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FULL COMMITTEE HEARING ON

FOOD PRICES AND SMALL

BUSINESSES

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

MAY 15, 2008

Serial Number 110-94

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

BRIAN HIGGINS, New York 

MAZIE HIRONO, Hawaii 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

STANDING SUBCOMMITTEES 

Subcommittee on Finance and Tax

MELISSA BEAN, Illinois, Chairwoman 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

VERN BUCHANAN, Florida, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

Subcommittee on Regulations, Health Care and Trade

CHARLES GONZA ́ LEZ, Texas, Chairman 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida

Subcommittee on Rural and Urban Entrepreneurship

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DAVID DAVIS, Tennessee

Subcommittee on Investigations and Oversight

JASON ALTMIRE, PENNSYLVANIA, Chairman 

CHARLIE GONZA ́ LEZ, Texas 

RAUL GRIJALVA, Arizona 

MARY FALLIN, Oklahoma, Ranking 

LYNN WESTMORELAND, Georgia

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1

Chabot, Hon. Steve .................................................................................................. 2

WITNESSES

Buis, Mr. Tom, President, National Farmers Union ............................................ 3

Tracy, Mr. Geoff, Chef Geoff’s, Washington, DC, On behalf of the National 

Restaurant Association ........................................................................................ 5

Formica, Mr. Frank, Formica Brothers Bakery, Atlantic City, NJ, On behalf 

of the American Bakers Association ................................................................... 7

Thomas, Mr. Daryl, Senior Vice President Sales and Marketing, Herr Foods, 

Inc., Nottingham, PA, On behalf of the Snack Food Association ..................... 10

Dinneen, Mr. Bob, President, Renewable Fuels Association ................................ 11

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 28

Chabot, Hon. Steve .................................................................................................. 30

Altmire, Hon. Jason ................................................................................................. 31

Braley, Hon. Bruce .................................................................................................. 32

Buis, Mr. Tom, President, National Farmers Union ............................................ 34

Tracy, Mr. Geoff, Chef Geoff’s, Washington, DC, On behalf of the National 

Restaurant Association ........................................................................................ 40

Formica, Mr. Frank, Formica Brothers Bakery, Atlantic City, NJ, On behalf 

of the American Bakers Association ................................................................... 48

Thomas, Mr. Daryl, Senior Vice President Sales and Marketing, Herr Foods, 

Inc., Nottingham, PA, On behalf of the Snack Food Association ..................... 55

Dinneen, Mr. Bob, President, Renewable Fuels Association ................................ 59

Statements for the Record: 

National Cattlemen’s Beef Association .................................................................. 67

25x’25 National Steering Committee ..................................................................... 70

American Farm Bureau Federation ....................................................................... 75

National Association of Wheat Growers and U.S. Wheat Associates .................. 85

The American Bakers Association .......................................................................... 90

(V) 

(1)

FULL COMMITTEE HEARING ON FOOD 

PRICES AND SMALL BUSINESSES 

Thursday, May 15, 2008

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:06 a.m., in Room 

1539 Longworth House Office Building, Hon. Nydia Vela ́zquez 

[chairwoman of the Committee] presiding. 

Present: Present: Representatives Vela ́zquez, Altmire, Cuellar, 

Clarke, Hirono, Chabot, Gohmert and Fallin. 

OPENING STATEMENT OF CHAIRWOMAN VELA ́ ZQUEZ 

Chairwoman VELA ́ ZQUEZ. Good morning. I call this hearing on 

food prices and small business to order. 

From coast to coast, Americans are seeing continued increases in 

the cost of food items. According to the U.S. Department of Agriculture, the average price of such basic staples as bread, milk and 

eggs increased over 30 percent during 2007. That was the largest 

annual jump in price in almost two decades. But the trend is projected to continue during the current year. Such increase have undeniable repercussions on consumers, small businesses and the 

U.S. economy as a whole. 

Today we will discuss the relationship between food prices and 

the entire economic chain from farm to grocer, to restaurant and 

to home. We will also explore the various factors contributing to 

the rising costs of food products and examine the specific effect on 

family farmers and entrepreneurs. It is an admittedly complex task 

that requires carefully considering a full range of viables. 

