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Release No. 0369.05 Contact: USDA Press Office (202) 720-4623

**KENTUCKY FARM BILL FORUM WITH AGRICULTURE SECRETARY MIKE JOHANNS AND
MODERATOR JEFF NALLEY, KENTUCKY FAIR AND EXPOSITION CENTER IN
LOUISVILLE, KY ON AUGUST 31, 2005**

SECRETARY MIKE JOHANNS: Thank you very much. Let me start out and say to
the Commissioner \[Mr. Richie Farmer\], first of all, and I mentioned
this to him, doesn't he have the perfect name to be the Commissioner of
Agriculture?

It is great to be here. Thank you for coming out. Give my regards to, a
good friend of mine, your governor. Tell him I said hi.

Ladies and gentlemen, it is great to be here in Kentucky. Mention was
made that I grew up on a dairy farm, and I did. I grew up on a dairy
farm in north central Iowa near a community called Osage. Now, you look
puzzled. Apparently not everybody knows where Osage, Iowa is. So I
better clear that up or you're going to be focused on that while we're
trying to discuss some important issues here. Osage actually is just
south of Stacyville and St. Ansgar, and straight east of Manly. So now
you know where Osage is.

\[Laughter.\]

SECRETARY JOHANNS: My father had three sons. There were four in our
family, my sister and then the three sons. I tell people that John
Johanns had a perfect way of building character in his sons. He handed
you a scoop shovel or a pitchfork and off you went to the barn or the
hog house and you stood ankle-deep in you-know-what and you started
shoveling away. That's how you build character in sons.

You know, I've been involved in politics all my life and little did he
know that what he was really doing was preparing me for my life in
politics; right?

\[Laughter.\]

SECRETARY JOHANNS: Your welcome when I walked in was great. Gosh, I just
felt right at home. Thank you very much. It reminds me of a story I
often tell. I had just been elected as governor of Nebraska, but I
hadn't been sworn in yet. I was in this two- or three-month period of
time between election and inauguration and I was asked to be an evening
speaker at an event in Kearney, Nebraska. So my wife Stephanie and I
drive on out to Kearney. It's kind of in the central part of Nebraska.
We get out there, nice introduction just like tonight. And, you know,
when I walked in everybody stood up and applauded and the same thing
happened in Kearney. As I'm making my way to the podium everybody stands
up and applauds. So I get to the podium and I said, "You know, that's
really very nice of you, but I haven't done anything yet." And somebody
in back yelled out, "and when you do we won't be standing."

\[Laughter.\]

SECRETARY JOHANNS: So it's nice to get a welcome. I've been on the job
about six or eight months and I still get a very nice warm welcome and
thank you.

I do want to also express my appreciation to the VFW Color Guard that
was here. They literally got called into service right at the last
minute. So we appreciate them getting over.

Sharon, who sang the National Anthem, gosh, do you have a beautiful
voice. That was just great.

Sharon is a USDA employee with ASCS, right? NRCS. So, Sharon, thank you
very much. Beautiful job.

Then John Mains and Devan Parrett helped with the Pledge of Allegiance.

I also want to say thank you to the USDA State Farm Bill Forum Committee
and the Kentucky State Fair organizers. Obviously this is a very
successful event. That doesn't happen accidentally. It happens because
people really worked hard to put it together and we do appreciate that.

I do want to start out tonight and thoughtfully remember the folks who
have suffered because of the hurricane over the last few days. My
goodness. I watched the news reports and I see the pictures in the
newspaper. I know you got the rain from the hurricane in some parts of
Kentucky, but what a difficult situation.

The President has pulled all of the Federal Government together and we
are doing all we can from the USDA standpoint, whether it's housing or
food supplies or whatever. Tonight I know all of us have those folks in
our thoughts and our prayers and I just wanted to mention that. It's
just a very difficult situation. We are going to do everything we can
from the USDA standpoint to help those good people get through a very,
very difficult time.

We are doing these Farm Bill forums all across the country. They came
about because the President encouraged me to get out across the United
States and visit with people involved in agriculture. "Visit with
farmers and ranchers," he said. He told me he wanted a Secretary that
got out of the Beltway and listened to people on the farm, on the ranch,
those involved in production agriculture, those involved in agriculture
generally, to get an idea as to the best approach when we start thinking
about the 2007 Farm Bill. So that is exactly what we are doing.

So I think it's appropriate tonight that maybe we begin with some
greetings from a good friend of yours, our President, President Bush.

PRESIDENT GEORGE W. BUSH \[taped\]: Thanks for letting me speak to you
at this Farm Bill Forum. America's farm and ranch families provide a
safe and abundant food supply for our people and for much of the world.
You represent the best values of America, stewardship of the land, hard
work and independence, faith, service, and community.

Mike Johanns understands the importance of America's farmers to our
country, which is why I chose him to lead our Department of Agriculture.
I am proud of his work and he will lead our efforts on the next Farm
Bill. Secretary Johanns and I believe the first step in this process is
to ask each of you how today's Farm Bill is working and how it can be
better. As we look to improve America's farm policy, we will continue to
focus on the following goals:

See, America has about 5 percent of the world's population, which means
95 percent of your potential customers are overseas. So one of our goals
must be to ensure that America's farmers and ranchers have access to
open, global markets.

A second goal is that we want future generations to have plenty of
opportunities to go into agriculture.

Thirdly we need cooperative conservation that encourages good
stewardship of our land and natural habitats.

We also need to act wisely in delivering help to our nation's producers.
We must promote cutting edge, agriculture products and research.

And, finally, we must ensure a good quality of life in rural America.

The Farm Bill is important legislation that meets real needs. The next
Farm Bill should further strengthen the farm economy and preserve this
way of life for farmers and ranchers of the future.

Hearing your advice is an important step toward meeting these goals. I
thank you for all you do for our country. And thank you for listening.

SECRETARY JOHANNS: Great. Greetings from your President. You bet.

\[Applause.\]

SECRETARY JOHANNS: Just a couple of thoughts about the Forum tonight.

We are going to ask you to think about six areas. Now, having said that,
we want to hear from you so when you get to the microphone and offer
your thoughts, we want to hear those thoughts. The only real rule here
is that if you've got a very specific individual problem, you know, "I
filed for a loan" or whatever, "and I haven't heard," we want to help
you with that, but it might be better if we could address that off the
mike. We've got a lot of USDA people here and myself, and like I said,
we want to do everything we can to help. But tonight we really want to
focus on the Farm Bill and what's working and what we might think about
doing differently.

So the six areas we are focusing on is "challenges for the new farmer."
We will begin our testimony tonight with somebody from FFA and 4-H. I
was in both of those organizations when I grew up and I just believe
that's where our future is. You know, those young people who have a
passion for agriculture, hopefully are the future farmers and will be
involved in agriculture as they get through school. So the first
question really deals with the challenges for new farmers.

The second area is in the area of competitiveness. Ladies and gentlemen,
27 percent of our receipts now come from the world marketplace. We
produce more than we can consume. It's an unbelievable agricultural
operation we have in this country. How do we position ourselves to be
competitive in that world marketplace, knowing that 95 percent of the
world's population lives outside of the country? Lives outside of the
United States? Only 5 percent of us live within the United States.

The third question relates to the farm program benefits. Are we
distributing the benefits of the farm programs in a fair way and an
equitable way? Is there something about that, that you like or you don't
like?

The fourth question, as you know we do a lot of things in conservation.
How are conservation programs working?

The fifth question area is rural economic development, rural economic
growth. I will tell you that at a news conference just a few minutes ago
before I walked in here we were able to deliver \$52 million to Kentucky
for rural economic development projects. The rural economic development
\--

\[Applause.\]

SECRETARY JOHANNS: Thank you.

When you see the President or the United States Senators or your House
members, tell them thanks because that makes a big difference to have
them on your side. But we are glad to do that.

Rural economic development is a piece of the Farm Bill now. How is that
working?

And then finally, what should we be thinking about relative to the
expansion of agriculture products? Ethanol is a really good example and
I just got a brochure of an ethanol plant here. Biodiesel, what can we
do to encourage more markets? And then are we getting the job done in
terms of those future products, the research component that has always
been so important for agriculture?

Now, folks, that's going to be about my comments tonight. Because the
more I talk to you the less time you have to be at the microphone. The
whole essence, the whole idea of this Forum is that you speak and I
listen. So really, for the remainder of the evening I'm going to sit
back. I've got a lot of note cards. I'm going to take notes, jot down a
note here and there as to what you're saying. Then at the end of the
Forum I'll take a couple minutes just to wrap it up. But for the time
being, it's up to you and the moderator to make this Farm Bill Forum
successful, and I know that it will be.

Thank you very much again for the very warm welcome to Kentucky, and God
bless you all.

\[Applause.\]

MODERATOR MR. JEFF NALLEY: That's the first time I've ever had a charge
from the Secretary of Agriculture, but we have a job to do over the next
few minutes.

If this were Robert's Rules of Order, and certainly in this I think we
would certainly respect the attitude of each individual, we could pass a
limit on time of debate. In this case, it's already been set for us.
I'll simply say that we have a microphone to the left and the right here
in the center. In front of that microphone is an aluminum piece that has
lights under it and there are three colors, you know those colors. You
will be given two minutes from the beginning and to the end at two
minutes and no more than two minutes. I may have to be the gorilla and
tell you time. But at that point your comments will be concluded.

Now, here's the other part of the equation. We want as many people to
speak as we can. You are welcome to get back in line. I would encourage
you to form lines and to take your turn at the microphone so we get as
many voices recorded as we can this evening.

When you come to the microphone, I'll ask you to introduce yourself,
your city and obviously the state you're involved in, your involvement
in agriculture and your connection to the Farm Bill. Also, if you don't
mind tell us which question you will be addressing. We are transcribing
this evening and are recording, so your comments will be a part of
record that we can refer back to at other times. I would ask you,
please, speak for your time and honor that with our agreement.

And, finally, I will share with you, and I don't think we have to have
it in this audience, but outbursts will not be tolerated. It will not be
tolerated. We cannot let that happen here in this particular Forum. It's
going to be a great night. We are looking forward to it.

Instead of you getting to ask the first question, the Secretary gets
that opportunity. We would like to welcome, Mr. Secretary, from the 4-H,
the current 4-H president, Jamie Williams \[sp\]. And also from the FFA
the current president, Devan Parrett.

Mr. Secretary.

SECRETARY JOHANNS: The first question is: how are we impacting the
future for young people in agriculture? So with that, take it away and
start our Forum.

MS. JAMIE WILLIAMS \[sp\]: Good afternoon, Mr. Secretary, ladies and
gentlemen. I am Jamie Williams, and this year I am serving as state 4-H
president. I am proud to tell you that I am a farmer. This is a phrase
that I have said many times, each as proud as the first. This pride in
my heritage is one of the many characteristics that I share with many of
my fellow youth all across this state. This is the pride that's
developed through the Cooperative Extension Service 4-H program.

We are very fortunate that past generations of farm policymakers have
chosen to invest in land grant systems and cooperative extension
services. The University of Kentucky's investment in 4-H programs is
part of a longstanding commitment to youth development and agriculture
education. With a record turnover in active farm population coming in
the next decade, it is imperative that we as a country continue to
address the needs of the next generation of agriculturalists. Extension
and 4-H have helped me to embrace this change in agriculture by itself
changing with time.

Technology programs such as E-extension, leadership programs,
communications, and life skills help us to keep ahead of these changing
times and help make a difference in my life and the lives of everyone in
this room. It is important that we continue to value agriculture
knowledge, leadership development, and community service. These are the
life skills that 4-H provides to help prepare youth like me for the
numerous future roles of agriculture in America.

Your goals in farm policy should focus much more attention on preparing
young people and limiting the obstacles to entering all aspects of
agriculture and agriculture business. A commitment to this goal includes
a continued priority to invest in the land-grant universities, the
Extension Service, and 4-H programs. Every reasonable economic and
educational incentive should be made available to guarantee that my
peers and I are prepared for the challenges of tomorrow.

On behalf of the Kentucky 4-H, thank you for this opportunity to speak
to such a prestigious group. Thank you.

\[Applause.\]

MS. DEVAN PARRETT: Good afternoon, Mr. Secretary, ladies and gentlemen.
My name is Devan Parrett, and I am currently serving as the 2005-2006
Kentucky FFA Association president.

I believe that the better question would be: what could the farm policy
do to encourage the next generation to enter production agriculture? Of
course, being an avid supporter of FFA and spokesperson that I am, the
first thing I would say would be to continue programs like the FFA and
even the 4-H that promote youth in agriculture. If more of the next
generation were to become involved in the FFA and 4-H, more youth would
be educated about agriculture. However, one issue that has changed about
the FFA and the youth involved, we are seeing an increased number of
members that don't have a farming, or even an agricultural background.
However, the FFA is still educating students that production agriculture
is still the basis of all agricultural fields.

One of the biggest barriers, I believe, facing a new generation of
farmers is the inability to start farming from scratch. Today if anyone
wanted to begin farming they either have to marry into a family farm or
inherit an existing family-owned farm. It is extremely difficult, if not
impossible, to simply start farming. One idea to make it easier would be
to begin to offer a tax credit for beginning farmers.

Another barrier that prevents younger generations from entering
production agriculture is the inheritance tax. Repealing the so-called
"death penalty inheritance tax" would prevent new farmers that have just
inherited the family farm from being saddled with a gigantic debt before
they even begin to farm. Instead of addressing unintended consequences
that discourage the new generation from entering production agriculture,
we should be asking what can we do to encourage the new generation to be
involved in production agriculture.

Thank you.

\[Applause.\]

MODERATOR: Ladies and gentlemen, when the National Association of Farm
Broadcasters gets an opportunity to talk to the Secretary, again, they
form lines in front of the microphone and we can work very quickly back
and forth. Right now we would just ask you to go ahead.

Mr. Secretary, if you would encourage that as well to go ahead and line
up, let's not burn daylight, let's make things work. Go ahead, sir.

MR. DAVID SWEITZER: I'm David Sweitzer. I am the executive director of
the Kentucky Thoroughbred Association. I live in Lexington, Kentucky.
Mr. Secretary, on behalf of our industry I would like to welcome you to
the horse capital of the world. Although we are not a part of food or
fiber, we are a very big part of agriculture in the Commonwealth of
Kentucky. A \$3.5 billion economic impact, 80,000 jobs, \$950 million in
receipts and sales, which has just been reported by the Ag Statistics
Bureau. So we are a significant industry.

I want to thank the USDA and you, Mr. Secretary, for being a supporter
of the MAP program. You may wonder, what does that have to do with the
Kentucky thoroughbred industry? It has to do with helping all of
agriculture. We appreciate that support. We hope that we can continue to
get that support and maybe even grow it.

Then one last thing that we would like the USDA to consider is
supporting some current legislation and possibly some language in the
Farm Bill that recognizes equine as livestock, and in particular for
disaster relief coverage. We are not eligible for disaster relief. We
are not eligible for disaster relief. We had a terrible incident in
2001. We were able to get some service from USDA, SSA, and we
appreciated that very much. But your support of making us eligible for
disaster relief would be very much appreciated.

