the morning i call these hearing on food prices on small businesses to order from coast to coast americans are seen continued increasing the cost of food items according to the u department of five a culture the average price of such basic staples of bread milk and eggs increase over thirty per cent turing's two thousand and seven that was the largest i will jump in price in almost two decades but the trend is projected to continue during the current year such increases on deniable repercussions on consumers small businesses and the u s economy as a whole today will discuss the relationship between food prices on the entire economic chain from farm to grocery to restaurant and to home we will also explore the various factors contributing to the rising cost of food products on examin industry or sector but there are many contributing factors to the perfect storm that is driving food prices up words we need to be mindful of every piece of this possible and gauge the specific  collective in fact that holds true whether we are talking about the corn used to make ethanol that we use to make bread or the products studies purchased in bulk buy gold stars as we will here today and  creates a difficult environment for businesses consumers have less disposable income and tightening credit markets make it difficult for small firms to access capital restaurants grocers and other foods and trip in wars also having to pay more for their role model cereals it now costs each of them a great deal more money to bring the same products to market their cost immersed meanwhile you have less to spend and they are more respects them than ever to pains higher prices it is an economic twenty two the heat small businesses from both directions the problem is compounded further by rising global demand for agriculture food developing economies such as china and india are putting new strains on supply and whether related production shortages of wheat right and all the crops are making these small businesses pay for basic staging just a few weeks ago all this committee delved into the economic implications of the one hundred fifteen dollars bottle of oil we push north of the one hundred twenty mark has demonstrated time and time again our nation small businesses economy is remarkably recently and interpret moore's can help us get things back on track so we should not be discourage instead we should lend them  about formulating on implementing solutions that allow the market to restore economic strength it is the time tested and commonsense approach arriving at policy solutions will require a comprehensive dialogue i am very pleased that to help us in that discussion we have a diverse range of perspectives represents and represented on today sano i want to thank each of the witnesses for joining us today i'm looking forward to your testimony and its many inside into this critical issues with that i now yield to the ranking member mr sharp for his opening statement i thank you chairwoman for yielding and thank her for holding this hearing on food prices and small business i think there's a very important hearing this morning this is a critical issue affecting not only american families but also as was mentioned american small businesses i also thank our witnesses for taking the time out of their very busy schedule to be with us here today i know we all appreciate that very much anyone who has been to a grocery store recently purchased basic consumer staples has noticed that the price of food has been rising and oftentimes quite substantially according to  department of labor last month food prices edged up point nine percent almost one percent driven by increases in numerous products including bread and butter and coffee and margarine and milk and other products american families are paying more for food and so are america's small business small restaurants grocers and food manufacturers are also feeling the squeeze forcing them to raise their prices oftentimes and according to the department of agriculture's economic research service the cost of food is expected to continue to rise this year by four to five percent and what's behind these increases rising demand for energy in ethanol has caused the price of grain to jump  china india and other countries are consuming more of our grain and our meat and other products and the weakness of our dollar has made our exported products and even better value this hearing is an excellent opportunity to examine how small businesses are being affected by food price increases and explore possible solutions to these challenges again i'd like to thank the chairwoman for holding this hearing and look forward to hearing from our panel of experts one thing i might mention is i'm the ranking member family farms in congress well congratulations on the farm bill and you have five minutes to make your testimony and thank you madam chair for holding this hearing and other members of the committee it's a it's a real honor to come to the small business committee to testify we'd like to say we represent farmers and ranchers but they are small businesses and we want to state for the record probably the one of the biggest concerns that that i hear around the countryside is this concern over the higher commodity prices and higher food prices and a lot of people want to seem to point the finger at the farmers but like any business we have to make a profit and if you look at commodity prices over the last twenty years you'll find very few years where our industry has been able to get back the cost of producing the commodities that we produce in fact over time the average rate of return for our business is less than two and a half percent return on investment so it's not like every farmer is out there going to the bank and getting rich over the past two years we've seen our input costs rise faster than the price of the commodities and if you look at all the energy that it takes to produce a kernel of wheat a bushel of corn or whatever it's tremendous john kennedy once said farmers are the only people who buy retail sell wholesale and pay freight both ways that need to be updated and modernized to say we're there also the only industry that pays a fuel surcharge both ways we're price takers not price makers we can't pass on those costs were totally at the mercy of the marketplace having said that and i did put some  extensive testimony together on on what we see is the causes and i'll be glad to answer any questions but roughly you can't blame corn ethanol and for those people who do number one if you ever tried to eat field corn this the primary use for field corn is animal feed and if you want to look at the price paid to farmers on livestock dairy it's all gone down in the past year so when people try to blame corn ethanol for all the increase in food prices i think they're just using us as a straw man no doubt as increased the price of commodities which needed to be because the previous ten years we averaged producing feed for animals at twenty seven percent below the cost of production there was a very good study done by tufts university showing the real beneficiaries of that it wasn't the family farmers in urging energy has such a direct input impact on on food from the very start all the fuel the fertilizer the pesticides the storage the drying the  handling is a big part of the farmers and put cost but when it leaves the farm then it's transported