or
lessen the impact of some of these key issues facing the
industry. Increasingly we will grow our berries in containers
rather than directly in the soil. These container techniques
are common in Europe and are quickly coming here. Tabletops
will allow harvesters to pick strawberries standing up; an
innovation that is good both for the farmer and the farmworker.
Our hope is this will attract a larger pool of available
workers. We are also exploring, with the help of others such as
Wish Farms, mechanized harvesting where visual systems identify
when a berry is ready to be picked, and then a mechanized arm
snips the fruit and gently moves it from the field to
inspection and packaging. Advances in visual systems are making
mechanized harvesting a reality in the berry industry.
We are addressing water shortages. Nearly 10 years ago our
community recognized that without significant change, saltwater
intrusion into our aquifers along the Pacific Coast would
worsen to the point that we would no longer grow in areas ideal
for berry production. This intrusion was caused by over-
drafting of the aquifer. We worked with various stakeholders
from different industries and backgrounds to develop a plan
that would restore balance to the aquifer. The plan involves
improved irrigation systems, recharge capabilities, well
monitoring, and continued dialogue around further
opportunities. Use of, and the learning from, organic farming
techniques to reduce our dependency on pesticides and fumigants
in both farming and plant nursery practices.
And then finally, as a community-based business, we look to
bring innovation to our communities. Innovation here takes
different forms, but is no less important. As an example,
Driscoll's, along with our local agricultural leadership
council, funded translation services for farmworkers who speak
indigenous languages. Others are creating innovative housing
solutions, daycare, and health clinics.
Driscoll's recognized that these challenges are larger than
any one company. Simply put, the size of the issues we confront
demand a different and more collaborative approach. We have
invested in technology accelerators, and, within agriculture as
a whole, ag-tech investment has doubled over the last 3 years.
From new production techniques to packaging, to better
connecting farmers and consumers, the future will be very
different from the past.
Driscoll's has been in business for over 100 years, and has
been built on a foundation of innovation. We plan on continuing
on this path as we believe it provides us with a competitive
advantage. Not surprisingly, I believe this is also true for
all U.S. agriculture as we try and maintain our leadership
position on the world stage. The farm bill will play a critical
role in making this happen.
As this Committee drafts the next farm bill, it must
carefully consider how to accelerate innovation in light of the
existing efforts of the private-sector. We cannot afford to
have our efforts slowed by well-intended but bureaucratic
solutions that result in less investment and less innovation.
The challenges are too great and the imperatives too near.
Thank you for the opportunity to address you today.
[The prepared statement of Mr. Murphy follows:]

Prepared Statement of Kevin Murphy, Chief Executive Officer,
Driscoll's, Inc., Watsonville, CA
Thank you, Mr. Chairman, Ranking Member Peterson, and Members of
the Committee for this opportunity to appear before you. I am Kevin
Murphy, the Chief Executive Officer of Driscoll's.
With over 25 years in the produce industry, I am honored to address
the topic of technology and innovation in specialty crops. I have been
very fortunate that my career has spanned both the fruit and vegetable
industries, and more importantly, because of the companies that I have
worked for, I have been at the heart of much of the innovation during
this time period. Fresh Express, where I worked earlier in my career,
pioneered the packaged salad category, and Driscoll's has led
innovation in the berry industry for many decades. Beyond my personal
career experience, I am also a member of the board of directors of
Western Growers, and Driscoll's has leadership roles in Produce
Marketing Association, United Fresh Fruit Association, and the
California Strawberry Commission.
Driscoll's is a family-owned company headquartered along the
central coast of California, where the families that began and continue
to own Driscoll's have farmed berries for over 100 years. Through
traditional plant breeding techniques, the company develops and markets
fresh strawberries, raspberries, blueberries, and blackberries that
independent family farmers have produced with Driscoll's patented berry
varieties. In addition to California, we have independent growers in
Washington, Oregon, Florida, New Jersey, and Georgia. Today, Driscoll's
represents roughly 30% of the total U.S. berry industry and 64% of the
organic segment. By dollar value, berries are the number one selling
all fruit or vegetable item in the retail segment.
This hearing comes at a critical time for U.S. specialty crops. As
we scan ahead, there are several powerful forces at play that will have
a dramatic effect on fruit and vegetable production in the future:

Too much food waste in the system. Roughly 30% of all
berries produced are not consumed. The cost of this waste is
ultimately being passed to consumers and will, if unchecked,
cause our products to become overpriced and less desirable.
Innovation around varieties, supply chain, better production
technologies, in conjunction with education, will reduce this
waste.

The combined effects of climate change with limited
resources of land, labor, and water. Water and labor are the
largest issues facing the industry today and are the primary
drivers of the need for technology and innovation. Sustained
drought conditions make more efficient use of water an absolute
necessity while the lack of farm labor threatens the very
future of our industry.

The push to eliminate fumigants and pesticides, driven by
societal and consumer concerns related to their perceived
impact on health and the environment. Part of the rise in
organic production (11% per annum) is consumers responding to
these issues.

Continued food safety concerns with products exposed to the
elements. Specialty crop block grants, funded through the farm
bill, are particularly important for food safety research and
initiatives. The Center for Produce Safety (CPS) matches block
grant funds with industry money for the advancement of
vegetable and fruit food safety research. It has been a model
of partnership--over the past 10 years, CPS has invested $20
million into 120 projects at 37 institutions in four countries.

Incorporation of new technologies already in use in adjacent
industries. In future years, we will see an increased migration
to automation, big data, and visioning systems, along with
other innovations within the agricultural sector.

The result of all these forces will be a more pronounced movement
toward more precise, controlled and automated environments. This will
require technology and innovation at a pace and scale unseen in our
industry to date. The question is not ``if'' this will happen but
``when'' and ``how''.
In my humble opinion, the next farm bill should prioritize research
that addresses the issues described above with a special emphasis on
water and labor. There is a great need to accelerate innovation through
research programs, public-private partnerships, and aggregated efforts,
and I applaud the formation of the Congressional Agricultural Research
Caucus that Representatives Davis and Panetta--my home Congressman--
lead.
At Driscoll's, by working with our growers and with industry
partners, we are continuing on a path of innovation and technology. The
following are examples of that effort:

Increasingly, we will grow our berries in containers rather
than directly in the ground. Through substrate systems growers
will have better control over the root-zone conditions, save
water, and have greater flexibility to customize soil. These
container techniques are common in Europe and other parts of
the world and are quickly coming here. Another type of
container grower method is to raise the containers to ``table
tops'' so that harvesters can pick strawberries standing up.
Additionally, container growing is an example of an innovation
that is good for both the farmer and the farmworker.

We are also exploring mechanized harvesting. With mechanized
harvesting, a robotic system uses visual systems to identify
when a berry is ready to be picked, and then a mechanized arm
snips the fruit and gently moves it from the field to
inspection and packaging. For the first time, advances in
visual systems that can quickly and accurately assess if a
berry is ripe are making mechanized harvesting a reality.

We are addressing water shortages. Nearly 10 years ago, our
community recognized that without significant change, salt
water intrusion into our acquirers along the Pacific coast
would worsen to the point that we would no longer grow in areas
ideal for berry production. Once again, innovation and
technology play key roles. To better steward this resource,
stakeholders in the Pajaro Valley on California's central coast
have gathered to address the imbalance of water supply and
demand through individual and collaborative action. Through
this partnership, a wireless irrigation network was created to
make it more cost effective for growers to use soil sensors.
These sensors help growers to irrigate more efficiently and to
understand the actual amount of water their crops need in order
to grow.

We worked with the Natural Resource[s] Conservation Service
and other stakeholders to create a privately managed aquifer
recharge basin in California's Santa Cruz County that provide
storage for collection of storm water runoff and replenishment
of groundwater.

We are innovating with regard to organic farming practices.
After investing over 7 years in researching the viability of
providing organically grown strawberry starter plants that are
disease and pest free for our growers, we announced a broad
expansion of organic nursery plant production and are currently
the only brand with an organic strawberry nursery certified by
the California Certified Organic Farmers.

While traditionally Driscoll's has funded its development of unique
berry varieties and specialized production systems and will continue to
do that in the future, we also recognize that these challenges are
larger than one company. Simply put, the size of the challenges demand
a different, more collaborative, and broader approach. We have invested
in technology accelerators including the Thrive Accelerator, which is
part of Western Growers' Center for Innovation and Technology. The
Thrive Accelerator is a technology incubator focused on agricultural
innovations in water quality, water use, labor savings, and a
sustainable workforce. We have also invested in other accelerators in
order to combine adjacent technologies with an agricultural focus.
Within agriculture as a whole, ag-tech investments have doubled over
the last 3 years with a particular focus on the use of the Internet,
sensing technologies, robotics, and mechanization.
Finally, as a community-based business, we look to bring innovation
to our communities to address local needs. Innovation here takes
different forms but is no less important. Driscoll's, along with our
local Agricultural Leadership Council, worked with health providers to
create Indigenous Interpreting + that provides translation services for
farmworkers who speak only Mixtec or other indigenous languages. We are
an active part of Hartnell College's Farmworker Education and
Advancement Program, the Salinas school's groundbreaking effort to
provide to farmworkers training in agricultural topics that will
increase their upward mobility within the agricultural sector. And one
of our growers, Reiter Affiliated Companies, created a program called
Sembrando Salud to address wellness issues in the farmworker community.
Within agriculture, more philanthropic dollars are being provided to
solve for local issues such as housing, medical care, and child care
services. Co-investment opportunities with growers, foundations, NGOs,
customers, and other industries are being prioritized to help bring
about collaborative innovation.
All of these innovations require that we stay engaged;
collaboration and investment are critical. From new production
techniques, to packaging, to better connecting farmers and consumers,
the future will be very different from the past. Like many in produce,
we are committed to meeting the issues we face. As this Committee
drafts the next farm bill, it must carefully consider how to encourage
innovation in light of the existing efforts of the private-sector. We
cannot afford to have our efforts slowed by well-intended but
bureaucratic solutions that result in less investment and less
innovation. The challenges are too great and the imperatives too near.
Thank you for this opportunity to address you today. I welcome any
questions you may have.

The Chairman. Thank you, sir.
Mr. LaVigne, 5 minutes.

STATEMENT OF ANDREW W. ``ANDY'' LaVigne, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, AMERICAN SEED TRADE
ASSOCIATION, ALEXANDRIA, VA

Mr. LaVigne. Thank you, Chairman Conaway, Ranking Member
Peterson, and Members of the House Agriculture Committee. It is
my pleasure to provide this testimony today on behalf of the
American Seed Trade Association, and our partners in America's
land-grant institution in USDA's research community.
ASTA's diverse membership consists of over 700 companies
involved in seed production, distribution, plant breeding,
research, and related industries in North America. As our
knowledge of plant genetics and biology has grown, breeders
have gained access to new tools, technologies, methods, and
strategies to more efficiently address evolving farmer and
environmental challenges, and to meet ever-changing consumer
demand. Today, breeders use an array of tools such as whole
genome sequencing, bioinformatics, molecular marker techniques,
and digital imaging, which allow them to improve plants more
efficiently than ever before. Through evolving and innovative
plant breeding methods like gene editing we can develop new
plant varieties without incorporating DNA from outside the
plant's family, allowing us to reach the same endpoint as
traditional breeding, but in a more precise and targeted
manner. Breeders are able to maximize the unique, novel
characteristics that are part of a plant's own family.
While no gene-edited products are available in the
marketplace today, this breeding method, as well as future
innovations in plant breeding, represents exciting
opportunities for agriculture. This is especially true in the
specialty crops arena where scientists are currently
researching gene-editing methods to address costly diseases in
crops like citrus, potatoes, grapes, lettuce, and others.
Federally funded agricultural research has played an
important role in expanding our understanding plant genetics,
leading to new crop varieties, and it is important that the
next farm maintains robust funding for that continued research.
USDA investments in gene sequencing of more than 25
agriculturally significant crops, many of those specialty
crops, are fundamental to this work. Typically, this research
is done in cooperation with partnerships with USDA,
universities and industry researchers. Some of the other
examples of research that is ongoing now in the specialty crop
arena is the work being performed by Dr. Richard Michelmore at
the University of California, Davis, where he is focused on
enhancing the efficiency of lettuce production. USDA's National
Institute of Food and Agriculture contributed to his work
through the Agriculture and Food Research Initiative, and it is
further supported by the Lettuce Genome Sequencing Consortium.
The investment by this private-sector group comprised of ten
vegetable seed companies in California is allowing Michelmore
and his team to expand the scope of the project. In 2016, AFRI
funded a project at the Cold Spring Harbor Laboratories in New
York, focused on improving growth and yield in tomatoes. Led by
Dr. Zach Lipman, researchers isolated genes responsible for
characteristics that can diminish yield in tomatoes. By using
CRISPR/cas9 gene editing tools, the team was able to develop
tomato plants without those negative characteristics, and
maintaining the plant's desired characteristics. And at Cornell
University, Dr. Thomas Bjorkman is using marker-assisted plant-
breeding techniques to develop new broccoli varieties that are
better suited for production on the East Coast. This initiative
is supported by several ASTA member companies and the farm
bill's Specialty Crop Research Initiative. Several varieties
have already been developed in this program and have been
released to the marketplace.
Finally, the Foundation for Food and Agriculture Research,
which was authorized in the 2014 Farm Bill announced just
recently the creation of the Crops of the Future Collaborative
research initiative with eight partners. This project will
leverage a $10 million Federal investment in pre-competitive
research to hasten yield and nutrition gains in leafy greens,
wheat, and corn.
It is clear that research in modern plant breeding requires
sustained and long-term funding, for ARS and for our academic
community through the NIFA programs. However, the promise of
these research investments will only be fully realized if
Federal policies foster a climate of continued innovation.
Overly burdensome policies around gene editing and other
evolving plant-breeding methods would likely limit their use to
large row crops, and preclude smaller companies and public-
sector researchers from benefitting from the use of these
methods. We urge Congress to encourage USDA, FDA, and EPA to
have consistent, science-based policies that promote innovation
so that everyone can benefit from emerging innovations like
gene editing in our future plant-breeding techniques.
In addition to domestic efforts, it is important that the
U.S. Government develops an international engagement strategy
to communicate with our trading partners in order to prevent
trade barriers due to non-harmonized regulations.
Mr. Chairman, Members of the Committee, this is truly a
monumental time for the plant sciences, and it is our hope that
the Administration, Congress, the research community, and the
public at large have the opportunity to benefit from the
knowledge and breeding methods that have been evolving since
before the time of Gregor Mendel.
Thank you for the opportunity to testify today, and I look
forward to answering any questions.
[The prepared statement of Mr. LaVigne follows:]

Prepared Statement of Andrew W. ``Andy'' LaVigne, President and Chief
Executive Officer, American Seed Trade Association, Alexandria, VA
Chairman Conaway, Ranking Member Peterson, and Members of the House
Agriculture Committee, it is my pleasure to provide this testimony
today on behalf of the American Seed Trade Association. Innovative,
science-based solutions are fundamental to meet the growing
agricultural and food needs of the United States and the world. Since
the creation of the American land grant institution system and USDA's
agriculture research structure, innovation has been the bedrock of
American agriculture production. Since 1948, total U.S. agricultural
output has more than doubled. The ability of the farm sector to feed
far more people today while using less farmland than 6 decades ago is
attributed to the ongoing innovation in agriculture research; and
continuing innovation will be critical as we look for ways to
sustainably feed nine billion people in the coming years.
Founded in 1883, ASTA works to enhance the development and movement
of quality seed worldwide. ASTA's diverse membership consists of over
700 companies involved in seed production, distribution, plant
breeding, research and related industries in North America. ASTA
represents all varieties of seeds, including grasses, forages, flowers,
vegetables, row crops and cereals. Many ASTA members are research-
intensive companies engaged in the discovery, development and marketing
of seed varieties with enhanced agronomic and end-use quality
characteristics. With respect to the U.S. specialty crop sector, the
U.S. vegetable seed market was $860 million in 2015, supporting a farm
gate value for specialty crops of $11 billion.
The plant world contains hundreds of thousands of species with an
amazing array of biological diversity. This diversity has evolved over
billions of years of natural and targeted selection, and continues
today using the science of plant breeding. As our knowledge of plant
genetics and biology has grown over time, plant breeders have gained
access to new tools, technologies and strategies to more efficiently
address evolving farmer and environmental challenges, and to meet ever-
changing consumer demands. Today breeders use an array of tools such as
whole genome sequencing, bioinformatics, molecular marker techniques
and digital imaging to assist in the breeding process. USDA research
programs have played a key role in the development and deployment of
these tools. Regardless of the plant breeding method used, the goal is
still the same: to produce a safe, nutritious, food and feed supply and
to improve fiber and biofuels through the creation of new plant
varieties.
The continued development of new plant varieties is vital to
consumers and the agricultural industry because of the constant
challenges to meet new market requirements, consumer demands, rapidly
evolving diseases and pests, and to increase the productivity and
durability of existing crops. To improve crops takes multiple
generations of breeding and testing lasting some 5-10 years for each
new variety. Today, with an increased understanding of genetics, the
capability to sequence plant genomes and the ability to link a specific
gene to a specific characteristic, breeders are able to improve plants
more precisely and efficiently. Breeders can now make very specific
changes in existing plant genes in a way that mimics the changes that
occur in nature. New, innovative plant breeding methods, like gene
editing, allow plant scientists and breeders to precisely make specific
changes to a plant's DNA using a plant's own internal processes. The
result can be the activation of a beneficial characteristic (such as
drought tolerance or increased nutrition), deactivation of an
unfavorable characteristic (such as disease sensitivity) or small
changes to the DNA that reproduce a characteristic found within the
plant's family (such as a disease resistant characteristic found in a
wild relative).
An underlying common denominator for new innovations in plant
breeding is that they can achieve the same end-result that could be
achieved through more traditional plant breeding methods, but in a more
precise and targeted way. This allows the plant breeder to forgo
multiple cycles of plant selection from a population of thousands of
individual plants and move to testing elite lines sooner. By utilizing
the plant's (or its wild relative's) own genetic makeup to create
genetic variability, the resulting new plant variety does not contain
any ``foreign'' DNA from outside the plant's gene pool. While no gene
edited products are available on the market today, this breeding method
represents an exciting opportunity for agriculture. It can be used
across all crops to produce better seeds that can thrive despite new
and emerging challenges such as changing weather, plant diseases, and
pests, while reducing crop inputs. In addition to farmer and
environmental benefits, plant breeding innovations can bring benefits
to consumers--like produce that is better tasting and has higher
nutritional content.
It is important to note that these methods are being improved and
are widely available to public and smaller private breeding programs.
In the specialty crop arena, researchers are evaluating gene editing
methods to address costly diseases in crops like citrus, potato, grape,
and lettuce.
Farm Bill Investments
Research programs authorized in the farm bill are critical to
advancing agriculture and these programs have shown a high rate of
return for the dollars invested. Federally funded U.S. agricultural
research has played an important role in expanding our understanding of
plant genetics leading to new crop varieties. USDA investments in
genome sequencing of more than 25 agriculturally significant crops are
fundamental to this work. Within the specialty crop arena, this
includes genome mapping for tomato, potato, apple, strawberry, carrot,
cranberry, lettuce, peach, papaya, cucumber, black raspberry,
watermelon, and pineapple. Typically, this research is done by groups
of USDA, university, grower and industry partners. The resulting
discoveries can then be further developed for commercialization by
large and small companies.
In addition, USDA-Agricultural Research Service genebanks contain
invaluable sources of resistance, tolerance, and adaptation to
stresses, and genes to improve the quantity, quality, and production
efficiency of crops. The GRIN-Global (Germplasm Resources Information
Network) information system developed by USDA provides breeders and
researchers with descriptions of plant materials which can then be
accessed through the National Plant Germplasm System (NPGS) genebanks.
In 2015-16 GRIN-Global had more than 1.5 million individual web page
visits and the NPGS facilitated distribution of more than 240,000 plant
germplasm samples domestically and internationally. New data-mining
strategies are enabling researchers to better associate specific genes
with agriculturally important characteristics, and build on genetic
advances in one crop to improve other crops.
Federal research dollars can be extended and multiplied through
public-private partnerships.
We have selected a handful of specialty crop examples to introduce
today from a myriad of projects.
Lettuce: is one of the top ten most valuable crops grown in the
U.S. with an annual market value of over $2.3 billion. The vegetable
seed industry relies on public plant breeders to provide basic genetic
resources, new breeding methods, and robust genetic stocks for use in
commercial lettuce breeding programs. At the University of California-
Davis, Dr. Richard Michelmore's lab has focused on enhancing the
efficiency of lettuce production, allowing for more efficient use of
agriculture inputs, and driving the development of consumer-desired
characteristics. USDA's National Institute of Food and Agriculture
(NIFA) contributed to Dr. Michelmore's work through the Agriculture and
Food Research Initiative (AFRI) and it is further supported by the
Lettuce Genome Sequencing Consortium. The investment by this private-
sector group, comprised of ten vegetable seed companies in California,
is allowing Dr. Michelmore and his team to expand the scope of their
project.
Tomatoes: In 2016, AFRI funded a project at the Watson School of
Biological Sciences at Cold Spring Harbor Laboratory (CSHL) in New York
focused on improving growth and yield in tomatoes. Researchers isolated
genes responsible for diminishing yield. By using CRISPR/cas9 gene
editing tools, the team was able to develop tomato plants without those
negative characteristics, while maintaining the plants' desirable
qualities. In a separate project, CSHL scientists used gene editing to
create tomato plants that flower and ripen more than 2 weeks faster
than conventionally-bred varieties. This translates to more plantings
per growing season and plants that are suitable for more northerly
latitudes. The lab is collaborating with several seed companies to
evaluate the agricultural potential of their findings.
Broccoli: is worth nearly a billion dollars in annual sales per
year; but due to temperature conditions, production is concentrated in
California. At Cornell University in New York, Dr. Thomas Bjorkman is
working to change that. Through funding from the farm bill's Specialty
Crop Research Initiative, his laboratory is using marker-assisted plant
breeding to develop new varieties that are better suited for production
on the East Coast. This initiative is supported by several ASTA member
companies who are engaged in an integrated broccoli breeding program
with public-sector plant breeders. Several varieties developed through
this program have already been released on the market.
Leafy Greens: The Foundation for Food and Agricultural Research
(FFAR), authorized in the 2014 Farm Bill, is utilizing public-private
partnerships to benefit specialty crop research. FFAR recently
announced the Crops of the Future Collaborative research initiative
with eight partners. This project will leverage a $10 million Federal
investment in pre-competitive research to hasten yield and nutrition
gains in leafy greens, wheat and corn.
Imported Seed: Last, The National Seed Health Accreditation Pilot
Program (NSHAPP) was funded from dollars designated in the horticulture
title for Plant Disease Management and Disaster Prevention Programs
(10007)--an important funding mechanism for specialty crops. Under the
goal of enhancing mitigation and rapid response, NSHAPP is developing a
model for a voluntary system of testing imported seed for pathogens of
phytosanitary concern that can be continuously adapted to emerging
pathogens. The USDA-APHIS National Seed Health System has coordinated
with the seed industry in a unique partnership to screen imported seed
with diagnostic testing to prevent the introduction of previously
undetectable and economically damaging seed-transmitted pathogens.
Conclusion
Farm bill investments in a broad portfolio of long-term research
are needed to sustain the global food supply. Collaboration between the
public and private-sector in these programs can ensure that research
dollars result in beneficial new products for farmers, consumers and
the environment.
It is important to note however, that the promise of U.S. research
investments will not be fully realized if an overly burdensome
regulatory structure impedes the broad adoption of new and evolving
plant breeding methods. We urge the U.S. Government to make a clear,
positive statement about the necessity of innovation in agriculture,
including innovation in plant breeding. Congress should encourage USDA,
FDA and EPA to have consistent, science-based policies that promote a
climate of innovation, particularly for university researchers and
small companies. The seed industry, and all of agriculture, is global.
Therefore, in addition to domestic efforts, it's critical that the U.S.
Government develop an international engagement strategy to prevent
trade barriers due to non-harmonized regulations.
In summary, Congress must ensure that Executive branch actions
including directives, regulatory and trade policies, and budgets foster
the growth of a strong 21st century farming economy through sufficient
funding of research programs and science-based decision making.
Chairman Conaway, Ranking Member Peterson, and Members of the House
Agriculture Committee, the American Seed Trade Association and its
member companies look forward to working with you to promote continued
innovation to ensure a strong economy, healthy environment, and a safe
and secure food supply to meet the needs of the growing population.
Thank you for the opportunity to testify today.