Thank you and welcome again.

\[Applause.\]

MS. PEGGY JO TIPTON: Thank you, Mr. Secretary. Thank you for this
opportunity to speak. I am Peggy Jo Tipton. I live up the road in
Shelbyville on a small family dairy farm. So we have something in
common, because when I first got married I was handed that fork.

\[Laughter.\]

MS. TIPTON: So first and foremost we would encourage the Farm Bill to
provide \$20 milk prices on a steady basis.

\[Laughter.\]

MS. TIPTON: I would like to retire someday. I don't want to sell the
farm to do it.

Mr. Secretary, I currently serve as the 2006 president of the National
Young Farmer Educational Association, also known as the NYFEA. We fall
in the footsteps of FFA. We are also known by the United States
Department of Education as the Adult Agriculture Association. We serve
on the national level as an adult ag education association with a
special focus on promoting and encouraging the young beginning producer
and young agri-business professional. Our mission is to promote the
personal and professional development of all people in agriculture. We
provide educational and leadership opportunities for our membership
through workshops, seminars, discussion panels, contests, and ag-related
tours across the United States. These opportunities provide avenues for
our membership to learn about agricultural practices across the U.S. and
provide networking capabilities among the attendees.

There are local and state associations across the United States as well.
However, many of our state associations have lost funding, thus ending
the charters and causing that state organization to dissolve. Which
brings me to the response to your question: how can federal, rural, and
farm programs provide effective assistance in rural areas? Because of
the aforementioned loss of state funding, many states are left without
adult ag education programs unless persistent members take it upon
themselves to make sure the organization continues. In this capacity
they are able to participate in the NYFEA activities.

NYFEA exists entirely upon its membership dues and donor support. Over
the years since the dissolution of the state associations, NYFEA has
experienced a decrease in dues, thus forcing NYFEA to create new avenues
for success. Therefore, I would propose your support in the Farm Bill
for education for adult ag.

Thank you.

MODERATOR: Two minutes, folks.

MR. JIM SMITH: Mr. Secretary, ladies and gentlemen, I am Jim Smith from
Carroll County, Kentucky. I am a farmer. But tonight I am here to speak
to you on behalf of the small and medium-sized water systems that are
charged in the state of Kentucky to take water service and sewer service
out to these rural areas, many of which are sparsely populated and
therefore have a low return on investment.

In years past the only place that many of us could come up with funds to
do this was through the rural development. And as the Farm Bill
continues to allocate monies to rural development, I think in Kentucky
there is hardly a water system I know of that hasn't been impacted
positively by these funds. And as we move forward and serve those areas
that are less likely to be productive in terms of profit-making, we are
going to need those funds even more so.

I am here on behalf of these small water systems and medium-sized water
systems to encourage you and to thank you for all of the past
allocations to rural development and to encourage you to please remember
us and our needs in future USDA Farm Bill budgets.

\[Applause.\]

MR. JERRY RICKETT: Mr. Secretary, I am Jerry Rickett. I'm with Kentucky
Highlands Investment Corporation. Thanks for the opportunity to speak
today.

Kentucky Highlands is a 37-year-old community development corporation
that works in southeastern Kentucky to generate employment by investing
and sustaining of businesses.

First of all I want to thank you and commend you for the excellent staff
you have in the rural development program led by Ken Slone. They truly
represent your agency well.

The area I am going to respond to is question five. I am going to talk
about some of the programs that the company I work for has used to
leverage over 10,500 jobs in some of the poorer counties in North
America. The first one is the rural empowerment zone, I would encourage
continued administrative support for that and continued funding priority
through the various rural development programs. In the particular zones,
some quick statistics on what's happened in implementing a
community-based plan. In Wayne, Clinton, and Jackson Counties, Kentucky,
the population has grown while similar counties in Appalachia Kentucky
have stayed stagnant or failed by 3,200 people. The net job growth has
been over 6,200 people in the ten-year period of the zone and poverty
has been reduced from those jobs from 35 percent to 26 percent.

Another critical need in rural America is venture capital if we want to
diversify our economy. Kentucky Highlands along with 20/20 in Tennessee
was designated as one of the award winners of the Arbick \[ph\]
designation. We would encourage you to continue funding that program in
the next year's budget as well as authorize it at \$100 million level in
the Farm Bill.

The intermediary lending program and Arback \[ph\] programs are valuable
tools we've used to help us generate these 10,500 jobs.

Thank you.

MR. BERNIE POE: Mr. Secretary, I'm Bernie Poe from Owenton, Kentucky,
the middle of the 'golden triangle.' My experience with USDA goes back
many years. My first experience was in 1947 when my father bought the
home farm. Without that FHA loan, he would have never had a farm and
remain a tenant farmer all of his life.

The second experience was in the 1980s when I was able to obtain a loan
from the Rural Development to build senior citizens housing in Owenton.
This has been a very rewarding and enlightening experience because the
people living in those units, many had not had indoor plumbing or
central heating, and it really made them feel great to have these
necessities.

The most recent experience I've had is when in the year 2000 we were
able to get a USDA loan to buy the local hospital in our community out
of the jaws of bankruptcy. Today that hospital is providing health care
to rural Kentuckians, many farmers as well as people that transit
through the town. We treat farmers with farm accidents, we treat
vehicle, automobile accidents, and many other illnesses. So your funding
for rural communities is vitally important to all of us. All of these
areas that I've spoken on involve loans. All the money will be returned
back to the Federal Government. So it's a great investment in rural
America to keep these programs going.

The USDA is a vital source of help throughout rural Kentucky and rural
America. It would adversely affect us in many ways, should that program
be denied. Thank you very much. We appreciate it.

\[Applause.\]

MR. GREG JONES: Mr. Secretary, my name is Greg Jones. I am executive
director of the Southern Kentucky Economic Development Corporation. I am
pleased to appear before you today to comment on USDA's farm policy. In
particular, I would like to comment on how federal rural programs
provide effective assistance to rural areas.

Mr. Secretary, the key to improving the economic conditions in rural
areas of Kentucky, and your home state of Nebraska, is the creation of
more jobs and good-paying jobs for family farmers. The creation of jobs
is the best opportunity provided by the private sector, as you know, but
there are a number of areas in rural America where capital is not
readily available. The programs of USDA Rural Development helped close
the gap of this private financing, bringing us closer to help us create
these jobs. To illustrate the benefits of the IRP program that provides
to rural America, I would like to give you an example.

Our corporation has loaned more than \$3.3 million to 23 companies in
southern and eastern Kentucky. These loans have leveraged more than \$30
million in private investments creating 750 new jobs. One recipient of
one of our loans was a company called Laurel Grocery Company,
established in 1920. Laurel Grocery needed money to expand their
warehouse and expand their transportation fleet. That also included
adding some state-of-the-art computer equipment for tracking their
inventory. This warehouse was expanded about 37,000 square feet then
created 67 employees in that local community which brings their total
employment to 290 people. That leveraged \$2.8 million in private funds.

USDA's investment was only \$125,000. Today Laurel Grocery serves 600
retail stores in five states throughout the southern U.S. I urge the
USDA to continue to support your Rural Development Intermediary
Relending Program, the Rural Business Enterprise Grant, and the Rural
Business Opportunity Programs. These programs represent a fraction of
USDA's total budget, but have a significant impact on all of rural
America.

I too want to recognize Ken Slone and the entire staff of the USDA. They
are great partners, representing USDA well. Thank you.

\[Applause.\]

MR. JACK REED: Mr. Secretary, my name is Jack Reed. I am a soybean and
corn farmer from Salem, Indiana. And since 70 percent of our grain
exports goes through the Port of New Orleans, I would like to ask you
how severely do you feel that the grain farmers is going to be hurt for
the coming year? Thank you.

MODERATOR: We should be taking comments here, Mr. Secretary, that's your
liberty, if you like. But, thank you.

SECRETARY JOHANNS: Yeah, I would just offer a comment on that. It's one
of the things that the White House mentioned to me today when I spoke
with them. As we prepared for our response to this hurricane, that's a
significant issue for us. I have to tell you as of tonight, I can't give
you that assessment because we just simply don't know yet. There are
people that are literally working now to try to figure that out. So, as
detail is available we will get it out publicly. I know it's a question
we are going to be asked a lot in the days ahead. And as soon as we get
information on that we will \-- this initial stage, as you know, was
really all about trying to save lives and get people off their roofs and
then provide for their care. So that's kind of where it's at today. But
there will be more information. So stay tuned, all right?

MODERATOR: It is an issue that you should understand as well, and this
is that there is no solid information. And, he is the Secretary of
Agriculture, and since we don't know, the Board of Trade was doing
enough speculating on their own today. We don't need to be speculating
from here. But thanks for your question.

Over the period of time we do need to stay to comments on these six
questions on the Farm Bill. Now we proceed. Thank you.

MR. LONNIE LAWSON: Mr. Secretary, welcome to Kentucky. My name is Lonnie
Lawson. I am CEO of the Center for Rural Development in Somerset,
Kentucky, and we cover 42 counties of southern eastern Kentucky. We
actually represent the home district of Congressman Harold Rogers, who
is a great supporter of ours. But I want to talk a little bit about your
question number five, rural development, today.

We cover 42 counties, as I said, and a wide array of economic
development programs including agriculture. I am one of those part-time
farmers that has a real job, but I also love my farming. I grew up on a
farm and I still have a small farm today that I try to maintain.

It's been our good fortune to work with Ken Slone and Vernon Brown and
the Rural Development folks for many years, ever since our inception. As
a matter of fact, some rural development money went to create our
organization back in the beginning. We've been in existence about ten
years now and we've done some tremendous things. Through rural
development funding, we've been able to put in community centers with
computers in those centers to give access to the world. We've also been
able to put in video conferencing capability to allow our farmers access
to worldwide trade. And those are some of the things that we really
think rural development ought to be able to continue to do, is build the
infrastructure to help our farmers long-term be able to sustain in this
global economy.

Thank you.

MODERATOR: Sir.

MR. JOEL LYLES: Yes. Welcome to Kentucky. I appreciate you coming here
and listening to the concerns that we have in Kentucky. I would like to
address the rural economic development.

MODERATOR: Could you give us your name?

MR. LYLES: My name is Joel Lyles. I am general manager of three separate
county water systems in southern Kentucky: Warren County, Butler, and
Simpson. And we have for many years utilized the Rural Economic
Development Program. It used to be called Farmers Home Administration
for Water and Sewer Infrastructure. And, of course, I was raised on a
farm and I can tell you first-hand, I know what it's like to live
without indoor plumbing, as probably many of you have. But it's very
important to the rural folks in Kentucky. We have made a lot of progress
over the years, but there is still a lot of work to be done.

The U.S. Rural Development Loan and Grant Programs have been and
continue to be extremely important in providing water and wastewater in
our rural population in Kentucky. These programs are vital, and we must
ensure that funding levels are adequate to meet the needs of rural areas
in the future.

At this time Kentucky has a backlog of applications for funding of about
three to one. Ken Slone and Vernon Brown do a good job administering the
loans and grants that they have, but there's just not enough funds
available. They need more funds and we would like to ask your support in
obtaining additional funds for water and sewer programs. There's no
other reasonable source of funds available to rural water and sewer
systems in Kentucky other than the USDA program. Without the Rural
Development Program, many residents would not have had the quality of
life that they have today and the availability of public water supply.
We still have many residents without public water, and there's just no
way these people can be served without the support of Rural Development.
It takes about 25 customers to the mile to be able to borrow the money
and finance it without any grant money. And, of course, this is real
important.

I also serve on the Kentucky Rural Water Association board of directors
and I know what I'm saying is echoed all across the state of Kentucky.
We have over 360 rural water systems that belong to our association, and
it's just very important. There are 32,000 members that belong to the
national and it's true all across the United States that there's a real
need here.

MODERATOR: Time.

MR. LYLES: Thank you very much.

SECRETARY JOHANNS: Thank you.

MODERATOR: Thank you. Mr. Secretary.

MR. JEFF CHOAT \[sp\]: My name is Jeff Choat \[sp\]. I am a trial court
judge. The last 24 years I've served in rural Kentucky. I'm from Albany,
Kentucky. What I am here for tonight is just to say thank you and give
you an example of what rural development dollars have actually done.

Three years ago I created a not-for-profit corporation. I called it the
"Foothills Academy" and we received an empowerment zone grant for
\$350,000. The empowerment zone monies were administered through
Kentucky Highlands and of course they were USDA monies. We converted a
farm that was seized in a drug raid to a home for at-risk boys. We used
the money to bring those buildings up to code. Through Mr. Slone and the
Kentucky office, we received a \$75,000 grant. I must say that his
accounting \-- his office's accounting was thorough but it was not
burdensome. They were very easy to work with.

We now have 70 boys living at the academy full-time. We employ 89
people, this is in rural Kentucky where jobs are scarce. We are the
second largest private employer in my county now. Next year we will put
over \$3 million into the local economy through the continuation of
funding that comes through the state. Without the help from Rural
Development, we simply could not have done this project.

What I am here to ask you is to try to continue the funding for the
community's facilities program, that's where the \$75,000 grant came
from. That's where the beds these boys sleep on, that's where all of the
equipment comes from.

So my whole purpose today was to say thank you.

\[Applause.\]

MS. VICKI JEFSKOWITZ \[sp\]: Thank you for the opportunity to be here.
My name is Vickie Jefskowitz, which is not a native Kentuckian name.

\[Laughter.\]

MS. JEFSKOWITZ \[sp\]: I am the executive director of Foothills
Community Action Partnership. We are a community action agency primary
serving Madison, Clark, Estill, and Powell Counties and I am here to
speak about the rural economic development program.

The Rural Housing Service is critical to the housing stability of
low-income rural people. Without that service, which is often
unduplicated in most rural areas of our state, people will continue to
reside in substandard housing, they will pay disproportionate amounts of
their incomes towards rent, and they may live from relative to relative
or friend to friend, essentially being homeless. Not only do the
low-interest mortgages provided by RHS provide the opportunity for
people to own homes, creating both a tangible asset and also just pride
in ownership, it also contributes to the economic viability of the
communities through increased property taxes, construction permits, and
other local government revenues associated with home construction and
ownership.

One example of someone who was helped by our agency in partnership with
RHS is a 55-year-old disabled woman who had lived in subsidized housing
all of her life. She was literally born into that housing and had never
moved out of it. At the age of 55 she was able to become a homeowner and
hopefully will live there the rest of her life. You know, I could go on
and on telling you stories of people like this woman, but if I did that,
that red light is going to come on and I'm bound and determined I'm
going to beat it.

But, you know, thanks to the help of Rural Development's Rural Housing
Service there are person after person who have benefited. I hope that
you will continue that program because once again, remember, in the
rural areas it is unduplicated.