somewhere more fuel then it's processed which uses energy to process the product whether it's corn flakes or  or livestock feed after it leaves there it has to be trucked back to either the distribution chain or the retail chain or elsewhere and by the time the consumer gets at the cost of one hundred  twenty seven dollars a barrel energy is at least twice what the impact of that raw commodity is second fat big factor weather related production problems wheat is a commodity that used for food primarily for food and last year in the growing season we had world wide weather production problems in all the major wheat growing countries of the world it wasn't that a bunch of wheat acres came out to go ethanol it was mother nature because number three the weak dollar went since we left the gold standard in this early seventy's and president nixon's administration you can track high commodity prices with the value of the dollar when compared to the dollar is weak and we reach thirty year lows recently commodity prices go sky high investors want to put money into a hedge against inflation other countries want to buy it but with  cheap dollars that we're sending for their trade deficit makes an attractive buy and cheaper than it was when the dollar was strong for speculators in the commodity markets if you look at the real high the record high commodity prices  that we've reached they occurred when farmers didn't have the grain they didn't have the commodity they occurred in a time period when farmers were thinking about planting or waiting for the winter re and those prices have now moderated in the production of wheat as we're getting ready to have a good crop in areas like oklahoma where we had a bad crop last year in kansas and elsewhere so we'll see those prices come down and today the price of wheat in central oklahoma is seven dollars and seventy cents a bushel not the fifteen dollars that a lot of people will cause i got a lot in here i won't touch and i know i'm out of time but let me offer a few suggestions for how we address it number one number one we have to get a handle on the price of energy you know i've i've read a lot of people's statements that say in only thing we can have any control over i think that's totally false i think that's a copout we can do something about the high or low prices we've recommended shutting off the purchases for the strategic oil reserve we've recommended opening the strategic oil reserve if it's not a crisis when it's when gasoline is four dollars a gallon i don't know what it is and we also advocate for hunger and the farm bill that was passed yesterday makes the largest commitment ever in our nation towards hunger and nutrition programs and it needs to be there's twenty six million people that are in the united states that participate in these programs and as a farmer i have to say i'm ashamed that anyone goes hungry because year after year except in in many ways i represent the american dream i have combined hard work education and an entrepreneurial spirit to create a small biz a small successful business that employs over two hundred people and serves more than a half a million guests each year i'm here today on behalf of the national restaurant association and i also serve on the board of directors of the restaurant association of metropolitan washington as you know restaurants have a huge impact on the u s economy i'm one of over thirteen million people who work in restaurants in this country and other than the government we are the largest employer in the united states sales for two thousand and eight are estimated to be five hundred fifty eight billion dollars the industry serves one hundred thirty three million guests a day and every dollar spent dining out generates two dollars and thirty four cents in business for other industries in short we buy and sell a lot of stuff creating a paycheck for a lot of americans and generating a ton of tax revenue i'm told that the total economic impact is one point five trillion dollars that's a little bit beyond my scope of understanding and in a world of big business in a nation where big corporations outsource jobs to foreign countries we remain an industry of small businesses and local operators we are rooted in communities and our and our neighborhoods seven out of ten restaurants are single unit operators and if you have been to a charity gala and made a bit of a silent auction or looked and looked at the sponsor of your child little league team you know that restaurants can to contribute generously to the community and yes there is a chef jeff little league team  right now we're facing a big challenge the price of food is going through the roof food and beverage costs are one of the most significant line items for a restaurant and in our p and l accounting for approximately thirty three cents on every dollar and say ells profit margins are not big in the restaurant world nine out of ten restaurants don't survive the first two years a business in those that do the average restaurant tour earns about a nickel on every dollar in sales an increase in food costs can have a dramatic impact on the bottom line the wholesale food price inflation we are currently experience is the highest has been in twenty seven years last year wholesale food prices jumped seven point six percent in the two thousand and eight year to date basis through march wholesale food prices continue to rise at eight point five percent while the industry is used to fluctuations recent increases are creating significant challenges when i check the food deliveries in the morning and review the invoices the numbers are not good this year flowers risen eighty seven percent eggs seventy three percent cooking oils forty nine percent cheese were my favorites twenty seven percent rice twenty five percent and milk twenty percent this is on top of double digit cost increases in the previous year i'm doing everything i can to keep my menu prices in line with what my guests perceive as value i'm switching around menus modifying portion sizes heckling my vendors but i'm a chef not a magician with skyrocketing wholesale food prices the bottom line is going to get even smaller or americans will have to dig dig a bit deeper into their wallets to enjoy a meal my vendors give me all the reasons why these prices are going up so dramatically and my vendors are always talking to my vendors they tell me energy prices make it more expensive they tell me that billions of people in china and india want the same items that i want increasing demand increasing price they tell me it's the weather my produce vendor is always giving me some excuse about the weather somewhere my cheese guy tells me it's the week us dollar and my nice cheese are going to cost me a few more bucks this year and many of my vendors tell me it's about the corn in the grain and that a larger share of the grain market is being diverted into ethanol and bio diesel production and since the chickens in the pigs and the cows all eat the stuff the price of my eggs milk cream cheese is all ills flour and seemingly everything else is going up and up so many of these factors are out of our control there are u s government policies in place that are contributing to food price inflation food to fuel mandates and subsidies encourage the use of grains for fuel instead of food should be revisited these policies put americans need for food against our need for fuel