The Chairman. All right, gentlemen, thank you very much for
your testimony this morning.
The chair would remind Members that they will be recognized
for questioning in order of seniority for Members who were here
at the start of the hearing. After that, Members will be
recognized in order of arrival. I appreciate Members'
understanding.
And with that, I am going to recognize one of the freshmen
to go first. That rarely happens in this arena. Mr. Dunn, you
are recognized for 5 minutes.
Mr. Dunn. Thank you very much, Mr. Chairman, and thank you
for your innovative order of questioning.
Mr. LaVigne, your testimony discussed a number of
commodities which have seen enormous benefits with the use of
innovative agricultural techniques such as gene editing, and
you cited benefits to crop yields, nutritional qualities, and
all these things benefit the farmers, the consumers, the
retailers, and the processors. What other ways can Congress
help you get these innovative techniques and use them to the
benefit of all of us?
Mr. LaVigne. Thank you, Mr. Dunn. As we look at the
evolving biology and understanding of plants' nature today, and
the ability to take the characteristics that are favorable to
growers' production practices, whether it is for flavor or
taste or size, or whether it is for disease resistance or pest
resistance, the ability to have a sound policy in the U.S. with
respect to plant breeding today is absolutely critical for
these tools to be able to be used down through the specialty
crop arena. Today, unfortunately, transgenics are not used in
the specialty crop arena, they are only used in large row
crops. That ship has sailed with respect to technology being
able to move into that arena.
As we look at gene-editing tools or techniques, we look at
these methods that will continue to evolve because we better
understand plants and the nature of what they have within their
plant family, we have to be able to use those capabilities
within the specialty crop arena. As you heard today, the
pressure from pests and diseases is huge, and the ability to
create resistance within a plant's family is a great
opportunity. That policy has to come from this Administration
and help the USDA.
Mr. Dunn. Can you help us target specific regulations that
are burdensome to your association members?
Mr. LaVigne. Yes, we can. We can. And we are working on
that in a couple of arenas with respect to Part 340 reform as
well as, as we look at plant-breeding methods.
Mr. Dunn. We will be calling on you for some help in that
area.
Mr. LaVigne. Thank you.
Mr. Dunn. One last question, Mr. LaVigne, GMOs have had a
perception problem in the public in recent years. I would like
to know what your association, your members, are doing and what
could Congress do to help?
Mr. LaVigne. Well, yes, unfortunately, the GMO transgenic--
--
Mr. Dunn. Speaking of science-based things.
Mr. LaVigne. Yes. The GMO transgenic industry we have
received quite a black eye as that has evolved, and a lot of
the misperception, there is overwhelming evidence and
scientific proof that shows it is safe in everything, and good
for production. We have seen that throughout the Midwest and in
many other countries.
As we look at it, our focus is going to be on education and
working with the ag and food value chain; how do we talk about
plant breeding. And unfortunately, hopefully no offense to
anyone in the room, but as we have found out in talking to the
public, a lot of people took one genetics class in college, and
if they passed it and didn't drop it, they didn't take another
genetics class; human, animal, or plant. And so we have an
uphill road just to talk about the plant-breeding methods we
use today, let alone that evolution of understanding of the
plant physiology for tomorrow's plant-breeding methods. We have
an extensive education program in place working with many of
the people at this table, as well as all the way through the
grocery chain, to try and educate the public and the food
chain.
Mr. Dunn. I hope we can join hands and accomplish that.
With the minute or so remaining to us, Mr. Wishnatzki, you
said that you think it is easy to fix the H-2A system. Please
enlighten us.
Mr. Wishnatzki. I am glad you asked me that question.
Mr. Dunn. I am ready to take notes.
Mr. Wishnatzki. Yes, please do, because I believe it could
be a very simple fix if folks would get together and understand
what growers need. We don't need indentured servants like H-2A
is now, it is akin to that, we need transportable visas that
workers could move from grower to grower as needed. I outlined
it pretty clearly and very briefly in my written testimony, so
you can read that, but the centerpiece to my idea of how simple
it is, is if you tied a heavy withholding amount to these
workers when they came here and did agricultural work, they
would not receive that back to them until they returned to
their home country, to me, it is very simple, it is just that
they are going to go back because you have golden handcuffs on
them.
Mr. Dunn. When we go back to Florida you and I will speak
some more. Thank you.
I yield back, Mr. Chairman.
The Chairman. The gentleman yields back.
Mr. Peterson, 5 minutes.
Mr. Peterson. Thank you, Mr. Chairman.
This is either for Mr. Wenger or Mr. Murphy, or anybody
else who wants to weigh-in. Mechanization can address some of
the farm labor issues, but as I understand it, it is not a one-
size-fits-all solution. There are some crops that are better
suited than others, and avocados, I am told, must be picked by
hand. It is estimated that foreign-born labor is nearly \3/4\
of the hired labor force on America's farms, and some people
argue that Americans should do these jobs. Others argue that
foreign labor enables us to produce more specialty crops here,
and that it in turn creates more jobs for Americans.
So what is your take on this?
Mr. Wenger. Well, I will start out, since we just went
through last year a very vociferous debate on the minimum wage
and the overtime in California, we had a 10 hour workday, 6
days a week, overtime after 10 hours in a day, and on the
seventh day we are going to be going now by 2022 to a 40 hour
workweek, 5 days a week, eight 8-hours a day.
Agriculture doesn't know weather, a time clock doesn't. It
was very interesting, when we went through the debate, Mr.
Peterson, some of the folks that ended up voting for the
overtime bill were talking to field workers, they were asking
what they were getting paid, they were getting paid $18 an
hour, this one particular worker, and they said what would you
get in Mexico, he said $18 a day.
And so as you look to the larger buyers of our products,
they are going to look to source it at the cheapest place they
can, and that is going to be in Mexico. They don't have the
labor standards, they don't have the wage standards, they don't
have the worker protections. And I would also say a lot of our
growers are in Mexico, and so I know that those abide by the
food safety standards that we have here, but many other
imported areas don't.
But we raise our kids to go to college and get educated so
they can get higher-paying jobs. And they all want fresh
strawberries on their plate, they just don't want to pick them.
And they are not going to pick them at any wage. They are not
going to pick them at $40 an hour, and that is just the way it
is. And so we know, as we have heard in the prior testimony,
that there is an aging workforce in Mexico. Mostly we have
looked for immigrant labor, for folks that are trying to climb
that economic ladder, and they have done it quite successfully
by coming here and utilizing agriculture in the United States,
particularly in California. But that is going to be aging out,
so we have to look to the robotics, we have to look to those
other things. And you are right, all the peaches, apricots,
avocados, strawberries, all the soft fruits, we have to look to
ways that a robot can size, can pick that product at the peak
point of ripeness where it is not overly ripe, but that it is
good enough so that the consumer will have a flavorful product.
But it is going to be technology.
Mr. Peterson. Mr. Murphy.
Mr. Murphy. To add to that, there are really four things we
need to do, quite simply. First, we have to definitely go down
the automated route; look for mechanization as best as we
possibly can, but that is going to be a 5 to 10 year view.
Second, we have to look to streamline the H-2A program in a
way that makes it easier to execute upon and simpler. The
numbers need to grow. About five percent of our workforce right
now is through H-2A. Because of what Mr. Wishnatzki talked
about, that could grow. We would need maybe 50 percent of that
workforce to be through H-2A. So that is a big deal.
Then the third element, this one is around the whole idea
of creating legal status for the workers that are here. Many of
them have been here a long time. In my opinion and from people
I have spoken to, most of them do not want to become citizens,
but they do want to have some legal status that allows them to
work here.
The last thing, is what we are talking about here today, is
the collaboration between private industry and government
working hand-in-hand to come up with creative solutions.
Mr. Peterson. Thank you. As many of you know, while I am
not an expert on H-2A, I have worked through it in some other
instances, besides agriculture, and the bureaucracy is
horrendous. I am skeptical that you are going to be able to get
a program at the end of the day through the United States
Government that is workable. By the time they get done with it,
they are going to screw this up. My idea is to let you guys do
this. If somebody is working for you, they have a job, and they
are not causing any trouble, they are not in jail, then they
can be here and they can work, but there is no citizenship, and
when they are done working they go back home. It is just too
simple, but that is what needs to be done.
Mr. Murphy. Yes.
We need you to advocate for us. I know that some of the
decisions are not made here in this Committee, but in other
committees, but we would respectfully ask that you help us in
this endeavor.
Mr. Peterson. I am there, and we will get some more.
Thank you.
The Chairman. Our colleague, Bob Goodlatte, is working to
fix that, and we are in conversations with him.
Mr. Austin Scott, 5 minutes.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
Mr. LaVigne, as you were talking about the perception, I
was reminded of a few years ago that my wife and I were at a
class before our little girl was born, and I listened to the
nurse at the front of the room talk about how bad biotechnology
was in agriculture and how good it was in health care. And
certainly, the perception, the GMO, it sounds like you are
going to become a zombie if you eat something, where, in the
end, it is biotechnology. I am interested in your thoughts on
how you intend to change the perception. Obviously, people
would be paying a tremendous amount more for food today, not
only in the U.S. but around the world, and quite honestly, I
think that biotechnology is one of the ways that we are going
to help eliminate starvation around the world.
And so what ideas do you have about how you are going to
change the perception of the use of biotechnology in
agriculture?
Mr. LaVigne. Well, Congressman Scott, you are exactly
right, one of the things that we did early on with
biotechnology, and what we are trying to learn from in that
arena, is we based everything on science. Trust us, science
says it is okay, it is good, all of those things. And it is
something that we are dealing with. I would say it is not just
in biotechnology, it is within agriculture in general.
There is a perception of this bucolic lifestyle on the
farm, and it still should be 40 acres and a mule, instead of
how agriculture has evolved because of innovation, and
biotechnology was the first one out there that really got the
focus. And our efforts here as we talk about plant breeding is
how are we as transparent as possible, let's talk about
breeding, let's talk about the solution that that plant breeder
is trying to find. Biotechnology will be a part of tools, or
methods, like gene editing. You will be able to create new
transgenics using those methods. But we will also be able to
create new varieties using these methods that could be disease-
resistant or resistant to pests, or have a longer shelf life,
or help even in the mechanization issues, as we did with
tomatoes in the early 1970s, I believe.
That is where we have to get the message out that this is
nothing new. We know more and more about plant physiology today
to be able to target those characteristics that are naturally
occurring in that plant's family.
Mr. Austin Scott of Georgia. Well, it is extremely
important, especially the ability to grow crops in different
areas as the seed becomes more drought resistant, and requires
less water, less pesticide, less other things. It is extremely
important to the environment. And the facts are, if you look at
the science, there is no discussion to be had. This is an
emotional argument that is not based on the facts in any way,
shape, or form.
Mr. Wenger, you mentioned in your testimony olives and
olive oil. That is something that many Georgia farmers are
using now to diversify their crop. I was surprised to find out
that the grading standard on olive oils, it took 62 years to
upgrade that standard, and yet approximately 50 percent of the
olive oil sold in the United States does not meet the grading
standard. Is that still the case today, any suggestions on how
we make sure that the consumer knows that what they are buying
on the label isn't necessarily what they are getting?
Mr. Wenger. Yes, it has been a real issue, and I know the
olive oil growers, they are now setting up standards that they
can work with. But 96 percent of the olive oil consumed in the
United States is imported, so there is a huge growth curve for
domestically produced olive oil. But again, a lot of folks
don't know what is in that bottle. Mislabeling has been a very
real issue, and continues to be an issue, and so that is why,
through the farm bill, really promoting domestically produced
olive oil and that what is in that bottle is what you are
getting, that is clearly the direction we need to go.
Mr. Austin Scott of Georgia. Yes, we tried to address this
in the last farm bill, and unfortunately, we lost, but it is
not so much promoting U.S.-grown olives or olive oil from U.S.-
grown olives, it is that what is imported and put on the
shelves is labeled at the same standard that the U.S. is
labeled at. I would appreciate your input and your support as
we go forward in the next farm bill to make sure that if
somebody is selling what is labeled as extra virgin olive oil,
it actually is extra virgin olive oil if it is purchased off
the shelf in the United States.
Mr. Wenger. We can definitely get you more information. I
know Jamie Johansson, my First Vice President, is a first-
generation olive oil grower in California, and so we can get
you some more information.
Mr. Austin Scott of Georgia. Well, gentlemen, thank you for
your testimony. And, Mr. Wishnatzki, I wish it was as simple as
you put it. Unfortunately, there are 535 people up here that
think they are the best chef in the kitchen.
So, gentlemen, thank you for your time and your testimony.
The Chairman. The gentleman's time has expired.
Mr. David Scott.
Mr. David Scott of Georgia. Thank you, Mr. Chairman.
In my State of Georgia, specialty crops come up to about $2
billion annually in terms of the farm gate value, so it is very
important. We have peaches, watermelons, blueberries, pecans,
peanuts, onions, you name it. I agree with you, Mr. Wishnatzki,
did I do that okay? All right? All right.
Mr. Wishnatzki. Yes. Thank you.
Mr. David Scott of Georgia. This is a crisis. This is a
serious crisis. And you mentioned those three things. You
mentioned climate, water, and labor. Each of these up here, as
we are dealing in Congress, sometimes get us into knots, the
real answer is going to come from you all.
Let me ask you if you could give the Committee some
examples of how and what type of mechanization will be able to
go in, pick blueberries, pick watermelons, be able to know when
they are ripe, describe what you are talking about. Give us a
look into the future and explain the differentiation, how we
can make this happen.
Mr. Wishnatzki. Sure.
Mr. David Scott of Georgia. How do we get them to pick
those peaches without squeezing them to death? Go ahead.
Mr. Wishnatzki. Well, it is a great time in history right
now. We are kind of at this crux here where there is this
tremendous need for automation, and at the same time the
technology is coming of age that we can do this.
I want to qualify what I am saying by, I am not the
engineer in this company, I tell people in Harvest CROO
Robotics I am simply some of the funding and the inspiration
behind it, but I do know enough to be dangerous. But, the one
thing about the technology that has changed dramatically just
in the last 5 years is the processing power of computer chips.
We are doing things on little, small, Nvidia chips that would
have taken massive computers not too long ago.
Mr. David Scott of Georgia. Yes.
Mr. Wishnatzki. The stereovision that we are using to
identify and go down and pick the fruit at the exact point
where it is on the ground, that technology just didn't exist
until very recently. We are processing something like 30
gigabytes of data a second, and we are processing these images
in 10 milliseconds; 10/
1,000 of a second. We are able
now to identify the fruit, we have a system with these soft
claws that this picking wheel that my cofounder developed and
we have patented. That is what is allowing us to get the
commercial speed, and it is allowing us to travel around the
plant, inspect it very quickly, and go down, dive down and pick
the fruit. It is some groundbreaking stuff. On our website we
have some information about it if you go to that, and some
videos also that show how it actually works.
Mr. David Scott of Georgia. And so if we just took one,
like blueberries, give us a picture of how that would look in
the blueberry field. What would that robot look like? And
second, at some point the human quotient has to come in there.
I mean you pick them, you have to get them up, you have to put
them in something, you have to transport. Where does that
start, where does it end, and where does the human quotient
come in?
Mr. Wishnatzki. Sure. Those are good questions. Well, we
are focused on the harvesting of strawberries right now, but I
know blueberries will be in our future.
Mr. David Scott of Georgia. Yes. Well, let's use
strawberries, yes.
Mr. Wishnatzki. Okay. Strawberries as an example. Well, one
of the things my cofounder, Bob Pitzer, has mentioned is that
there are a couple of problems here. You have to be able to
find them and pick them, but you have also got to be able to
transport them out of the field so you need a vehicle that
these robots are mounted underneath that is of enough size and
mass that you can actually put the finished product on and
stack it until you get out to the ends of the rows. And when we
do have that, developing it and we have the autonomous system
on it now, it is driving using GPS, and collision avoidance
using LiDAR technology. This is just a big platform that has 16
robotic picking heads mounted underneath it as this swarm of
robots that will be traveling through the fields picking the
berries, and then dropping them off at the end of the rows.
Our plan is not to utilize human labor to pack it either.
There would be a secondary inspection of the fruit that would
actually, after the berries were picked, they would be
inspected by another set of cameras, that would then actually
have robotic fingers that would put it into clamshells, or
probably maybe not clamshells, but a consumer unit that will be
transported at the end of the field.
Mr. David Scott of Georgia. Thank you.
Mr. Wishnatzki. Yes.
The Chairman. The gentleman's time has expired.
Mr. Crawford, 5 minutes.
Mr. Crawford. Thank you, Mr. Chairman.
I want to kind of continue on with the topic that my
colleague, Mr. Austin Scott, broached, and that is how we
communicate the value of genetically modified crops. In the row
crop industry, it has become a volatile issue, most notably,
Roundup Ready technology, things like that that the consumer
doesn't necessarily understand. But to all of you, what would
you suggest in terms of communicating the value to the
consumer, because we can get into all the technical, which you
did, Mr. LaVigne, and I appreciate that, but the consumers
without a science background are making a decision based on an
emotional response on some information that is out there in the
marketplace.
Can you all weight-in on that? What can be done sort of
collectively to soften the blow that has really been harmful to
you?
Mr. Murphy. Well, I will take a first stab at it.
When some of these technologies, most of this technology is
being used in research on humans and animals right now. When
some of this technology really creates tremendous value around
fighting disease and some of these other issues in humans, it
will turn. I believe that once the public sees the great value
in some of these tools, its perception will change, but it will
take time and education. We, as an industry, need to do a
better job of talking about it in the right terms, and sort of
more consumer-friendly terms. But, the progress that some of
these technologies like CRISPR/cas9 will have on human disease
fighting, things like Alzheimer's and other stuff like that
will get a lot of publicity, and ultimately that will start to
lessen the blow. The problem is it takes many years and time.
But this technology is here, it is not going away.
Mr. Crawford. I think, and just my observation, having
worked in the ag industry for a long time and been an ag
communicator, that the ag industry tends to be reactive, and
they wait for a consumer perception to occur and then respond.
What I am looking for from the ag industry, and particularly,
from you all from the specialty perspective, is how do we blunt
that, how do we get out there and advance and paint this
picture of what is coming, and prepare the consumers for the
good that they can expect from this, as opposed to waiting for
the attacks?
Mr. Heller. No, I think that is a very good point. I will
just add a thought to that. Part of it is education of what
crop breeding is what has happened historically; these crops
that we have today came about. They are through natural
mutations. This is just another tool; a more precise tool, in
order to improve crops, in order to feed the world. I think
that part of it is educating people that this has occurred
throughout history. This is why we are different than our
forbearers. And that fundamental understanding should help
provide a foundation so we can convince people or have people
accept different methods of plant breeding that are necessary.
Mr. Crawford. Go ahead.
Mr. Wishnatzki. Yes. It is my understanding that CRISPR/
cas9 is not a requirement to be even labeled as a GMO
currently, and the reason for that, they are taking genes, and
Mr. LaVigne can correct me if I am wrong on this, but they are
taking genes from within the same species; in other words, we
are not taking a fish gene and putting it in a strawberry or
tomato. They are developing varieties. And I would prefer to
call it smart hybridization, because hybridization has been
around for many years and that is how we cross everything, but
it is all just trial and error. But with this smart
hybridization, you are able to get a variety that is close but
maybe it has one little defect of susceptibility to a disease.
They can snip that bad gene out, put in a good gene from
another, say, if we are talking about strawberries, so it is
within the same species, you are not taking something else.
Mr. Crawford. This conversation we are having right now,
which I find fascinating, but you are scaring the consumer.
Mr. Wishnatzki. I agree.
Mr. Crawford. And that is my whole point is that we have to
stop using the term genetically modified organism, it is scary,
it sounds very sciencey. It instills sort of a fear in the
consumer. I would say a mule is a good example of a GMO,
somebody mentioned the bucolic picture of farming 40 acres and
a mule. They have been around a long, long time, but how do we
overcome that negative association? And the science sometimes
doesn't help us in that regard.
Mr. Wishnatzki. Yes.
Mr. Wenger. I just had something real quick. I just spoke
to the bioconference, and you are right, with CRISPR/cas9 we
are doing it all over again because we are telling everybody
what is good for them, and they think there is a profit
motivation in that and they don't trust us, so we have to bring
other people into the tent, we have to ask them what their
concerns are, and we have to address those concerns early on.
Mr. Crawford. My time has run out, but I want to help you
in every way I can in that regard.
I yield back.
The Chairman. The gentleman's time has expired.
Lisa Blunt Rochester, 5 minutes.
Ms. Blunt Rochester. Thank you, Mr. Chairman. And I thank
the panel.
I want to shift gears a little and go back to the
conversation about people. Mr. Murphy, you mentioned that
automation is a long-range solution, but you still really are
relying on workers. And, Mr. Wishnatzki, in your written
testimony you said that the jobs that Americans do not want to
do have been filled by newly arrived immigrants, since it is
only the newcomers that are willing to do the hard jobs; but,
you also mentioned that a lot of your workers are moving onto
other occupations.
My first question relates to demographic shifts, aging
population as well as less people. I am curious about
retention. What kind of strategies do any of you use for
retention of your employees, if we can start there, and then
also if you could talk about turnover rates; like what kind of
turnover rates you actually see?
Mr. Murphy. Obviously, keeping the diminishing workforce we
have is really important. You are seeing a lot of farmers start
to work closer with their workers around areas that are
important to them. For example, childcare, providing clinics.
At our company we provide clinics for some of the farmworkers.
There are a lot of extended services that we are beginning to
provide them that perhaps we didn't do in the past, and that is
becoming increasingly more important. Wages, of course, are
increasing.
Another thing that we have begun to work on, but it will
take a while, as I mentioned in my testimony, we are beginning
to try and make it easier for people to pick strawberries, for
example. Strawberries are on the ground, you have to bend over,
it is one of the hardest jobs you could imagine, so by putting
them on what we call tabletops and raising them, people
wouldn't have to bend over, it might be easier under tunnels,
and systems that will make it more attractive for those people
that are there, and potentially attract new people to the
industry.
So as others have mentioned, a lot of people working in ag,
even though it is backbreaking work, in California do make a
good wage; way above minimum wage. They work very hard for it,
but they do make that wage. It is not that the wage rate is
wrong, it is just that the work is so tough.
So the strategies, certainly in our company and others, is
to make it as easy for them to pick as possible, provide
alternative opportunities beyond just wage rate to keep them in
play.
Ms. Blunt Rochester. Thank you.
Mr. Wishnatzki. Yes. Ms. Blunt Rochester, yes, I am sorry.
Yes, I just want to add----
Ms. Blunt Rochester. We are having trouble with each
other's names.
Mr. Wishnatzki. Yes, I am sorry. I just wanted to add,
picking strawberries, and many other harvesting jobs in
agriculture, it is not a young person's game.
Ms. Blunt Rochester. Yes.
Mr. Wishnatzki. And so we don't have the young people
coming up in this country, we are not raising our children to
become pickers. Quite frankly, we are educating them, we have
set up scholarship funds for our folks, both in California and
in Florida we have scholarship funds, so our workers have
access to education, higher education, and our workers' kids,
chances are they are not going to be strawberry pickers, so
where are these people going to come from if we don't have some
sort of means to have guestworkers as a viable system for the
industry?
Ms. Blunt Rochester. I was just curious, when you gave your
testimony earlier you also mentioned the childcare, you
mentioned the health care, you mentioned housing even. Is this
the norm or is that unusual?
Mr. Murphy. No, it is becoming, in California, it is
becoming much more of an important factor in attracting that
limited workforce.
Ms. Blunt Rochester. Got you.
Mr. Murphy. To the extent that you can provide them with
housing, there is a vegetable grower in Salinas that has done a
really interesting job with housing, and they have created a
really sort of prototype for the rest of us to follow in some
ways.
You are going to see more and more of this as a way to not
only attract workers within the existing community, but also
bring people from the outside.
Ms. Blunt Rochester. Got you. Great. Anyone else want to
share on workers and just the recruitment and retention and
keeping them?
Mr. Wenger. Well, just one of the problems with the
seasonal crops, and it is one thing when you have a larger
operation where you keep year-round employment. And so you can
have the housing, you can have those workers for the daycare,
it is others where you have smaller farmers that have 20, 40
acres of peaches and they need large numbers of people for
thinning, they don't need anybody again for quite a while
except their two or three people that work with them, then they
need large numbers to pick that fruit. And so those are more
migrant, and they need to have more portability going from farm
to farm. Hard to provide the health care and those other
amenities that you can do for a year-round workforce.
Ms. Blunt Rochester. Great. Thank you.
The Chairman. The gentlelady's time has expired.
Mr. LaMalfa, 5 minutes.
Mr. LaMalfa. Thank you, Mr. Chairman. Welcome to our
panelists, especially our Californians who have to fly the
farthest, and I hope you didn't get caught in that air traffic
situation that was going on here a day or 2 ago. Thank you for
that, and good working with you as well.
The issue with California we have, obviously, as Mr. Wenger
laid out, a very, very diverse set of crops for the leader in
the vast majority of the, I will say maybe the non-commodity or
non-high-volume ones in the state. You mentioned almonds and so
many fresh crops and others. Yes, a lot of them are labor-
intensive, and when we talk about further mechanization and
newer technology, I have lived that myself as a rice grower. We
are not so labor-intensive, but even in the late 1970s and
1980s I spent more hours than you want to know about on a laser
leveling machine flattening those rice fields. And now we are
up to GPS. We cannot only flatten the field within \1/8\", but
we can do it taking into account the curvature of the Earth. It
is pretty amazing. Monitor technology for the grain coming in,
as well as the yield and the harvester, and later using that to
apply fertilizer as is needed. We have some great stuff going,
but we need to keep going because as the panel keeps talking
about with labor, where is the labor supply going to come from.
It isn't completely elimination of labor, but the mixture, the
percentage of labor versus further mechanization. We have seen
this in tomato picking where they can kick out the green ones.
Even the green grains of rice.
So when we are looking at the mechanization, if we had all
the workforce we needed, Mr. Wenger, do you believe the demand
for mechanized and upgraded machinery would still keep growing
or still keep needing to evolve, needing our input on that?
Mr. Wenger. I have a couple of comments. One, as somebody
that is not a rice grower but has always enjoyed flying over
into Sacramento and seeing those gorgeous rice fields, as you
contour those fields to meet for your level, and today they are
much squarer, I know for a producer it probably gives you more
yield per acre, but it does make----
Mr. LaMalfa. When you can get rid of 17 levies in an 80
acre field, and come down with only three levies.
Mr. Wenger. But there is something to flying over those
fields in the past and seeing the uniqueness to them.
Mr. LaMalfa. It is not as romantic anymore for the people
flying into Sacramento.
Mr. Wenger. Truly. But, yes, with the technology, number
one, we know that folks aren't going to do the types of jobs in
the field. That is really what we are looking at, even in the
processing area, they are still going to be more of those jobs,
higher-technology jobs, so a lot of those individuals that get
an education, they are going to be still working on farms,
running those machines, and doing the servicing of those
machines, but we know we are going to have a declining labor
force. In California with the 8 hour workday, 40 hour workweek,
we are going in that direction. With a lot of the heat illness
standards that we have that you have to provide shade after
80, and all the things that we have to do there, we are being
driven to go to mechanization. There is just no two ways about
it.
Even if we rub the crystal ball and we had an available
labor supply, we are going to be moving towards mechanization.
We have to.
Mr. LaMalfa. Let me drill down on the olive oil a little
bit Mr. Austin Scott was talking about a while ago. Again,
several of us took a pretty good run at that in the last farm
bill, in the imported oil, the quality, Americans don't know
what good olive oil tastes like in a lot of cases. The quality,
the mislabeling of extra virgin, they are getting away with
basically fraud on that. And the crops that we can grow; our
neighbor, Jamie, he is doing all right in that terrible fire in
the Oroville area here, right around here, Johansson, they grow
a beautiful olive oil there. And so the need to have truth in
the labeling is important, but also to be competitive. The
mechanization in the olive industry, now, you can grow olive
trees or more like vines these days that can be mechanized, but
you still have the ones you have to pick for table olives, so
what do you see going in that direction?
Mr. Wenger. Well, clearly, that is where we talk about
mechanization and plant breeding, and trellising and the other
things we do. One of the questions was about blueberries.
Certainly, as we look to the way that we plant blueberries
today, maybe they are going to do it differently in the future.
There was a group from China--as a walnut grower, our trees are
40, 50 tall, they are working on hedge growing where the
trees are 9 tall. Now when you start talking about robotics
and other things, and so we have to make sure we are ahead of
that curve, because there are other countries that are making
those investments to be able to do that. And currently, you are
right, for the fresh olives or the processed olives that you
would eat on your table or on your pizza, those are larger
trees, they aren't mechanically harvested, so maybe we are
going to have to look at ways that we can do that, and then
utilize the soft touch of a robot to be able to pick those so
that we can utilize them for eating and not just eviscerate
them for olive oil.
Mr. LaMalfa. Okay. Thank you, Mr. Chairman. I will yield
back.
The Chairman. The gentleman's time has expired.
Mr. Panetta, 5 minutes.
Mr. Panetta. Thank you, Mr. Chairman. Thank you for having
this hearing on this topic. I truly appreciate it, representing
the area that I do on the central coast of California. And also
thank you to our witnesses for taking the time to provide your
testimony and the information that you have provided this
morning. You are speaking to me. I hear you loud and clear. It
is something that I have been talking about ever since I got
here in Congress, and because I have been hearing about it well
before I got to Congress, about the issues that our people in
agriculture face on the central coast of California.
Obviously, in the past 5, 6 years California has faced,
excluding this year, a serious drought. And when you would talk
to people in agriculture, you would expect maybe that drought
was the number one issue. No, not at all. Hands down, it was
labor. It had always been labor, and the lack of labor there in
our fields to help produce and harvest the products that you
do.
That is why it is important that you are here and that you
are talking about it, and I appreciate that. As I see it, there
are two avenues that we can go in dealing with this issue. The
one avenue is, I believe, Congress' responsibility, via
immigration reform. I believe Congress has failed to address
that issue, unfortunately. The last time we had it was in 1986
with Ronald Reagan. And I do know that there was a serious
attempt at that in 2013 with S. 744, most recently. And there
are certain efforts that are happening now in Congress, and we
will continue to advocate for you and for those efforts.
But, as we work on immigration reform, the other avenue is
though mechanization in order to deal with labor shortages. It
is a two-avenue approach, and your being here helps both those
avenues; first, advocacy for immigration reform; but, also
talking about mechanization.
In the meantime, we have to keep our workers here. And,
Kevin, I appreciate that you have started to implement some new
processes. I was in the field a month ago with Miles Reiter,
the Chairman of Driscoll's, and I saw some of these new
tabletops that were in the field. Could you tell us about the
tabletops? People need to hear about that.
Mr. Murphy. Yes, so this is a technology that has been
around for a long time, especially in Europe. Now, Europe is
facing, and has faced in the past, many of the issues that are
coming here. They have always had issues with labor; they have
never had enough people to pick it. Pesticides, fumigants have
been a problem there, methyl bromide has been banned for many
years. Some of the issues we are facing they have already
faced. What they did, it drove them into substrate type of
controlled environment production. The tabletop is a system of
tabletops, basically, that are about 4 off the ground. The
product is grown in a substrate, which is a special type of
material that is good for the berries, and then it makes it
easier for people to pick standing up. As I said earlier, the
idea is to attract people to the industry as well as make it
easier for folks to do it.
We also think that mechanization might be easier in that
system because it is more precise. You are not dealing with the
ground as much as you are, these solutions are all going to
have to come together. The mechanization of harvesting and the
more sophisticated growing techniques as well as the packing
techniques all have to be an integrated system.
Sometimes the solution is just not in the harvesting, but
in the integration of all these efforts. But I will be honest
with you, it is going to take a long time for that to get done.
Now, we are going to work hard to try and make it faster than
that, but it doesn't all come together easy, as Gary just said,
and that is where the government can help, private industry,
there are lots of these startup companies that are around. They
have come, actually, from companies like Google and others in
the Silicon Valley that have this technology. They are young,
innovative groups that are coming together, very
entrepreneurial, and they want to partner with ag to get some
of these solutions going. And I would strongly encourage that
this farm bill identifies that. It speaks to our best
entrepreneurial spirit, and to the extent that money can be
allocated to some of this automation, whether it be the
harvesting or the growing, or whatever it is, but that is a
spot where money could be allocated to private industry. I
don't think the universities in this area are going to be able
to do the work that is required. I think they are very valuable
for other areas. And as the Chairman mentioned in his speech
around pesticides and other things, I think that is very
important, but in this fast-moving area of mechanization and
robotics, private industry is the way to go. And I would like
to see the farm bill in a creative way allocate resources in
that manner that could speed it up rather than slow it down.
Mr. Panetta. Agreed. Thank you.
Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
Mr. Yoho, 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman. I appreciate you
gentlemen being here. And it is very interesting this topic
today. It is one that is dear to my heart. I have been in
agriculture since I was about 15 years of age. And you guys
have touched on everything that is important that we need to
cover.
And so let me start with you, Mr. Wenger. You mentioned
your organization's strong support for the Whole Farm Revenue
Protection program, created as a pilot in 2014. How does this
program better serve many specialty products and producers, and
are there specific improvements that you would suggest for
this?
Mr. Wenger. Yes, there are a number of them, and so we
would look forward to working with you on it. One we think to
provide flexibility, keep it a pilot program. It is very
complicated, talking to those folks that have tried to utilize
it; the paperwork and trying to track everything is very
complicated. Also the $8.5 million level is very problematic
for a lot of our folks. As Mr. Peterson said earlier, when you
look at the value and the investment of some of the specialty
crops, recently we had the American Farm Bureau Trade Advisory
Committee was out and they were touring the ports, and they met
with some of our folks in the Salinas Valley, and one of our
growers they were going to lose a $4 million crop because they
didn't have the labor to pick it.
Mr. Yoho. Right.
Mr. Wenger. And so, now, that wasn't profit, but that was
just $4 million to bring that in. It is a step in the right
direction, it just needs a lot more work, but it is something
to be able to provide for specialty crops.
Mr. Yoho. If all of you could submit recommendations on how
to improve that program, it would be greatly appreciated.
Mr. Heller, you were talking about the Texas Bud Program,
how is that working in Texas on the citrus greening? As you
know, in the State of Florida, 100 percent of our groves are
affected, and this is something that we have to get ahead of,
and the cures are going to be an antibacterial, a GMO, or the
budding process or natural selection. What are your thoughts on
that? How well is that working?
Mr. Heller. Yes. Clean plant material is the foundation for
any good agricultural system, it is absolutely necessary. To
your point, the solution for HLB is probably a GMO or some of
these gene-editing techniques that are going to have a plant
that is either tolerant or resistant to this particular
pathogen.
But the program itself is working very well. Again, it is a
partnership between industry through check-off programs,
private donations, grants through the university systems. And
it is really to provide clean plant material not only to the
commercial industry, but to growers and hobbyists around the
state, because our neighbors need to have clean material as
well, otherwise those problems will come from those areas and
potentially affect us.
Mr. Yoho. Okay. And, Mr. Wishnatzki, it was great to hear
you talk about the University of Florida and promoting IFAS.
Let's see, my question for you, where did it go? You spoke
a lot about the labor situation. I feel confident that we will
fix this in this Congress.
Mr. Wishnatzki. Good.
Mr. Yoho. We have an ag guestworker program that we are
working on, we are going to talk with Chairman Goodlatte, and
Rick Crawford also has a bill. And in concert, I am sure we can
orchestrate a solution for this soon, because it is something
that we hear over and over again from all of our producers. But
I am also very optimistic about you talking about the
mechanization and the robotics. Do you feel that is something
that should be industry-driven, the entrepreneur, the innovator
out there, and not wait on a Federal Government program?
Mr. Wishnatzki. Absolutely. I mean the effort I have
undertaken has been highly collaborative. I went to a number of
competitors that have invested money in this, so I mean that
speaks to the need.
University systems are doing a wonderful job for us, and
research into pest issues, disease issues, but there needs to
be some money set aside for the private-sector, especially in
collaborative efforts like the one we undertook, but this
mechanization is kind of the last frontier in agriculture
because for years there have been ways to harvest crops,
destructive ways where you pick them once and you are done. But
many of these crops that we are trying to mechanize now are
selective in nature, so you have to come back again and again.
Mr. Yoho. We will get there, and you guys leading the
charge in the industry is what is really going to be the
catalyst for that.
Mr. LaVigne, I just want to talk to you about gene editing.
We have heard a lot about GMO, and we have talked, certainly,
enough about that, but one of the things with citrus greening
is one of the GMOs and we are seeing our processors putting on
their bottles non-GMO. They are killing themselves, and they
need to educate the public because, as you brought up, gene
editing is different than some of the other techniques. Gene
editing is facilitating Mother Nature and picking certain
phenotypes that we want to express in the plant, and is a
natural selection process that we have just kind of sped along.
And so the media campaign needs to be behind that to really,
really promote that.
And I am out of time, and I can't really have you answer
right now, but I look forward to working with you all. Thank
you.
The Chairman. The gentleman's time has expired.
Mr. Costa, 5 minutes.
Mr. Costa. Thank you very much, Mr. Chairman. This is an
important subject as it relates to not just California
agriculture, but the entire country.
Mr. Wenger, you and I have worked together for many years.
We had the drought that everybody knows about, and then this
year we got a lot of rain, and water has not been an issue, but
we have had labor as an issue because many folks, especially
our annual crops that would have liked to have planted
additional acreage, have been unable to do so or have hesitated
because the labor force is not there.
How would you describe the acuteness of the shortage of
labor in California in the last several years?
Mr. Wenger. Well, it is very severe. We are going out,
about 4 or 5 years ago we went out with a labor survey to our
folks, and we could see that there was huge competition for
folks, and we are seeing that again this year, we are going out
with another labor survey. But when cherries are being
harvested, a lot of those folks that were in other jobs, doing
other needed jobs for growers, and it was a huge cherry crop
this year, so it went out, we are paying above market, we are
paying a lot more, and so you saw all of a sudden that your
labor force was maybe not in your field, but they went to pick
cherries. And so it is a critical issue, and as we are now
getting into really the thick of our harvest season, it is
going to continue to be an issue.
Mr. Costa. And the nuances that people don't understand in
terms of the weather and the challenges as to you just don't
leave the crop on the field, if you have the triple digit
temperatures that we are having, it is ready, it has got to get
out of the field.
Mr. Wenger. Well, I might just add real quick, Congressman,
we are getting really close to where we were in 2006, we saw
the high temperatures. A lot of our peach growers, they saw
fruit that was not ripe in the morning, was overripe by the
afternoon. We saw--they had to go through and select----
Mr. Costa. No, and it happens that quickly----
Mr. Wenger. It happens that quickly, and so it takes a lot
of labor. And so really a lot of the labor went out of----
Mr. Costa. And what are the crops that mechanization is not
able to handle? I don't know if you have a quick list you can
go through, because there are a couple of other questions.
Mr. Wenger. Any of the soft--like somebody said, all the
ones that when they drop on the ground go plop probably are the
ones that are going to be most difficult. We will get there. It
is going to take time, it is going to take trellising, it is
going to take different cultural practices, and it is going to
take money.
Mr. Costa. And the private-public partnerships between the
land-grant universities have been significant over decades in
terms of developing the mechanization. But even then, as we all
know, labor and 70 percent of our workforce in California and
elsewhere is undocumented, is a challenge. Now, the blue card
legislation that Senator Feinstein and others of us are working
on is a partial solution, would you say?
Mr. Wenger. Yes, it's a part of the three-legged stool. We
need to figure out a way to get those here that don't have good
documentation, documentation, we need to improve H-2A, and we
have to have some kind of a system that allows for portability.
Mr. Costa. Yes. Mr. Wishnatzki, you stated in your
testimony about the Pew Study, which I happen to have right
here, that says a net loss of $140,000 from 2009 to 2014,
family reunification is the top of the reason for the return. I
will make an editorial note, maybe we don't need to build that