Thank you so much, I appreciate the opportunity.

\[Applause.\]

MODERATOR: And if you're wondering why that light is red it's because
we're in Louisville. Go ahead.

\[Laughter.\]

MR. CARROLL SMITH: Mr. Secretary, thank you for coming to Kentucky and
thank you for bringing us \$52 million. We will spend it wisely. My name
is Carroll Smith. I'm a Letcher County judge executive. Thirty percent
of the people in Letcher County, only 30 percent have access to
municipal water. Only 20 percent have access to municipal sewer. In the
past rural development has given us \$3.5 million, we have leveraged
\$12.4 million to extend water and sewer lines throughout the county. I
hope that the 2007 Farm Bill continues to support rural development to
the level that will allow them to assist us in providing water and sewer
to the people of Kentucky that need that very badly.

Thank you.

\[Applause.\]

MS. PENNY YOUNG: Good afternoon again. We met just a little while
previously. Thank you very much for a \$100,000 grant for frontier
housing to continue our home ownership program. I will be addressing
question number five which deals with economic development. My name is
Penny Young and I'm the chief financial officer for Frontier Housing in
Warhead, Kentucky.

I am actually here today representing the Federation of Appalachian
Housing Enterprises which is a community development financial
institution and a membership organization that supports housing
nonprofits throughout Kentucky, Tennessee, Virginia and West Virginia.
Our mission is to serve the housing needs of low-income people of
central Appalachia. In our 25 years of existence we've provided 900
families with affordable mortgage loans through your program.

Just in 2005 we have lent over \$7 million in rural housing. This has
enabled us to serve about 368 families. Today I want to talk about what
that really means in reality to give this room a real picture of how
important this program is to rural America.

Yesterday we closed a loan with a family in the amount of \$60,000.
Janet, which is what I will call her, has undergone six months of
extensive counseling and credit repair. During that time she never
missed a payment and was very faithful in getting her credit back in
line. Janet has three children and she works as a waitress in a local
restaurant and earns about \$12,000 annually. After six months of hard
work we are very fortunate and excited to be able to give her a home
mortgage and her payments will be around \$278 a month. She could not
rent anything to match that kind of safe and sanitary housing. And this
kind of thing would not be possible without RD programs. We want to
thank you very much for that.

Although that has been very wonderful, we still have a big challenge
ahead of us. In Appalachia alone, 30,000 homes lack complete plumbing,
20,000 lack adequate kitchens, 50,000 are overcrowded. Home owners and
renters are close burdened where they live now and our median income is
still at 56 percent of the national median income.

MODERATOR: Time.

MS. YOUNG: In the 2004 USDA budget rural development was still a small
percent of the umbrella budget.

MODERATOR: Time.

MS. YOUNG: We would like to ask for that to be increased. Thank you.

\[Applause.\]

MR. MARSHALL COYLE: Good afternoon, Mr. Secretary and welcome to
Kentucky. I am Marshall Coyle, first vice president of Kentucky Farm
Bureau. And on behalf of Kentucky Farm Bureau, I certainly want to thank
you for being here and having the opportunity to make some presentation
to you and listen to the folks that are here.

Mr. Secretary, as I go through this, I'm going to do my best to kind of
touch on most of the questions that you have. Hopefully we'll get pretty
close to that. I would tell you, Mr. Secretary that we believe that the
vast majority of farmers throughout the U.S. would tell you that their
ultimate policy vision would be a level playing field. Farm Bureau
believes that this should be our policy goal for the 21st century. A
world where our farmers are allowed to compete in open markets without
tariff barriers, without export subsidies, without currency
manipulations, and, yes, without production distorting domestic
subsidies.

An effective U.S. farm policy is one, which provides the support
necessary to safeguard our ability as a nation to feed ourselves.
Farmers have always had to deal with unpredictable weather and
fluctuating markets, but the uncertainties involved with international
trade, the value of a dollar and variable input costs have produced
turbulent and difficult times for agriculture.

The Farm Bill helps American farmers weather financial storms and it
provides unprecedented funds for our nation's conservation needs. The
best way to keep Kentucky green is to have a profitable agriculture. If
a voluntary incentive is offered for desirable environmental outcome
farmers will overwhelm America with improved soil conservation, water
quality, air quality and wildlife habitat. A significant percentage of
Kentucky's jobs are directly related to agriculture. Rural America and
production agriculture often face very different sets of problems. Some
rural counties are facing the issue of a declining population base,
while in other communities production agriculture is receiving
tremendous pressure from urban sprawl. This is not a problem that lends
itself to a one-fits-all solution and the next Farm Bill should
recognize that reality.

MODERATOR: Time.

MR. COIL \[sp\]: Product development, marketing and research issues are
critical to our future. We are seeing first-hand what an infusion of
dollars can do with our ag development fund here in the state of
Kentucky.

MODERATOR: Time.

MR. COIL \[sp\]: Thank you, Mr. Secretary.

\[Applause.\]

SECRETARY JOHANNS: If I might mention, I noticed some of you \-- that
was a great testimony, but all of the testimony has been really good. I
just wanted to mention, I notice some of you are actually reading from
prepared notes. We would love to receive those. So you can either hand
them to me before I leave tonight. We've got an e-mail, or a web site, I
should say, USDA.gov or just drop them in the mailbox and send them off
to us. So if you get cut off like we just did, we want to hear the whole
thing, so get that information \--

MODERATOR: You told me to.

SECRETARY JOHANNS: Yeah, you've got to do it.

\[Laughter.\]

SECRETARY JOHANNS: We've got to do it because we want everybody to have
a shot. But send that testimony out to us, we would love to receive it.
Somebody's got to be the bad guy, you know.

MODERATOR: Last week we were at the Washington National Press Club and
we have the four gentlemen, two that had another view of ethanol and two
that did, you know, I'm a Kentucky boy and I'm a journalist, and they
got more to grieve than I've got, you know, never mind. But,
nonetheless, it was like, fellows we're going to play by the rules and
they all agreed and we did. But I did have to tap on the podium a couple
of times to marshal them. And folks, I'm sorry, but we've got a rule. So
I'm done and you're done too. Okay. Next.

\[Laughter.\]

MR. PAT HENDERSON: Mr. Secretary, I also want to welcome you to Kentucky
and thank you for coming here. I am Pat Henderson a farmer, a
conservation district supervisor down the road here in Breckenridge
County, Kentucky. I'd like to just briefly go over eight points that I
hope you will consider in developing the 2007 Farm Bill.

Point number one, conservation, is wide and prudent investment for every
American, not just farmers.

Point two, programs applying conservation to working lands should be a
key component in the next Farm Bill.

Point number three, NRCS presence at the field level and the technical
assistance that they provide by doing that is a really a critical
component in our delivery system. If you are in Kentucky, and I think
nationwide forward, technical assistance enables many land owners and
farm operators to apply many conservation practices \--

\[Tape break.\]

MR. HENDERSON: \[In progress\] \-- assistance such as EQIP is also an
important component of the total plan. This provides both economic and
environment sustainability in my opinion.

Five, grasslands and forestlands as well as croplands should be a
component of the bill.

Six, a partnership involving USDA, state conservation agencies and local
conservation districts is a great delivery system. And, Mr. Secretary,
you realize that each of these entities leverages money for the other
partners.

Seven, conservation districts are willing and able to work with USDA and
you to help implement this bill.

And, finally, I close by saying, the ability of farmers to compete in
global markets is a critical component we must all solve.

Thank you, sir.

\[Applause.\]

MR. MAYNARD FERGUSON: Mr. Secretary, I'm Maynard Ferguson. I grew up on
a family farm in Centerville, Kentucky which is near the border of
Fayette, Scott, and Harrison County. This Bourbon County farm, there's a
little over a thousand acres and when my grandfather died, basically it
left the family because of the inheritance tax. So I echo what people
have said there.

I work today for the Lexington Fayette Urban County Government after I
retired as a county extension agent. And I work with the purchase of
development rights program in Fayette County. To date we've protected
14,266 acres of farmland in the county, which is an important industry.
It's over a \$300 million farm gate income for that county. It also
brings in 600 million a year in tourists that come to see and visit our
farms.

The region I live in just was named by the World Monument Fund as one of
the most endangered areas in the top 100 endangered areas in the world
in 2005. I think it's important that you keep the federal farm and ranch
land protection program, keep funding it. We hope to preserve 50,000
acres, which we think will support the AG industry in our community.
It's good for the environment. It provides a great place to live, clean
air, good food, which is part of this whole thing on food safety and the
fact that our young people will have a farm they can afford to buy
because the farmland will be sold at agriculture value in the future. It
has made the value of that land maybe increase some initially because
people like it when protected lands are around their farm and they can
farm without the encroachment of city dwellers, which basically don't
understand agriculture.

Most of the farms that have gotten funds from our program have
reinvested it by paying down debt, bought additional land to farm, or
improved the infrastructure. And today with the loss of the tobacco
program, the average age of our farmers is 60 years old. There's a lot
of pressure to sell to the highest bidder. And, as you know, that's
going to be the developer. So we need a program like this to continue to
preserve farmland throughout the nation. The PACE program does it
statewide and the PDR program in Lexington.

Thank you.

\[Applause.\]

MR. IVOR CHADKOWSKI \[sp\]: Good afternoon, Mr. Secretary. I am a
farmer. I am a tenant farmer. I started farming nine years ago from
scratch. Now, we have four full-time employees, three part-time
employees. I am also the president of a small grassroots membership
organization called Community Farm Alliance. We represent 1,600 members
across the state. I am here to speak on their behalf and on behalf of
family scale agriculture in two points, probably, of your six questions.

We appreciate in particular the SARE program of which I'm a past
producer grant recipient and I'm grateful for that. SARE is a regular
help for small-scale farmers looking for technical support. It's
immediately accessible on line. WIC is valuable to small farmers.
Community Farm Alliance has been an organization that started two urban
farmers' markets in low-income areas. We would like to see those WIC
dollars go to farmers through low-income residents. We think the program
is very valuable.

A few prepared notes. As farmers transition out of tobacco, we need
technical assistance. We think we have a valuable institution,
organization in Kentucky which is funded by USDA. It's called the
Kentucky Center for Cooperative Development. We think it needs more
money.

Finally, as a farmer who is still a tenant I would like to see more
money, as would I think other young farmers who are still tenants, go to
direct loans in the FSA program as compared with guaranteed loans.

Finally, if I can wrap up, to address your point about exports, farmers
in Kentucky, I think, are as much concerned with getting their products
to local markets. And, again, we think the technical assistance provided
by the cooperative center would be very valuable for that. We don't see
the export dollars that a lot of companies that process and such get. We
would like to see our money come to us quickly.

Thanks very much.

MODERATOR: Could we get your name and your county? I may have missed it
earlier.

MR. IVOR CHADKOWSKI \[sp\]: Ivor Chadkowski. We are tenants here in
Jefferson County.

MODERATOR: Thank you.

\[Applause.\]

MR. HAMPTON HINTON \[sp\]: Mr. Secretary, my name is Hampton Hinton, I'm
a farmer in Woodford County of grain, tobacco, and cattle. I've farmed
the same land since 1780 in the same family. My concern today is with
your presence in coming today. It's just recently your department and
the agency of Farm Service has just announced you're going to close one
third of our service centers. It seems an odd time to come here to
outreach to us when you are really try to close down a lot of the
service that we need all across this state. These are vital service
centers. They're important to our need. And as our farmers change, this
is a very important time for you to be here, not to be leaving.

We think the system that you are exploring with in Kentucky may be an
indication of a retreat from rural America, not a forward step. And I
hope you will think about this very carefully. If you base it on staff
reductions, not on the number of farmers you serve, but an old-fashioned
dollar received, dollar benefit, there are an awful lot of farmers here
who have been raising tobacco, who still farm in Kentucky. And they're
not going to vaporize if it's lost its tobacco program. And the FSA has
just delivered a Herculean job delivering this file, a ten-year program
and the effect that you have when you close down FSA on the other
agencies. You heard conservation speak, you've heard rural development
speak. Service centers have been created across this state. And you pull
one leg out from underneath the stool and the effect is monumental at
what it will do. I would urge you to think about this very carefully and
to think what you're doing. You don't want to be, I think, exhibiting a
retreat from agriculture right now.

We have a very vital and developing function out here in Kentucky and we
think you need to be here as often as possible and we hope you will look
at this system. We don't really understand why Kentucky is going first
in this closure issue. And we think the other agencies ought to be
consulted and you ought to think seriously about when you do close
offices if that happens, that you look at the effect you have on small
towns. If you move all the service centers to major urban centers, you
really have a real effect on what happens in these small towns that
depend on this rural economy. And we think if you do close down you
ought to be keeping these offices open in the more rural communities,
not the urban communities.

Thank you.

\[Applause.\]

MR. STEVEN BARTLETT: Good afternoon, Mr. Secretary. My name is Steven
Bartlett. I am from here, Louisville, Kentucky. I am a member of the
Community Farm Alliance also. I am here just to make one main point and
that is regarding competitiveness. The notion that U.S. agriculture has
to compete on the world market. I think this notion is false and it's
based on the over production policies that have led to a massive glut in
commodities. That then we need to force on third-world countries through
free-trade agreements such as NAFTA, which according to some of the
people I work with in Mexico, have displaced up to two million people
from the land because we are dumping cheap corn on their market. I think
we need to look for better solutions in terms of developing our own
national agricultural market that supports small farmers and not just
mega farms.

I think we need to take away subsidies from the large operations and use
that money to support a lot of the things that you've been hearing
people ask for here. Programs of rural development or conservation,
loans for start-up farms, and I think the whole notion that we need to
feed the world has to be shown to be false. Basically what we are saying
is, we want to dominate the world and make the whole world dependent on
us. And I think that's a wrong policy and I think it's a policy that's
created a great deal of unhappiness for farmers all around the world.

I've been working with farmers in the Via Complicina \[ph\] who called
for a concept called "food sovereignty." Food sovereignty means that
every farmer, whether they're in Kentucky or in Chapos, Mexico should
have a right to produce for their own market and not have their market
distorted by subsidized imports coming across the border.

Thank you very much.

\[Applause.\]

MR. LAWRENCE FORGY \[sp\]: My name is Lawrence Forgy, Mr. Secretary. I
live in Lexington, Kentucky and I have an apology to make. I am not a
farmer, I'm a lawyer. For 12 years I represented the Kentucky Burley
Tobacco Cooperative Association because of my relationship to Mr. Reagan
and to Mr. Bush, Senior.

For five years I traveled across this country in the Medicaid law suits.
When I first began to represent the Burley Tobacco Cooperative
Association, which had members in Ohio, Tennessee, Kentucky, West
Virginia, Indiana, Missouri, we had 1.8 billion pounds \-- excuse me,
1.2 billion pound quota for Burley Tobacco. It was selling about .130 to
.140 cents a pound. We are now at .130, if we're lucky, this year.

Now, the first thing I want to say to you is how much I believe the
tobacco farmers of the Commonwealth and my friends across this entire
belt appreciate George W. Bush and what he did in helping us get the
buyout. Because without his acquiescence it is clear it would have been
as dead as 4:00 a.m. in the morning. And we want you to take that back
to him.