well both are important priorities for the nation the restaurant industry supports the development of a fission renewable fuels including the promotion of the use of recyclable restaurant oil something i do well safeguarding against price distortions in the food supply these price distortions have and will continue to impact our customers and small businesses we urge congress to examine the impact the food to fuel price mandates and subsidies have had on on price increases conclusion the n r a urges congress to examine the impact of these mandates and subsidies in the context of national and global priorities are certainly many factors contributing to the sharp increase in hold sell food prices but this is one within our control prices on small businesses the current prices has greatly impacted my business i hope that today we can explore realistic solutions to the current situation aimee's frank the for me kit italian american baker proudly continuing over a century of family tradition in the baking industry i am the owner of for mika brothers bakery in atlantic city new jersey over the past ninety two years millions of customers have eaten sub sandwiches and bread made from brothers bakery including frank sinatra the beatles jay z and garth brooks to name a few on behalf of myself and the american bankers association i appreciate this opportunity to highlight the critical status of our economy and the epidemic that is  afflicting bakers in our customers across the country in my case over a century of family tradition is at risk of becoming extinct for me brothers legacy began over one hundred years ago in the year one thousand nine hundred when my grandfather francesco and my grandmother rose and i graded from sicily italy and realize their american dream by building for me is bakery in atlantic city new jersey i grew up baking italian bread alongside my grandfather my father and uncles and today we produce forty thousand pieces of bread a day creating roughly two hundred different varieties of handcrafted european breads which are sold both wholesale and retail in the greater atlantic city market and yes i'm one of the vendors he tries to get down but i don't serve him our daily retail base of over five hundred retail customers and three hundred wholesale customers and roughly fifty five families who work for our bakery depend on for me to staying in business a responsibility that i do not take lightly and now one quite frankly that keeps me awake at night let me share a couple of examples of how the current conditions are impacting for me because in our customers for me it has uses fifty thousand pounds of flour a week the price of flour had been relatively stable over a twenty to thirty year period between about eleven and seventeen cents an average of fourteen cents starting in september of two thousand and seven the price jump until it reached a peach peak of over sixty seven a pound what does that mean for me a year ago  paid seven thousand dollars a week three hundred sixty four thousand dollars a year for flour today we're paying twenty thousand dollars a week one million and forty thousand dollars a year for the same amount of flour in addition to flour no other ingredients have substantially increased on top of the ingredients the cost of distributing our products has soared further threatening my business and livelihood of the families my family my family my employees are the fact that we use six hundred gallons of fuel oil to deliver gasoline to our wholesale customers last year those cost average twelve hundred a week sixty two thousand a year this year two thousand we as we speak one hundred four thousand dollars a year in addition to the increased cost of flour and fuel we've seen prices increase the entire in products and services that we depend on to run our business we've been able to pass on some of these increases to our customers through higher prices but we absorb the majority the cost which is crushed our profit margin a profit margin that i'm fighting to keep above water for the first time in ninety two years and that includes the years the great depression which we operated straight through last year for makers successfully marketed a high protein whole wheat products to a school program manufacturer that was distributing to over two hundred sixty seven school districts on the east coast we invested a half million dollars in equipment and facility to support this increase in business as a price commodities jump especially flour and we had to pass these costs along to the manufacturer the cost of producing these healthier healthier products outstripped the already strained school budgets and schools canceled the program as a result i had to lay off many employees try to recoup the cost associated with this lost contact other bakers have had similar experiences trying to provide healthy low cost meals to schools high food commodity prices have caused many factors caused by many factors including increased worldwide demand a weakened dollar adverse weather conditions such as last year's drought in australia we can't control them we can't control the weather we can control government programs such as the ethanol program which distorts the marketplace by subsidizing crops for fuel versus food also in our control our government programs to pay farmers not to farm land on behalf of my customers my employees my family and my community i ask that you consider and adopt the american bankers association action plan to ease the pressure on our food make progress towards renewable fuels which we support wholly but not at the at the price of sacrificing food stocks at the at this time the world wide food shortages why is the government continuing to incentiv ethanol and not corn for food for food uses the u s has a finite number of acres to use for farming and fuel crops have taken over many acres that were previously used to grow food where will the land come from to grow more crops to meet ethanol mandates u s crop land is already stretched to the limit the a b a urges congress to consider the needs of consumers when supplies of wheat and other commodities drop to dangerously low levels historical s wheat stocks have averaged three months supply current estimates have are we stocks down to twenty four days which means there's twenty four days worth of wheat based on our present demand with an ever increasing worldwide demand the lowest amount since  a reports that the project we plan is will increase by over four million acres the u s d a recognizes that any increase will be more than offset by the increased use and trade prospects which this government supports meaning that the more we entering food chain that we're going to project that this year will do little to alleviate the current food crisis let alone return to the historical average stockpile which was our cushion for bad weather all of these assume normal weather patterns but as farmers anticipated crop unfortunately our margin for is gone and lastly the congress to address the increasing pressure on available for late in the us currently thirty four point six million acres of u s crop land lay idle through a conservation reserve program a noble cause a significant portion of c r p acreage is located in large producing states a b a believes that as much as one third of the acres under contract for c r p could without sacrificing the environmental the snack food association