Some may be tempted to point fingers at a single industry or sector, but there are many contributing factors to the perfect storm 

that is driving food prices upwards. We need to be mindful of every 

piece of this puzzle and gauge the specific and collective impact. 

That holds true whether we are talking about the corn used to 

make ethanol, the wheat used to make bread, or the produce that 

is purchased in bulk by grocers. 

As we will hear today, a number of troubling developments are 

coming to a head simultaneously. For starters, rising unemployment and fallout from the subprime mortgage crisis have left our 

economy in a weakened state. This creates a difficult environment 

for businesses. Consumers have less disposable income, and tightening credit markets make it difficult for small firms to access capital. 

2

Restaurants, grocers and other food entrepreneurs are also having to pay more for their raw materials. It now costs each of them 

a great deal more money to bring the same products to market. 

Their customers meanwhile have less to spend, and they are more 

resistant than ever to paying higher prices. It is an economic Catch 

22 that hits small businesses from both directions. 

The problem is compounded further by rising global demand for 

agriculture foods. Developing economies such as China and India 

are putting new strains on supply and weather-related production 

shortages of wheat, rice and other crops are making these products 

more expensive for everyone, including American firms. 

Last, but certainly not least, the weakened U.S. dollar and the 

continuing climb of oil prices have a sizeable effect on what small 

businesses pay for basic staples. Just a few weeks ago, this Committee delved into the economic implications of the $115 barrel of 

oil. As we push north of the 120 mark, the impact on food prices 

and the entrepreneurs who must bear them continues to deepen. 

The challenges posed by such a dramatic combination of factors 

is considerable, but they are not insurmountable. As history has 

demonstrated time and time again, our Nation’s small business 

economy is remarkably resilient. Entrepreneurs can help us get 

things back on track. So we should not be discouraged. Instead we 

should lend them our support. That means continuing to focus on 

the root causes of these problems and understanding how the many 

variables interact with one another. With a clear sense of those dynamics, we can set about formulating and implementing solutions 

that allow the market to restore economic strength. It is a timetested 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 represented on today’s panel. I want 

to thank each of today’s witnesses for joining us today. I am looking forward to your testimony and its many insights into this critical issues. 

With that I now yield to the Ranking Member Mr. Chabot for his 

opening statement. 

OPENING STATEMENT OF MR. CHABOT 

Mr. CHABOT. I thank the Chairwoman for yielding, and I thank 

her for holding this hearing on food prices and small business. I 

think this is 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 schedules to be with us here today. I know we all appreciate 

that very much. 

Anyone who has been to a grocery store recently to purchase 

basic consumer staples has noticed that the price of food has been 

rising, and oftentimes quite substantially. According to the Department of Labor, last month food prices edged up .9 percent to almost 

1 percent, driven by increases in numerous products including 

bread, and butter, and coffee, and margarine, and milk and other 

products. 

3

American families are paying more for food, and so are America’s 

small businesses. Small restaurants, grocers and food manufacturers are also feeling the squeeze, forcing them to raise their prices 

oftentimes. According to the Department of Agriculture’s Economic 

Research Service, the cost of food is expected to continue to rise 

this year by 4 to 5 percent. 

What is behind these increases? Rising demand for energy and 

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 an 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 would 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 am the Ranking Member also of 

this Committee and the Antitrust Task Force, and we have got an 

important hearing. John Conyers, the Chairman of the Judiciary 

Committee, is the full Chairman. I am the Ranking Member. We 

have a hearing at 11:00. So I believe Congressman Gohmert is 

going to fill in for me at that point. 

I yield back. 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Chabot. 

Now it is my pleasure to welcome Tom Buis. Tom Buis is the 

president of the National Farmers Union, and Mr. Buis represents 

farmers and ranchers in all States with organized chapters in 32 

States. As president, Mr. Buis oversees the Government Relations 

Office which advocates the interests of family farmers in Congress. 

Welcome. Congratulations on the farm bill. And, sir, you have 5 

minutes to make your testimony. 

STATEMENT OF MR. TOM BUIS, PRESIDENT, NATIONAL 

FARMERS UNION 

Mr. BUIS. Thank you, Madam Chair, for holding this hearing, 

and other members of the Committee. It is a real honor to come 

to the Small Business Committee to testify. 