The second thing I wish you would consider is that with the 130 million
pounds out here in rural development and in all other aspects of
Kentucky agriculture we are the largest unsupported tobacco commodity
group in America. I have given a member of your staff a copy of a book
called, "The Night Riders" by the great Robert Penn Warren who was one
of our great novelists and poets from Kentucky. I know as a political
figure you have read, "All the Kings' Men." But in that book you will
find what happens to farmers when they are confronted by large,
industrial groups, and while we may still sell 130 million, we need your
help. And in addition to that, and I'm going over, and I'm sorry, but in
addition to that we need you to consider that we will show up high in
the amount of money that Kentucky receives for this year and the next.

MODERATOR: It's time.

MR. FORGY: But we need help because we've lost our major industry. Thank
you very much.

\[Applause.\]

MR. JOE SPALDING: Mr. Secretary, my name is Joe Spalding. I am a tobacco
farmer from Lebanon, Kentucky, and I'm aware that given the current
budget shortfall funding is limited to farm program. However, I would
like to quickly voice a couple of issues that are of concern to me.

Tobacco was the most important commodity in my farm operation. Because
of that I am very thankful for the work of our Congress congressional
delegation to achieve the tobacco buy-out that was not paid for by
taxpayers. I also appreciate the work of the USDA to get the program
enacted as quickly as they did.

But now tobacco was the only major crop without access to any type of
safety net while it is also the commodity with the most concentration in
market power among buyers. I hope that given the great importance of
tobacco to this state USDA will consider new policy options to provide
tobacco farmers support similar to that provided to other commodity
growers including the possibility to include tobacco policy in the next
Farm Bill.

Additionally, I'm concerned about the limitations that have been placed
on USDA's Foreign Agriculture Services in distributing tobacco data and
restrictions that prevent them from promoting the exports of our
commodity. Tobacco is still a legal commodity and is in great economic
proportions to this state. It is important that USDA be permitted to
provide equivalent services to tobacco farmers as those provided to
other commodities.

Thank you very much.

\[Applause.\]

MR. RYAN BIVENS: Good afternoon and welcome, Mr. Secretary. My name is
Ryan Bivens, I'm a 26-year-old grain farmer from Hodgenville, Kentucky
which is about an hour south of here.

I would like to discuss with you today questions one and three
pertaining to young farmers and also getting assistance out to the
producers. We all know that whether it be a plant, animal, or human,
early years and stages of growth are very detrimental. The same is true
when it comes to young farmers, whether it be a male, female, or a young
couple, the first couple of years can either make or break them. Let's
just use, for example, myself.

One thing that I have tried to do to ensure some of my risks on my farm
is through the Federal Crop Insurance program which I want to stop and
say right now, I can appreciate the subsidies that have been given
towards that program because without them we would not be able to
purchase that insurance.

However, with the rumor of those subsidies being dropped in future years
to come, it really scares me. There are also other problems when it
comes to the Federal Crop Insurance program. For me, as a young
producer, when I start out without any average production history or
yield built up for myself, I am likely to take a county T yield or
transitional yield. These transitional yields for my county is 91. You
go two counties away, theirs is a 51. The county yields which are set
forward are not realistic. We've got a great statistic service in
Washington, we should use the yields that they put forward.

For example, if you take that 91 that I am given, if I buy a 70 percent
policy, I'm looking at roughly 60 bushels, or a 60-bushel guarantee.
That is probably going to cost me roughly \$12. So there's another six
bushels knocked off the top for what the insurance is going to cost, and
I'm guaranteed 50-some bushels to the acre. Let's be realistic. Times
have changes, so has the corn breeders. They've done an excellent job.
We need to work on that.

There are also several other young farmer programs out there through FSA
and the USDA. They need more money, they need more help, they need to
have bigger budgets.

The guy who talked about the mega farms, it's simply just like this,
Wal-Mart has gone to Super Wal-Mart. The farms have gone to Super
Wal-Marts. So we've had to get big to survive. You know, we need help
just as much as the little guys and the big guys.

Thank you.

\[Applause.\]

MR. LARRY JAGGERS: Thank you, Mr. Secretary. Welcome to Kentucky. I am
Larry Jaggers from Glendale, Kentucky. Glendale is just east of White
Mills and due north of Sonora.

\[Laughter.\]

MR. JAGGERS: I am a dairy farmer, a member of the Dairy Farmers of
America. We have some six items that we would like for Congress and USDA
to consider and possibly enact. And those being, we would like to see a
floor on class-one price mover at \$13 on a national basis.

Number two, we would like to implement a direct delivery differential to
cover some transportation costs incurred when local milk must be
delivered to a more distant destination than the closest market.

Number three, we would like to see some increased transportation credits
paid by the processors to help offset supplemental milk handling.

Number four, we would like to regulate the large producer handlers
nationally.

Number five, we would like to direct that you, Secretary of Agriculture,
not allow class three and class four prices to fall below support
levels.

Number six, not allow USDA to make more than one support price
adjustment per year.

Thank you again for allowing me to express my concern and certainly hope
these items will be considered and enacted in the next Farm Bill as they
are very important to me and to my fellow dairy farmers and also to
ensure a good wholesome product to the consumer at a reasonable price.

Thank you, Mr. Secretary.

\[Applause.\]

MODERATOR: Just a second. Okay. We're going to take a break here at 25
past the hour. We have six people standing, so if everybody goes two
minutes like we've been talking about, we're going to come right on the
mark. So the six that are standing right now, if you would complete us,
we'll take a break from there. And, Jeff Rice, if you would be the first
one up after the ten-minute break, if that would be okay with you, we
are going to be in good shape. If that's all right, moderator rules,
here we go. Yes, sir.

MR. LARRY JEFFRIES: Mr. Secretary, I'm Larry Jeffries from Henry County.
I'm a semi-retired farmer. I'm a member of the extension board and a
member of the conservation district supervisors. I want to talk to you a
little bit about the University of Kentucky. I am a representative
called a CAREG which is the Council on Agriculture Research and
Education for Land Grant Universities.

I think I have seen in the past couple of years \-- I've been involved
in extension for about six odd years \-- and I've seen county agents
with tobacco settlement funds that they worked with committees in the
local communities be the glue that held things together as we distribute
those funds. I look at what we can do and what the university can do in
the land grant system in the space of diversified agriculture we are
facing today. I think we are needed greater than any time in the past.

The funding for the university and the land grant systems, the formula
funds that are in the Farm Bill, have not been increased much since the
1980's. A lot of competitive grants have been added. But I would like
for you in the Farm Bill to look at the formula funding for the land
grant universities.

Thank you.

\[Applause.\]

MS. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (did not give her name): Good
afternoon, Mr. Johanns. I am a black farmer from here in Louisville,
Kentucky and I am associated with Adair County and the Black Farmers
Association in Hopkinsville. I recently had the opportunity to sit in at
the partners conference in D.C. What I just wanted to speak to is number
three, the appropriateness of farm program benefits.

As you are getting your Farm Bill together, I would like for you to
remember the disadvantaged and the people who have helped to make
America great as far as the black farmers. You know, we may be still
small in minority \-- I mean, small in numbers, but nevertheless we
still have added to the U.S. agriculture industry. There are problems
with some of the small black farmers simply in the foreclosure
department. A lot of them are having difficulties. And I believe what's
happened is because of economic problems of the past and educational
problems of the past, and technical problems as far as, you know, new
technologies and making plants grow and the best things for the cattle.
We need to implement some counselors and some people that will get out
to the small black farmers who are not maybe a part of the FFA and some
of the other educational programs and actually reach them and help them
to get their programs up to larger production levels.

So, if you could, again, address the foreclosure issues by implementing
some educational and economic programs that would help, I would
appreciate it.

Thank you.

\[Applause.\]

MR. JIM LACEY: Mr. Secretary, thanks for being here. I was very
impressed with the first one of these you had in Nashville. I will try
to be short and if I'm not, I know Jeff will destroy me. My name is Jim
Lacey. I am a farmer from east Kentucky. I serve on the executive board
for the National Association of Conservation Districts representing the
11 states and territories of the southeast.

As far as conservation is concerned, right now we have a pretty good
program, let's keep the money there, let's keep it going.

Second thing, I want you to please consider \-- reconsider the FSA
office closings. That will come as near destroying agriculture in the
state of Kentucky as anything else can.

Now, a few other things. As an American farmer, we must be able to make
a profit as well as continue to produce and abundant, consistent, and
wholesome supply of food and fiber. We can't afford to depend on food
from other countries whom, as you know most of them, don't like us
anyway. We see what depending on foreign sources for oil is doing to our
lives and economy and I'm not referring to the present problem in New
Orleans and Mississippi. Before that, this is, you know, a big
explanation point.

The thing that we must be able to do is make a profit and that is the
only way we can bring on new farmers. Keep in mind the average age is 60
and I quit.

\[Applause.\]

MS. NIOKA SLOAN \[sp\]: Mr. Secretary, my name is Nioka Sloan. I am from
the east, very most eastern part of the state, very up in the mountains
and very rural. What I want to talk to you about is the programs through
the land grant extension service. We had a program there called CYFAR
which is Children, Youth and Families at Risk. And if you live in
eastern Kentucky you are at risk. I don't care who you are or how much
money you've got, you're still at risk.

There is very little implements there for culture, very little work,
very low education levels. And through the CYFAR grant, through the
University of Kentucky, we saw a great difference in the kids and in
their parents. We worked with children with dyslexia, children who were
15 and pregnant for the third time. But that's okay, their parents had
done it before them for the last five generations. We had parents that
were married when they were 13. We worked with children who were
products of those marriages, two children raising two children. Or two
children trying to raise ten children. And only through the extension
service and the grants through CYFAR were we able to see a growth in
their self-esteem, a growth in their abilities to look forward to a
newer world, a newer, better way of doing things.

We taught classes in education, parenting classes. We had extra stuff
there for them to do. I ask you to please think about extending the
grant money to them, not just for my county, but for other counties that
are in the same boat.

Thank you.

\[Applause.\]

MR. HENRY DUNCAN: Mr. Secretary, I am Henry Duncan. I am speaking on
behalf of the Soil Water Conservation chapter here in Kentucky which is
an international chapter. We do want to thank you for selecting Kentucky
for one of the hearing programs. It's an honor for us to be able to
present our thoughts to you at this time.

Hugh Bennett, 60 years ago, when the Soil and Water Conservation Society
was being formed made the statement that the protection of our soil and
our water is important not only to farmers, but to those in urban areas
and throughout our country. Without adequate water, quality water, and
productive soil, these other programs and issues that we speak of can
never reach their full potential.

The indication that I have is that the current Farm Bill that we have
was very well funded toward conservation programs and environmental
programs. It was a turn around and we certainly appreciate that. There
are also indications that the full funding of some of these programs and
future pressures to fund such programs is under a considerable amount of
pressure. I guess what we would like to suggest and request is that
future funding be set aside for research through our land grants to help
the farmers develop best management practices that will protect our soil
and water. And adequate funding be made available to farmers as
cost-share projects and for technical assistance so we can keep our soil
and water at a maximum quality in Kentucky and throughout the country to
be a productive agriculture that we need to be.

Thank you.

\[Applause.\]

MR. DAN FEIGER \[sp\]: I feel I have a lot of pressure so the break is
on time. I would like to thank the Secretary for coming to Kentucky. It
means a tremendous amount, not only to Kentucky, but to the country, for
you to take your busy time and come listen to us and what we think.
That's tremendous to us. It makes a huge difference. My name is Dan
Feiger, I'm assistant director with Kentucky Department of Fish and
Wildlife Resources. I live here in Louisville, but my wife and I are
still very involved with family farms that we have back in Hopkins
County. I grew up in Madisonville which is a little town between Rabbit
Ridge and Possum Trot.

I am representing the 14 fish and wildlife agencies who are members of
the Southeast Quail Study Group and Kentucky Fish and Wildlife. First I
would like to relay the message that conservation provisions of the Farm
Bill are working. In Kentucky CRP, CREP, continuous signup CRP, WRP,
EQIP, WIC, CSP are all working to save soil, improve water quality, and
improve wildlife habitats.

In Kentucky they're working because of the partnership that we created
and that partnership includes NRCS, FSA, as you've heard already, the
county conservation districts, ourselves, and a host of other partners
in this process, I guess.

In my opinion, we have one of the best working relationships in the
country. Specifically I would like to thank David Sawyer the state
conservationist and Jeff Hall with FSA. I would also like to thank FSA
at the national level for working with the Southeast Quail Study Group
to create the CP-33 practice. The Southeast Quail Study Group just
recently this week had the opportunity to be one of 30 programs that was
highlighted at the President's Conference on Cooperative Conservation.

The conservation provisions of the Farm Bill provide stable, long-term
funding for farmers despite rainfall amounts, despite crop price
fluctuations and tobacco buyouts. They are enabling many farmers to keep
their land and the farming lifestyle. With the current concern that the
WTO has with crop subsidies, this might be an excellent time to consider
shifting money to the conservation provisions.

I would like to ask that all the conservation provisions of the 2002
Farm Bill be maintained at current or expanded levels and that co-equal
status of soil, water, and wildlife continues to be the standard.

Thank you.

MODERATOR: Thank you.

\[Applause.\]

MODERATOR: Ladies and gentlemen, we've done great so far and knowing the
Kentucky teams, we're good second-half teams, we are not done yet, still
have a period of time here after the break where we will be commenting
on the six questions. And then we go to an open comment period as we
begin to wrap up tonight. So for those of you who have already gone,
that's great. For those of you who intend to go, we are going to start
right after Jeff Rice, a ten-minute break here and then we'll be back in
action.

Thank you very much.

\[Brief recess taken.\]

Vocalist.

MODERATOR: All right. We are in a position now that we are getting ready
to go, or fixin' to begin, if you want to use that as a country term. To
let you know, we have 40 minutes of open comment on these six questions.

\[Pause.\]

MODERATOR: As you are taking your seats, we would like to introduce
again, Commissioner Farmer for a couple of comments.

COMMISSION FARMER: Thank you, Jeff.

As many of you know, when I came up here earlier I was reading from a
script and if you've ever heard me speak you very rarely see me read
from a script, so I just wanted to take the opportunity to say that as
the Secretary knows and everybody knows, agriculture is so very, very
important and I want to thank you all for coming here today. But
agriculture is very diverse, it affects the lives of every single
family, every single person every single day. And I just want to take
this opportunity, again, to thank Secretary Johanns for coming and
listening to all the many people and the concerns, and, you know, things
that are going to affect the Farm Bill that is going to affect our lives
for many years to come.

So, again, Secretary, thank you very much.

MODERATOR: All right. We are going to start when we begin here with Jeff
Rice. Then we have some others that are going again. This next 40
minutes or so, we're still responding to the six questions. Still
responding to the six questions. I would like to, to make it easier for
the folks that are transcribing this later on, I don't want to cause too
many issues with your notes, but we would like to get your name and
where you are from, whether it's Custer, Monkey's Eyebrow, or Garfield,
I would like to get those up front, your name and where you're from and
then the question that you are addressing. It makes it so much easier
for recording this data just a little bit later on.