and more recently served as chairman of the national federation of independent business herz employees twelve hundred and fifty full time employees we are a full line manufacturer of saudi  snacks include potato chips corn based tortilla chips and i will say that the corn that we use to make our tortilla chips looks like that corn except it's off the cob so it is a corn product like that our wheat  flour based pretzels our company and our industry manufactured a broad spectrum of products using the raw materials of wheat corn vegetable oil products are affordable nutrition for consumers that provide energy and also pleasure i'm here today to share the impact that rising fuel and commodity prices are having on our industry and on our business our cost of manufacture is skyrocketing consumer prices as a result are going up job security is being threatened and quite frankly as a privately held company one of the things that we pride ourselves in is being very generous in support of charities and different causes and that too is feeling the pressure of these higher costs herz in our industry currently are facing unprecedented commodity price increases typically we've seen a two to three percent increase over the years in rising  costs and in a pretty predictable fashion have been able to pass a lot on to the consumers to protect our bottom line in the well being of our shareholders and our stakeholders of hers this year our costs are up fifteen percent corn itself is up thirty pass these higher costs of doing business on to our customers and the consumer thus far this fiscal year that we're in we had to increase our prices three percent and anticipate another five point six percent on top of that to just break even on our commodity prices that have skyrocketed there's been a number of factors that are contributing to this such as the weather surging economies around the world market speculation these things are beyond our control not necessarily all unwelcomed however there is one thing that is most controllable and we believe requires immediate attention and that is the federal food to fuel or biofuels mandates last year the u s devoted roughly one quarter of its corn harvest  production that number is expected to surpass thirty percent this year and will keep growing if the alternative fuel mandates are met displacing such a large quantities of our corn harvest into fuel production is clearly having an impact on the stability of our food supply if there were to be any additional unforseen shortfalls we do fear that there could be food shortages in the u s and around the world as some countries are seeing already today as a representative of hers of the snack food association and the grocery manufacturers association i am hopeful that congress and our legislatures quickly to revisit the mandate schedule and bring relief to the food manufacturers and consumers i appreciate the industry data to its members of congress and to a government welcome thank you very much madam chair and members of the committee thank you for the opportunity to be here today and perhaps shed some light on solutions that we ought to be looking at i n terms of food price inflation i am very sympathetic to the plight of the witnesses here i've been to chef jeff's restaurant i just would be with them i think he is a magician and mr thomas as a snack food association has no bigger fan than bob dineen but their pain is real the solutions they are suggesting are misplaced as has been discussed already today including in the chairs opening remarks the causes of food price inflation are several it is indeed rising demand it is indeed weather related issues droughts in europe and australia last year that impacted w supplies it's speculation in the marketplace it is a result of the falling dollar that has encouraged greater exports and it is most definitely the rising price of oil you can't grow to fifty corn on for fifty diesel and the fact of the matter is eliminating the food to fuel mandates which might be a very clever phrase that some high priced p r firm came up with is really not based in reality the production of ethanol is actually producing food and fuel because we're only using the starch in the production of ethanol what is left from that era of corn when we're done with it is all the protein all the vitamins all the minerals much of the feed value which is then fed to livestock and poultry markets across this  that's a very important point because it is not simply we're utilizing so much of the corn crop we are passing along most of the feed value from the the corn that we are utilizing eliminating the renewable fuel standard as has been suggested would be moving in the exact opposite direction of what we need to do we need to recognize the role of oil and inflation all across this country including most pacifically food price inflation and recognize that the only thing that we have available to us to address that affect our biofuels ethanol is here today ethanol industry today is one hundred forty seven small businesses across this country that are producing eight have billion gallons of high quality renewable fuels that are blended into seven percent of the nation's motor fuel further a merrill lynch and alice's that was coated a few weeks ago suggesting that crude oil prices would increase about fifteen percent without world bio fuel supplies this morning we're looking at the highest gasoline prices in our nation's history on average three dollars and seventy seven cents where would they be were it not for the supplies of ethanol across this country and i will state university analysis completed a couple of weeks ago showed the gasoline prices across the country would be thirty to forty cents higher today were it not for ethanol being blended into gasoline just yesterday the international energy administration noted that sixty three percent of the increased demand for oil supplies was being met by world biofuels and they expressed a great deal of concern about the backlash against biofuels because frankly there isn't anything to replace it refinery pickups in this country and gasoline prices skyrocket take seven percent of the u s motor fuel market off of the supply and you will see gasoline prices go through the roof and that will hurt chef jeff  companies all across this country it will hurt consumers directly and her poor consumers most specifically we have to continue the movement that this country has made the commitment that this country has made to domestically produced renewable fuels like ethanol it's the only tool that we have to provide a hedge against skyrocketing energy prices across this country  it i mean you have to look at a variety of factors and you have to address a variety of factors again the price of oil the price of gasoline the price of diesel fuel is driving up everyone's co and food is very energy intensive from the farm all the way to the consumer second thing is is definitely whether on wheat you know i hear about egg prices going up i don't think anyone mentioned that that was a disease in the lane industry that caused a lot of chickens to be put into the food system as opposed to use for laying eggs it's not corn ethanol again i also think you got the problem with the weak dollar without a dial we set record export levels some most commodities this year at the same time we had record high commodity prices but those countries other