We would like to say we represent farmers and ranchers, but 

they are small businesses, and I want to state for the record probably one of the biggest concerns 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 their finger at the 

farmers, but like any business, we have to make a profit. And if 

you look at commodity prices over the last 20 years, you will 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 2-1/

2 percent return on investment. So it is not like every farmer is 

out there going to the bank and getting rich. 

Over the past 2 years, we have seen our input costs rise faster 

than the price of the commodities. If you look at all the energy that 

it takes to produce a kernel of wheat, a bushel of corn or whatever, 

it is tremendous. John Kennedy once said farmers are the only people who buy retail, sell wholesale and pay freight both ways. That 

4

needs to be updated and modernized to say we are also the only 

industry that pays the fuel surcharge both ways. We are price takers, not price makers. We can’t pass on those costs. We are totally 

at the mercy of the marketplace. 

Having said that—I did put some extensive testimony together 

on what we see as the causes, and I would be glad to answer any 

questions. But roughly you can’t blame corn ethanol, and for those 

people who do—number one, have you ever tried to eat field corn? 

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 has all gone 

down in the past year. So when people try to blame corn ethanol 

for all of the increase in food prices, I think they are just using us 

as a strawman. It no doubt has increased the price of commodities, 

which needed to be, because the previous 10 years we averaged 

producing feed for animals at 27 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. 

Energy. Energy has such a direct input—impact 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’ input costs. 

But when it leaves the farm, then it is transported somewhere, 

more fuel. Then it is processed, which uses energy to process the 

product, whether it is corn flakes or ethanol 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 that consumer gets it, the cost of $127-a-barrel energy is at least twice 

what the impact of that raw commodity is. 

Second big factor, weather-related production problems. Wheat is 

a commodity that is used for food, primarily for food, and last year 

in the growing season, we had worldwide 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 into corn ethanol. It was Mother Nature. 

Cause number three: the weak dollar. Since we left the gold 

standard in the early 1970s under President Nixon’s administration, you can track high commodity prices with the value of the dollar. When the dollar is weak—and we reached 30-year lows recently—commodity prices go sky high. Investors want to put money 

in to hedge against inflation. Other countries want to buy it with 

the cheap dollars that we are sending for their trade deficit; makes 

it an attractive buy and cheaper than it was when the dollar was 

strong. 

Four, speculators in the commodity markets. If you look at the 

real high, the record high commodity prices that we have 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 wheat harvest. 

And those prices have now moderated in the production of wheat 

as we are getting ready to have a good crop in areas like Oklahoma, where we had a bad crop last year, and Kansas and elsewhere. So we will see those prices come down. And today the price 

of wheat in central Oklahoma is $7.70 a bushel, not the $15 that 

a lot of people will quote. 

5

I have got a lot in here I won’t touch, and I know I am out of 

time. Let me offer a few suggestions for how we address it. 

Number one, we have to get a handle on the price of energy. I 

have read a lot of people’s statements saying corn ethanol is the 

only thing we have any control over. I think that is totally false. 

I think that is a cop-out. We can do something about the high oil 

prices. We have recommended shutting off the purchases for the 

Strategic Oil Reserve. We have recommended opening the Strategic 

Oil Reserve. If it is not a crisis when gasoline is $4 a gallon, I don’t 

know what 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. It needs to be. There are 

26 million people in the United States that participate in these programs, and as a farmer I have to say I am ashamed that anyone 

goes hungry, because year after year, except in rare cases, we overproduce. 

Thank you, Madam Chair. I appreciate the opportunity and 

would be glad to answer any questions. 

[The prepared statement of Mr. Buis may be found in the Appendix on page 34.]

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Buis. 

Our next witness is Mr. Geoff Tracy. Geoff Tracy is established 

in Washington, D.C. He is testifying on behalf of the National Restaurant Association. The NRA was founded in 1919, and it is the 

leading business association for the restaurant industry. The NRA 

represents an industry comprised of 945,000 food service outlets 

employing 13 million people. 

Welcome, sir. 

STATEMENT OF MR. GEOFF TRACY, PROPRIETOR, CHEF 

GEOFF’S, WASHINGTON, D.C., ON BEHALF OF THE NATIONAL 

RESTAURANT ASSOCIATION (NRA) 

Mr. TRACY. Thank you. Chairwoman Vela ́zquez and Ranking 

Member Chabot and members of the Small Business Committee, 

thank you for the opportunity to testify today regarding food prices 

and the impact on small businesses like mine. 