I know these are certainly important. We are glad that they are here in
Kentucky. I want to thank this Secretary of Agriculture especially
Secretary Johanns for working so closely with our National Association
of Farm Broadcasters. We were actually in Washington, D.C., at the USDA
when you announced that you were going to be holding these sessions. And
you've been working with great farm broadcasters all across the country
and our relationship with farmers to bring this about. So thank you.

Now, there is one thing though that I'm wondering. When you go to, let's
say, North Carolina, should there be an equitable value of time? Because
it's hard for somebody from North Carolina to be able to get two minutes
of comment in, in 120 seconds; do you understand?

SECRETARY JOHANNS: No, I don't understand that at all.

MODERATOR: We were in South Korea and we were on a trade mission with
the U.S. Grains Council and Guy Davenport was there and we had
interpreters that were between us. And we were supposed to be able to
ask questions of the South Koreans. And Guy started talking in North
Carolina and the lady that was the interpreter looked around like, what
is he speaking?

\[Laughter.\]

MODERATOR: So me being from Kentucky and I speak Carolina, I interpreted
to her, she interpreted to the South Koreans and then we brought it all
back and everything was fine.

\[Laughter.\]

MODERATOR: So anyway, maybe in Minnesota they would have less time to
speak. You know, up there they get talking things pretty fast, you can't
get so much done if you got to go to quick, you know, there, sir.
Anyway, the auditorium is coming together and I've made a fool of myself
in front of the Lord and everybody so now we are ready to go and have 40
minutes left.

Again, please, please, please, don't wait to get up. Let's go ahead and
form our lines and maximize the time that we do have available. The
floor is yours, sir.

MR. JEFF RICE: I want to welcome you to Kentucky, Mr. Secretary. And I
want to thank you for coming and listening to our concerns and our
ideas. And I want to thank you for being here and doing that and thank
God that we live in a country that we are able to meet and gather and
voice our opinions like that also.

I am Jeff Rice. I'm from Utica, Kentucky, just a few hills and a creek
away from Jeff Nalley there. I'm an agribusinessman and a farmer. I want
to address a few conservation issues there. Conservation has been very
important to our farmers in the past Farm Bill and I think it would be
real important for the 2007 Farm Bill.

I am going to make three points here. I think the conservation technical
assistance that we receive through NRCS has been real important in
getting those programs on the ground. The engineering, the surveying,
the help that the farmers have received in getting their waterways and
their structures in and helping us with our water quality management
plans. I think that's been essential here in Kentucky.

Then I'm real proud of what's done on the working land programs. Those
programs, the EQIP, the CSP, the WIP, those programs have been vital. I
think they've helped a lot of farms, helped a lot of our environment,
the conservation measures that's made our farms more valuable. And we've
got to help these active farms. I think that's the most important
things, even more than maybe some of the other programs.

Then the last point I want to make is on renewable fuels, helping the
environment in the conservation. We've got ethanol and the biofuels.
Those programs are growing. We see that as a great market for our crops.
I think we need to encourage that growth and then I think we need to
look at carbon credits programs as something that we can also add to our
Farm Bill. And conservation helps us all and it helps our agriculture
economy and environment.

I want to thank you again for being here with us today.

\[Applause.\]

MR. BRUCE METZGER: Thank you, Mr. Secretary, for allowing Kentucky to
have some input into our future Farm Bill. My name is Bruce Metzger and
I'm the adult AG coordinator at the Kentucky Community and Technical
College System. We have a group of fellows, 18 teachers, to be exact,
that work with adult farmers throughout the state. Our main thrust is to
provide technical assistance on a one-on-one or small-group basis. These
programs actually began back after World War II with the Veterans
program and Kentucky is one of the few states that's been able to hang
onto these. I think especially with our transition tobacco and
everything that's going on, we could use some expansion into this area.
And if you could add that as a consideration if you make any additions
to your Farm Bill, we would certainly appreciate that. Because I think
the contributions these folks can make can definitely have an impact on
the rural economy here in rural Kentucky.

Thank you very much.

\[Applause.\]

MR. LARRY HENDRICK: Mr. Secretary, I would like, again, to thank you for
using Kentucky as one of the forums here. My name is Larry Hendrick.
Today I represent the Kentucky Agriculture Teachers Association. While I
wear many hats, I first would like to acknowledge the comments of Mr.
Metzger as it relates to the adult education program that we have here
in Kentucky.

As a high school teacher of agriculture, I also have that program within
my jurisdiction. It may not come within your venue, however, I've had
the opportunity for the last 27 years to work with FFA members and have
been blessed with that. And one of the things that has kept this, and
indeed is about half of our total budget, is through the Perkins funds.
And I would like to encourage you to encourage whoever in the Department
of Education to not only reauthorize Perkins funding, but also increase
that Perkins funding.

Thank you.

\[Applause.\]

MS. KIMGERLY PADGETT: Hello. I'm Kimberly Padgett. I grew up in the
foothills of Appalachia in a small community called Hiding, Kentucky and
now I reside in Versailles and I'm state director of the Kentucky Rural
Community Assistance Program, RCAP. RCAP is federally funded by USDA
Rural Development, EPA and Health and Human Services. In Kentucky we
assist rural communities finance, water and wastewater facilities,
through rural development and then maintain compliance once those
facilities have been developed.

Last year our Kentucky programs leveraged more than \$24 million for
water and wastewater systems, which sounds like a lot, but it really
isn't. We have many needs. We are a direct service provider of USDA.

Kentucky RD led by Ken Slone and Vernon Brown remain devoted to
assisting the small systems which desperately need not only loan funds,
but many grant dollars as well. So on behalf of our rural residents,
systems and programs, I strongly encourage your continued financial
support and increased funding for USDA Rural Development.

Thank you.

\[Applause.\]

MR. RICHARD PRESTON: Oh, hi. I'm Richard Preston. I'm a farmer from
central Kentucky. I see a lot of fellow farmers out here and I know we
haven't had many speak yet. The one thing I wanted to address are two
points, point number two and point number five.

First of all, I would like to thank you for what the USDA \-- it's very
important for my farm. It is very important. My farm really depends on
the technical assistance I get from NRCS, all the help I get from FSA to
work through this mountains of paperwork and all that crap that we have
to work through.

\[Laughter.\]

MR. PRESTON: It's very, very important to have those offices and have
those people that are willing to sit down and help me understand this
stuff.

But the other thing I'd like to point out, there's been some talk here
as if when you give me money that those subsidies are a bad thing. What
I'd like to say is that those subsidies, you're getting a very good
return on your money. It's like bubble up economy instead of trickle
down economy.

For \$37,000 that you gave me last year I'm very thankful for that. I
spent \$800,000 in my community. So you got a pretty good return. So I
would say that farmers are very much in economic development. And we are
the engine of economic growth in rural America.

Thank you.

\[Applause.\]

MR. LARRY SNELL: Mr. Secretary, I'm Larry Snell, Executive Director of
the Kentucky Center for Cooperative Development with offices in
Elizabethtown, Kentucky and an office at UK campus in Lexington.

First of all, I would like to thank you for taking the time, like
everyone else has today, for coming to Kentucky. Agriculture and rural
economic development in the state of Kentucky are vital to the health of
our rural economy. I'm sure you're well aware of that as you travel from
state to state.

I'd like to comment on questions number five and number six. I urge
continued support of the USDA Rural Cooperative Development Grant
program. The Kentucky Center is one of 22 cooperative development
centers across the nation that are doing development work and providing
technical assistance to not only new cooperatives, but existing
cooperatives as well.

Co-ops aim for capital in rural communities, provide access to markets
for producers and generate wealth and jobs in rural areas. I am sure you
are well aware of this. Co-ops offer economic opportunities from small
and medium-sized farmers and entrepreneurs. Kentucky farmers can produce
a multitude of quality products, but at the same time the infrastructure
must be developed to market those products. Rural business development
is to keep pace with the diverse changes taking place in Kentucky
agriculture. The infrastructure must be developed as we diversify into
the new crops that we are challenging that we are trying to do here in
farm enterprises in Kentucky today.

And in regard to question six, I would like to urge continued support
for a very important program and that funding is needed for the
Value-Added Producer Grant Program. These grants identify alternatives
to traditional commodity farmers, for Kentucky farmers, and take
advantage of niche marketing opportunities. They have benefited many ag
businesses both cooperatives and LLCs in Kentucky and what basically
they do, they give these start-up businesses the opportunity to do some
careful planning, do feasibility studies, and to base these businesses
on sound business principals.

So, again, I thank you for coming and listening to us here today. Thank
you.

\[Applause.\]

MR. SCOTT TRAVIS \[sp\]: My name is Scott Travis, I'm a farmer from
Spencer County, just 30 minutes south of here and it's an honor to stay
and talk to you directly right here. It's a chance of a lifetime and I
appreciate it.

What I want to talk about is basically the Farm Bill. The Farm Bill that
we currently have in my operation is way ahead of the Farm Bill we used
to have. We have the safety nets and things in place. I remember back in
the '90s as a farmer when it doesn't rain, you don't have a lot of
income. You know, paying a lot of taxes is a good problem to have.
Because when you don't pay any taxes, you've got a whole lot worse
problems because there's no income in your operation. And there have
been years where the 1099 that you send at the end of the year has the
same amount on it as the Schedule F does on the bottom. Had that safety
money not came, to a grain and tobacco producer like I am, there
wouldn't have been income on the farm. And I can say that every dollar
that is put into a full-time farmer's hands, whether he lives here or he
lives down in the delta, out west, wherever, every dollar you put in a
full-time farmer's hand is a dollar very well spent. There's a small
part of the USDA budget that goes directly to farmers. There's a big
part of it that goes to people other than direct payment to farmers, and
everyone needs to realize that.

You know, yesterday I ate at McDonalds, I got two hot sandwiches, all
the Coke I could drink for \$2.85. I can't even buy a gallon of gas for
that. A hot meal is cheaper than one gallon of gas. It costs more to
drive to McDonalds than to eat at McDonalds.

\[Laughter.\]

MR. TRAVIS: What I want to say is it will be a sad day in this country
when we rely on another country to feed us like we rely on other
countries to provide us with oil.

Thank you.

\[Applause.\]

MODERATOR: Can I go over our format here. Questions one through six
right now and then open comment comes at about 20 past the hour. We want
you all to speak, but we also want to make sure of your name and where
you're from and then the question that you are addressing here and then
we'll get to the open session and we may have a little extra time for
that. As soon as we get through with one to six, then we'll move to the
rest. Sir.

MR. STEVE CULL \[s p\]: Mr. Secretary, my name is Steve Cull. I'm
assistant director at the Division of Forestry. And as far as addressing
conservation programs here in my tenure of 26 years with the division
it's been great to see forests and the resource recognized as a
commodity. And I think the importance of that resource is increasing and
it has been in the 1990 Farm Bill and other things through USDA, their
cooperative forestry programs and so on.

I think it's critical that a Farm Bill be part of, you know, have a
forestry component in it and have a forestry program in there which
includes incentives to land owners. While commodities are important and
the other commodities, EQIP and other programs, it's been stated, well,
there's duplication efforts. I think it's important that you recognize
the long-term investment when a farmer is dealing with their forest
resources. The importance of that resource is not only in Kentucky, but
in the south and nationwide. And I think that a forestry portion of the
Farm Bill needs to include that and incentives for that long-term
investment.

Thank you.

\[Applause.\]

MR. BOB WHITE: Mr. Secretary, thank you for hearing us. My name is Bob
White. I'm from Union County and I'm a farmer, period. That's all I do.
I'm here today speaking for the family farm. Incidentally, Union County,
you don't go through there to get anywhere.

\[Laughter.\]

MR. WHITE: We are just out there. But, anyway, the family farm is what I
am concerned about. In all of the past Farm Bill discussions that I'm
old enough to have been through the term family farm has been mentioned
in print or on the radio oftentimes very cavalierly in my opinion.

I started farming with my grandfather and my father who have both passed
away. But I now farm with three brothers, a son and two and a half
nephews. And my half nephew is eight years old and there's no doubt in
my mind that he will farm too. More importantly, that's what is in his
mind. So, when you get to discussing these things and making these
decisions, don't forget that the family farm is not a mom and pop
operation anymore. The family farm is a mega farm as I've heard already.
And I'm not necessarily proud of that, but that's the way the business
has evolved. And I hope that \-- I'm addressing question three, I'm
hoping that that is remembered when it comes time to decide payment
limitations and all of those other things that affect a family farm.

Thank you.

\[Applause.\]

MR. LARRY KIRKLAND: Thank you, Mr. Secretary, for listening to the voice
of American agriculture. Welcome to Kentucky. My name is Larry Kirkland.
I am a fifth-generation farmer from McLean County where I grow grain
crops and tobacco on about 1,000 acres. I am also your employee. For the
last 17 years I've served as director of FSA in my county. While there,
my staff and I, have tried to provide information and opportunity to the
farmers that we serve.

As a full-time government employee and a part-time farmer, I have viewed
USDA policy from both sides of my desk. I made many observations as a
CED, but today I am going to speak to you in a farmer's voice.

Mr. Secretary, I'm sure you've heard that old saying, if it isn't
broken, don't fix it. That analogy would apply to the loan deficiency
payment program. The program works the way it was designed to work. It
is only triggered when the price of a commodity falls below the loan
rate. It only pays up to the loan rate. Presently producers are entitled
to earn a payment on all the bushels they produce. There has been some
speculation and debate that in the future it may be limited to something
less than full production.

Many critics of the program argue that large payments are made in years
when producers have a large crop. Some farmers who are unfortunate to
have a poor crop in a good crop year argue that high LDP rates are
available when they don't have many bushels to collect on. So we ask you
to please do not consider limiting the LDP rate to anything less than
the actual production.

Risk management is an integral part of basic farm management in today's
economy. Over the past decade many farmers have been encouraged to
secure crop insurance. As a matter of fact, even required to secure crop
insurance in order to participate in some of the USDA programs. For many
it has meant the difference between success and failure. However, my
observations are that the real benefactors of crop insurance are the
insurance companies themselves.

MODERATOR: Time.

MR. KIRKLAND: It often appears that \--

MODERATOR: Time.

MR. KIRKLAND: \-- they are subsidized in the premiums that they collect
and in the indemnities that they pay. It is not surprising that
oftentimes they encourage claims to be made when there really aren't
any.

MODERATOR: Time. I'm sorry. Time.

MR. KIRKLAND: Thank you very much.

MODERATOR: Thank you.

\[Applause.\]

MR. LARRY BUTLER: Mr. Secretary, my name is Larry Butler. I would like
to tell you where I'm from, but I live in three counties. Actually the
county line goes right through the house and they have to determine
which kid goes to which school.

\[Laughter.\]

MR. BUTLER: Spencer, Jefferson, and Bullet County, Wilsonville would be
the closest place in Spencer, Whitfield would be the closest place in
Bullet, and Ralph would be the closest place in Jefferson.