countries are actually paying less for our products because they're buying with the cheap weak u s dollar so i think that's the big factors you can't you can control a lot of them i mean but time that food gets to the chefs table there's also a lot of other factors labor costs health care we can do something about health care in this nation we've ignored that for decades as well as energy policy but do you see any type of action that can be taken to address any of those factors that we have absolutely again open the strategic oil reserve depend to take that pressure off of an already short market and number two i think you can start to address you know sometimes you can't get below patient one response to rollback the r f s would be the biggest mistake congress could make because number one thirty years ago we had this wake up call when we had the oil embargo from opec we did nothing about it we went to sleep time after time after time brazil they took action they became energy independent it won't happen overnight and if we pull the plug now we will pull be pulling the plug on those future generation bio fuels feeds well you know i'm a chef business owner i don't understand you know global economic situations it's a very complex situation i just know how it impacts me and  you know i guess if there's anything that can be done i would ask people to consider every single option and because it's multifaceted and look at every single one and you know the one the national restaurant association is saying in addition to looking at some of the other ones is to look at the renewable fuel production from non food sources non food sources and so that's just but i just keep looking at these numbers and they keep going up and the really aggressively going up and ultimately i just have to i have to pass these prices on the business owner because otherwise i'm just not going to i'm not going to stay in business but otherwise i'm taking out of the pocket of every american chairman again it's i just think it's simple supply and demand i mean if there is not enough acres the grow the weed here and we're exploiting it under our programs and the demand is high we've got to find a way to grow more and he told us that we need we need good weather that will help us but weather is not a solution last year we were told not to buy our wheat at eighteen cents because we went from sixteen and we're going to get a good crop three devastating months later it then why wouldn't we relieve the tariff on that as well as the blenders credit i think that will solve a lot of problems for both of us problem is that there was a failure to accurately assess the cost of that strategy you know there's a lot of things have been listed as causes for the current situation that we're reporting to you on today it's been described as the perfect storm with surging demand weather speculation you know all these things have contributed but to me one of the basic things that comes to mind we're taking thirty percent of our corn crop and moving it out of the food supply that has to have an effect on the prices of corn you know when you take that much out of the market there's going to be a shortage of corn that's going to drive the price up supply and demand as the price went up farmers are changing you know naturally so they're changing their you know their crop strategy they're moving from growing corn and wheat in these other products and it's been exacerbated by the weather in the droughts that we've seen around the world there's a lot of all these things probably go together to contribute to the problem we face and the question my mind is how can we quickly respond and bring relief to food companies to consumers because i think that we're on an upswing here and i don't think anybody here has any idea today what this means going forward but just from our vantage point as a small business we can't take price increases fast enough to cover our costs and i mean it really i mean it's diluting our bottom line not mr thomas's will house but there was actually thirty percent of the corn crop last year was twenty two percent and again that's of corn use and you have to consider the feed value as well and that's ignoring that comment in terms of what we would but the prices in it well there are big food producers as we are but i think you have to keep in mind also we're also big food exporters and while mr thomas with all due respect talking about how we shorted the food market on corn it's just not true we produced the largest corn crop in our nation's history last year in terms of acreage and in terms of volume almost three billion bushels more now that equates to about the amount the wind into ethanol but it on top of that we exported the largest amount of corn ever in our nation's history almost two and a half billion bushels of corn we can produce an older farmer once told me the best solution for higher prices is higher prices and we're going to see if you're seeing transformation of corn acreage back to being acreage this year so soybean prices will come down you sell more acreage go into wheat man i'm sure we can do major reasons for prices going up on food and everything else we talk here you would dispute the fact that diverting a significant amount of the corn crop and other crops is one of the principal reasons that the price of gone up having that go to go to ethanol basically you would you disagree with that premise is that correct let me let me be clear certainly the increased demand for grain for ethanol production has had an impact but the impact pales in comparison to all those other factors that have been discussed to do so an impact but not a significant impact when you compare it to the other things nowhere close and again it mr tracy and mr for making mr thomas you gentlemen don't buy that correct you believe that is significant part of it's a diversion and ethanol and others they based upon the fact of how many acres that were planted by corn that previously were causes and i just think that that the ethanol issue the corn corn driven ethanol as opposed to other non food sources of ethanol is just one reason would you say a significant reason i have no idea how much i would say it's a significant reason when you look at the crop reserves are at an all time low that went someplace and that's obviously has an effect on supply and man driving the price up ok let me just stop i get another question so there's just a disagreement on that particular issue relative to the fact that oil being so high right now dollar twenty five dollars twenty six a barrel all right now it's been going up when people it was thought that you know it could actually get to one hundred dollars a barrel and we're beyond that now and it wasn't that long ago but obviously that's running up the price at the gas pump that consumers are paying ok so that's the problem now and i would i would argue not necessarily argue but make the point that i think to a great extent we're reaping really bad decisions that our government whether they were presidents or congress made over the years in doing a number of major things one being restricting where we can go after energy that we have under our control for example in anwar up in alaska in the outer continental shel that we've made it virtually impossible to build oil refineries in this country we have built one since one thousand nine hundred seventy six so even if we