wall that somebody else is supposed to pay for because,
frankly, that is not the challenge, from my perspective. But
even if we got that legislation through, and I believe you are
all familiar with it, it comes short because, to your point,
all of you made the comment that the people that are coming to
work in the fields today, when you provide scholarships for
their children, when you provide additional support, the next
generation is not going to want to be working in the fields.
And so if you don't provide for continued opportunities for
people who do want to work in these fields, it is only a
partial solution. Would you care to opine, any of you?
Mr. Wishnatzki. Yes, sure. I mentioned before it is a young
person's game. The industry is always dependent on the new
people coming here.
Mr. Costa. Mr. Murphy, would you agree?
Mr. Murphy. Yes. Yes, I would agree.
Mr. Costa. Okay. We need to address that in any legislation
that may or may not have a chance of moving forward here this
year or next year. I don't know that I share our colleague's
optimism that we are going to get this done, we certainly need
to get it done in some bipartisan fashion.
Mr. Murphy. Yes. Congressman, one point we are not talking
about the loss of product that is not grown because of labor. I
know in the berry industry in California we have cut back on
strawberries by as much as ten percent because most of the
growers are nervous they can't pick it. The losses we are
talking about are not the crops that were not grown. The demand
is there for the product, it is just not getting grown because
of fear of labor shortages. If you add that up, it becomes a
pretty big number.
Mr. Costa. Well, and then you have automation that is going
to take some of these jobs away. I mean I saw a dairy machine,
I have some familiarity with that industry that is totally
automated. I mean you don't need a person to milk the cow.
Mr. Murphy. Yes.
Mr. Costa. This will continue, and we need to work together
as we look at the farm bill, Mr. Chairman, to figure out ways
in which we can combine the best of both worlds.
Thank you.
The Chairman. The gentleman's time has expired.
Mr. Allen, 5 minutes.
Mr. Allen. Thank you, Mr. Chairman. And as I sit and listen
to our discussion today, there is grave concern about labor
shortages in this country, particularly as we grow the economy.
And, in fact, we have 6\1/2\ million job openings out there in
high-tech and high-paying professional jobs right now. In my
industry, construction, alone, we anticipate over one million
job shortages, as the economy grows. This is a pressing
problem, and I just wanted to kind of hear from the panel, what
is the most critical need as far as the farm bill and this
Congress in dealing with this? Would it be immigration reform,
and I am not talking about just dealing with Mexico and maybe
South America, but I am talking about dealing with the world,
because we know there are people looking for work all over the
world. There are refugees looking for work all over the world.
Would you consider that the major initiative we need to tackle
immediately to solve this problem?
And, Mr. Wishnatzki, would you comment on that, and then
the rest of the panel as you see fit?
Mr. Wishnatzki. Yes. One of the issues is that we are
getting, you alluded to, there are people around the world that
need work, and I don't think Mexico is a long-term solution for
our labor. It is short-term, because they are getting ready to
be faced with the same issues we are having here in this
country, as their population levels off and ages. The growers
in Mexico have already contacted me, one in particular from
Baja, California, sees the handwriting on the wall. It is going
to be an ongoing issue there as well.
Mr. Allen. Do you see us addressing this immigration
reform, we have talked about welfare reform and getting folks
off welfare and back to work. We have 45 million people on the
SNAP program right now that are requiring help, and obviously
if we reduce that number and those folks become taxpayers, we
have an opportunity to balance our budget. We need that to
happen, but also the immediate need is for this Congress to put
this as a priority to address this labor problem, not only
inside the country but also as far as what we are going to do
as it would be, like a guestworker program, I guess. Any other
comments?
Mr. Wishnatzki. I would agree with Mr. Murphy that there
are two prongs. I mean we have to first make sure we have
workers for the short-term, but we have to address the longer-
term which is automation.
Mr. Allen. Yes. Okay. Any other comments?
Mr. Wenger. No, I was just going to mirror exactly what he
said, we have to get the automation, but first and foremost,
our growers are very susceptible, if we, for some reason, had
an e-verify system that went into place without some way to
make sure that our workforce has documentation that allows them
to be here, and we are not talking about citizenship, we are
just talking about legal documentation that allows them to be
here, it would be devastating for our producers in the field.
And so first and foremost, we need to figure out how to get
those folks good identification, but we need to continue to
work on because of the aging workforce. And it is interesting
talking to some folks from Chile. They are moving to almonds
and walnuts as well, and away from a lot of the fresh fruits.
And as I asked them why they are doing that, it is because of
perishability, seasonality, and labor supply. It is not just
here in California or the United States.
Mr. Murphy. I would agree with those comments. It is going
to have to be a guestworker program, you have to get the
immigration sorted out. The farm bill can really address the
automation part by collaborating with private industry to get
some of that working. There are different parts of government
that need to come to play.
Mr. Allen. How about our colleges and universities, are
they in play on this automation?
Mr. Murphy. They are, but the automation is really
happening in the private-sector. And it is moving so fast,
certainly, where we are from in the Central Valley, we are
right next to Silicon Valley, and so a lot of the stuff that
Google and any of these other folks that are innovating on are
really close to us, and they are really interested in doing
that. There is a really good collaboration going on. Western
Growers, which I am a board member of, has an accelerator
program where they bring entrepreneurs in to help get them
going. That would be another area you could team up with. There
are lots of opportunities to help move that along in an
aggressive way.
Mr. Allen. Good. Thank you.
I am out of time. I yield back.
The Chairman. The gentleman yields back.
Mr. Lawson, 5 minutes.
Mr. Lawson. Thank you very much, Mr. Chairman. And welcome,
gentlemen, to the Committee.
I live in north Florida, where we have specialty crops like
tomatoes. When I talk to some of the tomato growers, they are
very worried about immigration, being able to get those crops
out, and some of the tomato growers who are right on the border
with Georgia pretty much have the same problem. What I am going
to do is to focus my question, because I have a million
questions I would like to ask all of you, but I am going to ask
this one. Since Florida is the second largest producer of
specialty crops in the nation, and innovation and technology
are essential to farmers remain competitive in the marketplace,
can any of you talk about the farm bill program, such as the
Specialty Crop Block Grant Program, does it play a role in
producing innovation and technology?
Mr. Wenger. Yes, I will speak real quickly. The uniqueness
of the Specialty Crop Grant Program is it allows you to really
focus on things as they are happening. And so you look to the
farm bill, it is a bigger picture, longer-term, but as we went
through the recent drought, 4 years of drought, we saw a lot of
specialty crop grants that went to innovations to be able to
squeeze the most crop per drop, and things like that. I believe
the Specialty Crop Grant Program and the research dollars are
very, very important to meet the needs as they are happening,
that we can't foresee maybe a few years down the road. To have
that block of money there, it is extremely important.
Mr. Lawson. Okay, thank you. And I would like to ask
another question since I have Mr. Wishnatzki, who is
knowledgeable with the University of Florida. What is IFAS
doing to solve the problem with the irrigation program for
strawberries? Is it that serious, have they recommended some
research to improve it?
Mr. Wishnatzki. Yes. There have been some uses of the block
grants. I know the University of Florida has been instrumental
in a few different things. Improved irrigation, I think that is
what you were referring to, to reduce water usage that has been
very helpful. And we have several other programs that relate to
blueberry sustainability, looking at mechanization there. There
is also diversification on strawberries where they are looking
at other crops that can be double-cropped, because in Florida
we have the luxury of planting a secondary crop after the
strawberry crop is on the way out. There has been a lot of
research, and the University of Florida in particular has done
really well. There is a research center in Balm, Florida, and
Dr. Natalia Perez has done a lot of work with plant pathology,
looking at different diseases, and there has been a lot of
utilization of the block grant program for that.
Mr. Lawson. Okay, thank you.
Earlier, it was mentioned that 30 percent of the berries
you can't get out of the field. What contributes to all this?
Is that the labor force or what is it?
Mr. Murphy. Yes, if I am correct, we aren't even growing
the potential that we could grow out of California, for
example, in strawberries because there are not enough people to
pick them, so there is a loss of production. But in my
testimony, I talked about the waste associated. Is that what
you are referring to?
Mr. Lawson. Right.
Mr. Murphy. There is 30 percent, a lot of it occurs
throughout the supply chain. In fact, a good chunk of it
actually occurs in the consumer's refrigerator. When you think
about it, farmers throw good berries away because they can't
pick them or they go bad, and then we lose them throughout the
supply chain, and ultimately the consumer throws them away. And
we have done some studies, they don't always, there are other
studies that are being done, but roughly \1/3\, 30 percent of
berries that had the potential to be eaten are not actually
eaten. If you think about the amount of resources and money
wasted in that, that is an obvious opportunity. And there is an
opportunity in the farm bill to continue to work on that
throughout the supply chain.
Mr. Lawson. Okay. And real quick, do the food banks and all
of those other different agencies that work to get food to give
to people in need, do you all have a great relationship with
them?
Mr. Murphy. Yes, we do. We are the largest supplier of
produce to the food bank. We are happy to do that in
California. Millions of dollars. We are happy to do that, but
that shouldn't be our purpose.
Mr. Lawson. Okay. Mr. Chairman, with that I am going to
yield back, but I know I still have about 100 more questions to
ask.
The Chairman. I appreciate the gentleman's restraint.
Mr. Denham, 5 minutes.
Mr. Denham. Thank you, Mr. Chairman. This is a very
important topic, especially in light of our challenges on
immigration reform.
The Chairman. Would you turn your microphone on please? We
can't hear you.
Mr. Denham. As we have discussed many times in this
Committee, the need for labor is of huge importance. I am one
that wants to continue to fight to make sure that we have full
reform on immigration policy, making sure that we can guarantee
to the American public not only do we have secure borders and
internal security, but obviously that we have a guestworker or
guest labor program that allows us to continue to have the
safest, greatest agriculture in the world.
But with that comes opportunities to mechanize. As we have
in the Central Valley, what we grow, we are very mechanized,
but in the Salinas Valley especially, lettuce, spring mix,
especially strawberries, many crops have not gotten to that
point yet, and there are some that may never get there. The
question is will we outsource, as we currently are much of that
produce, to Mexico and other countries because of their labor
source, and possibly even sacrifice on the food safety side, or
will we actually be able to address both labor and
mechanization so that we can continue to have the best and most
abundant agriculture anywhere.
And I know this Committee especially, when it comes to the
farm bill, we have done more not only on the specialty crops
but also with ag research.
I wondered specifically, Mr. Murphy, first if you could
talk on some of the research that is being done by the UC
system or even CSU in our community college level to help
automate on the berries, which I believe is one of the most
difficult crops to actually mechanize.
Mr. Murphy. Yes. There is no question, most of the work on
the mechanization of the harvesting of berries is being left up
to private industry right now. Mr. Wishnatzki has a very
interesting project which we are close to. We are involved in a
project as well. We are all looking at these various projects.
To the extent that we tap into the universities, that is
happening. What we do see outside of mechanization is a lot of
input and work with universities, especially around pesticide
use we are seeing quite a lot of work. The funding that came
out of the farm bill, around food safety was a really good
example of how this should work, where industry, particularly
in the Central Valley, came up with their own approach to food
safety, and through some of the money through the farm bill and
some of the thoughts that came out of that farm bill, we have
been able to really kick it up a gear after that spinach food
safety issue. So that is another area.
Most of the university stuff in research is done on stuff
not related to automation. But ultimately in this area, as I
said earlier today, it is really going to be a public-private-
sector work in this regard. That is where most of the energy is
right now. And as I said earlier with Google and others getting
involved, that is where that energy is.
Mr. Denham. Thank you.
And, Mr. Wenger, glad to have you here once again.
Incidentally, Mr. Wenger is a constituent of mine, so not only
am I a member of the Farm Bureau, but glad to have you here as
a constituent.
If you could answer the same question, especially when it
concerns both the industry as well as your member companies
that are either expanding to other countries either due to
mechanization unavailable to certain commodities, or by just
the lack of labor. And maybe you can also touch on the H-2A
program, and I know that there are a number of your members
that have really, really tried to make that work, are still
seeing a huge shortage.
Mr. Wenger. Yes, time is short so we won't be able to spend
much time on it. H-2A is certainly for a lot of those folks
that have a longer-term and a set number, when they need a set
number of workers for a set time, H-2A works for them. It is
very difficult to get through the H-2A program though. We need
to make it less cumbersome. But we still need a portability
system that allows workers to go from field to field, crop to
crop.
I might just add real quickly, as we talk about all these
issues and we talk about regulations, and we talk about
innovation, in California, in our highly regulated area,
especially when you think about the cap in trade that is now
going on in Sacramento, when we talk about facilities limits on
the amount of emissions that you can have for our processing
plants and others, it is even bigger than what we want to talk
about. When we think about innovation for mechanization and the
striving for a Tier 4 final engine, that we have the uniqueness
of so many different types of engines that we don't have
companies making the engines for them to drive the machines for
the mechanization.
So there is a lot more we can talk about when we have time
to talk about it, but certainly, regulation does drive
innovation, but in California, unfortunately, we are seeing
that regulation is stifling it.
The Chairman. The gentleman's time has expired.
By the way, Mr. Costa claimed him as a constituent as well,
so are you saying that Mr. Wenger committed voter fraud? He
votes for both of you guys?
Mr. Denham. He farms in a lot of areas.
The Chairman. Yes.
Mr. Soto, 5 minutes.
Mr. Soto. Thank you, Mr. Chairman. I have the honor of
representing central Florida where we have a ton of citrus, a
ton of cattle, and then also a very big blueberry and
strawberry industry in our area.
I wanted to first start off with Mr. Heller. We were really
fortunate to get over $125 million in citrus greening research
money, an additional $41 million, I believe, was added in there
in this last omnibus. And it basically addresses the fact that
we have had a 70 percent reduction in production of citrus in
Florida.
I was wondering, what is the reduction in Texas right now?
Mr. Heller. Yes. Each region of the country is in a
different state in the disease progression. In Texas right now
there has not been a significant reduction in productivity
within our groves. We are probably 5 to 7 years behind the
disease curve or cycle as it is occurring in Florida. We are
hoping and learning that things will be different, or learning
from Florida's experience and hoping we can manage differently.
But certainly, those funds that you mentioned and those
dollars, while they haven't found a solution, they have been
instrumental in building a foundation and understanding of the
disease, or bringing us closer to hopefully what will be a
solution for all the different regions across the United
States.
Mr. Soto. And so you believe that we will still need
substantial resources to continue to address the citrus
greening condition?
Mr. Heller. Yes. This problem is not solved, Mr. Soto. I
think that continued funding will be necessary. Again, there is
a lot of work to be done, and there is probably not one answer.
There are going to be many different types of science that will
come into play, so funding does need to continue on this issue.
And there will be other pest and disease issues, so this has
been a very important tool for citrus producers. Again, the
different regions; California, Texas, Florida, we want to see
it stay in the farm bill. Thank you.
Mr. Soto. Mr. Chairman, just a note, we can head this thing
off at the pass still if we continue, both for your state and
mine, if we continue to fund it.
Mr. Wishnatzki, welcome to Washington. It is an honor to
host you up here.
Mr. Wishnatzki. Thank you.
Mr. Soto. In Polk County, we have a ton of blueberries and
strawberries. And I want to compliment our berry growers for
hitting the mark this year. Last year blueberries did not meet
that 3, 4 week window. We are the only berries in the United
States, which is a very unique situation for us. Obviously,
strawberries have been more consistent to hitting that mark.
So my first question is: how are the crop insurance tools
to help with these highs and lows of, if you miss that 3, 4
week window?
Mr. Wishnatzki. Yes. Quite frankly, we are not using crop
insurance in strawberries because I don't believe there is
anything specific to strawberries, to the best of my knowledge.
The whole farm insurance is something that we are beginning to
look at, but I don't believe any of our associated growers are
utilizing that program right now either.
Mr. Soto. What about for blueberries?
Mr. Wishnatzki. And blueberries, the same thing. I don't--
--
Mr. Soto. Do you think it would benefit, since we have such
highs and lows, depending if you hit that window, if you all
had better access to crop insurance?
Mr. Wishnatzki. Absolutely. If there was a means to help
level out some of those dips, because quite frankly, Florida
strawberries over the last 5 years have been very challenged
because of several issues related to competition and related to
labor availability.
Mr. Soto. And I wanted to go into labor. If we had a
revised farmworker, guestworker program where it was a 3 year
or 5 year term, rather than a 1 year, that would only be
revoked if that individual committed a crime, and they would
have to go back each season, would that be a benefit to the
industry?
Mr. Wishnatzki. Absolutely. If there was a means to keep
folks here. In Florida, the work goes on into the summer. There
are usually a few slower months, they would probably find other
work in other neighboring states, but having the availability
of labor and having them there would be a great benefit. And I
am not sure that that is possible getting that through, but it
would be a benefit if it was.
Mr. Soto. Anything is possible with an Act of Congress,
sir.
I wanted to finish by talking about a lot of our specialty
crops that have faced stiff competition by other countries that
have far lower costs. How key is the Specialty Crop Block Grant
and other programs in addressing trade inequities?
Mr. Wishnatzki. Is that question for me?
Mr. Soto. Yes.
Mr. Wishnatzki. Yes. Yes, it is vital. We need to fund our
land-grant universities with these funds because there are so
many problems with pests, diseases that come about that we
really depend on that resource. In no way, shape, or form would
I advocate that funds be taken from that to go to something
else. I mean automation is important as well, and there needs
to be additional funds made available for that.
The Chairman. The gentleman's time has expired.
Mr. Thompson, 5 minutes.
Mr. Thompson. Thank you, Mr. Chairman. Gentlemen, thank you
for being here for this important hearing, important topic.
In the House of Representatives, jurisdiction over the
domestic nutrition and food assistance programs is split
between this Committee and the Education and the Workforce
Committee. I chair the Subcommittee on Nutrition in the
Agriculture Committee, and am a senior Member of the Education
and the Workforce Committee. I am curious about your experience
with specialty crops and programs like Fresh Fruits and
Vegetables Program and the SNAP program that allow recipients
to make specialty crop purchases at farmers' markets, and how
do you think these programs are working? And I throw that out
to whoever would like to respond.
Mr. Murphy. Well, I can't respond to the specifics of the
programs, maybe you will ask some other folks here, but I have
a real passion, we need to have the kids stop eating candy and
start eating fruits and vegetables. And so anything, anything
that can help our kids eat berries instead of candy is a good
thing. So that would be my perspective. And I am actually
encouraged to see in general consumers doing a lot more of
that. Younger families, you see them eating a lot more berries,
and that is great for our business, but it is also great for
their health.
That is my point, but how the programs work I would have to
ask some of these other folks here.
Mr. Wenger. Yes, having the SNAP program is very important,
going to farmers' markets is great as long as it can be
monitored, having the EBT cards and whatnot to allow folks to
have specialty crops, and also having it to when the freshness
and they are available, the canned, frozen, or dried, for those
that would be out of season is still very, very important. But,
as you said, having these nutrition programs access to crops
grown here in the United States is extremely important. The
SNAP program is extremely important for that.
Mr. Thompson. Anyone else care to weigh-in? If not, let me
go to my second question.
Now, some of you mentioned both the Specialty Crop Research
Initiative and the Agriculture and Food Research Initiative as
ideal places for mechanization funding through the next farm
bill. A significant effort was made in the last farm bill to
ensure research projects supported under the Specialty Crop
Research Initiative were based on both scientific merit and
relevance to the industry. What are some of the specific
examples of the ways your industry has benefitted from SCRI as
a result of that?
Mr. Heller. I can speak to the citrus perspective there.
The Citrus Disease Subcommittee provides the relevancy
guidance, I guess, to the scientific community with regards to
HLB. As I mentioned earlier, the progression of the disease
within each individual region of the United States is
different, so growers' needs are different. Having that as part
of the discussion and the focus has been very beneficial to
guiding the research in the direction to address not just a
particular part of the country's needs, but the whole country.
That grower-stakeholder involvement is very important.
Mr. Wishnatzki. Yes. Dr. Jack Rechcigl, who is the head of
the Gulf Coast Research Center, he made me aware of a program
that is a multi-state interdisciplinary project on tomatoes,
which is not my area of specialty, but I had asked him prior to
coming here about giving me some examples of just what you are
asking, and that project actually brings together 13
researchers from six different universities, representing five
states working towards a common goal to improve the tomato
health, Xanthomonas is actually what they are trying to solve.
Yes, there are many more examples of that.
Mr. Thompson. Sure. That was a great example.
Mr. LaVigne. Yes, the Specialty Crop Block Grant Program
too, as I mentioned in our presentation, Cornell University has
used it to help develop varieties of broccoli that are much
more acclimated to produce on the East Coast versus the dry
weather of the West Coast and the Valley. And so Dr. Bjorkman
there at Cornell has done great work in identifying those
characteristics within broccoli that are more favorable for a
moister, humid climate on the East Coast, enabling farmers to
produce it out this way.
Mr. Thompson. While I have your attention, Mr. LaVigne, I
am interested in the lettuce public-private partnership that
you discussed at the University of California, Davis. Can you
talk about how NIFA and AFRI funds have been used in
collaboration with private dollars?
Mr. LaVigne. Yes. The Lettuce Consortium out there in the
Salinas Valley came together with Davis and USDA, NIFA, to
really look at the challenges of mildew and other production
issues that are impacting lettuce production. There are a lot
of issues of pest and disease that reside in the soil that you
have to rotate the crop and you have a limited amount of time.
You had seed companies come together for the private funding,
brought germplasm to the table, their own private germplasm,
working with the University and USDA and Federal dollars to
develop varieties that are more acclimated to address those
issues, resistance when they could induce resistance, and
really move forward with varieties that meet that new packaging
that the consumer wants, but also enable them to produce, as
well as possible, with limiting the inputs, also if possible.
Mr. Thompson. Thank you.
The Chairman. The gentleman's time has expired.
Ms. Kuster, 5 minutes.
Ms. Kuster. Thank you, Mr. Chairman. And I just want to
note how bipartisan the approach is today on terms of labor,
immigration, comments of immigration reform, and also our
agreement on eating fruits and vegetables. I talked to my 25
year old son on the phone last night, he had been to the
dentist, and it turns out I was right all those years that I
was recommending fruits and vegetables instead of candy, and
now he has come around to our approach. I would love to work
with you to encourage that diet.
In our home State of New Hampshire, specialty crops are
particularly important, and we have berries, we have apples and
leafy greens, and I just want to highlight a new startup
operation, it is called Leaf Farms, a new branch of Pleasant
View Garden, and it is a fully automated indoor greenhouse,
able to produce up to a dozen varieties of lettuce and other
greens, delivering their products within 24 hours of harvest
locally, which you can imagine for us when it is 10 in the
winter, the idea of fresh lettuce is very exciting.
So it leads me to my question about moving on from the
immigration issues for labor, we have talked about
mechanization and automation, what resources are needed to
support the development of mechanization, and stated a little
bit differently, in our current education system, do we have
the right mix of teaching and techniques and skills for staff
to service robotics and various technology? And I guess this
came up also in California, but just looking to the future of
more automated agriculture, what should we be thinking about
for education and skills training?
Mr. Murphy. In my testimony I mentioned five very powerful
factors that are coming together here around pesticide and
fumigants and climate change and availability of resources. And
my conclusion from this is that those are all driving us
towards more automated, controlled environments. The example of
Leaf is what you talked about is the sort of extreme edge of
that work. Quite frankly, in the U.S. we are behind. In Asia
this is something they have been doing. There are over 500
factory farms alone in Japan. Theirs are being driven by the
similar issues, plus they don't have a very good climate.
It is still on the cutting edge, or maybe in some cases
some people would say the bleeding edge, but there is no
question that there will be some part of our production that
moves in that regard. It just makes too much sense. In other
words where you have your nursery producing plants in these
growth chambers that ultimately go into what we would call
these factory farms or growth chambers that you can grow the
product, and you actually can distribute it right to the store
within a few kilometers.
Ms. Kuster. I am sorry, just to bring this up, because we
had talked earlier about you said berry picking is for the
young, are there opportunities in our current labor market for
this approach, and what kind of skills would be needed to do
these jobs of servicing the machinery and even the other STEM
jobs that you have talked about, the kind of high-tech growing?
Mr. Murphy. Yes, it would just require more education,
because it becomes automation rather than manual labor. There
is no question that that would be part of the equation.
Ms. Kuster. Great.
Mr. LaVigne. I think you are seeing some very creative co-
operations out there today. Universities, the land-grant side
of a university, reaching across campus and talking to the
engineering department.
Ms. Kuster. Yes.
Mr. LaVigne. And you now see them talking to community
colleges so that they can work in curicula with respect to
irrigation systems and the computer systems and GPS and drone
technology. And so a lot of the land-grant institutions are
reaching out to Lake City Community College in north Florida,
from the University of Florida, or the community college in
Salinas Valley and Davis working with them. That encouragement
to work somewhat outside of the mold that we have in the
current land-grant institution and those creative deans that
are saying we can find additional labor here to help our
customers, the growers out there.
Ms. Kuster. My time is up, but one of the local farms that
I visited, the roof of the building opens and closes based upon
the time of day and the precipitation. Totally computerized. It
is really quite extraordinary.
So thank you. I yield back.
The Chairman. The gentlelady's time has expired.
I recognize myself for 5 minutes.
Again, thank you, gentlemen, for being here. We have had a
lot of complaints about the implementation of the Food Safety
Modernization Act, and can I get your thoughts on its
implementation? Are there things that are being done correctly
or incorrectly that you would share with the Committee?
Mr. Wenger. I might just start by saying we certainly know,
and the folks dealing with the leafy greens in Salinas Valley
and the Leafy Green Marketing Agreement, what we did under the
Food Safety Modernization Act. Unfortunately, any well-
intentioned plan can sometimes run amuck, and certainly, as we
have seen the implementation of the Food Safety Modernization
Act, it has become its own cottage industry. And so what we see
in California is a lot of folks doing what should have been the
first point of processing is now going out into the field. And
some of the water monitoring and everything that you have to do
that really has no reflection on the safety of the food once it
gets to the processor and to the consumer.
So while it is well-intentioned, there needs to be a lot of
work to make sure and bring it back to the focus of its
original intent.
The Chairman. Other comments?
Mr. LaVigne. From the seed side, Mr. Chairman, we are
experiencing some challenges that we are working with FDA as
they look at the implementation. You can imagine when you have
seed that is cracked or not able to be used for planting
because the shell is damaged, it still has a nutritional value
across the board, and it can be used in feed. And so it is now
being considered in some cases an ingredient in feed when there
is really no risk at all, given the way that we produce seed
and the way that seed is handled.
So we are working with them. It is one of those cases that
just went a bit too far, and trying to get them to back off of
that as we go forward.
The Chairman. What has been your experience dealing with,
we don't have jurisdiction over FDA, so I can criticize them in
this room, but what is your experience with them in terms of
cooperation and help? We all want safe food, but we also want
regulations that make sense, that you can live with. From
working with them directly, what has been your experience?
Mr. Wishnatzki. Yes, my experience, I am on the Board of
Florida Fruit and Vegetable Association, and they had a
representative that came and spoke with the board, and I got
the impression that they are doing a lot with outreach and
trying to identify the pain points and what things are wrong.
From my perspective, I believe they are doing a pretty good
job. It is a big undertaking.
Mr. LaVigne. Yes, they have been very receptive in
listening to the issues, trying to find a way out of evaluating
where the risk is and then determining: we don't see a risk
here so how do we move you out of this process so there is not
an issue, and all the seed plants across the country don't have
to register as food facilities.
The Chairman. Right. Anybody else? Go ahead.
Mr. Wenger. Well, I was just going to say, as we start to
maybe look for some retrenchment and going back, it is as if we
are not for safe food. And so that puts you in a very
paradoxical position that if you say let's take a look at it
again, that somehow you are saying we are not wanting to
deliver safe food, and that is just not true. We have to take a
look at practical things that we can do to make sure that food
is safe.
The Chairman. Yes, I got you.
A couple of you mentioned innovation. Are there regulatory
barriers to the work you are trying to do with robotics, or
whatever the innovations you have out there? Are there things
that we need to consider removing from the regulatory scheme
that slow innovation from actually getting done, and at a speed
that you think you can make it happen?
Mr. Wenger. Yes, it just seems like, especially in
California, every time you want to come up with a new idea, you
have to do it many times over. We could have a long discussion
on that, Mr. Chairman, but yes, it is even, what I said
earlier, coming down to engines. We have cleaner and cleaner
engines, but they are just never clean enough.
The Chairman. Absolutely. Right.
Mr. Wenger. And so as we are asking people to invest in new
mechanization that would be robotic, so it would be drones and
other things, there will be some offsetting things with it, but
let's not let the perfect be the enemy of good.
The Chairman. Yes.
Mr. Wishnatzki. I just want to add, at this point, my
harvester robotics company is still in development, so you
might ask me this question in a couple of years when we begin
commercialization what kind of things we are running up against
because I suspect that we are going to find some regulatory
problems down the road, but at this point in time we are still
just developing.
Mr. Murphy. Our biggest issues are the crop right now. It
is a very soft berry, and are trying to sort that out, but down
the road there will probably be an issue at some point.
The Chairman. Okay. Well, as you do come across those
regulatory schemes or problems that are not working, we would
be keen on understanding it and trying to figure out how we can
work with that.
My time has expired. I now recognize Ms. Plaskett for 5
minutes.
Ms. Plaskett. Thank you, Mr. Chairman. Good morning,
gentlemen.
Mr. LaVigne, I wanted to ask you, the 2014 Farm Bill
provided for significant investment in agricultural research
for specialty crops. There was an $80 million per year for
Specialty Crop Research Initiative, and $85 million a year for
Specialty Crop Block Grant Program. Could you give examples of
cutting-edge research that has emerged from these programs?
Mr. LaVigne. There are a number that have come through that
the researchers are looking at with respect to the specialty
crop arena in the disease pressure that growers are
experiencing. I did mention one earlier that is key is the
broccoli production. It was very, very difficult for growers to
produce broccoli on the East Coast. Mildew and other issues
were devastating crops. Through molecular marker techniques and
working with the Specialty Crop Block Grant Program, they were
able to develop varieties that are more favorable for the East
Coast.
Very similar to tomato production in California, in looking
at how the process is done and what diseases were impacting
them most, how do you improve the varieties enabling them to be
less susceptible to those diseases.
We have really tried to focus on those areas where you had
a collaboration between the grower community, in our case, the
seed companies and the breeders and the university, USDA, to
address those localized programs, and those Specialty Crop
Block Grants were invaluable to those processes.
Ms. Plaskett. Do you feel as we are working through the
farm bill coming up now that this is the right amount of money
or that additional funding should be provided for this kind of
research?
Mr. LaVigne. Well, that is always the question. In this
area, we can always use additional resources. As we see climate
change issues, we see pest and disease moving, Mother Nature is
a wonderful adaptor, and as we develop varieties that are
resistant, as we develop other agrochemicals that will help us
produce, she adapts. And so we have to be able to do that as
well, and the Specialty Crop Block Grants enable our research
and science community to be able to develop those varieties
that can address those, so it is invaluable to have it. It is
always good to have more available as we address the
challenges.
Ms. Plaskett. You talked about disease, at the University
of the Virgin Islands, in our extension program, they deal a
lot with supporting our local farmers in not so much disease as
also water issues, irrigation, other kinds of crop safety, and
I wanted to know if you could address some of that, some of
these irrigation programs, or do you see that happening in
other places as well? Do any of you?
Mr. Wenger. Yes, recently, some of the SCRI funds were used
by University of California and the Almond Board to come up to
monitor the amount of water used by almond trees, and to have
real-time water usage. As you probably heard, during the
drought, a gallon an almond, and it seemed to be everywhere on
the press. And so utilizing these funds that were available and
other such funds to be able to look for that technology that
leaves water in the system for other uses. So they have been
used.
Ms. Plaskett. One of the things that I am interested in
hearing from you all, Mr. Wenger, others, if you could talk
about is, you have talked quite a bit about specialty crops, in
the Virgin Islands we have special specialty crops. Probably,
very tropical, but also very small in terms of our ability to
compete with foreign crops that come in, whether it be from
Guatemala or others, there is no way on our islands we are
going to be able to grow as much mango as Guatemala does or
other places like that. What support can these programs give to
the diversification of crops here in the United States to
sustain farmers who are not operating on huge, enormous tracks
of land?
Mr. Wenger. Well, that is what really helps with the block
grants. It does leverage the money from the taxpayer, and so
you have others that join in for whether it is research or
whether it is doing marketing. Some block grants have been used
for, as we were saying before, with the olive oil industry to
be able to help market locally, or domestically produced olive
oils against imports that maybe aren't adequately marked. And
so having those funds help the smaller grower, and it leveraged
the taxpayer dollar at the same time.
Ms. Plaskett. Do you find that most of these smaller
growers end up being in what would be termed as the fancy foods
area or things like that?
Mr. Wenger. Some of them, and a lot of them come together
in co-ops and whatnot, and so can work together to be able to
apply for these grants, and to meet that very specialty
designer food market.
Ms. Plaskett. Yes, I know I am running out of time, but the
cooperation and the co-ops are going to be really key. In the
Virgin Islands we are really looking to creating cooperatives
among the smaller farmers for food processing plants to be able
to qualify for that and support it, and the block grants are
really helpful.
Thank you so much, Mr. Chairman.
The Chairman. The gentlelady's time has expired.
Mr. LaMalfa, did you have additional comments?
Mr. LaMalfa. Yes, please, 3 minutes?
The Chairman. Three minutes.
Mr. LaMalfa. Okay, thank you, Mr. Chairman. I appreciate
it.
I want to talk to Mr. Murphy for just a bit. We are talking
about new technology and innovation here, and sometimes it
isn't available, and so what we see with the need for methyl
bromide, we don't really have a good replacement for this in
certain applications. I am working on a bill, H.R. 1891, to
allow a little broader use, et cetera, but could you comment
please on what the bill is seeking to do is that right now the
power lies with the EPA to decide an emergency use. It still
has an ability for emergency application under EPA guidance.
What I am seeking to do is to keep it around as an emergency
tool, but also switch that authority to the USDA, which has a
much better idea of what is going on with crops, et cetera. You
mentioned lack of access to any kind of fumigants, what would
be your comment to me about this barrier we have to be able to
do to utilize it, especially for our strawberry growers we have
in northern California and around the country?
Mr. Murphy. Certainly, methyl bromide was a fantastic tool
for our industry for many, many years. Its most urgent use is
actually not nurseries. What we need to have is clean plants so
that we can send those to our farmers around the country and
make sure that they have good plants that they can grow. If
there was any area that needed particular attention, that would
be the area that I would focus on; making sure that our
nurseries have that capacity and that capability. So that is
really important.
Mr. LaMalfa. Clean nursery plants, yes.
Mr. Murphy. Clean nursery plants, because one plant in the
nursery generates maybe ten daughter plants that ultimately get
sent out, so its use in that concentrated form is very, very
valuable. And there is really no solution in the nurseries that
we have come up with at this point that is viable. We are doing
a lot of work on different forms of disinfestation of the soil
using all sorts of anaerobic processes; there is chloropicrin,
there are lots of things going on, but the net of it all is we
haven't reached a stage where we have the same capacity that
methyl bromide has.
Mr. LaMalfa. Basically, on those seed ones it is very
critical.
Mr. Murphy. Well, it is more in berries we plant propagate,
so it is for the propagation of the plants in the nurseries.
Mr. LaMalfa. Yes, okay. Thank you.
Mr. Wenger, please comment on that from a California
perspective with methyl bromide and an emergency USDA usage. I
will stop.
Mr. Wenger. Well, I was here many, many years ago talking
about that very issue about replacements for methyl bromide,
and I can remember that even those that were in favor and being
challenged by the Chairman at the time, what are the
alternatives, and the response was there is no silver bullet.
It will take multiple different technologies and chemicals to
do what methyl bromide does in one fell swoop. It has been used
very safely, and is an issue that there really is no
replacement for methyl bromide, and it is going to create a lot
of other undesirable alternatives that we are going to have to
look at.
Mr. LaMalfa. Okay. Well, Mr. Chairman, I appreciate the
time. Thank you.
The Chairman. The gentleman's time has expired. Ms.
Plaskett, do you have anything else?
Ms. Plaskett. Nothing else.
The Chairman. All right, thank you.
Well, gentlemen, thank you very much for being here today.
We have covered a variety of subjects, and all of them
important to the specialty crop industry. We have beat the
labor issue to death. It is a fixable problem that Chairman
Goodlatte, Chairman of the Judiciary Committee, has
jurisdiction over. All of us are in conversation with him about
his proposed plan that would work to expand the H-2A program,
make it more workable, make it where folks could stay here and
work; the dairymen, the processors who need folks every single
day, and crop producers who need them from time to time. The
idea of an immediate e-verify and the impact it would have on
the workforce is not lost on Mr. Goodlatte or the rest of us in
terms of how we implement that. The opportunity to create
programs would be evergreen in the sense that as people do
decide to do something else, that a worker is going to come in
behind them and replace that aging workforce as it moves
forward. And then the inextirpable drive and move toward
mechanization and robotics will continue at a fast pace.
Necessity is the mother of invention, so to speak. We will have
to fix that. If you look at the big row commodity crops; corn,
and cotton in particular, not a lot of sweat labor left in
that.
So thank you for sharing your ideas with us.
Under the Rules of the Committee, the record for today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Committee on Agriculture is adjourned.
Thank you.
[Whereupon, at 12:15 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by Barbara P. Glenn, Ph.D., Chief Executive
Officer, National Association of State Departments of Agriculture
Statement of Interest
Chairman Conaway, Ranking Member Peterson, and distinguished
Members of the House Committee on Agriculture, the National Association
of State Departments of Agriculture (NASDA) applauds the Committee's
work to reauthorize the farm bill prior to its expiration in 2018, and
NASDA appreciates the Committee holding a hearing on ``The Next Farm
Bill: Technology & Innovation in Specialty Crops'' on July 12th. NASDA
stands ready to assist Congress in developing a robust and
comprehensive farm bill prior to the expiration of the Agricultural Act
of 2014 to ensure our farmers, ranchers, and rural communities have the
tools and infrastructure necessary.
About NASDA
NASDA represents the Commissioners, Secretaries, and Directors of
the state departments of agriculture in all fifty states and four
territories. As elected and appointed officials, our members serve as
strong advocates for American agriculture and are partners with a
number of Federal agencies in regulating, marketing, and providing
services to the agricultural community. As the chief agriculture
officials in their states, NASDA members are keenly aware of the
changing dynamics, increasing challenges, and new opportunities in
agricultural production across the country and have a deep appreciation
for the important contribution agriculture makes to our nation's
security and economy.
NASDA Farm Bill Perspective & Specialty Crops
Agricultural producers, the rural economy, and communities of every
size rely upon a forward looking and fully funded farm bill. In the
House Committee on Agriculture's Budget Views and Estimates letter
earlier this year, you described the economic hardship facing rural
America. NASDA is concerned with efforts to reduce spending on vital
agricultural programs and instead calls for enhanced investment in
American agriculture that provides producers the tools they need to
succeed. The farm bill is also vital to providing consumers access to
the safest, highest quality and affordable food supply, which is
essential for our nation's economy and security.
NASDA's priorities for the next farm bill focus on enhanced funding
for invasive species programs, the Specialty Crop Block Grant Program,
and the Market Access Program. The next farm bill should also provide
investments in critical research, resources for farmers to comply with
FSMA, new tools and resources for animal disease coordination, and
investments in flexible, locally-driven conservation practices.
Building on these, NASDA, has also worked in conjunction with our
state partners at the National Governors Association and the National
Conference of State Legislatures, to outline key areas of importance
for states in the upcoming farm bill:

Provide sufficient resources to implement critical farm,
conservation, forestry, pest and disease, and trade programs;

Invest in the security of our farm economy by continuing to
provide producers tools to mitigate and manage risks;

Support essential research, especially on the safety and
security of the food system and protection of our natural
resources;

Invest in voluntary, incentive-based conservation programs
that are implemented in coordination with state and local
intergovernmental partners;

Ensure sufficient investment and stable resources for rural
areas, including high speed Internet;

Minimize burdens on food producers, processors, and
distributors so that they can continue to provide the safest,
highest quality, and affordable food supply for consumers; and

Provide states, as partners with the Federal Government,
maximum flexibility and opportunity for innovation to create
efficiencies, coordinate funds and achieve program priorities.

NASDA has likewise outlined specific priorities regarding upcoming
appropriations affecting a host of programs and industries. Our letter
to the House and Senate Appropriations Committee's is attached for your
reference.
Among NASDA's priorities in the specialty crop space for the 2018
Farm Bill are to enhance funding and flexibility for the Specialty Crop
Block Grant (SCBG) program to meet demands including Food Safety
Modernization Act implementation; increase funding for the Plant Pest
and Disease Management and Disaster Prevention Programs (known by its
section number, 10007) to include a stable source of funding for the
USDA Office of Pest Management Policy; and to sustain funding for the
Specialty Crop Research Initiative.
Among these programmatic funding priorities, NASDA wishes to
highlight an area of policy that we request the Committee consider.
Specifically, NASDA is concerned with efforts to restrict how the
various State Departments of Agriculture may use funding from the SCBG
program and notes that the statute directs the Secretary of Agriculture
to make grants to states for each of the fiscal years to be used solely
to enhance the competitiveness of specialty crops. Since the program
was funded in 2006, NASDA Members have partnered with the U.S.
Department of Agriculture's Agricultural Marketing Service (USDA AMS)
to distribute over $537 million in grants to local commodity groups,
colleges and universities, municipalities, tribal organizations, and
nonprofits. These locally responsive projects are fulfilling the
statutory mandate of increasing competitiveness, not just by increasing
consumer access to safe and healthy food but also by expanding economic
opportunities across the rural-urban spectrum.
NASDA notes that while overall spending was reduced by $16.5
billion in the 2014 Farm Bill, Congress saw the importance of the SCBGP
and increased funding by $270 million over 10 years. The budget
situation is even tougher for the 2018 Farm Bill. But NASDA encourages
Congress to enhance investments in this vital program. More funding
means a more competitive specialty crop industry in our rapidly
expanding health-focused consumer base.
While we highlight this program as a success, program funding
recipients have growing concerns that the flexibility the SCBG program
was built upon is eroding due to increased and unnecessary bureaucratic
processes. This is especially evident in the establishment of certain
performance measures for the program. While we all want to ensure the
wise use of tax dollars, we are concerned these bureaucratic
requirements--especially new sales reporting requirements for marketing
projects--are simply not feasible for many of the kinds of projects
that have made this program so successful, and we ask this Committee to
take these concerns into consideration as we work towards a flexible,
locally responsive program in the next farm bill.
Support for OPMP
The U.S. Department of Agriculture's (USDA) Office of Pest
Management Policy (OPMP) was created as part of the 1998 Agricultural
Research, Extension, and Education Reform Act in order to provide
leadership in coordinating interagency activities with the EPA, the
U.S. Food and Drug Administration (FDA), and other Federal and state
agencies to coordinate agricultural policies within the Department
related to pesticides. The law further requires OPMP to consult with
and provide services to producer groups and interested parties.
The Congress believed creating OPMP was necessary to focus and
coordinate the many pest management and pesticide-related activities
carried out within the Department. From the legislative history, it is
apparent Congress felt strongly this was a necessary step for USDA to
effectively carryout its statutory responsibilities with respect to
pesticide issues and pest management research.
The law creating this office established that the Director of this
office would work with EPA, State Departments of Agriculture producers,
producers, and other appropriate groups to develop effective, efficient
mechanisms for gathering data necessary for making regulatory
decisions. To achieve the many objectives the law envisioned in
creating this office, it was expected the office would be created
within and staffed by an official within the Office of the Secretary.
Congress was particularly concerned the Director of the OPMP be
someone the Secretary had trust and confidence in to ensure that the
department would be an effective and forceful advocate within the
Administration on issues within the purview of this office. As such,
the law requires the Director of the OPMP report directly to the
Secretary or Deputy Secretary of Agriculture.
We ask that Members of this Committee use your considerable
influence to ensure OPMP is vested with the authority and political
leverage intended by the statute under which it was created. OPMP is an
essential resource and indispensable partner to State Departments of
Agriculture in its delivery of expertise on pesticide regulatory
programs.
Conclusion
NASDA requests the Committee carefully consider the needs and
challenges with making our specialty crop producers more competitive.
The Committee will address a number of complex issues when crafting the
next farm bill, but due to the tremendous support from NASDA and the
specialty crop grower community--the SCBGP should not be one of those
issues. The SCBGP represents a very modest investment of resources in
the farm bill, but yields tremendous gains for a more competitive
specialty crop industry and healthier communities. NASDA stands ready
to work with the Committee to maintain flexibility for this critical
program.
Thank you for your consideration of this testimony, and please
contact Amanda Culp ([Redacted]) if you have any questions.
attachment 1
We Need A Farm Bill.
Good Food. More Jobs. Conservation. Thriving communities.

These are all things we can get behind.

The farm bill impacts everyone.

Trade Promotion.

Specialty Crops.

Invasive Species.

Animal Diseases.

Research.

Hon. Thad Cochran, Hon. Patrick Leahy,
Chairman, Ranking Minority Member,
Senate Committee on Appropriations, Senate Committee on Appropriations,
Washington, D.C.; Washington, D.C.;
Hon. Rodney Frelinghuysen, Hon. Nita Lowey,
Chairman, Ranking Minority Member,
House Committee on Appropriations, House Committee on Appropriations,
Washington, D.C.; Washington, D.C.

Dear Chairman Cochran, Chairman Frelinghuysen, Ranking Member Leahy
and Ranking Member Lowey:

As Congress prepares Fiscal Year 2018 (FY18) appropriations
legislation for Federal agencies, the National Association of State
Departments of Agriculture (NASDA) encourages you to support vital
programs to ensure a safe, affordable, and abundant food supply. Ahead
of the 2018 Farm Bill, support for discretionary programs under your
Committee's jurisdiction is more important than ever. Amidst the farm
economy downturn, investment in these programs demonstrates support for
America's farmers and ranchers and commitment to agriculture programs.
Many economic analyses predict record levels of farm foreclosures and
ripple effects throughout rural communities.1-2 We
respectfully request that you preserve and enhance the various rural
programs under your jurisdiction for FY18.
---------------------------------------------------------------------------
\1\Federal Reserve Bank of St. Louis. (2017, February 9).
Agriculture Finance Monitor. Retrieved from https://
files.stlouisfed.org/files/htdocs/publications/ag-finance/2017-02-09/
2016-fourth-quarter.pdf.
\2\ERS, USDA. (2017, February 24). 2017 Farm Sector Income
Forecast. Retrieved from https://www.ers.usda.gov/topics/farm-economy/
farm-sector-income-finances/farm-sector-income-forecast/.
---------------------------------------------------------------------------
NASDA represents the Commissioners, Secretaries, and Directors of
agriculture in all fifty states and four territories. As elected and
appointed officials, NASDA members are strong advocates for American
agriculture and are partners with a number of Federal agencies in
regulating, marketing, and providing services to the agricultural
industry. One of NASDA's top priorities is the principle of cooperative
federalism--a robust partnership and role for states in Federal
policymaking. Effective Federal-state partnerships are critical to a
host of federally-mandated regulatory programs, as well as key services
the agriculture industry depends upon. Enhancing resources for states
to deliver these programs and ensuring no unfunded mandates on the
states are especially critical.
Food and Drug Administration
Integrated Food Safety System
Fund Food Safety Modernization Act (FSMA) State
Implementation Programs at $100 million.

NASDA urges the Committee to provide sufficient funding for Food
Safety Modernization Act (FSMA) implementation. NASDA requests the
Committee to continue to increase funding for the state implementation
activities that are required by FSMA. While FDA is charged with writing
the rules, significant implementation and enforcement activities under
FSMA are the primary responsibilities of state agencies. It is crucial
that Congress provide sufficient resources so as to avoid unfunded
mandates on the states and to ensure farmers have the tools and
education necessary to comply with these new Federal requirements.
Moreover, NASDA continues to insist that FDA get the rules right. The
combination of problematic elements of these regulations coupled with
inadequate funding for their implementation will ultimately subject
producers to inconsistent and arbitrary enforcement, putting their
farms in economic jeopardy while doing little, if anything to enhance
food safety. Funding to ensure parity between imported and domestic
food is also necessary.
NASDA continues to estimate state programs will need an investment
of $100 million annually to ensure the systematic and timely
implementation of the elements of FSMA for which states have primary
responsibility. To date, funding for states has focused on implementing
the Produce Safety rule, but funding is also necessary for the
development and operation of programs associated with the Preventive
Controls: Human Food and Preventive Controls: Animal Food rules.
Specifically, NASDA estimates the following funding levels for state
programs are necessary:

Produce Safety: $40 million annually for state programs.

Preventive Controls: Animal Food: $20 million annually for
state programs.

Preventive Controls: Human Food: $40 million annually for
state programs.

NASDA appreciates the initial investment in food safety and state
programs Congress made beginning in the FY16 omnibus bill. It is hoped
that the availability of additional funding, coupled with what has been
provided, will ultimately allow states to fully implement effective
programs.
Center for Veterinary Medicine (CVM)
CVM program areas at least $196.7 million.

National Antimicrobial Resistance Monitoring System (NARMS)
funding at $10.8 million.

Combating Antibiotic Resistance Initiative at $35 million
for USDA.

NASDA supports funding of at least $196.7 million for CVM, which
oversees the safety of animal drugs, feeds and biotechnology-derived
products. Though questions exist related to FDA's approach to
regulating animal biotechnology, funding must be adequate to ensure
efficient pre-market review. Further, we request that the new user fees
established by the Animal Drug User Fee Act (ADUFA) of $22.977 million
be included in the FY18 appropriations bill. ADUFA establishes a system
of performance standards to improve the new animal drug review process
at CVM. The review process has improved as CVM has met the performance
standards. To maintain this success, we request the fees be integrated
into this year's appropriation bill. The appropriation is entirely
budget neutral as the money is provided by the animal health companies.
NASDA strongly supports the continuation of the National
Antimicrobial Resistance Monitoring System (NARMS) presently funded at
$10.8 million. NASDA thanks Congress for increasing NARMS funding for
meat testing by $3 million in previous years. Continued funding will
help detect trends in antibiotic resistance. NASDA supports an
additional $35 million for the USDA and $1 million for the Food Drug
Administration--Center for Veterinary Medicine (CVM) for research,
monitoring, and surveillance under the National Action Plan for
Combating Antibiotic Resistant Bacteria (CARB). Finally, NASDA supports
developing scientifically valid methods to better understand
antimicrobial drug use practices in animals and the public health
impacts of resistant bacteria.
U.S. Department of Agriculture
Agricultural Marketing Service (AMS)
Protect the Specialty Crop Block Grant (SCBG) Program's
mandatory funding of $85 million.

NASDA urges the Committee to protect the Specialty Crop Block Grant
Program's mandatory funding of $85 million. The SCBG Program provides
important research, education, and marketing tools to enhance specialty
crop competitiveness, while also advancing foods with critical health
benefits to the American people. NASDA also urges the Committee to
protect these funds from arbitrary reprogramming efforts from within
the Administration.
Agricultural Research Service (ARS)
ARS at $1.3 billion.

Office of Pest Management Policy (OPMP) at $5 million.

Fully fund National Agricultural Law Center (NALC).

NASDA supports funding of at least $1.3 billion for ARS. ARS'
intramural research and their partnerships with universities and
industry are uniquely suited for projects requiring a long-term
investment while maintaining the capacity to respond to emerging
problems.
NASDA urges the Committee to fund the Office of Pest Management
Policy (OPMP) at a minimum of $5 million, which includes a requested
increase above the $3 million authorized by the Agricultural Act of
2014. We further request assurances USDA-ARS executes this complete
funding allocation to OPMP. OPMP plays a critical role in coordinating
policies and activities at USDA related to pesticides. Furthermore,
OPMP provides a crucial source of leadership in the coordination of
interagency activities between USDA, the EPA, the FDA, and state
agencies.
NASDA encourages continued extramural funding for the National
Agricultural Law Center (NALC), and its partners in the Agricultural &
Food Law Consortium (Consortium) through the USDA-ARS National
Agricultural Library. The Consortium supports development and
dissemination of objective, scholarly, and relevant agricultural and
food law research and information to producers, policy makers,
extension, others and NASDA leadership and members as they are a formal
NASDA partner. Led by the NALC, the Consortium includes the National
Sea Grant Law Center at the University of Mississippi School of Law,
the Agricultural & Resource Law Program at The Ohio State University,
and the Center for Agricultural & Shale Law at Penn State Law.
Requested report language: The Committee expects USDA-ARS National
Agricultural Library extramural research and information consortium
projects to be funded at no less than the Fiscal Year 2014 levels.
Animal and Plant Health Inspection Service (APHIS) discretionary
programs
APHIS discretionary program areas at a minimum of $950
million.

Fully fund Cooperative Agricultural Pest Survey (CAPS)
Program.

Fund Wildlife Services at $120 million.

Fund Feral Swine Control at $20 million.

New research funding for National Animal Health Monitoring
System (NAHMS).

Fully fund National Animal Health Laboratory Network (NAHLN)
at $15 million.

NASDA members are key regulatory partners with USDA-APHIS in
protecting American agriculture and rural economies from the threats
posed by animal and plant diseases and pests. It is estimated that
plant pests alone cost the U.S. economy over $100 billion a year. NASDA
recommends a minimum of $950 million in discretionary funding for
APHIS. Any reductions to APHIS' budget will result in deterioration of
essential services and impair the Agency from carrying out its
fundamental mission, which is ``to protect the health and value of
American agriculture and natural resources.''
We urge the Committee to fully fund the Cooperative Agricultural
Pest Survey (CAPS) program, which is an important state-Federal
cooperative program that conducts science-based national and state
surveys targeted at specific exotic plant pests, diseases, and weeds
identified as threats to U.S. agriculture and/or the environment. A
strong agricultural pest detection system is essential to providing a
continuum of checks from offshore programs, domestic port inspections,
and countrywide surveys.
NASDA encourages the Committee to adequately fund APHIS's critical
Wildlife Services (WS) programs at $120 million. In cooperation with
state departments of agriculture, industry and others, WS leadership
and expertise is needed to resolve conflicts between humans and
wildlife, protect public health and safety related to water quality and
safety of air travelers, and protect agriculture from detrimental
animal predators through identification, demonstration, and application
of the appropriate methods of control. Periodic efforts to reduce or
limit the use of funds for core WS missions should be rejected. NASDA
also supports $20 million to the national control program for feral
swine. These invasive species cause an estimated $1.5 billion annually
in damages to pastures, crops, and natural areas.
NASDA supports fully funding the National Animal Health Monitoring
System (NAHMS) for antibiotic research. Further, funding of this system
must be new money not redirected USDA funds. Antibiotic use data
collection should be collected through the NAHMS, which conducts
national studies on the health and management of U.S. livestock
populations. NAHMS has defined protocols in place, is already on-farm
collecting data, and provides confidentiality protections.
NASDA was pleased the 2014 Farm Bill authorized $15 million
annually for the National Animal Health Laboratory Network (NAHLN), but
even if fully funded, NAHLN will need additional funding beyond what is
authorized. NAHLN is a cooperative effort composed of USDA-APHIS, NIFA,
university, and state veterinary diagnostic labs. NAHLN is an early
warning system for emerging and foreign animal diseases, and we urge
Congress to provide the full authorized funding in FY18. This funding
will help expand surveillance and surge capacity of the NAHLN by:
increasing the number of participating state labs; developing
infrastructure for electronic data transmission; and, increasing
efficiency and effectiveness of lab personnel training and employment.
Food Safety and Inspection Service (FSIS)
Remove Prohibitions on USDA Horse Meat Inspections.

Fund State Food Safety and Inspection at $63 million.

We encourage the Committee to resist attempts to include language
that would prohibit funding for USDA horse meat inspection for human
consumption. A 2011 GAO study concluded that removing funding for USDA
horse meat inspectors has resulted in widespread starvation,
abandonment, unnecessary suffering of horses and unwanted horses being
shipped farther to processing facilities in Canada or Mexico.
NASDA urges the Committee to restore funding for State Food Safety
and Inspection programs to $63 million and refrain from further cuts.
This funding is critical for states that provide state meat inspections
under a variety of programs regulated by FSIS.
Foreign Agricultural Service (FAS)
Protect mandatory funding for the Market Access Program
(MAP).

Protect mandatory funding for the Foreign Market Development
(FMD) program.

Funding for the Foreign Agricultural Service (FAS) is a key NASDA
priority, and is vital to ensuring American agricultural producers and
related businesses are able access important export markets. NASDA
recognizes industry requests to enhance this program and urges the
Committee to protect mandatory funding invested in the Market Access
Program (MAP). MAP encourages the development, maintenance, and
expansion of commercial agricultural export markets. The program
especially helps small businesses in urban, suburban, and rural areas
access foreign markets and increase export opportunities. In addition,
we encourage you to protect mandatory funding invested in the Foreign
Market Development (FMD) Program, thereby helping to foster trade
opportunities with American businesses in emerging markets.
National Agricultural Statistics Service (NASS)
Funding for NASS of at least $176.6 million.

NASDA urges the Committee to fund NASS at a minimum of $176.6
million as NASS data is vital to keeping agricultural markets stable,
efficient, and fair by making available objective data to commodity
market buyers and sellers. NASS provides objective, timely, accurate,
and essential statistics in service to U.S. agriculture. NASS
statistics provide the information necessary for producers,
agribusinesses, farm organizations, economists, and others for critical
decision making in agricultural marketing and investing.
National Institute for Food and Agriculture (NIFA) Discretionary
Programs
National Agriculture in the Classroom at $1 million.

Agriculture and Food Research Initiative (AFRI) at $700
million.

Veterinary Medical Loan Repayment Program (VMLRP) at $6.5
million.

Veterinary Services Grant Program (VSGP) at $3 million.

Food Animal Residue Avoidance Database (FARAD) at $2.5
million.

Section 1433 at $10 million.

NASDA encourages funding for Agriculture in the Classroom (AIC)
Programs at $1 million. This funding supports state programs that
provide tools to improve agriculture literacy among Pre K-12 teachers
and students. NASDA recommends this programming remain under USDA's
scope due to its closely aligned mission areas.
NASDA strongly supports providing $700 million for the Agriculture
and Food Research Initiative (AFRI). AFRI competitively funds new
projects and addresses emerging issues in food, agriculture, and
natural resources research. Studies show that every dollar invested in
agricultural research returns over $20 to our economy. NASDA is
supportive of language directing AFRI to address pollinators,
antibiotic resistance and advancing drug approvals to treat minor
species. Within NIFA, NASDA requests funds for the following,
emphasizing impacts on animal agriculture:

$6.5 million, or level funding, for the Veterinary Medical
Loan Repayment Program (VMLRP). Since 2010, 286 veterinarians
have participated in the VMLRP and nearly 860 have applied.
NASDA also urges Congress to exempt VMLRP awards from
withholding taxes.

$3 million for the Veterinary Services Grant Program (VSGP)
in FY 2018 with future increases to the full authorized level
of $10 million. Congress needs to begin initial funding for the
newly authorized competitive grant program to address gaps in
rural areas.

$2.5 million for the Food Animal Residue Avoidance Database
(FARAD). This program has received level-funding in the past at
$1.25 million. In 2013, there were more than 7.5 million
animals impacted in nearly 2,000 residue avoidance cases
handled by FARAD.

The 2014 Farm Bill includes enhancements to Section 1433,
Continuing Animal Health and Disease, Food Security, and Stewardship
Research, Education and Extension Programs. The expanded Section 1433
maintains the program for animal health and disease and adds a
competitive grant program focusing on priorities in the areas of food
security, one health and stewardship. NASDA recommends funding of $10
million for fiscal 2018, less than half of its authorized level of $25
million.
Natural Resources Conservation Service (NRCS)
Protect mandatory Environmental Quality Incentives Program
(EQIP) funding at $1.75 billion.

Ensure Conservation Stewardship Program (CSP) availability
at 10 million acres.

Protect mandatory Regional Conservation Partnership Program
(RCPP) funding at $110 million plus eligible funds from EQIP,
CSP and ACEP.

Protect mandatory Agriculture Conservation Easement Program
(ACEP) at $250 million.

NASDA encourages Congress to protect the mandatory funding for the
farm bill title II working lands conservation programs. Voluntary,
incentive-based conservation programs are necessary to advance
agriculture's efforts to improve water and air quality, soil health,
and address water quantity concerns. These programs also help producers
avoid overly burdensome regulatory pressures.
Specifically, we urge Congress to maintain all mandatory
conservation program funding for FY18. Additionally, NASDA encourages
Congress to provide the maximum possible funding for Conservation
Technical Assistance which provides the direct, on-the-ground
assistance producers need to address specific concerns.
U.S. Forest Service
Forest Inventory and Analysis program at $83 million.

The Forest Inventory and Analysis (FIA) program provides critical
information on the state of our nation's forests. We ask the Committee
to reverse recent spending cuts and fund FIA at a level of at least $83
million. The program inventories America's forests and provides
unbiased information for monitoring trends in habitat, wildfire risk,
insect and disease threats and other resource questions.
Environmental Protection Agency
Office of Pesticide Programs (OPP)
Fund OPP at $128 million.

Pesticide Program Implementation Grants at $15 million.

Pesticide Enforcement Grants at $19 million.

State Pollinator Protection Plans at $5 million.

NASDA encourages the Committee to adequately fund EPA-OPP at $128
million to ensure the agency has appropriate resources necessary to
support FIFRA-related activities, training, resources to facilitate
state meetings, and field training resources. NASDA urges the Committee
to fund EPA State Pesticide Program Implementation & Enforcement Grants
at $34 million ($15 million for Pesticide Program Implementation and
$19 million for Pesticide Enforcement grants). NASDA supports funding
of at least $5 million for OPP to support existing resources available
to states and tribes to develop pollinator protection plans. This
funding is critical for states in developing and implementing state
managed pollinator plans. NASDA supports OPP's work to improve
pollinator health through research and technical analysis on
pollinators and improving understanding to promote pollinator health
through the regulatory processes.
Office of Water
Clean Water Action Section 319 Program at $164.9 million.

NASDA requests a minimum of $164.9 million for the Clean Water Act
Section 319 program but, the national need is much greater. These funds
are critical for state non-point source water quality efforts.
Army Corps of Engineers
Army Corps of Engineers
Fund costs of construction and expansion of the four
priority inland waterways projects at $363.8 million.

Fund at least $800 million for inland waterways operations
and maintenance.

Fund Operations & Maintenance (O&M) at $3.137 billion.

Appropriations at levels called for in WRRDA 2014 for the
Harbor Maintenance Trust Fund.

We support $363.8 million in funding for the Corps to ensure
funding of the Inland Waterway Trust Fund (IWTF) for inland waterway
modernization, replacement, rehabilitation, & expansion projects
(including the Olmsted, Lower Mon, Kentucky Lock Expansion and
Chickamauga projects) is maintained at the highest level supportable by
the inland waterway diesel tax revenues expected for FY18 by Treasury
for the IWTF. NASDA supports the Corps of Engineers' Operations &
Maintenance (O&M) funding level of $3.137 billion for the operations
and maintenance activities of the Corps including inland/coastal
navigation.
We request reaching the Harbor Maintenance Trust Fund (HMTF) Target
levels outlined in the 2014 WRRDA bill, including 74% of HMT received
the prior fiscal year for FY18.
Conclusion
NASDA asks that you give our requests careful consideration as you
work to fund the nation's agricultural policy priorities in Fiscal Year
2018. NASDA is a partner and co-regulator with Federal agencies in the
implementation of a host of food, agricultural and natural resources
programs. NASDA Members have a unique wealth of information,
experience, and expertise but require resources to implement and
execute their responsibilities. We realize how difficult your task is
but know that investing in the outlined programs will be beneficial now
and in the future. NASDA stands ready to work with you and your staff
to expeditiously pass the agriculture appropriations bill. Thank you
for your consideration, and please let us know if you have any
questions.
Sincerely,

Barbara P. Glenn, Ph.D.,
Chief Executive Officer.

CC:

Representative Robert Aderholt (R-AL), Chair, Agriculture
Appropriations Subcommittee
Representative Sanford Bishop (D-GA), Ranking Member, Agriculture
Appropriations Subcommittee
Representative Ken Calvert (R-CA), Chair, Interior Appropriations
Subcommittee
Representative Betty McCollum (D-MN), Ranking Member, Interior
Appropriations Subcommittee
Senator John Hoeven (R-ND), Chair, Agriculture Appropriations
Subcommittee
Senator Jeff Merkley (D-OR), Ranking Member, Agriculture
Appropriations Subcommittee
Senator Lisa Murkowski (R-AK), Chair, Interior Appropriations
Subcommittee
Senator Tom Udall (D-NM), Ranking Member, Interior Appropriations
Subcommittee
Fiscal Year 2018 Appropriations Priorities
Food and Drug Administration
Food Safety System
Increase for the Food Safety Modernization Act (FSMA)
implementation to $100 million.
Center for Veterinary Medicine (CVM)
CVM program areas at $196.7 million.

National Antimicrobial Resistance Monitoring System (NARMS)
funding at $10.8 million.

Combating Antibiotic Resistance Initiative at $35 million
for USDA.
U.S. Department of Agriculture
Agricultural Marketing Service (AMS)
Protect the Specialty Crop Block Grant Program's mandatory
funding of $85 million.
Agricultural Research Service (ARS)
Fully fund ARS at $1.3 billion.

Fully fund Office of Pest Management Policy (OPMP) at $5
million.

Fully fund National Agricultural Law Center (NALC).
Animal and Plant Health Inspection Service (APHIS)
Fund APHIS discretionary program areas at $950 million.

Fully fund the Cooperative Agricultural Pest Survey (CAPS)
Program.

Fund Wildlife Services at $120 million.

Fund Feral Swine Control at $20 million0

New research funding for National Animal Health Monitoring
System (NAHMS).

Fully fund National Animal Health Laboratory Network (NAHLN)
at $15 million.
Food Safety and Inspection Service (FSIS)
Remove Prohibitions on USDA Horse Meat Inspections.

Fully fund State Food Safety and Inspection at $63 million.
Foreign Agricultural Service (FAS)
Protect mandatory funding for the Market Access Program
(MAP).

Protect mandatory funding for the Foreign Market Development
(FMD) program.
National Agricultural Statistics Service (NASS)
Fund NASS at a minimum of $176.6 million.
National Institute for Food and Agriculture (NIFA)
National Agriculture in the Classroom at $1 million.

Fully fund Agriculture and Food Research Initiative (AFRI)
at $700 million.

Level funding for Veterinary Medical Loan Repayment Program
(VMLRP) at $6.5 million.

Fund Veterinary Services Grant Program (VSGP) at $3 million.

Fund Food Animal Residue Avoidance Database (FARAD) at $2.5
million.

Fund Section 1433 at $10 million.
Natural Resources Conservation Service (NRCS)
Protect mandatory Environmental Quality Incentives Program
(EQIP) funding at $1.75 billion.

Protect acre availability in the Conservation Stewardship
Program (CSP) at 10 million acres.

Protect mandatory Regional Conservation Partnership Program
(RCPP) funding at $110 million plus eligible funds from EQIP,
CSP and ACEP.

Protect mandatory Agriculture Conservation Easement Program
(ACEP) at $250 million.
U.S. Forest Service
Forest Inventory and Analysis program at $83 million.
Environmental Protection Agency
Office of Pesticide Programs (OPP)
OPP at $128 million.

State Pesticide Program Implementation Grants at $15
million.

State Pesticide Enforcement Grants at $19 million.

State Pollinator Protection Plans at $5 million.
Office of Water
Clean Water Action Section 319 Program at $164.9 million.
Army Corps of Engineers
Army Corps of Engineers
Fund costs of construction and expansion of the four
priority inland waterways projects at $363.8 million.

Fund at least $800 million for inland waterways operations
and maintenance.

Fund Operations & Maintenance (O&M) at $3.137 billion.

Appropriations at levels called for in WRRDA 2014 for the
Harbor Maintenance Trust Fund.
attachment 3
May 17, 2017

Hon. Mitch McConnell, Hon. Charles Schumer,
Majority Leader, Minority Leader,
United States Senate, United States Senate,
Washington, D.C.; Washington, D.C.;
Hon. Paul Ryan, Hon. Nancy Pelosi,
Speaker, Minority Leader,
United States House of United States House of
Representatives, Representatives,
Washington, D.C.; Washington, D.C.