I'm going to address the FSA office today. The amount of paperwork, the
ladies that we have and gentlemen that we have that they're doing their
jobs. You put a tremendous burden on them \-- and "burden" might not be
the correct word to use \-- when the tobacco ballot came through. In
March they were asked to do something that no one had ever been asked
before. By June they were making payments. My name ending in B meant
that I was one of the first ones that got to sign up. Well, before they
got to S's the programs were already changing and we were having to go
back and resign up again. Our information was correct, it was on time.
Whenever there was a problem because the programs were changing, the
ladies were on top of it, they had it to us, we were able to get down
and we got our sign ups together. Everything was doing fine.

It's been mentioned of all the cuts that we're going to have through the
state of Kentucky, 31 offices, and amount of people that I don't even
know the correct numbers for. I think it would be in bad interest at
this point in time to be closing these offices until we get through at
least the first full year of our tobacco buyout. There are so many other
programs that are talked about that needs to be done for the state of
Kentucky to be a pilot program for livestock identification. You have a
great avenue right there with the amount of people you already have on
staff to handle that without any type of cutting funds, without any type
of cutting offices or employment.

I'm going to get out of here before the lights come on. I have one other
thing I want to address, but I guess that would be on the open forum.
But I think this needs to be taken into consideration, especially our
cattle identification. We've been told that they want to make Kentucky a
pilot state. So there would be a great opportunity right there to use
our FSA offices.

Thank you.

\[Applause.\]

MODERATOR: Let me poll the audience for just a second. How many more of
you here want to comment on question one through six? We have a schedule
that they set, but they also have given me some liberty here, and I'd
like to offer it. How many want to comment on one through six? Anybody
else who wants to comment on one through six? I know we have three
people standing here. Okay. Cool. We have one there? How many more?
Because I've got 30 minutes allotted for it.

Okay. How many of you would like to participate in the open forum, you
plan to either speak now or speak again? And you see, we're going to
have a whole lot of daylight left if everybody doesn't get back in the
game. So let's go ahead for the next five minutes or so and let's put
our comments on the one through six. And Mr. Secretary, if that's okay
with you, we will open up for general comments an allow a broader period
there. But if you're going one through six, please come on and do that
and then we can open this up so I don't feel so bad about pulling
somebody out of line and one thing or the other. Okay. Let's go ahead.
Thank you.

MR. MITCH DUNN: Thank you for being here, Mr. Secretary. My name is
Mitch Dunn. I am from Wilmore, Kentucky. I am actually wearing three
hats today. I'm a tobacco farmer in Jessamine County, which is just
south of Lexington. I am a USDA employee in a county Farm Service Agency
office. And but probably more importantly today I'm here to represent
our FSA county office employees. I am the current president of the
Kentucky Association of FSA county office employees. And if you don't
mind, I would like to ask our FSA employees that are here to stand
please. I think you will see we are very well represented. State
committee folks, county committees are here and so as you can see we are
very well-represented here today. Thank you all very much.

What I would ask you to do is examine the track record that FSA has had
in delivering prior Farm Bills. I think you will find that we have
delivered programs in a most cost efficient manner. We are very proud of
our employees and the involvement they have in their communities. We
just administered very effectively and efficiently, I think, the tobacco
buyout program. And now we as FSA county office employees stand ready to
deliver the 2007 Farm Bill in whatever capacity that we can. We just,
under the leadership of our state director, Mr. Jeff Hall, we ask you to
look at our track record and put us to work in the 2007 Farm Bill.

Thank you.

\[Applause.\]

MR. \_\_\_\_\_\_\_\_\_\_\_\_\_: Mr. Secretary, glad you could be here
today. I'm kind of wearing two hats today. I am an AG lender with U.S.
Bank in Hopkinsville, Kentucky. I was raised on a family farm down in
that area. So I guess my whole heart is in this whole meeting here
today.

But I guess the point I want to make is that with the new Farm Bill
coming up, I think you all need to make a very aggressive effort to
either keep the program payments in tact or some other version, or we've
got to find markets for this grain out here. The farmers I work with, if
they don't have good yields each year and if these government subsidies
are not there, they don't cash flow and it makes my job hard. And I know
these farmers have hard times too.

I might also mention, I grew up on a family farm down there in
Hopkinsville, as I said. And back when my dad farmed in the '60s, he had
600 acres of grain, some of it (unclear) grain, we had about 30 or 40
acres of tobacco and a cattle operation. Well, I've got a brother
farming today and to make the same standard of living that my father
made, he has to farm 5,000 acres and his profit margin is that narrow.
And he has two, \$200,000-plus combines. My dad had one he paid \$40,000
for new. So that I hope parallels what we are looking at here today.
Everybody talks about mega farms and all this. These farmers have no
choice. They've got to get bigger to make their standard of living for
their families.

So I didn\'t plan to speak today, but I thought I was compelled to do it
because nobody else in the banking industry has been here and I'm an AG
lender and I have a lot of farmers that need the help.

Thank you very much.

\[Applause.\]

MR. DON MARTIN: Mr. Secretary, I'm Don Martin, president of Agrifuels,
LLC. Agrifuels is a Meade County business located near Brandenburg,
Kentucky. Question five addresses how can federal, rural and farm
programs provide effective assistance in rural areas? Parts of the
existing 2002 Farm Bill already give producers and rural-based
businesses a competitive edge. The 2007 Bill needs to preserve all of
that great work that was done in the 2002 Bill.

In one section of the existing Bill the renewable energy assistance
program allows producers and rural businesses to apply for grants and
guaranteed loans for renewable projects that produce fuel, ethanol being
one of those fuels. Based on positive results our group from positive
results from a feasibility study done by the Cobank Business Advisory
Services we have decided to go ahead and make plans to build an ethanol
plant in Brandenburg on the Ohio River.

Based on our financial need and the rural area that we are from, if it
wasn't for this program, we would not have an opportunity to compete
with the larger corporations. And I want to thank you for giving us that
opportunity to compete for the grants end and participate possibly in
the loan programs.

Again, I would like to encourage that the 2007 Bill preserve the great
work done in the past on the 2002.

Thank you.

\[Applause.\]

MR. BUD BLAIR: Mr. Secretary, Bud Blair from Springfield, Kentucky and I
want to address issue one with beginning farmers. The quickest way to
get my message across, I think, is to tell a true story.

In 1982 I was 22 years old, couldn't get a loan at the bank to buy a
farm that I had been working on. They wanted to sell. I go in, in 1982
my loan is approved in May of 1982. It takes a year from the Farmers
Home Administration to get the money. It was a hard year, the heirs
wanted their money for this farm. I got it, I still have that farm.
That's where I live today. Back last year at the tobacco warehouse this
young guy that I know, hard worker, good farmer, he tells me he is going
to buy a farm. He goes in and deals with the same man that loaned me my
money. And I seen him six months later and I said, "well, did you get
your farm?" "No. Got the loan approved. The man, he got real ill, his
daughter wanted to sell the farm and wanted her money now."

You've got a good program, but when it takes a year people get antsy in
that year's time. You've got an excellent program, why does it take a
year when your loan officer approves it to get the money to trickle down
from Washington? Land prices are changing fast. When a farm comes up for
sale and it brings more money than what they priced to you, then they
want more money. So if you could speed that process up, I think it would
help beginning farmers a lot.

Thank you.

\[Applause.\]

MR. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_: I'm open comments, Jeff, first in
line.

MODERATOR: One through six. One through six, anybody left? Come on up
and then we're going to go. One through six. Good deal. Go right ahead,
ma'am.

MS. CATHY BAIRD \[sp\]: Hello, Mr. Secretary. Thank you for coming to
Kentucky. My name is Cathy Baird and I am a proud employee of the Union
County Farm Service Agency and I proudly serve our farmers. But just as
important, I am the wife of a farmer and I'm part of a farm family. My
husband is a full-time farmer and farms just over 1,000 acres in corn,
soybeans and cattle.

I would like to address question number one concerning the next
generation of family farms. Mr. Secretary, my family is the next
generation of family farms as the average age of today's farmer is 55
years plus. The face of the family farm is changing. It is imperative
for the family farm to now have an outside source of income that comes
with health insurance, retirement and other benefits. The farm family
has to send their children to day care because both parents are working
instead of having that chance to grow up on the farm.

As life changes on the farm, farm policy must change too. The next
generation need encouragement to continue to farm. It is difficult for a
young farmer to be competitive when saddled by debt from machinery and
operating expenses like \$2.30 a gallon for farm fuel, then sell their
commodity below the posted county price. Please remember the next
generation during the next Farm Bill. Please continue with the LDP,
countercyclical payments and other price support programs, along with
the farm loans as the gentleman from Springfield said from the farm
service farm loan team, and consider tax breaks or credits for land,
machinery, and other large operating expenses.

Thank you.

\[Applause.\]

MR. MIKE ELLIS: Mr. Secretary, thank you for coming and I noticed you
are taking a lot of notes. So I know you're listening, so thank you for
that. I am Mike Ellis a Shelby County and Henry County farming. We are
about 35 miles to the east of here. We are grain farmers primarily. Have
been tobacco in the past of course, but primarily grain now. Item number
four is the conservation programs and I think this would also impact
number one in helping young farmers.

I have a couple of conservation and reserve suggestions. One is the crop
history now has to be four out of the six base-period years to
participate in that program. And that program is based on years 1996
through 2001. So it's not kept up and current with today. And it would
help the program if it were the last six years and rolled forward each
year in the new Farm Bill if that could be possible so that today it
would be applicable to today's farming that we are doing and not what
was done in the past.

The second thing that I see that could help is when we take a new farm
under to grow crops on and lease it, most farms that we're leasing have
not had row crops. So we have to then put areas along streams into row
crops for a period of time until this crop history is met. Then at that
time we can then enroll in CRP programs. If there were some way or
provision that would allow these areas to enter into the CRP (unclear)
program at the onset of cropping so we wouldn't have to be forced to
crop them in a manner that's inconsistent with this management practices
it would help.

Thank you.

\[Applause.\]

MODERATOR: Okay. Help me gauge my time just a little bit. How many of
you would like to participate in the general comment period? Can I see
some hands? Let me see you so I know what we're doing. We're not going
to play another hymn and sing and come down. We're not going to do that.
We're not going to pass the plate either, okay. But I would like to know
and I'm probably not going to clear my throat until about two and a half
minutes, okay. Don't tell him, but that's probably what I'm going to do.

We don't want to have the Secretary of Agriculture and our audience and
lose any time. Okay. So now is our opportunity. Maybe you came and you
just didn\'t want to, you're not sure that you're the person to do it.
Yes, now is your chance. Let's be sure that we get it done. A lot of
things have been in the news that we haven't talked about here tonight
and I certainly hope that you do your part in bringing those up. If not,
this guy may start asking you questions and they get real tough.

First general comments, come here.

MR. WAYNE HUNT: Mr. Secretary, my name is Wayne Hunt. I'm from the
western part of the state. I live on a family grain farm, three
generations, only farm now. It's a 5,000-acre operation. It started as a
240-acre operation. That's the center of it today. That is the true
family farm.

I first would like to send a message to the President and say, thank you
for a job well done. This Farm Bill is working and it's done very well.
I don\'t know of a single part of it that hasn't done its job. I'd have
to tell you, I'm not sure we agreed with it 100 percent when it was
passed, but it has worked very well. It has provided a safety net and
things it should have. The property insurance a critical part of it. We
have to have our property insurance today.

I think you need to realize, when we go to talking about things like
payment limits and things of that nature, when you see out here, when
you see true production agriculture, it's not a small thing anymore.
Payment limits can be very limiting. That money goes to pay debts, it
goes to pay bills, it didn\'t go in our pocket. So I think if we're very
careful when we limit. If we ask for production agriculture to stand up
in this room today, I don\'t know what that number would be. I would
just like to say, everybody's got a hand in it or are true production
agriculture, would you stand up?

You see, our number is not too large. We do a good job of feeding this
country today, but it's obvious Farm Bills affect a lot of things that I
didn\'t know it affected until I got here today.

\[Laughter.\]

MR. HUNT: But the production agriculture, the guy that's grassroots on
the farm, that portion of the Farm Bill has worked very well and I wish
you would take it back to the President. Our hats off to him. He's done
a great job of it. And we would like to salvage all of it we can. I
understand budget constraints, I understand that you've got to meet all
those, but your job might be pretty easy. You've got a good framework to
work in. We appreciate what you've done and appreciate you coming to the
state and meeting with us.

\[Applause.\]

MR. ANTHONY TRAVIS: I'm Anthony Travis from Spencer County which is near
Taylorsville. I want to thank you for coming to our great state, Mr.
Secretary. And I grew up on a small dairy farm. I don\'t know how big
yours was, but we went on and we had 15 or 20 cows when I started out
and when we quit the dairy business we had about 450 heads of dairy
cattle.

I was blessed being able to raise my children on the family farm. The
knowledge that they gained from that family farm is going to be hard to
replace with grade school, high school, college, whatever. It's very
important for those kids. There's education there that can't be gained
elsewhere.

I've served on the FSA committee director of Farm Bureau. I've farmed
all my life and I now serve on our county government. I've also farmed
in the state of Indiana, Kentucky, Tennessee, and Mississippi. And I'll
have to tell you that these programs come and go and we all look at them
when they come by and say, what's going to happen to us now, what's
coming. But I will have to tell you that all these program what is there
is working.

And I have to go back to the thought that getting to work on the combine
one day and a fellow, I told him, "we're going to work on this combine."
He said, "Mr. Travis, you run all those soybeans yesterday, why are we
going to work on it for?" And that's the point that goes back to the
program that we've got now. I realize that it has to be looked at again,
but we need to take a serious look and maybe a rubber stamp would be
more appropriate.

Thank you.

\[Applause.\]

MR. PAUL HORNBACH \[sp\]: Mr. Secretary, Paul Hornbach from Shelbyville,
just about 30 miles east of here. I'm a tobacco, row crop, and beef
cattle farmer. I also serve on a state committee and I appreciate the
opportunity to do that and help serve USDA in that level.

The comment I wanted to make today, Jeff, is like you talked about, it's
something that's been in the news. Mr. Secretary, it's not under your
all's jurisdiction in USDA, but it's an issue that's of utmost
importance to agriculture all over this nation and that's immigration
reform. The need for agriculture to have a legal, stable, affordable
labor supply to harvest crops all over this country. I understand the
needs. And I also might say that I'm chairman of the American Farm
Bureau Labor Committee, so I know the needs of agriculture all over this
country, and the need for that stable supply of labor that we have. I
also understand the need for immigration reform as it pertains to
national security that we protect our borders. That's something we need
to do. We need to make our borders more secure so we don't have people
just walking in all the time.