have the crude we can't refine it quickly enough to actually utilize it boutique fuels having to have this one in this state in that area makes it tougher to get the supply around efficiently not building nuclear power plants in twenty years in this country france has seventy five percent of their electricity generated by by such  facilities so a number of decisions that the government made up here in washington d c that that affected these is there anybody that would disagree with the premise that that's one of the major problems that we're  panel does everybody agree basically so i think everyone is affirming that they that they do but let me if i go to the restaurant industry mr tracy how significant you know with the exception of if it'd increased dramatically for tipped employees which earn a lot more than minimum wage but but that's always been kept down to a level a dollar increase on tipped employees would be a very significant cost but over the last five to six years there has been any dramatic effect that i mean our wages have stayed well above the minimum wage in your conversations with others in the restaurant industry  and i'm almost out of time here but i i do want to mention i know we've been getting a lot of letters and phone calls from our local bakers making us aware not that we're not aware of it but but making us even more aware of the impact that the high cost that we i think you mentioned on average fourteen percent fourteen cents an ounce up to sixty plus forty right it was sixty it's about forty right now i appreciate that but that's so so i would commend you know your colleagues for  their effort to make us aware of it i can honestly say that congress has acted to the degree it needs to act to really do something about that but i would completely agree with the entire panel here that you know i think it's our responsibility to do something about these high gas prices i know in cincinnati for example monday when i came up here i bought gas in the morning was like three sixty nine a gallon by the time i went to the airport a few hours later all the ones that i passed it got to three ninety five and cincinnati and it's it's really hurt an awful lot of people and we absolutely need to do something about it so thank you very much for your back and i'm sure  thank you very much i think one thing that this is this panel does point out is that i think there is general there is agreement that the high cost of oil is really driving much of everything including gasoline cost of fuel transportation all of that and there may not be agreement on what part s and all production has said or so i think it's really important as we proceed that we need to have fact based solutions we should sorry excuse me yes i noted that you suggest that one of the things we should do is cut the subsidies multibillion dollar subsidies to big oil and that's a start to be curious to know what the other panelists think about that and immediate kind of a thing that congress could do i guess energy policy is not my level of expertise but you know again i think a comprehensive review  all the factors is very critical and as you said so that we have some hard numbers and some and some real data so that we don't just act and then and then have to deal with the negative or positive results down the line with it we make some real positive and sort of long term plans and then that is what we're attempting to do in many of our committees not just this committee but the transportation infrastructure committee of energy committees all of these committees but as a start  situation where big oil is making multibillion dollar profits record profits does it make sense to you that we continue to give them huge subsidies taxpayer subsidies well it depends if subsidies were put in place for them to perform in the marketplace they were supposed to go out and find other sources resort find other resources do search i mean i would not know again similar to a restaurant owner of the baker owner not having the expertise but certainly knowing good business practice if the government put the subsidies in place so that it could you know stabilize our oil supply maybe it's just the enforcement of what they're getting the subsidies for that would solve the problem i guess some talk to hear the bakers defend subsidies to oil and at the same time be suggesting that we should be eliminating subsidies for the domestic renewable energy industry i just find that a little bit hard to believe when we're looking at one hundred twenty five oil i agree with the congress when we ought to be looking at this issue from the fact they stand point but it is as some people have suggested on this panel and governor perry from texas has called for eliminating the renewable fuel standard the thing that's going to help reduce food price inflation in fact we looked at that very closely and we determine if you were to eliminate the renewable fuel standard in the way the governor perry from texas has requested gasoline prices would actually increase from three dollars and sixty eight cents to four dollars and seventy nine cents now i got into this business because i was never very good at math but i think that's a dollar and fourteen cents on top of record high gasoline prices that will impact consumers that will impact each one of these gentlemen and their businesses in a very meaningful way thomas if you want to add something to this discussion just echo that that's not my area of expertise and one of the points that was not brought up i'd like to just mention is that there's a lot of question around the efficiency of that is a real fuel source i've seen a study reported on c n n that it requires over twenty percent more fossil fuel to manufacture refine and actually burn one of these bio fuels so i think the other piece is looking at the shortage you know we can say that it's that it's all these petroleum products in the profits of these companies are making that is  driving fuel the food price up the fact matter is there is a shortage we have an all time low reserve on our grain products and fact even it was just recently reported national retailer is is having to ration some of their products to their customers and stuff so i think you know there is a shortage and it comes back to the supply demand thing but and i have to correct the record there's not a shortage in fact we added to the surplus of production almost every year we're short and wheat we're short and some specialty rice that's imported into this country not because of our production or rice more rice than we've had in the last three years in the united states i think my time is almost up but again this discussion we're having  and i find that making my argument thank you thank you ma'am shares interesting discussion we appreciate all you gentlemen joining us here today well it's quite evident that the cost of food is rising for our families and our consumers in our businesses and the cost of fuel to ship your products and to make your products are absolutely have an effect upon our american families and even upon your project productivity and the people you employ the profits you make the expansion of your businesses and i am one of those people who believe that we have to diversify our fuel sources and use all sources of fuel and i am very concerned that our nation  much money is made to be about five hundred billion dollars and buying foreign