Dear Leader McConnell, Speaker Ryan, Leader Schumer and Leader
Pelosi:

On behalf of the nation's governors, legislators and chief state
agricultural officials, we urge Congress to make enacting the next farm
bill a priority prior to the current bill's expiration in 2018.
As the chief executives, elected representatives and agriculture
officials in our states, we have long advocated for certainty and
stability for our farmers and ranchers as they make long-term decisions
impacting their communities that are important for our nation's economy
and national security. We recognize the value of a healthy agricultural
economy and the important role Congress plays by investing in American
agriculture to provide producers the tools necessary for success.
Amidst the farm economy downturn, Federal investments in these programs
remain especially crucial. As Congress considers legislation to define
future agricultural, conservation, nutrition and forestry policy, we
urge you to consider these principles:

Provide sufficient resources to implement critical farm,
conservation, forestry, pest and disease, and trade programs;

Invest in the security of our farm economy by continuing to
provide producers tools to mitigate and manage risks;

Support essential research, especially on the safety and
security of the food system and protection of our natural
resources;

Invest in voluntary, incentive-based conservation programs
that are implemented in coordination with state and local
intergovernmental partners;

Ensure sufficient investment and stable resources for rural
areas, including high speed Internet;

Minimize burdens on food producers, processors, and
distributors so that they can continue to provide the safest,
highest quality, and affordable food supply for consumers; and

Provide states, as partners with the Federal Government,
maximum flexibility and opportunity for innovation to create
efficiencies, coordinate funds and achieve program priorities.

Governors, state legislators and state agricultural directors
remain committed to a robust state-Federal partnership, and look
forward to working together on this critical legislation.
Sincerely,

Scott D. Pattison, William T. Pound, Barbara P. Glenn,
Ph.D.,
Executive Director and Executive Director, Chief Executive
CEO, Officer,
National Governors National Conference of National Association
Association; State Legislatures; of State Departments
of Agriculture.

CC:
Chairman Roberts, Senate Committee on Agriculture, Nutrition, and
Forestry
Ranking Member Stabenow, Senate Committee on Agriculture,
Nutrition, and Forestry
Chairman Conaway, House Committee on Agriculture
Ranking Member Peterson, House Committee on Agriculture
Chairman Enzi, Senate Budget Committee
Ranking Member Sanders, Senate Budget Committee
Chairman Diane Black, House Committee on the Budget
Ranking Member Yarmuth, House Committee on the Budget
______

Submitted Statement by Jack Griffin, Chief Executive Officer,
Metropolis Farms
Chairman Conaway, Ranking Member Peterson, and Members of the
Committee, thank you for this opportunity to submit my written
testimony for the record of the Committee's hearing on Technology and
Innovation in Specialty Crops. I commend the Committee for choosing
this topic for hearing in preparation of the next farm bill.
My name is Jack Griffin and I am the President of Metropolis Farms
in Philadelphia. Metropolis' primary farm is in south Philly, in a
warehouse, on the second floor. Our farm is in Rocky Balboa's
neighborhood. It's not your typical farming community.
We are not your typical farm, though, either. We are an urban,
indoor farm. At our Philadelphia headquarters facility, we produce
crops on hydroponic trays that are 36\2\--9 long, 4 wide--that stack
up to 15 high in a modular tower with four levels. One tower,
harvested three times per year, can grow the equivalent of up to an
acre on an outdoor farm. We are currently supplying customers in the
Philadelphia area with produce.
Metropolis uses zero soil, and approximately 95 percent less water
than conventional specialty crop farming, even though our production is
hydroponic. Moreover, the way our towers are configured inside our
warehouse, and with the use of the ambient temperature effects of the
hydroponic systems, we use between 70 to 80 percent less energy than
conventional greenhouses. Finally, our system is portable and light
enough that we can locate in most existing underutilized building
spaces.
Mr. Chairman, innovation is at the core of Metropolis Farms. I have
spent most of the past 4 years doing research and development to
improve indoor farming, and we continue to learn and adapt new
processes. Our systems are able to grow not only the leafy and micro-
greens that so many assume is the limit for indoor ag, but the
Metropolis Farms system also produces flowering plants such as
tomatoes, peppers, strawberries and other fruits and vegetables. Also,
we successfully have produced trial crops of sunflowers and other minor
oilseed crops. And our innovation continues. We are developing a system
to grow stevia, the low-calorie sweetener, and because of our tight
control of the growing environment we can repeatedly produce plants
with the highest concentrations of the desired stevia glycosides.
The most accurate description of our business is that we are a
technology company which owns and operates farms, and sells farming
systems to other farmers. Our focus on innovation is not only targeted
to more efficient and cost effective crop production--although that is
obviously of paramount importance--beyond that, we are focused on
bringing down the financial barriers to entering into farming. One of
the things I soon discovered upon entering the indoor farming space was
that so much of the technology was,as the financial world might term
it, over capitalized.
Indeed, the pre-existing technology for farming was expensive.
Ironically, I also found it not to be that efficient. To build an
indoor farm with most of that technology, it would cost literally
millions for such things as LED lighting, stainless steel water piping
which allows for steam flushing to disinfect and remove the inevitable
bacterial build-up of a hydroponic system, and state-of-the-art climate
and pest control systems.
Metropolis' innovations are based on a systems optimizations
approach rather than being focused on a specific new technology. The
result is a much more effective and efficient, not to mention less
costly, farm system. We developed customized ceramic lighting which
generates more light with less heat, and thus reduce cooling loads.
We've developed a piping system with PVC piping which can be
disassembled, cleaned, and re-assembled in less than an hour for
regular maintenance after harvest and before planting. This is both a
cost saving and phytosanitary improvement over current systems and
practices. Our farms also integrate hybrid carnivorous plants that
attract insects away from the crops, and then eat those insects as a
means of natural pest control.
These innovations represent just a few of the Company's more than
20 patents and trade secrets which have been applied to more than a
dozen development projects around the country. Future innovation is
targeted for nursery applications. Indeed, our systems can develop
rapidly propagating crops for transplanting to outdoor farming which
can help improve farm infrastructure and productivity.
Our latest innovation is in development. It will be a 100,000\2\,
fourth floor space in South Philadelphia. This operation will grow the
equivalent of more than 660 acres of produce per year. It will be the
world's first solar powered indoor farm, with a 1,750 panel, 400 kW
rooftop solar array that produces an average of 525 MWh of electricity
per year; this represents the largest solar array for any purpose in
the City of Philadelphia. In short, we removed many of the climate and
environmental risks of outdoor production, and will be applying back
the most beneficial input of traditional outdoor farming: solar energy.
Let me re-emphasize a point made previously; the ability to put our
modular systems on upper floors in a warehouse building is a major
financial savings. The repurposed building where the solar farm will be
located rents ground floor space for $25 per square foot per year; the
4th-floor space rents for less than 1/
16 that rate. Indeed, at the heart of all this
innovation has been a focus on keeping everything cheap and simple to
operate. As stated earlier, Mr. Chairman, Metropolis Farms wants to
break down the barriers to entry when it comes to farming--at least
indoor farming.
I believe that indoor farms, at a minimum, can:

provide opportunities for current conventional farmers
looking to fill seasonal demand for certain produce and crops;

assist with job training in high unemployment areas of our
major cities; and

open new avenues for military veteran farmers, especially
wounded veterans.

I know this Committee is committed to helping veterans and last
year held a hearing on Veteran Contributions to National Food Security.
Helping veterans is also a passion of mine as I come from a family that
has produced a long line of U.S. Marines. In trying to develop sound
occupational safety practices within our farm systems we've also been
able to make Metropolis Farms systems adjustable to be handicap
accessible; wheel chair bound farmers and employees can conduct a
harvest in a Metropolis Farms operation. We'd like veteran farmers to
be able to take advantage of this innovation.
Therefore, one of the policy recommendations I have is that the
next farm bill adequately ensure that indoor farming qualifies under
the Beginning Farmer and Rancher Development Program, especially the
five percent of funds set-aside to meet the needs of veteran farmers
and ranchers, as well as the Agribility program, which provides
assistance to farmers and ranchers, including veterans with
disabilities.
Beyond just veterans' programs, I urge the Committee and Congress
in the next farm bill to ensure that indoor agriculture not be excluded
from programs for which such similar ag operations would otherwise
qualify. These would include Farm Service Agency operating loans, which
heretofore, only micro-loans have been offered to indoor farms.
Such programs would also include Farmers Market Promotion Program,
Local Food Promotion Program, Specialty Crop Block Grants, Value-Added
Producer Grants, Farm to School Grants, Local Utility Program and even
Rural Development's Business and Industry Loans.
Furthermore, as the report language from the House Agriculture
Appropriations bill says, ``USDA should consider intramural and
extramural research where the Department and its stakeholders can work
towards advancing technologies'' in new types of agriculture, including
urban, vertical, indoor and other production systems. Research is
important to keep these new innovations matriculating towards
commercialization.
I commend the Committee for its 2 year, top to bottom review of the
Supplemental Nutrition Assistance Program (SNAP) and the reform themes
that emerged from that review. I believe that indoor farming has a
place in addressing nutrition policy generally and SNAP specifically
moving forward.
There were three specific ``findings themes'' in the Committee's
December 2016 report on the Past Present and Future of SNAP that
specifically caught my eye as an indoor farmer and systems builder:

Unemployment and underemployment are leading causes of
poverty, and promoting pathways to employment is the best way
to help individuals climb the economic ladder out of poverty
and into self-sufficiency.
Better enforcement of work requirements is needed in some
states, and enforcement needs to be coupled with more effective
SNAP employment and training (E&T) programs.
Americans in both urban and rural communities cannot improve
their diets without adequate access to healthy food.

In many areas, especially urban and food desert areas, indoor
farming can provide employment and training as well as access to food
and nutrition. While much of conventional agriculture suffers from a
shortage of available labor, indoor farming can bring ag production to
areas with a shortage of jobs. I urge you to consider ways that urban
indoor farming can provide solutions to SNAP and other nutrition policy
issues.
Finally, there is a simmering issue with regard to the USDA Organic
certification and whether it should apply to hydroponics, aquaponics,
aeroponics, or containerized systems. There is fierce opposition among
some in the traditional commercial organic sector to even having this
question on the National Organics Standards Board (NOSB) agenda. This
so-called Keep the Soil Movement argues that new alternative,
innovative systems are at odds with the spirit of organic
certification. However, what is indisputably true is that demand for
organic produce, or at least produce grown without certain synthetic
pesticides, herbicides and fertilizers, vastly outpaces domestic
production, and under the National Organic Program which requires
producers to go through a 3 year transition before they can marketing
products labelled organic, that gap is not going to close quickly.
The response from the USDA Agricultural Marketing Service's
National Organic Program was to travel to Mexico in June 2017 to train
organic certifiers there to develop U.S. equivalency. While I
understand we trade, especially in produce, with Mexico, I believe that
domestic U.S. producers including indoor producers who otherwise
qualify under the NOP production practices--except for the presence of
soil biological activity--deserve the benefit of the doubt in gaining
certification under some USDA administered label in order to satisfy
U.S. consumer demand. This would benefit both U.S. consumers and U.S.
agriculture.
Mr. Chairman, indoor farming systems--whether urban or rural--are
by definition an innovation that adds another building block to the
future of American agriculture and helps to make our entire food and
fiber production chain stronger. However, I believe this sector is
often overlooked. I noted a while back that the Agricultural Act of
2014 required USDA to report to Congress on local food production
trends. Surprisingly, indoor farming is not mentioned in the report. In
that regard, I hope that my testimony will provide some insight into
indoor farming and its potential so that appropriate policies can be in
place and barriers to growth can be removed.
Thank you for this opportunity to provide my testimony.
______

Submitted Questions
Response from Paul J. Wenger, President, California Farm Bureau
Federation
Question Submitted by Hon. Alma S. Adams, a Representative in Congress
from North Carolina
Question. As you know, we have to operate within certain budget
constraints as we begin writing this farm bill. Our districts and
states have multiple priorities that need to be funded in the farm
bill.
For example, District 12 which I represent in North Carolina is in
desperate need of a strong nutrition title and the SNAP program
remaining intact. Given this fiscal reality, what recommendations do
you each have for the Committee as we begin to address specialty crop
concerns in the reauthorization of the farm bill?
Answer. Farm Bureau understands the importance of keeping the
nutrition title in the farm bill. As an organization, we believe SNAP
should remain an integral part of the USDA. In California, we produce
most of the fruits and vegetables consumed by Americans, and we believe
a strong horticulture title is important to ensure that these healthy
products remain viable for all consumers. As we further develop farm
bill priorities, we will send them to the Committee with specific ideas
for improvement.
Response from Paul Heller, Vice President, Wonderful Citrus, Texas
Division
Question Submitted by Hon. Alma S. Adams, a Representative in Congress
from North Carolina
Question. As you know, we have to operate within certain budget
constraints as we begin writing this farm bill. Our districts and
states have multiple priorities that need to be funded in the farm
bill.
For example, District 12 which I represent in North Carolina is in
desperate need of a strong nutrition title and the SNAP program
remaining intact. Given this fiscal reality, what recommendations do
you each have for the Committee as we begin to address specialty crop
concerns in the reauthorization of the farm bill?
Answer. Wonderful Citrus acknowledges that the farm bill is an
extremely important piece of legislation for a number of essential
programs across the U.S. agricultural, nutrition, and food assistance
sectors. While we understand that finding the right balance between
these competing priorities can prove challenging, we cannot over stress
the significance of these farm bill programs for the continued success
of the specialty crop industry. The industry would not be where we are
today without these key programs supported by the U.S. farm bill. This
is especially true as it relates to our ability to leverage private-
public partnerships to bring additional innovation and technology into
the farming sector. It is essential that the reauthorization of the
farm bill continue to support these vital specialty crop programs.
Specialty crops represent a unique sector of the agricultural
industry. The production of fruits, vegetables, tree nuts, nursery and
greenhouse commodities accounts for over 44% of farmgate value for
crops, yet only 3% of U.S. cropland is actually dedicated to growing
these unique commodities. The farm bill provides growers with the
stability and confidence to continue foraging ahead in an inherently
uncertain industry, especially when it comes to tree crops, which
require many years of maturity before bearing harvestable fruit. As
such, we respectfully request that the Committee keep the following in
mind when addressing the future of the specialty crop related farm bill
programs.
Crop Insurance
Crop insurance must remain a bedrock program in the farm bill.
Every year, growers face a series of unpredictable challenges, from
weather related incidents to pest and disease issues. The stability the
farm bill crop insurance programs provide give growers the confidence
to plan for the future and make difficult business decisions in an
uncertain environment. These crop insurance programs must be protected
in the reauthorization of the farm bill in order to continue to
encourage growth and innovation in the specialty crop sector.
Industry has been working side-by-side with underwriters and
developers to enhance the safety net provided by these programs, while
also ensuring that they provide adequate coverage without incentivizing
abuse. While we understand that the future of these programs are
sometimes put into question, the truth is that without these
assurances, many specialty crop producers--citrus especially--would be
out of business with the first bad frost. Crop insurance has become a
vital risk management tool for specialty crop producers to mitigate the
risks that come with producing high quality fruit for market and must
be protected.
Pest and Disease Funding
It is absolutely imperative that we continue to support pest and
disease research, effective mitigation measures and innovative response
programs that help industry combat the ever expanding domestic pest and
disease threats. While industry is extremely proactive with treatments
and prevention, it would be impossible to stay ahead of the curve
without the public-private partnerships that fuel these essential
research programs. Section 10201 of the 2008 and 2014 Farm Bills has
provided critical funding and direction for innovative initiatives to
identify and mitigate offshore threats, and improve pest detection and
rapid response. Policies established under both of these farm bills
provide great opportunities for reduction in risk, establishment of a
consistent and clear communication structure, and provide for problem
resolution with built-in accountability. We believe Congress should
continue these important programs and build on their successes over the
last 10 years.
These pest and disease programs have been especially vital to the
domestic citrus industry in recent years. As you know, the citrus
industry is currently grappling with an unparalleled pest and disease
threat in the bacterial disease known as citrus greening or
Huanglongbing (HLB). HLB has already caused a reduction in Florida
citrus production by over 60 percent since 2007, and caused all citrus
producing counties in Texas to be put under quarantine. While there is
still no known cure for HLB, great strides have been made through
Federal, state and industry collaborations funded in part by the farm
bill.
The future of domestic citrus production is contingent upon our
ability to find a cure for HLB. As such, we encourage the Committee to
continue supporting the USDA's Citrus Health Response Program (CHRP),
the Huanglongbing Multi-Agency Coordination Group (HLB-MAC), and
dedicate resources for the Tree Assistance Program (TAP), which has
been instrumental in slowing the spread of HLB by encouraging growers
to replace diseased trees.
In addition to the aforementioned programs, we would be remiss if
we did not also address the critically important specialty crop block
grant (SCBG) and Specialty Crop Research Initiative (SCRI) programs in
the farm bill. The 2008 and 2014 Farm Bills included key provisions
which dedicated research funding to address industry priorities in
specialty crop research and extension. Both of these programs are based
on competitive processes, require stakeholder involvement, and have
already had significant positive impact on industry.
The SCRI, managed through the National Institute of Food and
Agriculture (NIFA), has been instrumental in addressing critical needs
in the areas of plant breeding, innovative technology development, and
refining methods to prevent, detect, monitor and control for food
safety hazards in the production of specialty crops. Similarly, the
SCBG is a much needed effort to help specialty crop producers balance
the uncertainties of agriculture production with improvements to their
products and the access consumers have to those products. Additionally,
this program has become an integral part of industry's ability to
combat immediate pest and disease threats at the local and state level.
When isolated pest and disease outbreaks occur, it is the state
departments of agriculture that are best suited to eradicate the
problem before it has the opportunity to permeate and spread. Without
this funding, we are likely see otherwise manageable local pest and
disease issues escalate to a multi-state and national level.
Market Access and Trade Programs
The U.S. has some of world's best growing regions for specialty
crops, especially in California. As such, we grow, process and market
our produce not only to domestic consumers, but internationally as
well. U.S. specialty crop growers face significant obstacles in the
development of export markets for their commodities and unique
challenges due to the perishable nature of our products. Our ability to
bring nutritious food to people around the world would not be possible
without the support of programs like the Technical Assistance for
Specialty Crops (TASC), which provides funding to U.S. organizations
for projects that address sanitary, phytosanitary, and technical
barriers that prohibit or threaten the export of U.S. specialty crops.
As such, we strongly support the continuation of these types of
programs in the reauthorization of the farm bill.
Response from Gary E. Wishnatzki, Owner and Chief Executive Officer,
Wish Farms*
---------------------------------------------------------------------------
*There was no response from the witness by the time this hearing
was published.
---------------------------------------------------------------------------
Question Submitted by Hon. Alma S. Adams, a Representative in Congress
from North Carolina
Question. As you know, we have to operate within certain budget
constraints as we begin writing this farm bill. Our districts and
states have multiple priorities that need to be funded in the farm
bill.
For example, District 12 which I represent in North Carolina is in
desperate need of a strong nutrition title and the SNAP program
remaining intact. Given this fiscal reality, what recommendations do
you each have for the Committee as we begin to address specialty crop
concerns in the reauthorization of the farm bill?
Answer.
Response from Kevin Murphy, Chief Executive Officer, Driscoll's, Inc.
Questions Submitted by Hon. Alma S. Adams, a Representative in Congress
from North Carolina
Question 1. The topic of food waste has become a growing concern.
In your testimony, you stated that approximately 30% of all berries
produced are not consumed. This is particularly concerning to me as I
represent a district in which food deserts and lack of access to food
is prevalent. What are some examples of innovation surrounding better
production technologies of berries that have or can lead to reduced
food waste?
Answer. In order to reduce food waste we are looking at increasing
the yield per plant, obtaining on-farm efficiencies, incorporating new
technology applications and executing waste diversion plans. Examples
of on-farm efficiencies include movement to production systems using
substrate and trellising. Substrate is the soil-less growing of plants
in a media that has biological activity, organic matter and can provide
nutrition to the plant. Trellising is a technique that keeps plants off
the ground, improves production and increases usable space. These types
of systems make it easier for harvesters to find and pick the fruit in
a timely fashion meaning more fruit is available for consumption. New
technologies like visioning systems allow for more precision packaging
and production capabilities. We are developing alternative product
streams to provide fruit to consumers that meet their specific needs.
Our long term vision is to influence the behavior of consumers and
retailers to reduce waste at home and in-store. For highly perishable
goods the majority of food waste takes place at this point in the value
chain.

Question 2. As you know, we have to operate within certain budget
constraints as we begin writing this farm bill. Our districts and
states have multiple priorities that need to be funded in the farm
bill.
For example, District 12 which I represent in North Carolina is in
desperate need of a strong nutrition title and the SNAP program
remaining intact. Given this fiscal reality, what recommendations do
you each have for the Committee as we begin to address specialty crop
concerns in the reauthorization of the farm bill?
Answer. I appreciate the opportunity to provide insight into
innovation within specialty crops--specifically within the berry
industry. Congress has a momentous task of balancing the priorities of
its constituents. Given that, we acknowledge the Specialty Crop Block
Grants have been very important for food safety research and
initiatives. These Federal research dollars can be extended through
public-private partnerships as has been done over the last 10 years
through the Center for Produce Safety.
Response from Andrew W. ``Andy'' LaVigne, President and Chief Executive
Officer, American Seed Trade Association
Question Submitted by Hon. Alma S. Adams, a Representative in Congress
from North Carolina
Question. As you know, we have to operate within certain budget
constraints as we begin writing this farm bill. Our districts and
states have multiple priorities that need to be funded in the farm
bill.
For example, District 12 which I represent in North Carolina is in
desperate need of a strong nutrition title and the SNAP program
remaining intact. Given this fiscal reality, what recommendations do
you each have for the Committee as we begin to address specialty crop
concerns in the reauthorization of the farm bill?
Answer. Agriculture is an industry that affects every district and
every state in the country. The funding authorized through the farm
bill affects all Americans directly or indirectly. Continued dedicated
funding for research in specialty crops can lead to improved vegetable
and fruit varieties that offer higher nutritional content for
consumers. As highlighted in my testimony, there are multiple avenues
through the farm bill that fund such research. The Foundation for Food
and Agriculture Research recently announced the Crops of the Future
Collaborative research initiative with eight private industry partners.
This project will leverage a $10 million Federal investment in pre-
competitive research to hasten yield and nutrition gains in leafy
greens, wheat and corn. This is just one example of how Federal
research dollars can be extended and multiplied through public-private
partnerships, which is a key tenant of the seed industry.
Other federal grants such as the Specialty Crop Research Initiative
and the Agriculture and Food Research Initiative are typically matched
by funding from private industry partners. This is critical, because
federally funded U.S. agricultural research has played an important
role in expanding our understanding of plant genetics leading to new
crop varieties. USDA investments in genome sequencing of more than 25
agriculturally significant crops are fundamental to this work--without
Federal investments, it is likely these advancements would have taken
much longer to achieve. Within the specialty crop arena, this includes
genome mapping for tomato, potato, apple, strawberry, carrot,
cranberry, lettuce, peach, papaya, cucumber, black raspberry,
watermelon, and pineapple.
These projects ultimately benefit the American consumer. Through
research authorized by the farm bill, consumers might one day be able
to purchase lettuce with increased vitamin content due to federal
investment in plant breeding research.
The July 12 hearing also touched on the very real challenges facing
the specialty crop industry. Diseases such as citrus greening and downy
mildew are very real threats, and continued research is necessary to
effectively combat these threats. As our world's population grows from
today's seven billion people to an estimated nine billion by the middle
of this century, agriculture is faced with the continued challenge of
meeting the rapidly growing demand for food, feed, fiber and fuel.
The seed industry is a research-driven industry that cannot
innovate without investment from the public-sector. While the seed
industry invests significant amounts into R&D, the Federal investments
in long-term research like mapping genomes or operating gene banks
can't be undertaken by private industry. The investment is so long-term
and success is so uncertain, no company is able to shoulder the risk.
Furthermore, these resources should be publically available. However,
the resulting discoveries can be further developed for
commercialization by companies of all sizes and the private-sector can
collaborate on projects.
While research may seem an innocuous area of funding that is ripe
for cuts, we strongly urge the Committee to at a minimum keep funding
research at current levels. It is our hope to see those authorized
funds increased, even though we recognize the fiscal climate the
Committee is operating under. Specialty crop research depends on
Federal funding. Without this dedicated funding, innovation in
specialty crops will lag, and American agriculture will suffer.

THE NEXT FARM BILL

(PATHWAYS TO SUCCESS FOR SNAP HOUSEHOLDS)

----------

TUESDAY, JULY 18, 2017

House of Representatives,
Subcommittee on Nutrition,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:01 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Glenn
Thompson [Chairman of the Subcommittee] presiding.
Members present: Representatives Thompson, Crawford, Davis,
Yoho, Comer, Marshall, Faso, Arrington, McGovern, Adams, Evans,
Lujan Grisham, Lawson, Panetta, Soto, and Maloney.
Staff present: Caleb Crosswhite, Callie McAdams, Jennifer
Tiller, Mary Rose Conroy, Rachel Millard, Stephanie Addison,
Kellie Adesina, Lisa Shelton, Liz Friedlander, Troy Phillips,
Nicole Scott, and Carly Reedholm.

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

The Chairman. This hearing of the Subcommittee on Nutrition
entitled, The Next Farm Bill: Pathways to Success for SNAP
Households, will come to order.
Good morning, everyone, and welcome to today's Nutrition
Subcommittee hearing. Thank you to everyone for taking the time
to be here, particularly our three witnesses.
As you know, over the past 2\1/2\ years the Committee has
undertaken a comprehensive review of SNAP. The review has
helped provide Members with a better understanding of SNAP, the
population it serves, how it is administered, and ways it can
be improved. While witnesses in previous hearings have touched
on education and employment pathways for SNAP households,
today's discussion is dedicated to examining ways for eligible
SNAP households to improve their education and labor force
involvement as they aim for independence.
Career pathways are not a new approach to helping
individuals move up the economic ladder and out of poverty, but
there are new avenues to preparing work-capable SNAP recipients
for employment and education. Pathway approaches, which we will
hear about today, reorient existing education and employment
services from endless disconnected programs to a structure that
syncs employer needs with individuals' education, training and
employment needs. This cohesive approach brings together
resources, funding, data, policies, partnerships, and perhaps
most importantly, shared performance measures that continue to
allow for the development, scaling, and sustainability of these
pathway programs.
And my work with the Career and Technical Education Caucus
has enhanced my awareness of the importance of career and
technical education, or skills-based education, as we work to
advance policies that improve skilled labor education and
support job growth. I share that same passion here and hope to
discuss and explore ways to couple services with employment and
training to ensure our work-capable SNAP recipients move to a
sustainable point of self-reliance.
Again, I want to thank all of our witnesses for sharing
their time and expertise.
[The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good morning, and welcome to today's Nutrition Subcommittee
hearing. Thank you to everyone for taking the time to be here,
particularly our three witnesses.
As you know, over the past 2\1/2\ years the Committee has
undertaken a comprehensive review of SNAP. The review has helped
provide Members with a better understanding of SNAP, the population it
serves, how it is administered and ways it can be improved. While
witnesses in previous hearings have touched on education and employment
pathways for SNAP households, today's discussion is dedicated to
examining ways for eligible SNAP households to improve their education
and labor force involvement as they aim for independence.
Career pathways are not a new approach to helping individuals move
up the economic ladder and out of poverty. But there are new avenues to
preparing work-capable SNAP recipients for employment and education.
Pathway approaches, which we will hear about today, reorient existing
education and employment services from endless disconnected programs to
a structure that syncs employer needs with individuals' education,
training and employment needs. This cohesive approach brings together
resources, funding, data, policies, partnerships, and perhaps most
importantly, shared performance measures that continue to allow for the
development, scaling and sustainability of these pathway programs.
My work with the Career and Technical Education Caucus has enhanced
my awareness of the importance of career and technical education as we
work to advance policies that improve skilled labor education and
support job growth. I share that same passion here and hope to discuss
and explore ways to couple services with employment and training to
ensure our work-capable SNAP recipients move to a sustainable point of
self-reliance.
Again, I want to thank all of our witnesses for sharing their time
and expertise. I now recognize Mr. McGovern for any opening comments he
would like to make.

The Chairman. I now recognize my friend and colleague, Mr.
McGovern, for any opening comments that he would like to make.

OPENING STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE
IN CONGRESS FROM MASSACHUSETTS

Mr. McGovern. Thank you, Mr. Chairman. I want to thank the
witnesses for being here. I want to applaud some of their
innovation, and look forward to hearing their recommendations.
I am not going to refer to my prepared text for a minute
because I am a little concerned as we gather here. This is our
twenty-third hearing on SNAP, and I just read the Republican
budget where there is a proposal out there for a $10 billion
cut in SNAP: $10 billion. In the last farm bill there were
savings of $104 billion; $92 billion came from SNAP.
I know it has become convenient for some to look at SNAP as
an ATM machine to pay for other things, but SNAP is a vital,
important program that millions of families rely on to put food
on the table. And it is not a particularly generous benefit.
The average benefit is about $1.40 per person, per meal. You
can't even buy a cup of coffee for that. That is why many SNAP
recipients end up at food banks at the end of the month.
Yes, we need to figure out ways to help get people to be
secure and have a job, and we are all for work, but understand
one thing, 67 percent of the people on this program are not
expected to work or cannot work; they are children, they are
senior citizens, they are people who are disabled. Of those who
can work, a majority work. Let's get that on the record. I am
tired of the perception that somehow everybody on SNAP is lazy
or doesn't want to work. The fact is the majority of them who
are able to do work. The question is why do they earn such low
wages? Why does work pay so little in this country? Of those
who are not working, who we believe are able to work, we need
to explore this population. These able-bodied adults without
dependents face a policy where if you don't have a job within 3
months, or you aren't in a work training program, you lose your
benefit for 3 years. Well, that population is complicated, and
I have come to learn that in that population you have people
who are chronically homeless, you get people who can't read, we
have people who foster kids who are aging out of foster care,
we have people with undiagnosed mental illnesses, and now we
are learning we have a lot of veterans that are falling into
that category.
I would like to ask unanimous consent to insert in the
record an article that appeared in The Washington Post on May
22 that talks about one Navy veteran in Maine who was thrown
off of the benefit because he couldn't get work within the
prescribed period of time, and who was living off of squirrels
that he was skinning and eating, that was his only source of
food because he lost his food benefit.
The Chairman. Without objection.
[The article referred to is located on p. 1435.]
Mr. McGovern. I point this out because, if we are talking
about how we help transition people who can work into the
workforce, we need to understand that you don't do it by
cutting the program by $10 billion. And we talk about things
like the cliff, we have to understand that it is not just SNAP.
It includes housing, it includes daycare, it includes a lot of
things that are not part of what this Committee has
jurisdiction over. I would urge my colleagues that the
perception in Washington about SNAP, and about those who
receive the benefit, does not reflect the reality. Yes, we can
find people who abuse the program, I am sure, and we can find
people that ought to be in a job and who are not, but the vast
majority of people in this program would prefer not to be.
Being poor in this country is hard work, and I would like to
think that we would recognize that, and this budget that has
been unveiled today does not.
By the way, not only are there cuts in SNAP, we see cuts in
things like Pell Grants. You want children of SNAP families to
be able to have a future, then the one thing you don't do is
cut their education benefits. I appreciate the chair's
indulgence, but I am really angry at this budget.
I will just say one final thing. If this is the budget and
this is what we are going to see in the farm bill; a cut of $10
billion, and I think that may be a floor, not even a ceiling,
then I will predict right here and now we will not have a farm
bill. I certainly will do everything I can to kill a farm bill
that has a $10 billion cut in it.
I yield back my time.
The Chairman. Just to clarify, because we are probably
seeing the same budget information, the $10 billion, there were
no specifics that it was coming from SNAP. It was the
agriculture budget.
I would like to----
Mr. McGovern. If I could just say to the Chairman, I am
looking at the summary and all the references are to SNAP and
more hurdles and work requirements. I don't see any
relationship to any other programs in it. Again, in the past
SNAP has accounted for $92 billion of the $104 billion in
savings.
Thank you.
The Chairman. The chair would request that other Members
submit their opening statements for the record so the witnesses
may begin their testimony, and to ensure that there is ample
time for questions.
I would like to welcome our witnesses to the table. I very
much appreciate their participation, and bringing their
expertise here for this very important topic on nutrition. Dr.
Harry Holzer the John Lafarge, Jr., SJ Professor of Public
Policy, McCourt School of Public Policy, out of Georgetown. Mr.
Eliyahu Lotzar, how did I do?
Mr. Lotzar. Pretty good.
The Chairman. We are off to a good start then. I have
always learned that there is only one thing you come into this
world with and you leave with, and it is your name, and so I
hate to mess those up. Those are important. Student Success
Coordinator, Onondaga Community College Economic and Workforce
Development and Pathway to Careers, out of Syracuse, New York.
Ms. Heather Reynolds, President and Chief Executive Officer,
Catholic Charities Fort Worth, Fort Worth, Texas.
Dr. Holzer, please being when you are ready, 5 minutes for
your oral testimony. The written testimony for all three of you
have been distributed ahead of time to all Members of the
Subcommittee. And the light system is pretty simple, the first
4 minutes will be a green light, the final fifth minute is a
yellow. When it hits red we just ask that you wrap up whatever
thought that you are on at that point.
Dr. Holzer, please go ahead with your 5 minutes of
testimony.