I also know that we have a large number, some say 14, 15 million
undocumented workers here in the United States. Those workers don't need
amnesty. I agree with the President and you can take these comments back
to the President, amnesty is not thanks to that. We do have to document
those workers, get them on the tax roles, not put agriculture in a
situation that we are without a work force for a period of time because
if it's tobacco it takes 250 man-hours per acre to harvest that crop. Or
if it's citrus crops down in Florida or Arizona, the vegetable crops all
up through California and the east coast or anywhere in this nation,
they hadn't harvested the crops we had. Those are not jobs that like to
be done by the American workers.

I have participated in the H2A program as many others do here in this
room, which is the only legal source of seasonal migrant labor that
there is and it is in desperate need of reform. Along with that, I just
want to make sure that you take those comments back to the President and
that agriculture does get treated fairly in any type of immigration
reform we might have. Because I know the President has been talking
about it recently mainly for purposes of national security and I think
it's something that it's time that we handled.

\[Applause.\]

MR. JIM PIERCE: My name is Jim Pierce and I'm from Oldham County,
Kentucky. Mr. Secretary I want to thank you for coming to Kentucky today
and listening to some of our concerns that we have here today. I would
like to say to you that I am a farmer that is above average. I am over
60 years old and therefore I'm a little bit beyond what some of these
other fellows are.

I want to talk about four different issues that I feel are important to
us. One of them, and this is somewhat in the general area. Rural
Development funds are very, very important. I can remember back when I
was a teenager and Oldham County received funds from Rural Development
to develop a water system. We were having problems running a dairy with
having the quality of water that was always needed, having to pump from
wells and things of that nature. So that is a very, very important thing
and please do not shortchange that.

The next item is the closing of FSA offices. I happen to farm a small
family farm and have taken in some other land that surrounds me from
owners who either do not have the equipment or are older and so forth.
We have lost our FSA office and moved to the other one in one of the
other rounds. It took about three to five years for the group up there
and they're wonderful people, they work hard, but simply to get all the
intricacies of our farm plan together and make it work so that if you do
need to contact them by telephone that they can work with you. And I'm
reaching out to those other people even though we may not be hit by the
farm FSA closure, but other counties that may be. If you are in a large
area such as your home state in Nebraska and places like that where they
farm thousands of acres on maybe one or two tracks, but when you are
farming multiple tracks, it's a hassle to have to retrain people in the
FSA office to do this.

I would also like to thank you for the tobacco buyouts. This one thing
was a program that helped immensely for those of us that are raising and
cannot find labor to do that.

The last thing I would like to speak to is the renewable fuels. I may
have a simple solution to a very complex problem. But one of the things
that pleases me is that this summer one of the local co-ops made
available to their infrastructure biodiesel for me to use on the farm.
And there is nothing that pleases me any more when I start my tractor or
this fall when I start my combine to know that I am running on
farmer-produced fuels. I am only using B-10 at this time. But I'd just
like to say, I wish we could help with the infrastructure to get more of
those out so that we as farmers can help solve the problem and B-10
would cut 10 percent of the fuel that we need \[off microphone\].

\[Applause.\]

MR. ROGER THOMAS: Mr. Secretary and Jeff. Thank you, Mr. Secretary for
coming to Kentucky. I am Roger Thomas. I am sure you don't remember me.
I had the extreme pleasure of meeting you just a few days after you
assumed your responsibilities at a function that the Kellogg Foundation
sponsored for Rural Development. And we had the opportunity to talk
about your views on Rural Development and I could tell then that you
were sincere in the need that you see for monies to be provided for
investment in rural America.

I am supposed to tell where I'm from. I'm from Smith's Grove, Kentucky
and I was going to tell you that it's east of Oakland, west of Hayes,
and south of Hydro, I believe that's right, folks from Warren County.
But I know you know where Smith's Grove, Kentucky is. So I won't tell
you that.

\[Laughter.\]

MR. THOMAS: I am here \-- first, let me say thank you for the job that
FSA does. I haven't been in every FSA office across this state, but I
have been in the one in Warren County. It's run in such a professional
manner and we are fortunate, Warren County is, to be blessed with an
office that we have in Warren County. And we are fortunate that Warren
County is not on the list of offices to be closed. But I will tell you
that I know of some of the offices that are scheduled to be closed and
some of those offices are in the most tobacco-dependent areas in the
state and obviously a lot of their workload had to do with tobacco.

If the office closings, if that's a done deal, if there's no backing up,
I would urge you as the Secretary and the administration and our
congressional delegation to think about those tobacco-dependent counties
here in Kentucky, unique from any other state, and those offices that
are being closed, try to come up with a way to offer special incentives,
special things in rural development for those counties that are having
offices closed.

Finally, and quickly, I am also the executive director for the Kentucky
Dairy Development Council. It's a new organization that with the help of
the Department of Agriculture, the Agriculture Development Board is
doing a great job of diversifying agriculture in Kentucky, we were able
to form this organization and we look forward to fostering an
environment for growth for dairy in Kentucky and we'll do that hopefully
working with young people. That's Rural Development too.

Thank you, sir.

\[Applause.\]

MR. AARON READING: Mr. Secretary, Aaron Reading. I'm from Howardstown
\[sp\], Kentucky. It's about an hour south of here. I'm just glad you're
here. I feel it's a great opportunity to talk farmer to farmer and let
you know what my concerns are.

I want to address specifically the commodity loan program portion of the
Farm Bill. As a young corn and soybean grower, I don't really have the
ability yet to lay it out in cash for all of my inputs. So, you know,
I'm running, I'm borrowing money here. And with that in mind, you know,
as December rolls around, you know, my bills are going to be due. I have
to pay those bills. So I rely heavily on being able to put those corn
and beans under loans so I can meet those obligations. I don't have to
sacrifice my grain at the historical low point of the marketing year. I
can hold my grain and try to sell it later on in the year and realize a
profit and then pay my loan back. And I want to stress to all the
subsidy phobia people out here that this is a loan, I'm paying it back.
It's not a handout. And so I guess what I'm asking is that as you go
into the next Farm Bill, you know, I've heard a lot of discussion about
reducing the loan rate or reducing the amount of my production that I
can put under loan that you will really consider not doing that. In
fact, possibly even raising the loan rate, especially when you consider
the skyrocketing cost of fuel and fertilizer, you know, these are all
obligations that I am still going to have to meet within that time frame
of my operating loan. Again, I just want to stress that this is a loan,
this isn't a subsidy, it's not a handout and I feel that could be very
beneficial.

Thank you, sir.

\[Applause.\]

MR. CHUCK SMITH: Yes, I'm Chuck Smith, a seventh-generation Henry County
farmer, was a third-generation dairyman. Two droughts kind of put us out
of the business. And an ex-tobacco grower.

I am here to talk about the term limitations on loans of FSA. In 2002 I
was granted a loan to actually \-- we diversified into growing grapes
here in Kentucky and having a winery. And I had been a borrower for
several years from FSA. So after a couple of years they implemented a
program that only seven years you could be active and to borrow in
operating loans. And that has really cut into our ability to fund our
operating expense in this new value-added venture here in Kentucky.
Also, the value-added grant system, the applications, even two lawyers
couldn't help me fill these things out. So I wish you would look at
that. Those are two issues that I think some people in the room and
especially the seven-year term limitations on loans that you can only
have a loan for seven years, I mean, we are still out here struggling
with this farm economy and I hope that something in the new Farm Bill
can be done about that.

Thank you.

\[Applause.\]

MR. PHILIP GARNETT \[sp\]: Mr. Secretary, I am Philip Garnett from
Hopkinsville, Kentucky. I just hate to see us do away with this Farm
Bill after we have finally halfway figured out what's going on with this
new Farm Bill. Because of the safety nets involved in it with the
federal crop insurance program, that I think when you go to the bank and
get your loan to put a crop out they have security. Just like if the
wind came through and destroyed a lot of corn at least we could sleep at
night knowing we would get our production costs back.

Also the LDP program has been very efficient. Of course, it doesn't
store. In 1980 every warehouse in our town was full of corn and it gave
us a chance to go ahead and move the corn on out to the pipeline and it
won't kill the next year's price. So the LDP is only working when it is
working because we are moving that grain on out so we can see the
future. And maybe ethanol will come along and maybe we won't have to
have any LDP. That would be the best thing to go. But these safety nets
in agriculture are very important because if we don't have the insurance
and the LDP payments, direct payments, in other words there's nothing
out there, we would all be like in 1980 when we were all up here crying
selling our farms. So I think these safety nets are working. I think
everybody here you don't hear about the foreclosures like you did 20
years ago because of this Farm Bill. I wasn't all for the Farm Bill. I
was afraid of the farm it would hurt. I said, "How are we going to make
that work?" You know, I said, "you know, you can raise all you want, but
it is working. So I think we need to stay to the course and keep these
safety nets in line.

Thank you.

\[Applause.\]

MR. \_\_\_\_\_\_\_\_\_\_\_\_\_: I too would like to welcome you, Mr.
Secretary. I would like to express also that I've been farming for 25
years, I've been through several Farm Bills and I would like to express
that this is one that is working, working very well. I can't imagine why
we would want to mess with something when we've got something as much as
government we have to do. And we have so many problems with things in
this one to be working this well.

I would like to also express on renewable fuel. There, again, we have
the \-- if national security for no other reason and solving the
farmer's plight in having a market for his grain and corn, if we could
just start using the resources we have, we wouldn't have to rely on
foreign oil. And all this to play in the Farm Bill is working today. So
why do we want to change? And I just hope we can leave it alone.

Thank you.

\[Applause.\]

MODERATOR: You were standing so you're going to have to stand to go.

MR. AL PETTIGO \[sp\]: I saw Bruce waiting, so \--

MODERATOR: No, it doesn't work that way.

MR. AL PETTIGO \[sp\]: Mr. Secretary, I'm al Pettigo \[sp\]. I'm from
Fountainrun, Kentucky. I too want to thank you for being here today and
listening to our comments. I am a full-time farmer, beef cattle, tobacco
and a small amount of grain. I have some concerns, I guess.

Well, first of all, I want to say thank you to you and the
administration for the trade negotiations, CAFTA and others that you've
completed to help us reduce tariffs on our products going into those
countries. Sometimes I think we forget that most of those products are
coming in here tariff free from those countries and that we are paying
high tariffs on products going into their countries. So I do appreciate
that.

However, I am a livestock producer and one thing that's concerning me is
the reluctance of particularly the Asian markets, I guess, to reopen
their borders to our beef cattle industry. We put the safeguards in
place, I think, to ensure that we have a safe product. I would encourage
APHIS and FAS and all those within USDA to work diligently and anything
that the administration can do to reopen our borders would be
appreciated.

I am a very strong supporter of the MAP and FMD funding. I hope we can
continue to fund those. I serve on the U.S. Meat Export Federation board
of directors and we appreciate those funds and I think utilize them very
well to promote our product overseas.

Trade is so important to agriculture. I think we don't look at it as we
should always. I know in the beef industry, the value of our animals,
there are so many things in a beef carcass that we don't want to consume
here in this country that others look at as a delicacy. It's important
that we have trade. It's important that we have trim coming into this
country to blend with our \-- or lean cuts coming into this country to
blend with our trim to ensure a higher value for our carcasses. So I
think trade is very important.

Finally, on tobacco I do want to thank you for all the work that went
into the tobacco buyout, especially from our congressional delegation
that are here today. There are staff people and all the work that they
did. That was critical in us transitioning. But tobacco is going to be
important in Kentucky. I think it will be. And I'm not here to ask for
the government to help us with tobacco again, but I think tobacco is a
legal commodity and if we could just get it to be recognized as a
commodity so it would be eligible for any export enhancement funds or
any other kind of funds to help us export tobacco. We export 30 percent
of our tobacco in Kentucky overseas and that's critical for us.

Thank you.

\[Applause.\]

MR. BRUCE KLINE: Mr. Secretary, my name is Bruce Kline and I'm from
Crofton, Kentucky and probably the only reason I'm going to speak here
today is I rode up here with five gentlemen and three of them have
spoke, and just felt like I had to speak.

\[Laughter.\]

MR. KLINE: I would like to take the opportunity to thank you yourself
and the administration. This is a plug for me and the President in which
I do value this President greatly. The on-going war in Iraq, I think we
are doing the right thing. And just from one Kentuckian to this
administration, I think he's right on target. I know he's been under a
lot of fire otherwise.

The one thing that I would like to speak to you today about. I am
probably one of the biggest H2A users here in the state of Kentucky. And
the H2A program as Paul has so well defined today has got some problems.
But the thing that I do not want to see happen is that we throw the baby
out with the bathwater, so to speak with the program. It is a good
program, a very good program. It just needs to be tweaked. You know, we
don't need to throw the program away, just as you've heard folks talk
about the Farm Bill today, the H2A program is a very good program. I
would encourage more people to use the program. You know, the wages that
we have to follow \[tape break\] \--

\[In progress\] I filled it today and paid \$3.00 a gallon for gas as we
came up here. The renewable fuels, I just think it is wise if we could
continue that path also.

Thank you much for being here.

\[Applause.\]

MR. DEAN WALLACE: Mr. Secretary, I'm Dean Wallace with the Council for
Burley Tobacco. I represent Burley Tobacco farmers. We are glad to have
you here. I want to thank you for all the work of USDA and the President
in getting the buyout done and getting it done efficiently and getting
the money out.

You heard two things today that you probably \-- two words that you
probably haven't heard at a lot of other forums and one is tobacco and
the other is family farms. We have had a family farm culture in Kentucky
for one simple reason, because of tobacco. And we're going through a
whole new era. We don't know where we're going right now. We just know
that it's gone down a lot. We've dropped from almost \$1 billion, to
just saw USDA released back here, last year tobacco sales in Kentucky
was \$421 million. And likely this year we'll probably, because of the
drought and reduced production, probably we'll be down about another
\$175 million from last year. So we are talking about big bucks
impacting a lot of these family farms.

We don't know where to go. We used to have the tobacco program. We
weren't part of the Farm Bill, so we didn\'t look at it. So I'm just
here to say, keep an open mind. Remember our tobacco farmers here in
Kentucky as you go forward. I think there are going to be issues that
we're going to need to address, we're going to need some support. For
example, I think we need management to where we are reporting tobacco
acres to FSA offices. I think we need to know where tobacco is being
grown. Is it going to Pennsylvania? Is it going to Maryland? Is the
Burley Tobacco going to North Carolina?

I think our farmers need reporting of markets and prices. How are we
going to know what prices are and how much tobacco is sold?

So thank you for coming and just keep our tobacco farmers involved. And
we may need to be at the plate more so in the future with the Farm Bill.

Thank you.

MODERATOR: Okay. I'm just going to nudge here for just a second. We have
about eight minutes, maybe ten minutes left for open comments here. I
want you to think about this person and what he has to do and what the
President has to do and then ultimately what the Congress is going to
do. When they get back to work I think the AG committees are under a
September 16 deadline to decide how they're going to cut under budget
reconciliation \$173 million in FY-06, \$3 billion cut over the next
five years.