energy from foreign countries and that we import about sixty two percent of our energy needs for our country to me that's a national security threat and an economic threat to  businesses in our country itself but i have i am very concerned about the cost of food and families and the price of gasoline and how it's affecting ever been so i'm interested all your discussions about do we have enough corn do we not have enough corn are we taking away tell me again that the cost if you were to eliminate ethanol corn production you said the price of gasoline would go from three dollars in something to four something when the analysis was run the price of billion gallon renewable fuel standard so only half some of the gentlemen have today testified that it should all go away but just eliminating half of that having to find four to have billion gallons of replacement  energy would drive up gasoline prices a dollar and fourteen cents in the near term in the longer term the marketplace would adjust and the impact would only be about thirteen percent but nonetheless it would still have a dramatically negative impact and  about seven percent of fuels in the united states yes i did so if it makes up why would we have such a large increase in the cost of gasoline if we did away with that or even cut it in half because refinery supplies are so tight there just isn't an additional four to have billion gallons of fuel supplied to suddenly satisfy the increased demand and we have been talking about the increased demand of fuel i have a report here is kind of interesting that is from the u s energy information administration that states if we discover the renewable in anwar would give the united states ten point four billion barrels economically recover recover oil which is twice the proven reserves in all of texas mr gohmert and i guess my question is do do you feel that if we were to allow more exploration production in the united states that it would help the prize the open up more supply in the marketplace and maybe have an effect upon costs i absolutely believe that we need to be encouraging all forms of energy particularly ten years before you'd see any gasoline from that region and you have to look at what's available in the near term and what the consequences of actions might be in the near term you know it's interesting you say that i was reading some reports from  now it's a dollar hundred twenty four dollars a barrel and ten years ago we didn't think it'd be worth it then and here we are today in the midst ran a good point and actually we did pass congress and it pop line seventy four miles from there and we could have it online in three years now so that was the most recent information in the past week that i've heard and i didn't know if yours was more recent than that  we just this this week did a nice thing we passed a bill that would hold up putting any forty thousand barrels a day into the strategic oil reserve nice gesture we've brought an line then you have a million to a million and a half barrels a day we play in around the edges with this thing natural gas some national farmers you know what that does the price of  from my farmers fertilisers kill and this is not just the corn that it's gotten more expensive the fertilizer is more expensive and in some areas we've had too much rain other areas have bad drought  here we have more livestock made a lot of chickens a lot of beef not so much the row agriculture but it just seems that we have a kind of a perfect storm right now between fuel costs and our refusal to deal with what we have before us some of the information in the last few weeks is no secret that the so called experts are saying twenty thirty percent the price of a gallon of gasoline is speculation and the speculators aren't stupid they're looking at what we've done in the last seventeen months and they're saying gee everything you're doing put your own energy off limits we've made it more difficult to go after coal we've put more of that off limits we had a report in the last couple weeks some indicate there may be a trillion barrels of oil left in the entire middle east says if they would be allowed to go for it they can recover three to five trillion barrels of oil from the shale in colorado utah and wyoming we've got people that we thought were going to be on board for doing what france is and i'm not an advocate of doing what france does on anything but nuclear seems to work over there and we made that too difficult we keep making it harder and harder to bring refineries on line ethanol which you still had a third of that value that went back into livestock feed we had there's about i think eight or nine percent that goes into food uses the biggest food uses corn syrup  you know i think contrary to a lot of public opinion what we're talking about using for ethanol it's not sweet corn it's not canned corn there may be some tortillas snack food chips made but tortillas in that tortilla present test in mexico last year that corn ethanol got blamed for made out of white corn in the united states is prohibited from providing mexico with any more than two percent of the white corn meat under trade agreement it's not used to make beer last year before for the fourth of july which is probably the biggest beer drinking holiday in america the rays all blame corn ethanol for raising the price of beer beers made out of rice and barley you know i'm a corn farmer originally from indiana and i know they they make drinking spirits out of corn it's called whiskey it's not called beer but you know we get it depends on the beer  anyway this hearing is short you've come a long way to give us your time and your information and we'll be looking at that but it doesn't have to stop this hearing and i know  madam chair we welcome there and put after the hearing please don't let your thinking stop here we need your help we need your information to put it together and try to come up with something that helps all of us thank you for your time thank to plant crops would you favor them absolutely and do you believe that that will help alleviate some of the pressure on the market by planting calm just by the mere fact that we are only a twenty four days of wheat supply when we traditionally depend on three months that would have to add to our cushion in the case of another perfect storm down the law time that we could depend on does any person on the panel half a different perspective i absolutely madam chair the conservation reserve program was created in the mid eighty's to stop soil wind and water erosion on farms much of the land that's been removed from production was done so because it was unsuitable for for f g and now we've had some land come out of production it's not at its all time high it's probably we're probably at the limit of what could come out and be reasonably farmed that's not the cause of today's crisis if you really want to look at wheat production and despite what these gentlemen have been told that corn is displacing we dacres that's occurred since the one nine hundred eighty s where a farmer can plant a higher value commodity like corn soybeans or rice or cotton bill do so because of the economics of it and i don't know how you force people to plant a crop that they're not going to make a decent return on investment that we take or each that is displaced by corn is very minimal and to open up the conservation reserve program would open