STATEMENT OF HARRY J. HOLZER, Ph.D., JOHN LaFarge, Jr., SJ
PROFESSOR OF PUBLIC POLICY, McCOURT SCHOOL OF PUBLIC POLICY,
GEORGETOWN UNIVERSITY, WASHINGTON, D.C.

Dr. Holzer. Thank you very much, Chairman Thompson, Ranking
Member McGovern, Committee Members. Thank you for inviting me
today to testify on the role of employment in the workforce
policy for SNAP recipients.
I can support an agenda to increase work and earnings among
SNAP recipients, especially in the currently tight labor
market, but such an agenda must recognize the great variation
among recipients in their training potential, their basic
skills, their job readiness, and their need for work supports.
It must allow different rules and services for different
categories of recipients. One size cannot fit all. Any major
changes should be based on rigorous evidence of cost-
effectiveness, which is currently scant. And to implement such
changes, every state agency should receive enough resources to
assess each recipient's abilities and needs, to provide a range
of work or training options to them, both within mandatory or
voluntary SNAP E&T programs. Changes like these would take
considerable time to implement and must be done carefully and
appropriately.
I would like to make three additional points this morning.
First, the most effective forms of workforce training in terms
of generating long-term improvements in worker employment are
those that actively engage employers. The best models here are
sector-based training and work-based learning, like
apprenticeships, especially in high-demand occupations and
industries for any state or region. And, of course, the high-
demand industries tend to be health care, construction,
advanced manufacturing, IT, transportation logistics, and even
the higher end of retail and hospitality. More SNAP recipients
should have access to such models of education and training,
which would benefit themselves but also benefit employers who
are seeking more skilled workers. It would reduce SNAP
expenditures over time and raise overall economic productivity.
But only workers with fairly strong cognitive and employability
skills will benefit from such training, and I believe we should
use the roughly 3,000 local One-Stop offices, or American Job
Centers, to more fully assess recipients and link them with
appropriate training opportunities.
Second, most workers can also benefit from steady work
experience over time, though the earnings and productivity
gains that that approach generates are smaller than we get out
of training. Some workers, in order to work, will need more
support such as active job search assistance and placement
activity, transportation or childcare, if we want them
consistently to work. And individuals who are deemed hard to
employ, with a set of multiple work barriers such as very poor
skills, very little work experience, physical/psychological
disabilities, or substance abuse, that population will have
difficulty accumulating positive work experience in the job
market. We have also found that job search or workfare alone
for these populations has very limited effects on their
subsequent earnings.
Third, any expansion of work requirements under SNAP should
be imposed carefully, allowing for clear exemptions that are
consistently applied for those with physical or psychological
ailments, substance abuse problems, or those caring for small
children, even if those children are above the age of 6. The
Federal Government should provide additional administrative
funding if we require work activities to a greater extent, as
well as funding for the worker service opportunities and
supports that many SNAP recipients will need if they are to
work. Indeed, for those who cannot find employment, training or
some positive work experience or activity this should be
provided. I recently authored a paper with Robert Doar of the
American Enterprise Institute, and Brent Orrell of ICF, two
friends of mine who are conservatives, and we came up with a
set of policies if we are going to implement stronger work
requirements. One of the principles was if people cannot find a
job on their own, they should be offered some positive
activity, even for 5 or 10 hours a week, before they are
sanctioned or kicked off the rolls. In our view, there was a
package of supports and also subsidized jobs that would have to
go along with the imposition of stronger work requirements. And
since we have relatively little clear evidence right now on how
such changes to work requirements would affect SNAP recipients,
we believe we should pilot and evaluate any major changes
before implementing them to see how they really work. And a set
of rising work supports, like more generous EITC or child care
and transportation should be provided along with this.
The evidence right now, the rigorous evidence and research
does not suggest strong negative effects on employment from
current SNAP policies and, therefore, we shouldn't make that
assumption; and, therefore, argue for much more stringent
requirements when the current evidence does not support that
point of view, even if, theoretically, we can find some cliffs.
I am going to stop there. Thank you for inviting me today,
and I look forward to a robust discussion afterwards.
[The prepared statement of Dr. Holzer follows:]

Prepared Statement of Harry J. Holzer, Ph.D., John LaFarge, Jr., SJ
Professor of Public Policy, McCourt School of Public Policy,
Georgetown University, Washington, D.C.
Thank you for inviting me today to testify on the role of
employment and workforce policy for SNAP recipients, as you consider
The Next Farm Bill: Pathways to Success for SNAP Households.
I can support an agenda to increase work and earnings among SNAP,
especially in the currently tight labor (though it will not be tight
indefinitely). But such an agenda must recognize the great variation
among recipients in their training potential, basic skills, job
readiness and need for support. It must allow different rules and
services for different categories of recipients--one size cannot fit
all. Any major changes should be based on rigorous evidence of cost-
effectiveness, which is currently scant. And, to implement such
changes, every state agency should receive enough resources to assess
each recipient's abilities and needs, and to provide a range of work or
training options to them--both within mandatory or voluntary SNAP E&T
programs. Changes like these would take considerable time to implement,
and are very different from the current approach in the mandatory
programs (which mostly provide just job search or ``workfare'' to
participants).
I'd like to make the following additional points this morning:

1. The most effective forms of worker training, in terms of
generating long-term improvements in worker employment and
earnings, are those that actively engage employers. The
best models are sector-based training and work-based
learning (like apprenticeship), especially for high-demand
occupations and industries in any state or region. More
SNAP recipients should have access to such models of
education and training, which would benefit themselves and
employers seeking skilled workers, reduce SNAP expenditures
over time, and raise economic productivity.\1\
---------------------------------------------------------------------------
\1\See the National Skills Coalition (2014).

Sector-based training involves a partnership between local or
regional employers, a training provider (often a community
college), and an intermediary. Rigorous evaluations
indicate strong impacts on the earnings of disadvantaged
workers, lasting for as long as 6 years. Apprenticeships
also generate strong impacts on earnings, with little
fadeout over time. When workers earn a post-secondary
credential from such training, like a certificate or an
associate's degree, the training is more likely to have
lasting impacts, and to be portable across firms and
sectors. Career pathways, in which workers can ``stack''
certificates and combine them with appropriate work
experience, show promise as well. The high-demand sectors
now include health care, advanced manufacturing,
information technology, transportation/logistics, and the
high ends of retail and hospitality.\2\ But only workers
with fairly strong cognitive and employability skills will
benefit from such training. The roughly 3,000 local ``One-
Stop'' offices in the U.S. (now called American Job
Centers) could help assess recipients and link them with
training opportunities, when appropriate.
---------------------------------------------------------------------------
\2\See Conway and Giloth (2014) for an overview of sector-based
training strategies, and Maguire, et al. (2010) and Elliott and Roder
(2017) for evidence of their large and lasting impacts on the earnings
of disadvantaged workers. For discussion and evidence on apprenticeship
programs see Lerman (2014).

2. Most workers can also benefit from work experience over time,
though the earnings and productivity gains it generates are
smaller than those of the training approaches described
above. But some workers need more support--such as active
job search assistance and placement, transportation, or
child care--to consistently work. And individuals deemed
``hard-to-employ,'' with multiple work barriers, will have
difficulty accumulating positive work experience in the job
market.\3\ Job search or workfare alone for these
populations have very limited effects on their earnings.
---------------------------------------------------------------------------
\3\Evidence of lower work activity among those with multiple
barriers can be found in Danziger and Seefeldt (2002).

With additional resources, assessments of worker
characteristics could be provided through SNAP agencies or
local job centers. But the more ``barriers'' to work any
recipient has--such as very poor skills, limited work
experience, physical/mental disabilities or substance
abuse--the less likely they are to sustain work experience
---------------------------------------------------------------------------
leading to wage growth over time.

3. Any expansion of work requirements under SNAP should be imposed
carefully, allowing for clear exemptions that are
consistently applied for those with a range of physical/
mental ailments or substance abuse problems, and for those
who care for small children. The Federal Government should
provide additional administrative funding if required work
activities are expanded, as well as funding for the work or
service opportunities and supports many SNAP recipients
will need.

I recently embraced an agenda for strong work engagement among
SNAP recipients in my paper with Robert Doar and Brent
Orrell (published by the American Enterprise Institute in
2017), but with some caveats. SNAP recipients who care for
small children, or who have clear disabilities (physical or
psychological) or substance dependencies, should be
exempted from any newly required work activities. For those
who cannot find employment on their own, a public or
private work (or training) activity should be provided.
Indeed, an expansion of subsidized jobs in the private or
public sectors is a sensible complement to any expanded
work requirements.\4\ And no worker should be sanctioned
who has not at least been offered an appropriate work or
service activity by SNAP administrators--though that is
currently the practice for many ABAWDs operating under a 3
month time limit on their recipiency.
---------------------------------------------------------------------------
\4\See the Center for Poverty and Inequality at Georgetown
University (2016) for evidence on the positive impacts of subsidized
jobs for the poor.
---------------------------------------------------------------------------
New funding for expanded administrative activity and for work
opportunities would be critical, either through E&T program
grants or reimbursement grants. Since we have relatively
little clear evidence of how any changes to work
requirements would affect SNAP recipients, we should pilot
and evaluate any major changes before implementing them on
a wide scale (and also see what we learn from the pilots
from the 2014 Farm Bill). And they should be accompanied by
rising work supports, such as funding for child care and
transportation as well as a more generous Earned Income Tax
Credits for childless adults, from other parts of the
Federal budget.
References
Center on Poverty and Inequality. 2016. Lessons Learned from 40
Years of Subsidized Employment. Georgetown Law Center, Georgetown
University, Washington, D.C.
Conway, Maureen and Robert Giloth eds. 2014. Connecting People to
Work: Workforce Intermediaries and Sector Strategies. Aspen Institute,
Washington, D.C.
Danziger, Sandra and Kristin Seefeldt. 2002. ``Barriers to
employment and the `hard to serve': Implications for services,
sanctions, and time limits.'' Focus, Vol. 22, No. 1.
Doar, Robert; Harry Holzer and Brent Orrell. 2017. Getting Men Back
to Work: Solutions from the Left and Right. American Enterprise
Institute, Washington, D.C.
Elliott, Mark and Anne Roder. 2017. Escalating Gains: Project
Quest's Sectoral Strategy Pays Off. Economic Mobility Corporation, New
York.
Lerman, Robert. 2014. Expanding Apprenticeship Opportunities in the
United States. Brookings Institution, Washington, D.C.
Maguire, Sheila, et al. 2010. Tuning Into Local Labor Markets. PPV,
Philadelphia PA.
National Skills Coalition. 2014. SNAP Employment and Training
Program. Washington, D.C.

The Chairman. Thank you, Dr. Holzer, for your testimony.
Appreciate it.
Now recognize Mr. Lotzar for 5 minutes of testimony.

STATEMENT OF ELIYAHU LOTZAR, M.S.W., STUDENT SUCCESS
COORDINATOR, DEPARTMENT OF ECONOMIC &
WORKFORCE DEVELOPMENT, ONONDAGA COMMUNITY
COLLEGE, SYRACUSE, NY

Mr. Lotzar. Mr. Chairman, Mr. McGovern, Members, thank you
for inviting me here.
This testimony will outline a method we use at Onondaga
Community College that helps SNAP beneficiaries start on the
path out of unemployment, and out of the ALICE category, asset
limited income constrained employed.
Our career training programs emphasize soft-skills training
and relationships with employers and with students. Under the
leadership of Michael Metzgar, our team has implemented this
model at colleges in Arizona, New Jersey, and now in Syracuse,
New York.
Syracuse has the highest rate of extreme poverty for
African Americans and Hispanics of any city in the country. In
2010, there were 19 neighborhoods where over 40 percent, that
is 4-0, of the residents lived below the poverty line. SNAP is
necessary.
Syracuse is also a refugee resettlement city. I believe
that approximately \1/2\ the students in our workforce programs
either receive or have received SNAP benefits. Many of our
students are third-generation recipients of one or another
benefit program, and this influences their mindset.
Some have grown up with the expectation that because their
parents or neighbors received benefits and lived in very poor
conditions, they will too. We try to help our students overcome
that mindset. The mindset of survival and extreme poverty is
not a career success mindset, and any program to raise people
out of extreme poverty needs to address that mindset change.
We currently operate seven programs in health care, food
service, and technical-mechanical studies. The programs all
include ten elements. First, find out which industries are
hiring locally, now and for the next 18 months. Second, choose
entry-level jobs that provide a living wage and a path to a
sustainable wage. Three, keep tuition costs within Pell
eligibility levels that, I am sorry to hear, may be changing,
so that students graduate with no debt. Four, let employers
tell us what to teach. We use a Canadian process called DACUM,
Developing a Curriculum. Five, teach employability skills, not
just academic and technical skills. Soft skills training helps
with mindset change. Six, provide proactive, in-program
retention efforts to help people overcome barriers by
connecting them with college and community resources. Seven,
utilize competency-based education. Most employers are not
interested in students' grades. They want to know can they do
the job. Therefore, when a student demonstrates competency,
they finish school. Eight, at the end of our in-house education
we send students out to an employer for 100 hours of
observation on-the-job. If the person obtains employer
approval, they receive the certificate and move on to element
nine, which is to help them get a job by connecting them with
employers. If they haven't already been offered a job during
our practicum, we help them connect with another employer.
Number ten, maintain contact with students up to 2 years post-
graduation to gather data and reconnect them with employers, if
necessary.
Now, not everyone comes from extreme poverty. Some turn to
us to avoid supplemental assistance. I will give you one
example, some details have been changed for privacy, and then I
will finish with recommendations. Anifa was born and raised as
a Muslim in Yemen. I know it is a little different from what I
wrote there, one of those details. At a certain point, she
converted to Christianity. Death threats and attempts on her
life ensued, including when an uncle tried to kill her. She
married and they applied for refugee status in the U.S.
Arriving with her husband and his family in Syracuse, she was
soon working as a cashier, and he as a delivery driver, but
then he was caught in a car accident and she sustained a work
injury. Neither could work, but she pressed on. Anifa received
a grant from our Chamber of Commerce to join OCC's Food Service
Program. She wanted to nourish others. Unfortunately, her
husband's family frowned upon her moving forward into an
independent career while he was still unemployed. Domestic
violence ensued. That is where relationships come in. Her
instructor in the student success team helped her finish her
studies and start a small business by guiding her through a
Workmen's Compensation claim, the challenging law process,
finding a women's shelter, improving her English, and dealing
with a new culture, all in under a year. As we have nurtured
her, she is starting to nurture others with her food business.
Not easy. It demands a relationship, but it is worth it.
The bigger picture is a serious challenge. As the wealth
gap widens, it becomes more likely that currently poor and
impending poor will need food assistance. A counterbalance to
the extremes of wealth aggregation and wealth emptiness is
human relationships. Not just touchy-feely, but as a strategy.
We recommend that you support the programs with three
essential elements: employer relationships, student
relationships, and soft skills education. Training out of
poverty is possible. We can vouch for that.
Thank you.
[The prepared statement of Mr. Lotzar follows:]

Prepared Statement of Eliyahu Lotzar, M.S.W., Student Success
Coordinator, Department of Economic & Workforce Development,
Onondaga Community College, Syracuse, NY
Introduction
This testimony will outline two steps necessary to support those
SNAP beneficiaries who have a reasonable chance of utilizing community
college education to access stable income sufficient to remove the need
for receiving SNAP benefits. One step is traditional career training;
the second step is mindset change. The two steps do not need be
sequential. They are mutually supportive: traditional career training
can help change mindset, and mindset change can help success in career
training. These are not the only steps that could be taken, but they
are options that community colleges can offer. In this testimony I will
outline the methods we in the Department of Economic and Workforce
Development at Onondaga Community College (OCC) employ to provide that
training. Our recommendation is that the Committee do all it can to
promote the structure we utilize for providing opportunities for some
people to break their tethers to life in financial and health poverty.
Acknowledgements
Much of how I see the paths for SNAP recipients is through the
organizational framework developed by Michael Metzgar, currently
Associate Vice President of Economic & Workforce Development at
Onondaga Community College (OCC). In his three iterations of Workforce
Development at community colleges--University of Advancing Technology
in Arizona, Raritan Valley Community College in New Jersey, and OCC in
New York--he repeated the model that is outlined in this document. I
would know little about Workforce Development without having spent
years working for him. The Committee would have benefitted had he been
able to prepare and deliver testimony.
Local Context of Testimony: the Challenge
The content of this testimony is limited to one person's opinion.
It is based largely on personal experience of nearly 3 decades spent in
social work, education, and business. It is not based on peer reviewed
primary research. Part of that personal experience is all that I have
gained from colleagues at two community colleges--one serving two
counties in northwestern New Jersey, two of the wealthier counties in
the country, and one serving five counties in Central New York,
counties which are largely rural and are focused in some of the poorest
urban [ZIP C]odes in the country. Last year, the city of Syracuse, NY,
was listed in local newspaper and TV as the U.S. city with the highest
rates of poverty for African Americans and Hispanics, the 28th overall
poorest in the country.
Who Our Students Are
In the last 2 years here in Syracuse we have served approximately
450 students in our programs. From anecdotal knowledge, I would say
that more than \1/2\ of them, or someone in their immediate family,
receive SNAP benefits, and more than that are eligible. The South Side
of Syracuse--one of the primary locations from which we recruit, and
perhaps the most challenged part of the city--has been a complete food
desert up until earlier this summer when our first supermarket opened,
a Price Right Supermarket. Before that, people used their food benefits
at small corner stores which did not have much fresh food.
Syracuse is a refugee resettlement city. Refugees have been
arriving for decades in Syracuse, and our North Side is home to
populations from many different countries, including countries in Asia,
the Middle East, Africa, and Latin America. Many of our program
participants are refugees or immigrants.
Our students--most of whom are first generation to attend college--
also include many in third generation poverty. Among these students is
a mix of those whose families have always worked and never or almost
never taken benefits, families that have survived from a combination of
work and public assistance. Some have grown up with the expectation
that because their parents received benefits and lived in very poor
conditions, they will too. That's just how it is is a mental framework
that surrounds some of our students. Even the question, ``What else can
you do?'' is not a question that residents of the poorer neighborhoods
in Syracuse can ask themselves for long, since the options available to
them--minimum wage jobs and slightly higher--are the only opportunities
that they can see.
How We Find Our Students
Intentionally, we recruit for our programs primarily through the
governmental workforce system of the Department of Labor. Our goal is
specifically to provide employment opportunities for the long term
unemployed, the serially unemployed, and the underemployed. We work
with employment counselors at the One Stop (the operational arm of the
Workforce Investment Board--WIB) and job coaches at ``JobsPlus!'' (the
local organization that distributes Temporary Assistance from the DOL).
Both organizations exist to channel the unemployed back into jobs. Our
training programs are an option for their clients.
Our Program
Our programs currently cover three fields: Healthcare (Medical
Billing, Certified Nurse's Aide, Phlebotomy, soon to be Medical
Assisting), Food Service (Restaurant entrepreneur, Line Cook), and
Technician (Machine Operator, Warehouse Technician, and soon to be
Natural Gas/ Utilities Techn[i]cian).
Our programs include several elements:

1. Analysis of which industries are hiring in Syracuse, in Onondaga
County, and in the five surrounding counties within the
next 18 months. We will not train people for jobs that may
be the wave of the future but would still leave them out to
sea upon graduation. For this we use the expensive but very
good Burning Glass data.

2. Living wage to sustainable wage. We will not train for a job that
will not produce a living wage ($12.75/hr in Syracuse if
employers usually provide insurance; $15.25/hr if they do
not) within the first 6 months of graduation. The entry
level job must also lead to a path for obtaining better
jobs within industry such that a person has a path beyond
what United Way calls the ALICE level (Asset Limited Income
Constrained Employed).

3. Employer-driven curriculum. We gather employers to tell us what
they need from our students when they graduate in order for
them to want to hire our students upon graduation.
Everything they tell us is necessary then becomes a
necessary component of our education; what they do not
consider necessary we do not include. We have nice-to-have
elements too where possible. The owners and supervisors
create a name for the entry level job that we are
discussing, and they tell us which soft skills are needed
(more on soft skills in a section below). The expert
workers in a subsequent panel tell us what all the tasks
are that the employee must perform in order to accomplish
all their duties. We use a Canadian process called DACUM--
Developing a Curriculum. It is necessary sometimes to
slightly modify the multi-day process to fit employer
availability. This is accomplished in half a day, then
another full day. We take the data from the employer and
expert worker panels and then utilize our own curriculum
developers together with an industry partner or an
instructor we have, and turn it into curriculum. The
curriculum contains three elements:

a. Academic Knowledge: creating a conceptual grasp of the
industry, the job,
its processes and language

b. Technical Ability: a person has to demonstrate that she or he
can perform
the tasks necessary. This differs from regular academic
learning, but is
in line with traditional vocational learning.

c. Soft Skill Ability: we teach employability skills, including
both behavioral
elements and also that which undergirds the behavior:
beliefs, attitudes,
assumptions, in short: mindset. A graduate must not
only be able to un-
derstand the job and to do the job, but must have the
transferable skills/
soft skills/21st Century skills/non-cognitive
abilities/employability skills
to get and keep a job in a middle-class work
environment.

4. In-Program Retention Services. Staff proactively engages students
to discover barriers to their successful completion of our
training programs. We are connected with 23 Community Based
Organizations, plus college resources, to help provide
resources such as bus passes, food, clothes, women's
shelter, educational tutoring, counseling, transportation,
and child care. We also act as cheerleaders, metaphorically
speaking.

5. Competency Based Education. Most of our programs do not give
letter grades. We believe that employers are not interested
in what grades so much as whether they are prepared to do a
good job. When a student learns the material, they finish.
Some programs allow students to finish and to start at
different times, and we continue to work in that direction.

6. Practicum. Our in-house teaching involves varying degrees of
classroom and hands-on education. At the end of our
program, when we believe we have trained them well, we send
them to an employer for 100 hours of observation in a
workplace situation. Sometimes the employer lets us know of
poor employability skills; sometimes the employer hires the
person on the spot; sometimes the employer approves but has
no availability. If the person passes the employer approval
in the practicum, they receive a certificate from OCC, and
are moved to the next stage.

7. Channel to Employment. The same employers with whom we
established relationships to gather the data for curriculum
are those we return to offer them good employees. Sometimes
the students find themselves jobs before we do. Sometimes
they ask us for work before they finish the program and we
help them secure part time work during the program. About
75% of our students reach the end of the in-house studies.
About 85% of those attend a practicum. About 25% of those
are offered jobs before the end or at the end of their
practicum. About another 25% of those who finish practicums
secure work, either through their own efforts or through
our assistance by connecting them with employers with whom
we are in contact, within the first 3 weeks of the end of
the program. The other 50% tend to accept non-related jobs
or do not find work, or we lose contact with them and we do
not know their situation. We are arranging to receive
Unemployment Insurance (UI) Wage Data which will tell us
everyone's status with a 6 month data delay.

8. Maintain Contact. We maintain contact with the students once they
graduate, especially if we are still helping them find
employment. Once they find employment, we try to check
their employment status at 3 months, 6 months, a year, and
2 years. We have found some difficulties with this segment
of the process due to time/resource constraints/
prioritization, and changing rapidly contact information of
the graduates.
Recommendations
The recommendations are simply to help reproduce our program in one
form or another. Training out of poverty is possible. It takes
dedication and resources. There are enough dedicated people, and
resources are being devoted too. The key difference is to help create
public awareness, and an education system to support it, which accepts
starting a career after high school as an honorable path. There is good
work being done in South Carolina, in Vermont, in various places around
the country. The point is that skills now must include not just the
academic and technical, but the employability skills. According to
Gallup-Lumina Foundation, employers consistently report that students
are under-prepared. Academic research also shows that the skills which
employers value most highly tend to be soft skills such as
communication, and characteristics such as integrity, honesty, and
self-management.
To teach these things, we need to realize that there is a great
chasm that a student who grew up in poverty has to jump. It is deep and
it is scary. If I go out of my house and expect to be accosted by a
gang member, and this is becoming more and more common; if the only way
that I know to gain power and respect is to sell drugs, then I'll need
to drop my a veneer of bravado which covers my low self-efficacy. I'll
need to be rather more reserved. I'll need to change my language, my
gait, how I wear my clothes, how little or much I speak. I'll need to
code-switch. And hardest of all, I'll need to believe that the system
which failed my parents won't fail me. This takes time. The
recommendation is that this type of employability education which is
based on employer feedback, emphasizes soft skills, and connects people
with employers, start in high schools. It's happening slowly; it just
needs support in order that more people will be able to feed themselves
and their families, and feed themselves well, and do it with a minimum
of public assistance.
Here's Why: An Anecdote
I was brought up with Talmudic expression: ``Save one life and
you've saved the whole world.'' Policies need to support people of
course, and they always intend to; the question is just how. If you can
build personal relationship into your policies, that would be huge.
I'll call her Samantha and I'll change just a few details for
privacy sake. Samantha arrived to the U.S. about a year and a half ago,
and to our Food Service Manager program about 6 months ago. She arrived
from a small city in Afghanistan as a refugee. She was raised Muslim,
but at a certain point she and her family, and what would become her
husband's family converted to Christianity. Death threats ensued, even
two attempts on her life, including when her uncle tried to kill her.
She and her husband and her husband's family went through the 2 year
process and were awarded refugee status by the U.S. Government.
Arriving in Syracuse it was not long before he was working as a
delivery driver and she was working as a cashier in a supermarket. But
then he was caught in a car accident, and she sustained a work
accident. She soon heard about our program and before she finished
recovering she joined us in order to promote her cooking with her own
restaurant. Unfortunately, life happened again and without her family
here, her husband's family frowned upon her moving forward into an
independent career. Domestic violence ensued. Her instructor and the
two Student Success Coordinators were able to guide her through a
workman's compensation claim, the challenging law process, helped find
her a woman's shelter, helped her improve her English, help her start
her own food business, deal with an emotional divorce that she never
had dreamed of, get set up in a new life situation. Through all this
Samantha remained grateful and worked hard to move forward with her
dreams. As we have nurtured her, she continues to nurture others. Not
easy. But worth it.

The Chairman. Thank you, Mr. Lotzar, for your testimony.
And now Ms. Reynolds, go ahead and proceed with your 5
minutes of testimony whenever you are ready.

STATEMENT OF HEATHER REYNOLDS, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CATHOLIC CHARITIES FORT WORTH, FORT WORTH, TX

Ms. Reynolds. Okay. Chairman Thompson, Ranking Member
McGovern, and Members of the Subcommittee on Nutrition, thank
you for having me. My name is Heather Reynolds, and I am CEO of
Catholic Charities Fort Worth.
We have one goal; to end poverty one family at a time. Here
is what I know. When our organization shifted from serving
families to ending poverty with families, we quickly saw that
we needed to invest our resources differently. My message to
you today is simple; we need you to invest differently too.
The farm bill, specifically as it relates to the
Supplemental Nutrition Assistance Program, should be a pathway
for success for Americans. Families in poverty face many
challenges, from food to housing to toxic stress. These
benefits address one of these critical needs; however, these
alone do not propel an American family forward. Reform must
focus on shifting to a comprehensive solution to moving people
out of poverty.
First, benefits should not have a sharp cutoff based on
earnings at 130 percent of the Federal poverty line.
Eligibility requirements need to provide a gradual decline in
benefits until participants reach a living wage. Programs with
sharp cutoffs have you, the Federal Government, working against
those of us in the field. We are serving a single working
mother with one child. She makes $25,000 a year, and utilizes
$357 a month in food stamp benefits. We are walking with her as
she pursues her dreams to become a nurse, and to support her
son free of government assistance. Her first step is to become
an x-ray technician; a certification that takes her 6 weeks of
study to achieve. She finds a job earning $1 more an hour while
she continues her education. The bad news, she now makes too
much to qualify for these benefits. Even worse, with her
increased wages, losing this benefit means a net decrease in
her overall income.
We have made the working poor our people at Catholic
Charities, but you and I often aren't working toward the same
goals because the minute a family starts moving forward with
our help, they are pushed backwards because of the way benefits
are structured. It makes more financial sense to stay on public
assistance because earnings cannot increase fast enough to
outpace lost benefits.
My second point, without intensive case management,
families will not move forward. And I do not mean the
transactional model of case management, I am advocating for
someone who can come alongside the families that we serve,
understand their needs, and work with them for the long-haul
until they reach a place of self-sufficiency.
We run several randomized controlled trials with the
University of Notre Dame's Lab for Economic Opportunity. One of
those is called Stay the Course. We know that a credential is a
game changer between minimum and living wage employment, but a
major provider of those credentials; community college, have
graduation rates under 20 percent nationwide. We know low-
income students often don't graduate because life happens, and
education is often the first thing to go. We designed a study
to fix this. Participants were divided into groups of students
who received case management and financial assistance, those
who received just financial assistance and those who received
no help at all. After 1 year of study, we saw that students who
received only financial assistance actually did worse than
those who had no services at all. Yet, those with case
management, with some assistance, were more likely to reach
their goals. After 6 semesters, those in case management were
twice as likely to persist in their education, and females were
four times more likely to walk that graduation stage.
A second example is Padua, another trial we are running.
Our key intervention is case management to move families out of
poverty. Of the families involved, 80 percent are women, 23
percent are married, 50 percent have a high school diploma or
less, the average family earns $18,000 a year, and 60 percent
are on food stamps. But after just 1 year of intensive case
management, we see some pretty incredible changes. Monthly
labor earnings are up by 17 percent. There is a 21 percent
increase in the hourly wage, a 30 percent rise in full-time
employment, a 19 percent decrease in spending, and a 41 percent
drop in credit card debt. This further emphasizes my point. It
is not just my gut that tells me case management makes the
difference, it is data and analytics that show me when we work
with families in poverty through case management, amazing
things happen.
My message today is that we need to invest differently.
More Americans will experience income stability if we get these
Federal programs right. Farm bill reform must include fixing
the welfare cliff problem, and doing more than giving away
money. We must break this cycle of poverty for families and for
their children.
Thank you.
[The prepared statement of Ms. Reynolds follows:]

Prepared Statement of Heather Reynolds, President and Chief Executive
Officer, Catholic Charities Fort Worth, Fort Worth, TX
Chairman Thompson, Ranking Member McGovern, and Members of the
Subcommittee on Nutrition, thank you for having me. My name is Heather
Reynolds and I am CEO of Catholic Charities Fort Worth. We have one
goal--to end poverty, one family at a time.
Here's what I know: When our organization shifted from serving
families to ending poverty with families, we quickly saw that we needed
to invest our resources differently. My message is simple. We need you
to invest differently, too.
The farm bill, specifically as it relates to the Supplemental
Nutrition Assistance Program, should be a pathway to success for
Americans. Families in poverty face many challenges, from food, to
housing, to toxic stress. These benefits address one of these critical
needs. However, these alone do not propel an American family forward.
Reform must focus on shifting to a comprehensive solution for
moving people out of poverty.
First, benefits should not have a sharp cut-off based on earnings
at 130% of the Federal poverty line. Eligibility requirements need to
provide a gradual decline in benefits until participants reach a living
wage.
Programs with sharp cut-offs have you--the Federal Government--
working against those of us in this field. We are serving a single
working mother with one child. She makes $25,000 a year and utilizes
$357 in food stamp benefits a month. We are walking with her as she
pursues her dream to be a nurse and to provide for her son.
Her first step is to become an X-ray technician, a certification
that takes her 6 weeks of study to achieve. She then finds a job
earning $1 more an hour, while she continues her education. The bad
news? She now makes too much to qualify for these benefits. Even worse,
with her increased wages, losing this benefit means a net decrease in
her overall income.
We have made the working poor our people. But you and I are not
working towards the same goals. Because the minute a family starts
moving forward with our help, they are pushed backwards because of the
way you structure benefits. It makes more financial sense to stay on
public assistance, because earnings cannot increase fast enough to
outpace lost benefits.
Second, without intensive case management, families will not move
forward. And I don't mean the transactional case management model of
the past. I am advocating for someone to come alongside a person,
understand all their needs, and work with them for the long haul until
they are out of poverty.
We run a randomized control trial with the University of Notre
Dame's Lab for Economic Opportunities.
We know that a credential is the game-changer between minimum- and
living-wage, but a major provider of those credentials, community
colleges, have graduation rates under 20%. We know low-income students
don't graduate because ``life happens'' and education is often the
first thing to go. We designed a study to fix this. Participants were
divided into groups of students who received case management and
financial assistance, those who only received financial assistance, and
those with no assistance at all. After year one, we saw that the
students who got only financial assistance actually did worse than the
control group. Yet, those who received case management with some
assistance were more likely to reach their goals. After 6 semesters,
those in case management were twice as likely to persist in their
education.
A second example is Padua, another trial. Our key intervention is
case management to move families out of poverty. Of the families
involved, 80% are women, 23% are married, 50% have a high-school
diploma or less, earns $18,000 a year, 60% receive food stamps.
After just 1 year, we have seen notable changes. Monthly labor
earnings are up by 17.4%, a 21% increase in the hourly wage, a 30% rise
in full time employment, a 19.5% decrease in spending, a 41% drop in
credit card debt. This further emphasizes my point--it is not just my
``gut'' that tells me case management is critical. It is data and
analytics that prove that Federal programs cannot just be financial
assistance to people in need. We need comprehensive case management to
move a family out of poverty.
You will not hear from me to ``invest more.'' My message today is
to invest differently. More Americans will experience income stability
if we get these Federal programs right. Farm bill reform must include
fixing the welfare cliff problem and doing more than giving money. We
must break the cycle of poverty for parents and their children. Thank
you.