We've got to write a new Farm Bill and figure out how to do as much as
we can with the amount of money. So if you were writing this legislation
and you were forced by Congress to cut the budget, where would you cut
it and how would you cut it? Because there are some that say they want
to take it all out of farm programs and leave nutrition alone. There are
others who see it a different way. This man has influence in Washington,
you already know that. We haven't talked about that yet, so I'm asking
you, somebody maybe get the nudge here and see what you would advise him
to do. Go ahead.

MR. TERRY PARTON: Thank you. Mr. Secretary, my name is Terry Parton. I
am a lifelong farmer. I am from Adair County, Kentucky at Columbia. I am
also a very dedicated Farm Service Agency employee. I have been very
blessed to have had the opportunity to serve farmers. I think you will
find that most FSA employees feel much as I do.

One thing that I am concerned about as a feeder calf producer is that
we've heard a lot of discussion about the National Animal Identification
Program and premise identification. I think that it's very important and
I guarantee that we must have the confidence of the consumer in order to
protect our livestock industry today. Through that National Animal
Identification System, I think we can accomplish that goal.

I would like to mention, so that my comments won't be considered from a
selfish nature, that I have just recently submitted an application for
voluntary early retirement with FSA and I probably won't be on the rolls
when we have Thanksgiving harvest. But from my knowledge of the Farm
Service Agency and the staff that is on board with that agency, I would
really encourage you to look at that agency for the implementation and
efficient operation of this National Animal Identification Program. I
think you have an agency in place with the personnel, the location to
put that program into action and to work well with farmers in getting
that accomplished.

Thank you very much.

\[Applause.\]

MR. MARK HANEY: Mr. Secretary, I'm Mark Haney. I'm one of the officers
at Kentucky Farm Bureau, second vice president, and I too want to thank
you for the opportunity to come and share with us here in Kentucky. You
know, we've had lots of testimony here today. And as you well recognize,
we are a diverse state. We have lots of things going on in agriculture
in Kentucky. We've had success stories here talked about from rural
development, from conservation, programs and all those are wonderful and
an integral part of the economy here in Kentucky.

I'm just here to tell you that you've got a tough job. I don\'t know \--
you know, I know there's budget cuts that you've got to deal with, but
we do have a Farm Bill that's working well. And it's very few negative
comments today about the things that's going on in Kentucky. You know,
Rural Development is extremely important where I live, and the
conservation, and so are commodity programs. You know, for us full-time
farmers they are very, very important.

But I want to just say that any wholesale changes to this program that
we have, I would have to say would be cautionary. So that's my opinion.

I want to thank everyone that came here today myself. I think it's been
wonderful testimony and I've enjoyed every bit of it. Thank you.

\[Applause.\]

I have the advantage of speaking twice. (Unclear) from Woodford County.

MODERATOR: You all did.

But I'll be very brief on this issue.

MR. HAMPTON HINTON: I have the advantage of speaking twice. Hampton
Hinton Woodford County.

MODERATOR: You all did.

MR. HINTON: But I'll be very brief on this issue. One of the issues that
is affecting Kentucky and this region is disaster. And I know you are
familiar with the disaster in Illinois and obviously in the delta
region. We have experienced an extraordinary drought. I personally have
turned my cattle into soybean fields. I have no pasture and now I'm
eating the soybeans.

Disaster is always an ad hoc program. It's not included in a Farm Bill.
We have no way to plan for that. We've talked about crop insurance and
the adequacies and the inadequacies of that of just covering production
costs and the costs thereof. If there was some way to include disaster
revenue assurance into Farm Bill legislation it would be extraordinarily
helpful for planning.

A study recently, I think, out of Purdue, shows that in general if you
have major disasters, a lot of your payments go down. Deficiency
payments are kind of cyclical go down. So really there's some net
savings and you could draw on some of those net savings when you don't
have to pay out the LDP's for those people who are suffering production
losses. And if you don't have the production it really doesn't matter if
an LDP price is high or low. So somehow we've got to include some
disaster legislation into this situation.

Another issue is the lack of implementation of COOL, Country of Origin
Labeling. I don't really understand exactly why we haven't moved forward
with that especially in livestock. I think it's extraordinarily
important that we move on that issue. And I would urge you to consider,
especially as you think about Farm Bill, ways to get that what was done
in the last Farm Bill actually implemented in this Farm Bill.

Thank you very much.

\[Applause.\]

MODERATOR: This is the room \-- now, Mr. Beck, correct me if I'm wrong,
this is the very room where about a week ago we sold a ham for
\$340,000. Did you know that? \$340,000 for a country ham in this room.

SECRETARY JOHANNS: Really?

MODERATOR: Yes, we can't sell the rest of the hog for that, but, Mike,
we're trying, aren't we?

\[Laughter.\]

MR. JEFF NALLEY: I'm Jeff Nalley from western Kentucky, Mr. Secretary,
and I want to thank you for your willingness to be here and participate
in this program. Within the Department of Agriculture, first of all, a
tremendous thank you to the communications staff who work with our farm
broadcasters all across the country getting us access to you and the
other people to make sure that we're working in a cohesive manner for
the folks that are listening.

Your market reporting service, that information available so that we are
able to pull it off of the wire or off the Internet and making it
available so that these folks can see it as well. And just the knowledge
that we appreciate your effort, but also knowing that the challenges are
ahead.

I would encourage you all that this comment card, and I'm going to chide
you just a little bit more here. We didn\'t hear anyone talk about farm
accounts tonight; those accounts that were proposed in the last Farm
Bill where you would be able to take a lot of money from one year when
you had a bin buster, save some of that money back and use it in the
lean years that we know come from time to time. Didn\'t hear any
comments tonight about research. We know how significant research is.
And even perhaps even some assistance toward precision farming. Some of
the things that we are seeing even at the farm progress show, it's
amazing that they're talking about incentives to help you be more
productive in the soil. And a general communication effort for folks to
understand what it means to get a check from Washington and that's not
net income, that's gross. That every dollar that comes to the farmer is
worth five to seven dollars in the local economy. We all have a
commitment. We all have a vested interest in it.

I'm a Kentuckian and, boy, I'm proud to have shared the stage with you
tonight. There is one more important to us and he serves us all, that's
our Secretary of Agriculture, Mike Johanns.

SECRETARY JOHANNS: Great. Thank you very much.

\[Applause.\]

SECRETARY JOHANNS: Thank you. That's nice.

\[Applause.\]

SECRETARY JOHANNS: Thank you. I thought our moderator did a great job.
How about a round of applause for Jeff. Great job.

\[Applause.\]

SECRETARY JOHANNS: Well, I appreciate your attendance tonight. That's
where I want to start in terms of wrapping up my comments. The comments
by each of you were excellent. I did take a lot of notes. As I said to
you when we started, mostly what I like to do in these forums is just
sit back and listen, jot a note down just so it jogs my memory when I
look back through my notes two weeks from now or two months from now. So
it's very, very helpful.

Somebody mentioned I have a hard job. I have the best job in America.
But Farm Bills are complicated. There's just no doubt about it. So the
best way to try to figure it all out is just to come out here and listen
to people.

And like this Farm Bill forum, you do get a lot of debate and a lot of
discussion and difference of opinion as to how best to approach farm
policy.

For all of you, you've offered your input and I can promise you it's
going to be seriously considered. What do I mean by that? I'll share
with you today, for example. I spent about an hour, hour and a half at
the office at the USDA summarizing for some of the people working on
Farm Bill what I was hearing at the forums and what people were talking
about and some of the ideas that had been thrown out to me. So I do want
to assure you that your thoughts are considered. They are factored in.

Now, if I might just spend a few minutes here to talk to you a little
bit about process. When we kicked these off a couple months ago, a few
months ago, we got a comment or two from people saying, man, this seems
awfully early, 2007 and we're in 2005. Well, think about this. We had a
notion that we wanted to do forums. We really felt strongly that doing
forums wasn't about going to two or three locations in the country and
calling it good. We really wanted to do the best job we could to get
around to every area of the country. It's a big country out there and
that takes some time.

I've done, I think, 11 of these already. I'll be in Illinois tomorrow.
We'll announce some additional ones coming up here. So just to set that
kind of time aside, we are probably looking for these forums in one form
or fashion to last pretty much through the year because we do want to do
some forums on nutrition. We are going to do some forums that are
dedicated to conservation and that sort of thing. So it just takes some
time.

Well, once you are through 2005, you turn over the calendar, you are now
into 2006 and you start working with the House and the Senate, you start
putting some ideas down, you start working through those and economic
analysis and this, that and the next thing. Well, when it's all said and
done, you've probably used up a pretty good part of 2006 just to get
through that stage.

Now, you turn the calendar over, you're into 2007 and you really need to
signal to the farm community, to the banker, to the insurance agent,
whoever is involved in that Farm Bill policy what that Farm Bill is
going to look like, much less get it debated and passed and heard and
all of the things that need to be done. So actually when you think about
that as a rough timeline, our timing probably is going to be about right
in terms of getting this thing together.

Very important point here, we are not the only player. You've got the
House, you've got the Senate, you've got AG committees in both areas,
and they're probably going to do some field work across the country. So
you might hear that the AG committee is going to be in the state or
something like that and that's going to take some time into 2006. But no
Farm Bill is written by a single person. Farm policy today has got a lot
of stakeholders to it.

One gentleman made the point perfectly. He said, you know, I didn\'t
realize there were so many things involved in the Farm Bill. There's a
lot of things involved in that Farm Bill anymore, rural economic
development, conservation, investment in water programs and sewer
programs. Think about this, over 50 percent of our budget goes into
nutrition programs, food stamps, the school lunch program that you have
at your local school comes out of the USDA. The Women, Infants and
Children's program, which is a nutrition program comes out of the USDA.
You add all that together over 50 percent of our budget is in nutrition
programs. It's not the traditional farm program that you typically think
about with the USDA. Then you add into that the Forest Service, that's
under our jurisdiction too. All of a sudden you begin to realize that
it's a pretty significant majority of the budget that actually is
involved in other programs besides the specific program we got together
about this evening.

So we go from here, we finish up the forums as we head through the year.
What are some of the things that I'm hearing out there? I'll share this
because I gave some interviews to the media before I came in here. One
of the things I'm hearing is general support for our conservation
programs. I'll start there. Not unanimous, nothing is unanimous in life.
You know that. But by and large, people are stepping up to the
microphone whether they're farmers or Pheasants Forever or Ducks
Unlimited or just somebody interested in conservation, they're saying,
we think this is a good investment, it makes sense. And, again, not
unanimous.

We have heard from some ranchers out there saying, you know, when I go
to lease grassland to graze my cattle on, it feels like you're competing
for my need there which is that grassland area. So you get some of that
discussion out there. But by and large there's been good support.

To those who are involved in that Rural Economic Development, I would
tell you that as of this Farm Bill forum, it really has been pretty
unanimous in terms of our programs. The money that we invested here
today before I walked in here, we've been doing a lot of that and it's
working. And that's what we hear over and over again. Without the USDA
we could not be upgrading our sewer system or our water system. The jobs
that were created in this small town would not have occurred but for a
USDA grant or loan program. So we have had a lot of good support for
that.

It is interesting, one gentleman commented tonight of kind of this
concept of whether we should talk about the conservation programs even
becoming a more important part of the farm program. That's an
interesting concept. We hear about that, that's a discussion that occurs
out there. Way too early in the process to make final decisions about
anything relative to the Farm Bill, but it's an interesting comment.

The final area I wanted to mention, it goes without saying that in just
about every Farm Bill forum you are going to hear about trade issues.
Trade is a very easy thing to grab a hold of and beat up on. But I have
to tell you with agriculture there are some very interesting dynamics
here. One is, 27 percent of the receipts come from trade. Stated another
way, about one in three acres in the United States devoted to farmland
needs an export market.

The gentleman that got up here and talked about the size of their
farming operations, agriculture is so much different than when I grew
up. When I grew up it was 160 acres in north central Iowa, it was 30
cows, some hogs that we furrowed, I raised hogs to put myself through
college. I even remember the day when my mother had 5-600 chickens.
Quite a bit different farming operation today, to say the least. Quite a
bit different farming operation.

The other thing I'll share with you is that statistic we watch every
year at the USDA. Productivity of the American farmer and rancher
increases about 2 percent annually. And it's been steady productivity
increases year after year. Why is that? The equipment is better, the
fertilizer is better, the seed is better, just the ingenuity of the
American farmer and rancher is incredible. Education, technical
training, Internet, all of those things have made the American farmer
the most productive person maybe in the history of mankind. It is a
remarkable phenomena we are observing.

But the other thing I will tell you is that our consumption and our
population growth in the United States grows at less than a percent a
year. Now, if you are growing your productivity by 2 percent and you're
growing your consumption in your productivity by less than a percent, it
doesn't take long to do the math on that over the next decade, and
figure out that you got some issues here.

Now, the whole issue here with trade is this. I believe, and the
President has articulated this too, we believe in free trade, but we
also believe in fair trade. We have going on now the process, the WTO
process. You will read about it. You will probably read about it more as
we move closer to the big meeting in Hong Kong in December. But the
whole idea here is to get a good market access opportunity for American
Farmers and ranchers. And you will hear us talk about market access.

There are parts of this world where, quite honestly, selling your
products into that market is near impossible because of high tariffs, et
cetera, et cetera. We want to do everything we can to open that market,
and I believe, as I've said so many times, I know, I don't just believe,
I know the American farmer and rancher can compete on a world scale. I
see it happening already. I see it happening already. You couple that
with the last statistic that I mentioned earlier and that is that 95
percent of the world lives outside the United States; 95 percent of the
world lives outside the United States. Our productivity growth, our
consumption, the fact that the population really lives beyond our
borders all relate to that issue of how important trade is and its
impact in terms of the future for agriculture.

I grew up competing maybe with a kid in the next town over, at most the
next state over. Ladies and gentlemen, today whether you like it or not,
you compete in a world marketplace. You just do. And we have to do
everything we can to give you the opportunity to fairly compete in that
world marketplace.

Final thought. A lot of things going on. There's a lot of moving pieces
here. There are trade issues. There are issues relating to drought and,
you know, it just goes on and on. I mean, there are always issues.

This Farm Bill forum is months ahead of debate on the Farm Bill. So we
need to ask you to stay in touch with us. We have an excellent web site,
USDA.gov. You will see our Farm Bill forums. You can literally click
onto the site that gives you the ability to offer your thoughts, today,
tomorrow, two months from now, ten months from now. We want you to
access that. Or write us a letter. Do something to get your information,
your views known as we proceed. They will be considered.

As we continue to flesh out ideas, we will continue to talk publicly
about that. Hopefully that will encourage more discussion, more debate,
and a more thoughtful debate when we get to the actual legislation.

Kentucky thank you for the very, very nice welcome. It's just great to
be back in your state. God bless you all.

\[Applause.\]

MODERATOR: Agriculture Secretary Mike Johanns.

\[Applause.\]

MODERATOR: As Kentuckians, you are to be congratulated for the way that
you have conducted tonight. Thank you.