our country up to a lot more environmental challenges whether it's still running into the rivers the  tremendous erosion that occurs you know it was done for a purpose and just opening up without looking at it i think it's a big mistake if the market says to that producer i can make more money grow in wheat than i can make growing corn the farmers will grow wheat we just subsidize the end user of wheat for so many years and you can see by that chart on the bagel even at today's record high five dollars fifteen because of corn ethanol no connection whatsoever we could get in the wheat they were raised by more than me so for me i just want to ask oh we're talking about two things the conservation reserve program is an environmentally sensitive program is that not correct so i'm not talking about replacing wheat for corn we're talking about farmers getting subsidized not to plant on their land at all and studies have shown by smarter gentlemen than me ladies and me that some of this land can wheat prices are barely above the cost of production although there was there was some interest in that though not even six weeks ago this has to be factual based and anyone who thinks that every farmer's getting twenty dollars a bushel for the bloom this approach encourage alternate these inputs by taking pressure off corn mark well i don't pretend to understand the mechanics of that but if anything michel i don't know it would seem that it would when i read i read this report and i just was curious as to if we relieve the tariff important and all and we really wanted to relieve the stress of this country dependent by taking corn to alternative there's no question that the industry is continuing to evolve the foundation of the industry today is providing the base upon which a silo six second generation ethanol industry will indeed develop the legislation that you've introduced that will encourage research into say los ethanol will certainly help i would point out however that you're not going to have a second generation ethanol industry if you don't have a first generation ethanol industry providing the markets providing the infrastructure upon which that next generation industry can grow and just just really quickly because mr from eagle has mentioned mean we disagree on the different ways to do things but everybody here wants to be able to say we had the successful plans or it's not like anybody's going into anything to fail everybody wants it to work and you know it's a great point that if the money's there people are going to grow the crop i'd seen a presentation on your part of that it's a plant that grows in some areas where a lot of stuff won't grow supposedly ten times more efficient at producing ethanol it's an impressive presentation but i'm sure there's a disagreement over that too but any solutions anybody has to to the corn again i mean obviously that that's caused a great disagreement and we have people on both sides of the aisle that disagree on that as well i'd just like to figure out what the truth is would like to ask any other thoughts yes sir thomas just one of the things that occurs to me i mean it's an interesting i mean we're all sitting here and do respect each of our individual organizations and companies i mean there's an economic incentive for that you know where we all have to kind of you know see the prices either come down or to protect income i think the farmers union obviously their position is that they're getting a higher price for their grain products and they want to protect that i think renewable fuels association is likewise protecting the interest there industry it's interesting i think that we're s here though and we're all and the argument today is about corn and just a simple fact of supply and demand is if the supply is as plentiful as is being suggested i wouldn't think we'd be having this argument so i do think there's a force out there that as you know absolutely reduce the supply of corn it is driving the prices up out of chair you mentioned about some suggestions some ideas alternative things we might do the concern is is that you know the mandate says twenty five percent i think this past year thirty percent this year and that number continues to go up whether or not those ideas will help to ease the burden but there's also going to be an increasing burden as b go along and i would just you know plead for a quick response in whatever manner we can bring  that seems could be the most immediate effect on the pricing gasoline would be if the people who are driving the price up by twenty or thirty percent by speculating that it's going to go up we're all of a sudden to think oh congress is really getting serious about this they're really going to address this more than the speculation takes that twenty to thirty percent out you know in a week's time so it be nice if we could come up with a game plan that later is in congress speaker pelosi and leader reid could announce that not just take that dollar alpha slane right off the top quickly that comes from i appreciate it once again i think it's great i mean it at the end of the day everybody here has an interest that has to do not only with money but with families and lives and livelihoods and i can't i my mother side of the family i t about my father's side we had the largest farm in western south jersey at the turn of the century so we come from for my mother's side beggar's my father's side and i'm sure regardless of what anybody doesn't like about fuel industries mr de neen business has to do with that too but i just think that we have to come up with a solution when it comes to the food prices that are affecting us at the at the very base level of society something necessary if congress was to come up with something th would least put in a stop gap when we go below twenty three days twenty days whatever the you know the intelligent people tell us that congress will step in and maybe do something about the speculating for commodity wheat you know i'm not even talking about corn fuel now i'm just saying that we've got to do something that can maybe interlace all of the programs to stop the supplies from getting low regarding bikers one of the concerns i hear and we have a really diverse interests here pushing both sides sugar and comments about that there is sugar in right now is like you know people do not unfortunately everybody can just raise their prices to pass more and people are changing recipes getting out of different making products sugar looks like it's going to go through the roof based on the most recent bill passed and i can't even begin know what prices or what prices are going to do but yes it's a huge concern about the farm bill yes right right what that what was done with sugar in that farm bill again just coming out as a reader of it now an architect of it looks on conscionable for people to depend on that know we hear these figures all the time about high sugar prices and you know it's it's a domestic industry that's been here a long time and just to displace it with imported sugar that's produced with labor standards whale below the united states environmental standards and health and safety standards that are not up to par with us doesn't make a lot of sense either  continue to monitor the foot price the toys also we will look at exercising our oversight role regarding some of the farm bill implementation impacting farmers and impacting small