The Chairman. Ms. Reynolds, thank you for your testimony.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Members'
understanding.
I will take the liberty of taking my 5 minutes first for
questioning.
On June 15, 2017, the President issued an Executive Order
to expand apprenticeships in the United States. The Executive
Order aims to expand apprenticeships by further enabling
individuals to participate in paid and relevant workplace
experiences and opportunities. Apprenticeships can potentially
offer affordable pathways to secure positions with more
sustainable wages.
Can anyone speak to the value of apprenticeships, and what
both the initial investment and long-term outcomes look like?
Please, go ahead, Dr. Holzer.
Dr. Holzer. Well, I am a very strong supporter of an effort
to expand apprenticeships. They have strong impacts on the
earnings of the workers who receive the training, long-term
impacts, they also please employers who engage them because
they know that they are training the workers for the skills
that, in fact, they are looking for. These programs are best
when they are also combined with some classroom training at a
community college and some broader credential.
Then the key question is why are there only \1/2\ million
registered apprenticeships in the country, and what can we do
to improve employer take-up? I applaud efforts by the Trump
Administration, by the Obama Administration, to try to move
that ball forward. It is a positive policy.
The Chairman. Go ahead.
Mr. Lotzar. Yes, I can add just a little from the recipient
side.
I know that when I talk to people to interest them in our
programs, the one program that we have that leads to an
apprenticeship, every time I say the word, people perk up their
ears and it feels like a very safe path because there is, not
to harp, a relationship in there where they feel like they are
going to be taken care of and guided through it. And indeed,
they are. Aside from it being really good economically, people
are just very ready for it. And as a matter of fact, our
manufacturing program, we have shortened it and worked with our
local manufacturing association to where we have a guarantee
that if somebody graduates our program and stays in a job for 6
months, they will put them into an apprenticeship program. And
it is just very appealing to people who want to go that path.
The Chairman. Very good.
Ms. Reynolds, you had touched on something that I have
spent considerable time looking at, from different examples,
all the 70+ welfare programs that we have, and I know today our
focus is SNAP, but can you give any other examples, other
situations that you observe where poverty cliffs really have
worked against someone who started and they were in an
eligibility level, and then they were successful, because you
start out, but it is one step at a time, where the poverty
cliffs have worked against the goal of moving individuals to
self-reliance?
Ms. Reynolds. I will never forget, about a year ago I was
sitting in an appointment shadowing one of our case managers
working with a woman, and the case manager was talking to this
woman about starting savings behaviors, even if it was just
going to be $1 a week, but just to get in that pattern. And the
woman shared, I am a great saver, and the case manager said,
``Well, tell me more,'' and she said, ``Oh, yes, yes, yes, I
save, every time I go and use my debit card, I pull out cash
back of $10 and I save it.'' And I thought, well, that is a
good strategy. And he said, ``Well, how much do you have
saved?'' And she goes, ``I don't know, about $8,000.'' And he
goes, ``Great, okay, let's talk about that. Where do you have
it?'' Dah, dah, dah. She had it in the back of her closet. And
the reason she had it in the back of her closet, because she
was about two steps, which would take about another 6 months,
away from getting to a living wage, and she knew if she put
that money in a bank she would lose all public benefits, it
would cause her and her family to go into debt before she could
actually make it.
What we often find is people are having to make these
financial decisions and financial choices that they shouldn't
have to make. Oftentimes work doesn't pay in our country, and
we need to make work pay in our country because the more we can
pull people forward and invest in them for the long-haul, the
more people who aren't going to need SNAP and TANF and housing
in the future.
The Chairman. Right. Right.
Thank you. Dr. Holzer, your testimony speaks to the needs
of workers with skills, experiences and needs across the
spectrum ranging from those who need simpler supports, to those
with multiple barriers to achieving sustainable employment. How
can SNAP best engage and support workers from these various
backgrounds so that they can all move toward self-sufficiency,
and what are the different strategies, policies, and
investments needed to engage those who are work-capable in the
labor market?
Dr. Holzer. It starts with careful assessment, and at least
in many parts of the country, too little assessment goes on of
worker skills and worker needs.
When you have strong assessment, and I would look to some
of the SNAP E&T pilots funded in the last farm bill, my
impression is that some of them try to do more careful
assessment. One group of folks are those who are trainable, who
have strong, cognitive experience, have had some attachment to
the workforce, have employability skills, and they could be
referred maybe through the local workforce agency, through the
local job center, to sector partnerships, career pathway
programs, or even apprenticeships in the high-demand
industries.
A second group may not be quite ready for that, but might,
with the appropriate supports, be able to work steadily if the
supports include childcare assistance, transportation, et
cetera.
And then, of course, the third category I consider those
who are harder to employ because they have multiple barriers.
We start with the assessment, we refer people to existing
services that are appropriate for what the assessment tells us.
If there is insufficient funds, maybe we expect SNAP to provide
some of those additional services or experiences, but, of
course, that would take more money, not less, in the budget.
The Chairman. Okay. Dr. Holzer, thank you.
I now recognize the Ranking Member.
Mr. McGovern. Well, thank you very much. Mr. Chairman.
I just want to just go back to my opening statement when I
sounded the alarm bells about the budget. The reason why I am
so concerned, I am just looking at the summary of the budget
that was released, when it comes to talking about cuts and
savings and the farm bill part of it, there is no mention of
any farm programs, no mention of crop insurance, no mention of
anything other than SNAP and work requirements and more
hurdles. I think that is the intention here, and I didn't hear
anybody here say that the way we help people get out of poverty
is to cut SNAP by $10 billion.
Ms. Reynolds, I am a believer in comprehensive case
management as well, but there is a cost to doing that. And if
we believe in case management, we have to do more than say we
believe in case management. We have to have the resources there
to actually support the kind of comprehensive case management
that you are talking about.
On the cliff, states currently have the option to lift the
income limit through broad-based categorical eligibility.
Thirty states have used this option for flexibility. I remember
during the last debate on the farm bill, we had some of my
colleagues on the Republican side talking about eliminating
categorical eligibility and taking away states' ability to be
flexible. Even with the elimination of these waivers for the
ABAWD population, that is taking away states' flexibility. What
happens if a factory closes in a particular community, what
happens if there is, all of a sudden a, real big dip in the
economy? States need to have that flexibility to be able to
provide people with basic food assistance.
Dr. Holzer, I mentioned earlier there are lot of people who
are working who are on SNAP, and part of the problem is that
wages are low. You have people who could be working and still
be so poor that they fall into this category where they have to
receive benefits from the social safety net. Can you explain a
little bit about the prevalence of low-wage jobs in the
economy, and if the goal is to help SNAP participants no longer
need nutrition assistance, what kind of investments do we need
to make? And without access to skills training, how likely is
it that lower-skilled workers can earn their way off of SNAP?
Dr. Holzer. You are correct, there are tens of millions of
low-wage jobs in America today, depending on how we define
that. By all measures, there are many of them. They are
concentrated in agriculture, retail trade, the lower end of the
service sector. There are also jobs that pay better, but
increasingly in America it is only possible to get one of those
middle-paying jobs with some amount of post-secondary education
or training, including on-the-job training. And that has been
the big change from earlier decades in America. Historically,
there were production jobs in manufacturing, clerical jobs,
that pay well for high school graduates and even high school
dropouts in some cases. Those have largely disappeared. The
remaining work options available for people with only high
school, as I said, are in those lower-wage sectors where the
earnings, even working year-round, full-time, do not get a
single earner above the poverty line.
The way forward is to get people more post-secondary
education or work experience, but of the type that employers
value. What we do in America is we send many millions of
students to college, including community colleges, but too many
of them fail to complete any credential, or they get
credentials, like an Associate's Degree in liberal studies,
that employers don't value. I think we need both.
There are a lot of employers right now, especially in the
tight labor market, who need more skilled workers. There are
lots of options in community colleges and in other contexts
that provide that training, and we have to get more people who
are capable of getting the training into those situations to
create the skills that can lift people up.
Mr. McGovern. And by the way, going back to something Ms.
Reynolds said, we ought to be talking in general terms about
how you end poverty. I believe we ought to be asking the
question how do you end hunger in this country. I have proposed
for several years that there should be a White House conference
on food nutrition and hunger to try to get a comprehensive plan
together.
But we also need to know the people in the population we
are dealing with, this able-bodied adults without dependents
population, I would suggest we do a hearing on that population
because it is complicated. They are eligible for SNAP only 3
months out of every 3 years, unless they work. In your opinion,
is that a realistic time, knowing that this is a complicated
population, to expect them to be able to transition?
Ms. Reynolds. What we see in Fort Worth really depends on
the level of post-secondary education they have. That is our
experience too; we need people to complete some sort of
credentialing in order to do that. A journey out of poverty is
not a 6 month journey, for most families it is not a 12 month
journey. Usually it takes several years to move a family from a
place of how the Federal Government defines poverty, to living
wage income with a small amount of savings and no inappropriate
debt.
Mr. McGovern. Thank you.
I yield back.
The Chairman. The gentleman yields back.
I now recognize the gentleman from Arkansas, Mr. Crawford,
for 5 minutes.
Mr. Crawford. Thank you, Mr. Chairman. I appreciate it.
Mr. Lotzar, you had a couple of recurring themes in your
testimony I would like to get you to expand on. One of those is
changing the mindset. You mentioned that a couple of times.
Changing it from what to what? Talk about that a little bit.
Mr. Lotzar. The main thing is changing it from nothing is
going to work, there isn't any hope, those people over there
are using the language that I hear, they are going to have the
good stuff and I am not. It is changing it to, no, actually,
this whole business of prioritizing work, and if I can organize
myself to, no, I am not going no matter what, I am not going to
let my kids stop me from going to work, I will find some way to
get them on the bus to go to school, whatever it is,
prioritizing work. There are a whole set of assumptions in a
middle class, which is where we are trying to get people to a
middle class lifestyle, that many of us don't even notice
because I don't know that we accept them.
A mindset shows up in behavior, so you ask somebody,
``Well, are you work-ready,'' and they will say, ``Yes, sure,
of course,'' and then we say, ``Okay, do you have a photo ID?''
Well, no. What employer is going to hire you unless you can
even prove that, for instance.
It is, like Mr. McGovern said, it is complicated. Last week
I was in somebody's apartment; one of our students, and as I
walked in, it is a very friendly place around, okay,
nevertheless, there are, I don't want to say things like that
here, there is urine in the hallways, there are signs saying if
you throw-up, clean it up. And I walk in, because he hadn't
been showing up to class and I wanted to find out where he was,
and he was just getting it together because the week before his
cousin had been shot. Not everybody is like this, I understand
I am going to the extreme. And a couple of days before, his
best friend had been shot, and so his mind just could not
handle continuing his training. He was 19 years old, he was so
into it, really wanted to do it.
Mr. Crawford. Yes.
Mr. Lotzar. But what I am saying about where his mindset
was, was just survival, let me survive.
Mr. Crawford. Right. That dovetails with the other
recurring theme that you brought up, soft skills.
Mr. Lotzar. Yes.
Mr. Crawford. Okay, so soft skills are not something that
institutions of higher learning invest in typically because
those soft skills are usually acquired through modeled
behavior. How do you address that? I mean, okay, you have to
change the mindset. To do that, you have to equip them with the
kind of soft skills that are necessary to support a move into
the economy.
Mr. Lotzar. Yes.
Mr. Crawford. How challenging is that for you as an
educator?
Mr. Lotzar. Super challenging, especially because we try to
do very short-term programs. In our programs that last a year,
much less challenging. We can see more changes. Six months, it
is kind of hard. Three months, it is very, very, very hard. But
what we do is we actually found an assessment from a company
called Learning Resources, Inc., that does a very good job at
assessing employability skill level, the kind of soft skills
that you need just for work, which includes character,
decision-making, stuff like that.
Mr. Crawford. Yes.
Mr. Lotzar. We test them on that, we work with them with
the results, we use other tools, we use a feedback tool. A lot
of feedback has to keep happening. up-front we let them know,
listen, when you leave the program you are going to be a
different person than when you start.
Mr. Crawford. Yes.
Mr. Lotzar. And this is just standard education for being a
phlebotomist or something.
Mr. Crawford. Let me move into the next question. Okay, so
we go from changing the mindset, trying to acquire a skill set
with regard to soft skills, preparing you for the workplace.
Now, as an educator, you are actually going into a curriculum
to get a credential or a certification or something that is
attractive to an employer. What about entrepreneurship
training? You had a story about the young lady who kind of
lifted herself up, pulled herself up by her bootstraps.
Entrepreneurship training, is that attractive to people that
are in this socioeconomic strata?
Is it difficult for them to comprehend or grasp that?
Mr. Lotzar. Yes and no. Sorry. I think a lot of people
think they can, but don't realize the amount of stuff you have
to understand and really handle in running a business. I mean
the idea of a P&L sheet is a little bit far away for a lot of
people, but the desire and the motivation, yes, it is there.
Mr. Crawford. Yes. Well, that is going to be the challenge.
We talk about STEM education, manufacturing jobs, and so on,
there is very little attention paid at that level to
entrepreneurship potential, and I hope that that is something
that we can expand on, going forward.
My time has expired. Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
Now, I am pleased to recognize the gentleman from
California, Mr. Panetta, for 5 minutes of questioning.
Mr. Panetta. Thank you. I appreciate it. Thank you. I have
to commend Chairman Conaway for advocating for a robust budget
for the Agriculture Committee. I know over the last couple of
weeks he has been fighting away in order to make sure that we
are fully funded. But, clearly, as you heard from Mr. McGovern,
there is a concern based on that $10 billion cut to the SNAP
program, and how that would impede our ability to reach certain
populations and basically raise them out of poverty through
employment and training initiatives; the one you spoke about.
I guess my question though is, right now, you have a
certain amount of funding and you have SNAP that is addressing
certain communities, but are there still needs that are not
being met right now, and what are those, with the funding that
you have?
Ms. Reynolds. I can speak to that. One of the things we see
that is not being addressed is the idea of serving families
holistically. We have SNAP, we have TANF, we have housing, we
have childcare, there are so many wonderful public benefits
that our country offers, but families are whole families, their
problems aren't just food, their problems aren't just housing,
their problems are upward mobility, their problems are
stability. Without holistic, comprehensive, long-term case
management we don't really stand a chance as a country of
moving families forward. Even investment in workforce and
community colleges, which I am a big believer in, if we were
investing there, yet folks aren't completing their post-
secondary education, it really doesn't allow families to move
ahead.
Dr. Holzer. If I could add to that, please. Within the SNAP
population, and if we talk about the roughly \1/3\ of adults in
the program, the vast majority of them do not get any
involvement with an E&T program within SNAP, or with any other
local workforce or community college effort. The population is
not being touched at all. I am open to some mix of somewhat
greater pressure to engage in these activities, but at the same
time also funding for more services, more supports, more of the
assessments we have talked about, maybe referrals to the local
job centers, the one-stop-shops, for referral out. But right
now, given the budgets of most of these agencies, there is no
money there to engage any more than the roughly three million
people right now. That is a very small fraction of adult SNAP
recipients.
Mr. Panetta. Got you.
Dr. Holzer, how small a budget that we could be contending
with, I mean how would that impact SNAP E&T implementation in
your state?
Dr. Holzer. I live in the State of Maryland. I am not
enough familiar with that state. If there have to be cuts in
the overall SNAP budget, we don't want that to come out of food
allotments. The logical place for these cuts to occur would be
in other activities that are regarded perhaps as less
essential. I would fear that cuts in the budget, that they
would first come out of the kinds of assessments and supports
that really we have all talked about that I think are necessary
to help people.
Mr. Panetta. Great.
Mr. Lotzar. Can I just add a teeny bit?
Mr. Panetta. Please.
Mr. Lotzar. When the SNAP budget was cut before, we saw a
huge increase of our students needing food. And that is one of
the reasons why a lot of people drop out, because who can think
of these long-term things? What we have done is we have really
put a lot of effort into our own food bank right at the college
where, no questions asked, if you say you need food, you go in,
and we have been gathering resources. However, Syracuse is a
city, it is sitting in the middle of huge amounts of
agriculture. We are lucky we can do that, we can pull a lot of
food. Not everybody can.
Mr. Panetta. Fair enough.
Thank you. I yield back my time.
The Chairman. The gentleman yields back.
I now recognize the gentleman from Illinois, Mr. Davis, 5
minutes.
Mr. Davis. Thank you, Mr. Chairman.
I may not have heard it, but did you mention that you
represent the salad bowl of America yet today, Jimmy? It is
coming later, okay. Second round of questions. I thought I
might have missed that. I was a little concerned that we might
have had some issues here. And I noticed you yielded some time
back, so I was a little worried about you.
With all seriousness, thanks, everyone, for being here.
This is a problem that we recognize on a bipartisan basis, that
we want to get the benefits and the food to those families and
those individuals who need it the most.
I have been very active working with our local food banks
and food bank directors in central and southwestern Illinois,
and had the chance to visit the Central Illinois Food bank, and
their Executive Director, Pam Molitoris, a long-time friend of
mine. And while with her, we talked about bringing to light
some of the success stories of individuals and families who
have gotten SNAP benefits, and how they have used them to work
themselves and their families into a better situation to
achieve their American Dream.
And, Ms. Reynolds, I enjoyed hearing some of the stories
that you relayed.
And as a matter of fact, I want to also commend the
Chairman of the Subcommittee, Mr. Thompson, for focusing this
hearing on pathways to success for SNAP recipients.
I want to relay one story from central Illinois that Pam
gave me. She shared with me that at the age of 15, a woman
named Kelly had a newborn baby and needed assistance in
providing for her child. She applied for and received both food
stamps and WIC to assist her and the child during their season
of need. And 7 years later, when Kelly was 22, she graduated
college and was fortunate to no longer need SNAP assistance.
Kelly's child now has grown up and has a Master's Degree in
education, and has made Kelly a grandmother. Kelly believes
that were it not for her ability to receive these benefits
during her season of need, both her and her child's lives would
be drastically different.
We hear these stories, we see these stories often, and this
is the type of success story I hope we can all gather around as
we move into the next farm bill and begin this debate, in a
bipartisan way, so we can get to success to help families like
Kelly's.
I also represent a lot of rural areas, and that is my
concern, my question is to whomever wants to answer it first.
There are a lot of issues that aren't addressed in rural areas
like they may be addressed in places like Syracuse, where there
is easy access to transportation, easy access to good foods,
that may be grown in Jimmy's district. We may not have access
to those foods in rural areas, although we should. What are
your ideas for addressing the problem of access to these
benefits, and being able to use these benefits once they are
given in rural areas, because there are a lot of communities I
represent where the only store is a convenience store and a gas
station. Where is that access to good food for those
individuals who may not live in urban areas? And also what
flexibility may they need to be able to get the sustenance to
be able to be that success story like Kelly?
Who wants to start? Tick-tock, tick-tock. Dr. Holzer?
Dr. Holzer. A scholar at the University of Washington named
Scott Allard has done some research in this area, and he has
documented really exactly what you said, Congressman, that in
the rural areas, the availability of the support services is a
great deal lower. And so the perception is accurate. Again, it
would probably take an injection of funds, but we need to
improve people's transportation to available jobs, more robust
placement services, maybe at the local American Job Center. I
mean there are fewer employment opportunities in these areas as
well, outside of agriculture.
Mr. Davis. And agriculture is not a bad employment to be
in.
Dr. Holzer. It may not be. It tends to be, on average,
quite low wage, but again, with the right work supports, it is
fine to help move people in. But again, having them access the
services is more challenging, and probably would require some
extra resources to overcome that.
Mr. Davis. Okay. Ms. Reynolds?
Ms. Reynolds. I am a social worker by trade, not an
economist, but I have grown very fond of economists over the
years, specifically in our work with University of Notre Dame.
And I would say rural poverty is a really serious thing. We
serve a 28 county diocese. Catholic Charities, throughout the
nation, serve a lot of rural areas. And all in all, I don't
think that there is a lot of innovation that has occurred in
rural communities like it needs to be. My encouragement would
be investment in innovation pilots throughout America,
specifically in rural areas, that are rigorously evaluated, so
we can understand what really works and what makes the
difference, and then double-down there.
Mr. Davis. That may be a very good idea for the next farm
bill.
I am out of time. I yield back.
The Chairman. The gentleman's time has expired.
Now, I am pleased to recognize the gentlelady from North
Carolina, Ms. Adams, for 5 minutes.
Ms. Adams. Thank you, Chairman Thompson, Ranking Member
McGovern, and thank you all to the witnesses for your
testimony.
Food insecurity and poverty are persistent challenges for
many of the communities in the 12th District of North Carolina
that I represent, and SNAP is a vital part of the solution to
these problems. However, while education and training is a
hugely valuable and vital service that SNAP can provide, SNAP
is not a work program; it is a nutrition program meant to help
those who are struggling to put food on the table. And while we
should always look for ways to improve SNAP, we should not
forget this ultimate mission.
Dr. Holzer, SNAP E&T programs are required to provide
supportive services such as transportation and childcare to the
participants, but in many states it seems like they aren't
providing these services, or they are providing them at a very
low reimbursement level. Can you speak to how important these
services are to supporting low-wage workers, and helping them
find and maintain employment?
Dr. Holzer. Very simply, they are extremely important. The
first service that people need, and both my colleagues have
addressed this, is getting a connection with employers that a
lot of people simply can't generate on their own. If we don't
want the SNAP E&T program to do that, then we would need to
improve people's access to the local job centers where people
are experienced, or to have a job developer reach out to
employers. But once that connection is made, and once it seems
like an employer is willing to hire a person based on their
skill level, childcare for parents with small children, if they
don't have childcare but they are already of school age, then
the number of hours is quite restrictive, makes it hard to
work. The childcare is really critical, and, of course,
transportation matters as well for people. Especially, if you
are talking about people living in an impoverished
neighborhood, whether it is urban or rural, and the employment
may be available, but it might be over some significant
distance, to which public transportation is not available,
providing the transportation could be a key factor.
Ms. Adams. Okay. There is no approach now to provide
training for long-term employment, because that is really what
it is going to take.
Dr. Holzer. As I indicated, if we are looking for the
biggest increases in earnings capability, that does come from
training, plus the kinds of services that we have all talked
about, but again, often linked to employment in specific
sectors. The sector-based training or work-based learning are
the best models. And again, that involves linking with the
right employers, and also making sure that the individuals in
question are trainable in the sense of good basic skills and
job-readiness.
Ms. Adams. In view of what you have just said, do you think
it is right to sanction SNAP participants?
Dr. Holzer. Do I favor sanctions?
Ms. Adams. Yes.
Dr. Holzer. There are circumstances in which that might be
reasonable. My own view is that everybody should be offered an
appropriate activity; a work activity or a training activity,
before they are sanctioned. If a reasonable and appropriate
SNAP activity is presented to people not working, and if it is
turned down, sanctions may be appropriate. I am very concerned
about sanctions on families with small children where the cuts
can actually do real damage, because it creates food
insecurity, it creates stress on the children. That is why I am
always reluctant to sanction those kinds of families. But
again, I oppose it unless appropriate activities are provided
for people who cannot provide them themselves.
Ms. Adams. Okay. Thank you very much, Mr. Chairman. I yield
back.
The Chairman. The gentlelady yields back.
I now recognize the gentleman from Florida, Mr. Yoho, for 5
minutes.
Mr. Yoho. Thank you, Mr. Chairman. I appreciate it. I
appreciate you all being here.
My background is that I am a veterinarian, and I grew up
kind of poor, and my wife and I were on food stamps when we
were 19, so I understand the importance of that. We were on
that for about 6 weeks, and it was a benefit to have, for sure.
Our goal was to get in it, get off of it as quick as we could,
and we did. And so our goal, like today in this farm bill, is
to make sure that the program is there for those that need it,
and that we have the integrity of the program long-term, and
our country is facing economic hardship if we don't change some
things. And so reforms need to be made. Reforms, not cuts,
because what we want to make sure is that the people that truly
need this, have this.
We have seen several states implement work requirements;
Alabama, Maine, Kansas, Florida. We have seen a decrease of
people on the assistance program. In your experience, have you
seen any deleterious effects to the people that have been
removed from those programs? Anybody?
Mr. Lotzar. I am still stuck on the work requirements
thing. I work with a large social service agency that
distributes temporary assistance.
Mr. Yoho. Yes.
Mr. Lotzar. And one of the things about work requirements
is that it turns into the speed with which a person can find a
job, any job, I don't care, meaning the job coach needs to get
their 150, 250 people into jobs. Those jobs almost inevitably
are jobs that are undesirable to the person, and they will be
right back where they started in a matter of weeks or maybe
months.
Taking a pause and allowing a person to; first, encourage
training, and second, move into a really sustainable career is
going to help.
Mr. Yoho. Okay. Go ahead, Dr. Holzer.
Dr. Holzer. I don't know of any specific studies in those
four states that address that question.
Mr. Yoho. Okay.
Dr. Holzer. We do know that in the aftermath of welfare
reform 20 years ago, you had mixed effects. Some people did
better, they were able to move to more consistent formal work.
Some people did worse. There has been a documented increase in
struggling families. And we know that for a lot of those
families the access to food stamps has often been what keeps
them above water.
Professor Kathryn Edin at Johns Hopkins University has
documented very, very low-income families; families with very
little access to cash, and the access to food stamps is really
critical. We also know how deleterious the effects of toxic
stress is on children in families where their food stamp
benefits are cut.
Even though I don't know specific studies of what you have
talked about, there is broader evidence to suggest we move
very, very carefully in that area.
Mr. Yoho. Yes, I look forward to getting that information.
Ms. Reynolds?
Ms. Reynolds. Yes, thank you for your question. I would say
three things. The first is that I commend the idea of this is a
program for those who need it. What I would really encourage
first is that there are a lot of people who need food stamps in
our country and experience food insecurity that are working,
but they are still having to make choices between food on the
table for their children at night or medication that they or
their children might need.
We have to really look at benefits expanding to get to a
place of self-sufficient wages.
Mr. Yoho. Well, let me ask you something on that since you
are with Catholic Charities.
Ms. Reynolds. Yes.
Mr. Yoho. How important is it with the faith-based
communities, food banks, things like that, supplementing things
like this in a community, because community is where it needs
to be healed versus the Federal Government, and everybody
looking for the Federal Government. What are your thoughts on
that?
Ms. Reynolds. Great question.
It is a both-end-type model. I mean we need you and you
need us. We need our friends at the community college to
provide excellent education, and we need to partner with our
community colleges to help ensure that students are graduating
through----
Mr. Yoho. Let me go to Mr. Lotzar right now, because you
are at the community college level. And what I have heard and
what I have seen is, we are teaching basic skills at a
community college level. Where have we broken down so that
people aren't prepared by the time they get there, because what
we are doing is we are treating a symptom? How do we change
that narrative? And I know it is beyond the scope of this
hearing, but it seems like we are not as prepared as we should
be at the community college level.
Mr. Lotzar. No, it is important. Yes, it is true. The
answer is we need to start working in the high schools already
from tenth and eleventh grade, make sure that there are student
retention efforts in the high schools, and basic skills
training in the high schools.
Mr. Yoho. I would propose we need to work earlier than
that; like at the elementary and at the family level in the
beginning so that by the time they get to the junior college,
they are focused on a career. And I know not everybody is,
but----
Mr. Lotzar. Exactly. People have to change the model of
college honestly, to get to the employment thing.
Mr. Yoho. Thank you.
I appreciate your input. I am out of time. Thank you, all.
The Chairman. The gentleman's time has expired.
Now, I am pleased to recognize my colleague from
Pennsylvania, Mr. Evans, for 5 minutes.
Mr. Evans. Thank you, Mr. Chairman.
I would like to yield a few seconds to the Ranking Member.
The Chairman. The Ranking Member is recognized.
Mr. McGovern. Thank you. I just want to respond to my
colleague from Florida when he asked whether there were any bad
impacts from some of these increased, more stringent work
requirements that some states have imposed, and the answer to
that is yes. And there are lots of stories, but again, I will
go back to this Washington Post story that I referenced in the
beginning, which begins, ``for a period last year after he lost
his food stamps,'' as a result of Maine's increased, more
stringent work requirements. ``Tim Keefe, an out-of-work and
homeless Navy veteran, used his military training to catch,
skin, and eat squirrels, roasting the animals over an open fire
outside the tent he pitched in frigid Augusta, Maine.'' It goes
on to explain his plight. But this is not unusual, and that is
why we need to understand the population of people that we are
dealing with. It doesn't all fit into a nice neat category.
This is a very complicated population. And if we want to end
poverty we need to understand the people we are dealing with.
And I thank the gentleman for yielding.
Mr. Evans. Thank you.
In listening to all of testimony this morning and obviously
going through it, I just want to ask a real succinct question
and go down the line.
Does kicking people off of SNAP encourage work?
Dr. Holzer. I would argue that if the only thing you do is
kick people off SNAP, the answer is very little, because the
rigorous evidence----
Mr. Evans. Does that mean yes or no? I am trying to
understand.
Dr. Holzer. If that is the only thing we do, the answer is
probably no.
Mr. Evans. Okay. Can we go to the next person?
Dr. Holzer. Sure.
Mr. Lotzar. If you take away their SNAP benefits, they are
not going to be thinking about work, they are going to be
thinking about quick cash.
Mr. Evans. So that means what, yes or no?
Mr. Lotzar. What that means is not sustainable work, but
bringing in income by any means, usually means it is not
reported, and certainly, they are not paying any income tax on
it, and it is something that can often land people in jail.
Mr. Evans. Okay. Yes, Ms. Reynolds?
Ms. Reynolds. No.
Mr. Evans. Okay. I would like to go to Ms. Reynolds a
little bit. In your testimony you said at the end of it about
how we must invest differently. Be very specific here, what do
you mean when you say we must invest differently? If you had
your chance, how would you suggest we invest differently?
Ms. Reynolds. Many of our Federal safety net programs are
judged by the number of people who are receiving them or
rolling off the rolls. And at the end of the day, what we need
to be concerned about is the number of Americans who are living
a life of stability. For me, I feel like we need to invest
differently up-front so long-term we don't have to invest as
much, because we are moving more families out of poverty,
allowing them to provide for themselves.
Mr. Evans. Yes. We know that many SNAP participants are
actually working while receiving benefits, and many more work
immediately before participating in programs. It seems this is
just that for those in the program there isn't an unwillingness
to work, but rather the growing role of low-wage work in the
economy. Can you explain a little bit about the issue around
low-wage jobs? And I will go down the panel on this one. Give
some explanation about this.
Dr. Holzer. We have had a large growth in the low-wage
sector in America. As I indicated earlier, there used to be
good-paying jobs available to people without post-secondary
education or training. Those have largely disappeared. Now, you
have extremely large bodies of employment for folks with very
little education, often in the low-end of the service sector or
in retail trade or in agriculture, which means that more
working people need supports. Food stamps are just one kind of
support. I am also a big fan of things like the Earned Income
Tax Credit which incentivizes people to work more to get the
aid. The economic changes have simply created a situation where
if we want people working and surviving and being able to raise
families, we need to raise the number of supports, along with
the right incentives, to make that happen.
Mr. Evans. Yes.
Mr. Lotzar. Yes, exactly. There are a lot of low-wage jobs
which people do have, which will leave them in ALICE, but more
than that it is a generalized structure of how a lot of our
very large corporations work, which aren't based locally, in
that people will have jobs and they don't know next week how
many hours or which hours they are going to work, and they are
tethered to 3 hours here and 6 hours there. If there is any
pressure that can be put on corporations to have an
understanding that you need to have a long-term employment and
stable employment, and it is not just about their bottom line,
that would help.
Mr. Evans. Yes.
Ms. Reynolds. We see the working poor every day not able to
receive benefits because of the benefit income cutoff. Like I
said in my testimony, I couldn't encourage more for us to
consider benefits not cutting off at the Federal level or the
state levels until we get families to self-sufficient wages.
Mr. Evans. I yield back the balance of my time. Thank you,
Mr. Chairman.
The Chairman. The gentleman's time has expired.
I now recognize Mr. Marshall, from Kansas, for 5 minutes.
Mr. Marshall. Well, thank you, Mr. Chairman.
My first question is going to be for Mr. Lotzar. Mr.
Lotzar, I am a community college graduate. My wife, a community
college graduate, got her nursing degree. We have ten, eleven
community colleges, technical colleges in my state, and they do
the best job of quickly pivoting to the needs of what that
community needs for good-paying jobs. Specifically, I am going
to mention Cloud County Community College wind energy, it is a
2 year program. The kids can't finish even 1 year before they
get grabbed and they are making $50,000-$60,000 a year, which
is a very livable amount of wage in my area.
How do you measure success? What are you doing to gather
data to measure success?
Mr. Lotzar. Success in community colleges is usually
measured by completion rates, which, as Ms. Reynolds said, are
pretty abysmally low. I know at our college 47 percent of the
people who start don't finish. 15.4 percent of people who
intend to do a 2 year degree do it in 2 years, everybody else,
3, 4, 5, 6, or they don't. But there is another measure of
success that we do in our workforce development department,
which is how many people have jobs in the field that they went
and trained for, at least 2 years out after school. How do we
measure for that? We keep calling.
Mr. Marshall. Yes.
Mr. Lotzar. Yes.
Mr. Marshall. Yes, one of my technical colleges in the
aircraft industry, which has a 99 percent success rate of
getting a good job when you are done, I think that is a great
way of measuring success.
Ms. Reynolds, I will come to you. Catholic Charities is
alive and well in my district and does such a great job. I am
an obstetrician working with my pregnant moms, as well as our
immigration issues.
Talk about case management a little bit. What is the secret
to successful case management? Be more specific.
Ms. Reynolds. Great. A case manager is one who spends about
half their time connecting a client, and helping problem-solve
what a family is facing. That is childcare, that is
transportation, that is housing, all of those sorts of things.
That is enrollment in community college. And then the other
half of their time they are functioning as a coach, a
therapist, that sort of thing. The toxic stress people in
poverty face is very real. The lack of belief in oneself is
very real. The hopelessness that we find them in is very real.
And if we don't have someone walking alongside of them, when
they fail a class at a community college, saying we know you
failed, but you can do this, let's move forward. Oftentimes
they don't succeed. For us good case management is somebody who
is meeting very regularly with a client, face-to-face with a
client, seeing a client make progress toward their goals, we
measure success every 21 days, progress on their action step.
And a case manager is really playing that role of
accountability partner, cheerleader, coach, therapist, whatever
hat that that client needs at that time.
Mr. Marshall. Thanks. Yes. One of my colleagues asked me
why do I do so many town halls and roundtables, and part of my
job is to encourage the encouragers, to encourage your people
who are out there doing these jobs, and just to tell them that
they are doing a great job.
I am going to come back to my friend from the community
college. In your testimony, let me get it right here, the power
of case management and helping move--back to you, okay, train
people in jobs that may not exist in your region. My community
colleges do a great job of pivoting very quickly to the needs.
I mentioned the wind energy, Garden City has a diesel engine
program, we have lots of tractors in Kansas, so they train them
how to work on diesel engines. K State Salina has a maintenance
program for UAVs, which is growing tremendously in my district.
How does your community college try to deal with the
anticipated needs of the future of jobs rather than yesterday's
jobs?
Mr. Lotzar. Yes. What we have tried to do, as a matter of
fact, is look for the future jobs that are happening right
around the corner. That is why I said we look 18 months out
when we talk to employers, and we use a database called Burning
Glass, it is a private thing, kind of expensive, but really
good, done by a bunch of geeks from Boston. Sorry.
Mr. Marshall. Technical term?
Mr. Lotzar. I think so, yes. When we find only 18 months
out which jobs are hiring, then we can start training. When we
looked for programs, such as Green Jobs, we run a risk in our
area because they may show up, they may not. Curriculum
development takes at least 2 years and then some. It is going
to be another half a year at least before somebody signs up for
college, and then they start, and the 2 years to learn is
really 4 years. You are looking at 7 years from the time you
had the idea about what is going to happen, so you need to
focus on very short-term job opportunities.
Mr. Marshall. Yes. Before I yield back, do you realize that
there is a reception night for rural community colleges in
D.C.? Talk to my staff.
I yield back.
The Chairman. The gentleman yields back.
I now recognize the gentleman from Florida, Mr. Lawson, for
5 minutes.
Mr. Lawson. Thank you very much, Mr. Chairman. I really
enjoyed the testimony that you all are giving this morning.
In my district one out of every four Floridians are food-
insecure, and I have six of eight counties with the highest
food insecurity in the state. This issue strongly influences
how I look at agriculture and the farm bill. Today, with this
discussion of SNAP and E&T, I want to remind the Committee that
in 2016 only five states ensured that all SNAP beneficiaries in
their state that were subject to 3 month time limit were
provided E&T training, which is critical. That is unacceptable
and we need to address the problem in the 2018 Farm Bill.
Dr. Holzer, in my district, we have the second highest
poverty rate in the State of Florida. I represent many folks
who are looking for work and are trying their hardest to
provide for their families. When the mandatory ABAWD work
requirement went into effect in 2016, the Florida Department of
Children and Family estimated that 591,000 were removed from
SNAP in the first year. How can we amend current law so that
the vulnerable in communities are not excluded from the
nourishment that they deserve?
Dr. Holzer. Well, Congressman, I would change policy and
practice with regard to the ABAWD population. As I indicated
earlier, I would more carefully assess their employability and
provide both what some people in the field call accommodation
of help and hassle; pressure to engage in services and
activities, but also assistance and help in doing so. And,
frankly, one thing that could be considered is, in return for
that engagement, to suspending the time limit more easily.
Right now the time limit is suspended for people who engage
in work or a prescribed number of activities for 20 hours a
week. I would probably increase the assistance, maybe drop the
work hours, just to make it easier for more people to do
something productive but still have access to the food stamps
that they often need, as a work support.
Mr. Lawson. Okay. And, Ms. Reynolds, this question is
directed to you. I grew up in the country where people, to a
large extent when I was growing up, were not on SNAP or any
other program. They provided for themselves and helped each
other. How do you deal with the situation where some people who
are on this program that shouldn't be there? And people are
very smart, so every time the Federal Government implements
some requirements, a lot of people are very smart how to get
around those requirements. When I am working on this, I am
trying to see, I know people who need it the most really need
it, but there are a lot of people who are gaming the system.
How do you go and deal with that? What do you do in order to
stop that?
Ms. Reynolds. That responsibility in our community falls to
the State of Texas. What we see a lot in our organization is,
we work with a lot of families, most of the time our families
aren't on a lot of benefits that they do qualify for. One of
our goals or measures of success is families being off of
public assistance, however, what we often see is we enroll them
in public assistance until we can move them further along the
spectrum to eventually get them off of public assistance.
We have seen the anecdotal story of somebody who is taking
advantage of the system, but generally speaking, what we see at
Catholic Charities Fort Worth is people who want more for their
children than what their life looks like today.
Mr. Lawson. Okay. I will yield back in a minute. In Duval
County, there are about 200,000 people that go without food
every day, and you won't be able to answer this question, but I
would like to know, and I have gone to food banks, helped with
meal deliveries who get nonperishable items, and so forth, how
do we get nourishment to these people, especially kids, and
that is an issue.
But, Mr. Chairman, I will just yield back. That is just
something on my mind.
The Chairman. The gentleman yields back.
Now, I am pleased to recognize the gentleman from New York,
Mr. Faso, 5 minutes for questioning.
Mr. Faso. Thank you, Mr. Chairman, and thank you for
holding this important hearing today. And thanks to the
witnesses for coming.
I also am on the Budget Committee, and I would just note
that we have heard a lot about the budget. The budget does
presume $10 billion in reduced spending over 10 years, and it
is important to note that this program will spend somewhere
between $600 and $700 billion over that 10 year period. The
presumption is that if there were more stringent work
requirements, that there would be certain reductions in levels.
Now, I don't know how this will manifest itself, but I can
tell you that I don't think I have heard virtually anything
here today that one would disagree with. I mean you hear the
needs, the problem with the income cliff. I hear this all the
time from employers, small-business employers in particular,
who tell me people will come to them looking for work and they
will decline a job because of the prospect of losing benefits
because of the dramatic income cliff. And there is no doubt
that I hear from food pantries and others that the need and the
demand for their services are more significant now than they
have been in recent years. There is something going on. Then I
hear from employers constantly who tell me they have jobs, they
just can't find qualified people.
What percentage of those people, Ms. Reynolds, do you
think, on food stamps generally throughout the country, are
getting the kind of coaching that you are talking about would
be so important to getting people into jobs and helping them
move in a direction so they have less dependency on these
programs?
Ms. Reynolds. I would say a very slim margin. And if I
could encourage one thing and one thing alone today, I love how
your colleague talked about one of his roles was to be an
encourager of encouragers, because we have a team just at our
Catholic Charities of over 400 people who dedicate their life
to trying to move families out of poverty. Make it easier on
us, make it easier on our team at Catholic Charities and
Catholic Charities throughout the country, and allowing these
benefits where it makes sense for families to move ahead.
Mr. Faso. What if we were to presume some savings in EBT in
SNAP benefits, and plowed those savings into the kind of
coaching and educational opportunities for people that Dr.
Holzer was referring to and that Mr. Lotzar is conducting at
the community college level?
Ms. Reynolds. Yes. I am probably not familiar enough about
where savings could be realized, but I do think it is really
important that we invest differently, that we invest up-front,
and we invest in intensive case management.
Mr. Faso. Yes, Dr. Holzer.
Dr. Holzer. If I could just address that. The vast majority
of adults on SNAP never set foot in an American Job Center.
There are over 3,000, what we used to call One-Stop Shops,
around the country that are there to help connect people to
jobs. They never get those services. They never get the
counseling available in those centers that would help them
identify appropriate education and training activities to
improve their employability. Anything we could do within SNAP
to better connect people to the labor market services that are
already there, would be a big step forward.
Mr. Faso. Maybe a means by which we could perhaps bridge
some of the Republican-Democrat philosophical divide would be
to actually take savings, if they accrue, and plow them into
those kind of efforts.
Here is the crux of the matter, it seems to me, that the
public is oftentimes very frustrated by what they perceive to
be the abuse of the system. An under sheriff in my district
related to me not a month ago, every single drug dealer he
arrests has an EBT card for food stamps on them, and yet we
know, and I have met with the mental health associations in my
counties, the important need for people, they may not be single
adults, but they may, because of mental health difficulties or
other difficulties, what was related about the veteran in
Maine, these people simply don't have the capacity to work for
a variety of reasons, whether it is mental health, whether it
is drug addiction, whatever. There has to be some means by
which we can move many more of the people who are in SNAP now
and move them into productive employment by getting at this
income cliff that Ms. Reynolds; any comment that Dr. Holzer or
Mr. Lotzar have about the income cliff from your experience?
Dr. Holzer. It is one thing to find an income cliff
theoretically for someone who finds themselves at a certain
point in the earnings and hours distribution. It is another
thing to find a lot of people at that cliff and for it to
affect their behavior.
The rigorous evidence to date does not show large negative
effects on employment because of the SNAP program. It is not
like 20 years ago before welfare reform where the old welfare
system really did disincentivize a lot of people. In SNAP right
now, the rigorous evidence, and I would refer you to work by
Diane Schanzenbach of Northwestern.
Mr. Faso. Yes.
Dr. Holzer. There is almost no evidence of negative effects
on work by men, and modest effects on women. It is not zero,
but this notion that massive amounts of work are being deterred
is probably not accurate, based on the current research.
Mr. Faso. Thank you, Mr. Chairman. I yield back.
The Chairman. The gentleman yields back.
I now recognize the gentleman from Florida, Mr. Soto, for 5
minutes.
Mr. Soto. With the Chairman's indulgence, I would like to
yield 30 seconds to Mr. McGovern.
Mr. McGovern. Thank you. And I appreciate what the
gentleman just said, but I just want to point out one thing.
The SNAP program is one of the most efficiently, effectively
run programs in the Federal Government, and as Mr. Evans
pointed out, the primary focus of this particular program is to
make sure people have food and nutrition.
Now, we can talk about better case management, which
involves coordination with a whole bunch of different programs,
which is a good idea, but let's understand about this
particular program. And when you cut this program, what you are
doing is you are taking food away from people.
The benefit right now is about $1.40 per person, per meal.
That is it. That is why so many people on SNAP end up at food
banks. And in 2016, we threw a million people off of the
program because the waivers disappeared. Those people aren't
working, by and large, many of them. Those people have just
been cut off of their food benefit because waivers haven't been
extended. They are going without food. They are ending up in
food banks.
If we want to talk about a holistic approach, that is a
good conversation to have, and within the context of this farm
bill, finding $10 billion worth of cuts in SNAP is a terrible
thing to do, and it is going to make people's lives more
difficult, and make it more difficult to do the kinds of things
that the panelists here have suggested.
I thank the gentleman for yielding.
Mr. Soto. Thank you, Mr. McGovern.
As we know, \2/3\ of the folks on the program are children,
seniors, the disabled. Seventy-five percent of households where
someone is able to work, is working. And we already passed a
major reform for able-bodied adults where they get 3 months
every 3 years. We are talking about a really narrow section of
SNAP. Now, it is important for Americans to understand that
because people get the sense there are all these folks who are
able to work, and they are just getting SNAP the whole time.
I want to start briefly with, let's say we have seniors or
those with disabilities who want to work maybe a part-time job.
We are not forcing anybody to do that, but I know some folks
want to still get out of the house and make a little money.
What can we do to help out seniors and those with disabilities
who choose to want to work a part-time job or something of that
nature? That is for the whole panel.
Dr. Holzer. I would start with assessing their needs and
capabilities, and taking advantage of existing labor services
in our American Job Centers and try to connect them with
employers.
Frankly, and it is out of the domain of this Committee, I
would also like to see some reforms in SSDI, in the Social
Security Disability Insurance program, which right now is not
optimally set up to encourage people with disabilities to work.
Because a lot of the disabled folks are not only on food
stamps, but on SSDI. Instead of kicking them off food stamps,
we can think about changes in that program that would
incentivize greater work and then get them those services.
Mr. Soto. Sure. Since my time is limited, I am going to go
to my second question, which is dealing with able-bodied
adults.
How are we identifying these folks who come off of this 3
months, every 3 years, and what do you think we could be doing
better to make sure they have appropriate work and education?
And I give that question to both Mr. Lotzar and Ms. Reynolds.
Ms. Reynolds. It is my belief that the biggest thing we can
do for these families is walk with them. And that doesn't occur
over a few months, that occurs with somebody providing good
case management services to them. That really is about a
transformational relationship over several years.
Mr. Soto. Now, are these folks identified and then relayed
to your organizations efficiently right now?
Ms. Reynolds. Say it again.
Mr. Soto. Are these folks, able-bodied working adults, who
are off of this 3 months, do we efficiently right now identify
these individuals for your groups to help out with?
Ms. Reynolds. In some communities. It depends on local
collaboration relationships that occur. We tend to be a larger
provider of case management and assistance in our local
communities, so we get a large number of referrals coming
through our doors.
Mr. Soto. And, Mr. Lotzar, if we identify these folks
properly and efficiently, what could we be doing better to
assure they have appropriate work and education?
Mr. Lotzar. Yes. Short-term work training programs, because
you can't take a long time. You can't do an Associate Degree.
It is the very short part that helps, first. Second, like I
said, you have to work on the desire for a different kind of
lifestyle, which people say is there, and it is there, but a
demonstration of, I don't want to say regular, a working
lifestyle that is full-time work, that is meaningful work.
It takes a lot, and the way to do that is really with the
case management, with relationships. And case management
doesn't have to happen in any particular organization, but
short-term programs that deal with the person. There we go.
The Chairman. The gentleman yields back.
I now recognize the gentleman from Texas, Mr. Arrington,
for 5 minutes.
Mr. Arrington. Thank you, Mr. Chairman. And I apologize for
coming in late, but we have things that are scheduled at the
same time, unfortunately. And so being from west Texas, I
always find that being rude to walk in a conversation and then
act like you have been there for the whole time.
I am just curious, have there been studies about SNAP
recipients engaging in community college, education, skills
training, and how many SNAP recipients avail themselves of
those opportunities? And I mean is there any study like that? I
didn't see anything cited, yes, sir?
Dr. Holzer. There isn't a lot on SNAP recipients because we
know that very few of them are engaged in meaningful employment
and training activities, and I think we all share the goal of
seeing more of that for this population, we do have studies on
similar low-income individuals participating in community
college programs, and we have some sense of the different
programs that work for those folks. Some of them are Associate
Degree programs, some of them are certificates, but again, if
they have connections to employers in high-demand fields, we
have evidence of success there. And we would like to see more
SNAP recipients engaged in those efforts.
Mr. Arrington. If very few are engaged in that, how do you
incentivize this community to engage and avail themselves? I am
a believer in the education and skills training to empower
people, improve their lives.
Dr. Holzer. Well, there are incentives for the individuals,
and there are also incentives for the states that implement a
lot of these programs. One can imagine, for instance, bonuses
to states that engage more of these individuals in meaningful
activities or that improve their outcomes. At a minimum,
reporting requirements can matter, and bonus for states that
manage to raise the number of people engaged, again, in
meaningful activities. Performance measures, although those can
have a downside because they can encourage the agencies to
cream and do things like that. The incentives for the states
and the local agencies matter. And for the individuals
themselves, there is often an incentive already; that is higher
earnings, as long as that money is there for the assessments
and the support services needed to get them there.
Mr. Arrington. Okay. Mr. Lotzar, do you have a comment on
that? And then I just want to ask you about how you align
market opportunities with your educational programs. Community
colleges are the best at that, by the way, speaking as a former
Vice Chancellor at a major research university. Kudos to the
community colleges out there doing great work for our country.
Mr. Lotzar. Thank you.
Mr. Arrington. Any comments on the previous question, and
then that latter comment that I made?
Mr. Lotzar. Yes. On the previous question, I just wanted to
say that there is incentive for individuals, and that is
earning more income, but there has to also be modeling, there
has to also be demonstration on the parts of people who grow up
knowing SNAP and relying on SNAP, and not just SNAP but SSI or
SSDI, that connecting through short-term programs at community
colleges, I am just one of these flag-wavers, that leads to a
successful, stable income that is reliable. There has to be
modeling. And how you incentivize it, I don't know. He had some
good points with the state there.
The second question you asked was how do we find out which
jobs are the right ones?
Mr. Arrington. Yes, but let me skip over that one. I am on
the VA Committee, again, at my university back home, the one I
served at in the administration, we received a lot of funding
from the VA to provide great education for our veterans, and
were proud to do so, and won awards by having a veteran-
friendly campus, et cetera. But there are some that are really
critical about the for-profit guys. Some have gone out of
business, and they worry about veterans going to schools or
institutions of higher ed that may not be performing and
delivering quality education. My thought is, rather than us
picking and choosing at the Federal Government, why don't we
have some outcome-based funding? Why don't we give some of the
money up-front, and then if the population that we are
interested in is persisting, is graduating, and is getting
employment, then we put a little bit more money as a reward to
those institutions. Why not do something like that with this
population, quite frankly, with every population that the
Federal Government is spending taxpayer dollars on?
And I yield back, Mr. Chairman.
The Chairman. The gentleman yields back.
Before we adjourn, I invite the Ranking Member to make any
closing remarks that he has.
Mr. McGovern. Let me thank the panel for your excellent
testimony and your presentations. You have made a challenge to
all of us to be thinking more holistically about how we deal
with the issue of poverty and hunger in this country.
And I am going to close the way I began, by just expressing
my deep concern over our funding priorities here in this
Congress. The notion that we would even entertain cutting SNAP
by $10 billion, to me, goes against everything that I heard
today in terms of how we ought to be approaching this issue.
People on SNAP are a very diverse population, and as I
mentioned at the beginning of the hearing, 67 percent of those
on the program are not expected to work; they are kids, they
are senior citizens, they are people who are disabled. Of those
who can work, the majority are working. Yet wages are so low
that so many of them still need to rely on this program.
Of those who are not working, the population is very
complicated, and it includes returning veterans, it includes
people who are chronically homeless, people who have
undiagnosed mental illnesses. It is a complicated population
and we need to treat it as such. But, we need to reassess what
our priorities here are in this Congress. I appreciate very
much your presentations and look forward to working with you in
the future.
I yield back. Thank you.
The Chairman. The gentleman yields back. And I thank the
Ranking Member.
First of all, I want to thank the witnesses for, once
again, bringing your perspectives, your experience, and I can
tell your passion on the topics and the issues that were
discussed today. I greatly appreciate it.
I want to thank my colleagues. The Ranking Member does
better math than I, I can't keep track of how many hearings we
have done, but it was quite a few.
Mr. McGovern. Twenty-three.
The Chairman. Twenty-three, thank you, 23 hearings, and it
is a passion of all the Members of the Subcommittee. We have
great participation, and I think that is reflected on how
important that this topic is. And we have done this with
transparency. And I would agree, we found very few instances of
fraud and abuse, and we are looking to see how we can make this
program more effective to help American families.
I want to thank the staff who do all the really heavy
lifting on both sides of the aisle, that help prepare us for
this.
My principles are pretty clear, and I talk about them a
lot. The fact is nutrition matters, and farmers feed, that is
why I can't think of a better place for a nutrition title than
as a part of the farm bill. And we have one other, would the
gentlelady like to ask questions for 5 minutes? If so, I will
yield to the gentlelady from New Mexico.
Ms. Lujan Grisham. How about if I do a hybrid in respect to
the chair and the Ranking Member, because I am so late. And I
really appreciate the conversation, so I want to certainly
associate myself with those closing remarks.
And the one point is that I would just love to make to the
group, that in the testimony where work requirements and
getting folks out of poverty is certainly an issue that is
bipartisan, a one-size-fits-all model, I agree, never works.
And recognizing that there are states like mine with such
extreme poverty, have some of the hungriest families still in
the country, the highest unemployment or nearly so, we shift
positions where we are worst and then second worst. And there
is not a job market in any community that is having any impact
on our overall economy. No job training, no investments, no
state policy that works currently. We have to be very careful
about a Federal mandate that would create, whether perverse
incentives or not, the right opportunities for states like New
Mexico to make productive decisions that support families who
are really in need.
Mr. Chairman, that was very kind of you. I thank the panel,
and I thank my colleagues for this hearing today. Thank you.
The Chairman. The gentlelady yields back.
The focus of today's hearing was improving pathways to
success for SNAP households. SNAP households, a great Illinois
philosopher, Representative Rodney Davis, used a term that I
love, used in today's hearing about serving those folks who are
in the season of need. And that is certainly what our focus is
on. The good news is we are building on a record of bipartisan
work and accomplishments. The Workforce Innovation and
Opportunity Act that was passed and signed by President Obama,
and which really was focused on restoring greater access to
more effective job training. That is the One-Stops, the Career
Links were made reference to. And we have some great reforms
that, in a bipartisan way, we have accomplished those. And that
was just a few years ago. And then most recently we passed
unanimously the Strengthening Career and Technical Education of
the 21st Century, which again is about restoring rungs on the
ladder of opportunity, greater access to more effective skills-
based training. Coupled with our Nutrition Subcommittee work
that we have been doing and preparing for, we are providing and
looking for greater access to more effective skills-based
training and coordination with, obviously, meeting nutrition
needs. Our success--when we will be successful we are going to
see, I believe, more unemployed become employed, more
underemployed to have sustainable employment, and lower wages
to better wages.
It has been noted throughout the hearing this morning that
the budget resolution released this morning calls for $10
billion in reconciliation reductions from the Agriculture
Committee. Several folks have offered suggestions in the press
over the past few weeks for ways to cut SNAP to achieve those
savings. I want to remind everyone it is up to the Agriculture
Committee, how any required savings would be achieved. Not the
Budget Committee and not folks who are freelancing in the
press. And I would also note that we are only required to
respond to reconciliation instructions that make it through the
Senate and into a conference joint budget resolution.
For the time being, we are going to keep our eye on the
ball, and that means staying focused on the next farm bill.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional materials and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Subcommittee on Nutrition is adjourned.
[Whereupon, at 11:42 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Article by Hon. James P. McGovern, a Representative in
Congress from Massachusetts
Trump to poor Americans: Get to work or lose your benefits
The Washington Post
Wonkblog/Analysis
By Caitlin Dewey and Tracy Jan
May 22

A group of homeless men and women receive meals from
volunteers on May 18 in Morgantown, West Virginia. West
Virginia is one of the nation's poorest states where nearly one
in five struggled to afford basic necessities in 2015. (Spencer
Platt/Getty Images)

For a period last year after he lost his food stamps, Tim Keefe, an
out-of-work and homeless Navy veteran, used his military training to
catch, skin and eat squirrels, roasting the animals over an open fire
outside the tent he pitched in frigid Augusta, Maine.
The new additions to Keefe's diet resulted from a decision by state
authorities to tighten work requirements for recipients of the social
safety net--forcing the 49 year old, who lost his job at a farm
equipment factory because of an injury, off the food stamp rolls.
``I was eating what I could find, and borrowed from friends and
strangers,'' Keefe said in testimony to the Maine legislature. ``There
were many times . . . when I would go 2 or even 3 days without food. If
one was inclined to lose a lot of weight, I could recommend this diet
wholeheartedly.''
Now the Trump Administration in its first major budget proposal has
proposed more stringent work requirements--similar to those in effect
in Maine and other states--to limit eligibility for food stamps and a
host of other benefits as part of sweeping cuts to anti-poverty
programs.
The White House budget proposal, due to be unveiled on Tuesday,
would reduce spending on anti-poverty programs from food stamps to tax
credits and welfare payments by $274 billion over a decade, largely by
tightening eligibility for these programs, according to Administration
officials. With additional reforms on Medicaid and disability
insurance, total safety net cuts would top $1 trillion over 10 years.
Making low-income Americans work to qualify for so-called welfare
programs is a key theme of the budget. ``If you are on food stamps and
you are able bodied, we need you to go to work,'' said budget director
Mick Mulvaney during a White House briefing on Monday.
He said the strengthened requirements in the budget focuses on
putting the 6.8 million unemployed or underemployed Americans back to
work. ``There is a dignity to work,'' he said, ``and there's a
necessity to work to help the country succeed.''
The White House did not offer details Monday on how the work
requirements would be implemented, other than saying it would be
``phased in'' for able-bodied adults without dependent children.
The White House estimated the combined reforms to the Supplemental
Nutrition Assistance Program, better known as food stamps, would
generate nearly $193 billion in savings over a decade.
In addition to SNAP reforms, Trump will propose taking the earned
income and child tax credits away from undocumented immigrants working
in the United States, many of whom pay taxes or have American born-
children. That reform alone would save $40 billion over a decade,
according to the White House.
Anti-poverty advocates say the White House could implement its
desired reforms to SNAP in two ways: require recipients to work more
than the current minimum of 20 hours a week, or cut the unemployment
waivers in areas with high joblessness rates.
The influential Heritage Foundation, as well as a number of House
conservatives have championed a crackdown on waivers, leading many
anti-poverty advocates to conclude that is the most likely way the
White House would implement its proposed reforms.
Robert Rector, a senior research fellow at the Heritage Foundation
who has asked the White House to prioritize work requirements, said the
Trump Administration needs to ``go after'' the four million able-bodied
adults without dependents in the food stamp program.
``You say to them, `We will give you assistance, but come to the
office 1 day a week to do job search or community service,''' Rector
said. ``When Maine did that, they found almost immediately that their
caseload dropped 85 percent.''
Critics say such a change could endanger people like Keefe, a
veteran who has been unable to find a job after injuring his wrist on
the job at a plow factory in Rockland, Maine. As a result, Keefe now is
medically unable to lift more than 25 pounds--which disqualifies him
from other work in manufacturing.
The Navy veteran was one of several thousand former food stamp
recipients who lost benefits when Maine, in 2015, declined to renew its
waiver and reinstated statewide work requirements. He has spent much of
the last year living in a tent.
``I don't wanna worry no one,'' said Keefe, who recently testified
to Maine's Committee on Health and Human Services about the impact the
work requirement had on him. But, he added: ``I hope they understand
that people fall through the cracks.''
The Trump Administration is considering other changes to SNAP.
While details remain sparse, Mulvaney said the Federal Government would
be asking states to share in the costs for the food stamps program,
through a phased-in ``state match'' so they have a ``little more skin
in the game.''
``We believe in the social safety net. We absolutely do,'' Mulvaney
said. ``What we've done is not to try and remove the safety net for
folks who need it, but to try and figure out if there's folks who don't
need it that need to be back in the workforce.''
Suspending employment waivers would hit hard in areas with high
unemployment such as southern and central California, where the
unemployment rate can spike as high as 19 percent, as well as cities
such as Detroit and Scranton, Pa., where joblessness remains rampant.
The change would also hit hard in large portions of New Mexico, Oregon,
Washington, Georgia, Kentucky, Tennessee, West Virginia, Idaho and
Michigan.
``It's unconscionable, cruel and ineffective,'' said Josh Protas,
the Vice President of Public Policy at MAZON, a national anti-hunger
organization. ``I'm honestly not sure what their goal is.''
Critics say the changes in unemployment waivers would be
devastating for Native American families living on reservations in
North and South Dakota, Arizona and Montana where there is chronic
poverty and high unemployment.
``The President's budget proposal will force kids in rural America
to go hungry while wasting billions of taxpayer dollars on misplaced
priorities like a wall that won't keep us safe,'' said Senator Jon
Tester (D-MT), in a statement to the Post. ``Parents in Montana and
across Indian Country should not have to choose between food for their
tables, gas for their cars, and shoes for their kids.''
The number of Americans on SNAP remains high, however. In 2016, 44
million Americans receive the benefits, compared to just 28 million
people in 2008.
``They have not come down like we would expect them to do,''
Mulvaney said. ``That raises a very valid question: Are there folks on
SNAP who shouldn't be?''
Anti-hunger advocates argue that, generally speaking, there are
not. Because SNAP benefits decrease gradually with increased income,
there is no incentive for people to avoid work to get benefits--a
phenomenon economists call the ``welfare cliff.'' And benefits are too
small for people to subsist on them without working: The average food
stamp benefit was $465 a month for a family of four in 2015. Most
people are on the program for between 7 and 9 months on average.
``The notion that people would prefer not to work to get that
benefit, give me a break,'' said U.S. Representative Jim McGovern, (D-
Mass.) a longtime anti-hunger advocate. ``This is a lousy and rotten
thing to do to poor people. They look at SNAP as an ATM to pay for
their other priorities.''
Additionally, \3/4\ of households using SNAP contain children,
seniors, or people with disabilities, said Elaine Waxman, a senior
fellow in the Income and Benefits Policy Center at the Urban Institute.
Without SNAP, the country would have had three to 4.5 million more
people in poverty during the recession, she said.
More than \1/4\ of able-bodied adults without dependents on SNAP do
not have a high school diploma, Waxman said; another 57 percent don't
have college degrees--putting them at a disadvantage when it comes to
finding work.
A number are also veterans, young adults aging out of the foster
care system, and felons recently released from jail. SNAP recipients
who cannot find work, for these or other reasons, are supposed to
attend job training programs--but they're not widely available because
of lack of funding.
``This is the trick. On the one hand, you want people to do
something, when in fact a lot of folks may not realistically be able to
find a job,'' Waxman said. ``Most states don't want to put the money
in. This is a dilemma that we're in.''
The evidence that stricter work requirements actually cause people
to get jobs is mixed, at best. In Kansas, which reinstated the
requirements in October 2014, 40 percent of unemployed adults were
still unemployed a year after being kicked off SNAP. Among former SNAP
participants who lost benefits, the average annual income was only
$5,562, according to the Foundation for Government Accountability, a
right-wing think tank based in Florida.
Progress has also been hotly debated in Maine, a state that
conservatives regularly hold up as evidence that stricter work-
requirements are effective. When the state dropped its waiver in 2015,
the number of unemployed adults in the program immediately fell by
nearly 80 percent.
But a May 2016 report by the state found that nearly 60 percent of
those affected individuals did not report any income in the year after
they left the program--suggesting they were still unemployed or
underemployed a year later.
On the national level, Michael Tanner, a senior fellow who focuses
on social welfare issues at the Cato Institute, a libertarian think
tank, said he doesn't think similar mandates will have a huge impact on
moving large numbers of recipients into employment or result in
significant budget savings. Most SNAP recipients who can work are
already working, and many of those who are not meet one of the various
exemptions such as being disabled.
``It's making a statement that Republicans think people who are on
public assistance should be doing all they can to get off,'' Tanner
said, ``and that means working whenever possible.''
McGovern, who sits on the House Agriculture Committee, said he was
surprised to learn about the White House proposal given Agriculture
Secretary Sonny Perdue's testimony before the Committee last week
saying he did not favor any major changes to the food stamps program.
``It's been a very important, effective program,'' Perdue said,
according to a recording of the hearing. ``As far as I'm concerned we
have no proposed changes. You don't try to fix things that aren't
broken.''
The Trump Administration is advocating other ``fixes'' to the
safety net, as well. The budget will also propose requiring people to
have a Social Security [N]umber to collect tax credits. Mulvaney said
it is unfair that taxpayers support immigrants working illegally in
this country.
``How do I go to somebody who pays their taxes and say, `Look, I
want you to give this earned income tax credit to somebody who is
working here illegally? That's not defensible,'' Mulvaney said.
Rector, of the Heritage Foundation, said he also hopes Trump will
prioritize work requirements for those receiving housing subsidies.
Mulvaney did not address that on Monday.
Diane Yentel, President of the National Low Income Housing
Coalition, said the majority of Americans receiving housing subsidies
are elderly, disabled or already include someone who works. Of the
remaining households, nearly half include a preschool child or an older
child or adult with a disability who needs the supervision of a
caregiver.
Establishing work requirements for the remaining six percent of
households who are `work able' but not employed would require state and
local housing agencies already facing funding shortfalls to establish
cumbersome monitoring and enforcement systems for a very narrow segment
of rental assistance recipients, she said.
``This is neither cost effective nor a solution to the very real
issue of poverty impacting millions of families living in subsidized
housing or in need,'' Yentel said in a statement to the Post.

Correction: This story incorrectly stated the average annual
income for SNAP participants in Kansas who had lost and then
found jobs was $5,562. That figure applied to all SNAP
participants who had lost the benefit.

Caitlin Dewey is the food policy writer for Wonkblog.
Subscribe to her daily newsletter: tinyletter.com/cdewey,
@caitlindewey.
Tracy Jan covers the intersection of race and the economy for
The Post. She previously was a national political reporter at
The Boston Globe, @TracyJan.