My name is Geoff Tracy. I own three restaurants all within 6 

miles of where we sit here today. I believe in many ways I represent the American dream. I have combined hard work, education 

and an entrepreneurial spirit to create a small, successful business 

that employs over 200 people and serves more than half a million 

guests each year. 

I am 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 am one of over 13 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 2008 are estimated to be $550 billion. The industry serves 133 million guests a day, and every dollar spent dining 

out generates $2.34 in business for other industries. 

6

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 am told 

that the total economic impact is $1.5 trillion. That is 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 neighborhoods. Seven 

out of ten restaurants are single-unit operators, and if you have 

been to a charity gala and made a bid at a silent auction or looked 

at the sponsor of your child’s Little League team, you know that 

restaurants contribute generously to the community. And, yes, 

there is a Chef Geoff Little League team. 

Right now we are 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 in our P&L, accounting for 

approximately 33 cents of every dollar in sales. Profit margins are 

not big in the restaurant world; 9 out of 10 restaurants don’t survive the first 2 years of business. And those that do, the average 

restaurateur 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 experiencing is the highest it has been in 27 years. Last year wholesale 

food prices jumped 7.6 percent, and on a 2008 year-to-date basis 

through March, wholesale food prices continue to rise at 8.5 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 flour has risen 87 percent, eggs 73 percent, cooking oils 

49 percent, cheese—one of my favorites—27 percent, rice 25 percent and milk 20 percent. This is on top of double-digit cost increases in the previous year. 

I am doing everything I can to keep my menu prices in line with 

what my guests perceive as value. I am switching around menus, 

modifying portion sizes, heckling my vendors. But I am 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 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 I am 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 and increasing price. They tell me it is 

the weather. My produce vendor is always giving me some excuse 

about the weather somewhere. My cheese guy tells me it is the 

weak U.S. Dollar, and my nice cheeses are going to cost me a few 

more bucks this year. And many of my vendors tell me it is about 

the corn and the grain, and that a larger share of the grain market 

is being diverted into ethanol and biodiesel production. And since 

the chickens and the pigs and the cows all eat the stuff, the price 

of my eggs, milk, cream, cheeses, oils, flours and seemingly everything else is going up and up. 

While many of these factors are out of our control, there are U.S. 

Government policies in place that are contributing to food price inVerDate 0ct 09 2002 15:44 Jun 17, 2008 Jkt 033615 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\40865.TXT LEANN
7

flation. Food-to-fuel mandates and subsidies that encourage the use 

of grains for fuel instead of food should be revisited. These policies 

pit Americans’ need for food against our need for fuel. While both 

are important priorities for the Nation, the restaurant industry 

supports the development of efficient, renewable fuels, including 

the promotion of the use of recyclable restaurant oils, something I 

do, while 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 

price increases. 

In conclusion, the NRA urges Congress to examine the impact of 

these mandates and subsidies in the context of national and global 

priorities. There are certainly many factors contributing to the 

sharp increases in wholesale food prices, but this is one within our 

control. 

Thank you again for the opportunity to testify today, and I appreciate all the time. I would be happy to answer any questions at 

the appropriate time. 

[The prepared statement of Mr. Tracy may be found in the Appendix on page 40.]

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Tracy. 

Our next witness is Mr. Frank Formica. Frank Formica is the 

third-generation owner and operator of Formica Brothers Bakery in 

Atlantic City, New Jersey. Mr. Formica will be testifying on behalf 

of the American Bakers Association. ABA is a voluntary trade association designed to represent the interests of the wholesale baking 

industry at the national and State levels. 

Welcome. 

STATEMENT OF MR. FRANK FORMICA, FORMICA BROTHERS 

BAKERY, ATLANTIC CITY, NEW JERSEY, ON BEHALF OF THE 

AMERICAN BAKERS ASSOCIATION 

Mr. FORMICA. Thank you, Madam Chairman Vela ́zquez, Ranking 

Member Chabot, members of the House Committee on Small Business. Thank you for holding this critically important hearing on the 

impact of high food prices on small businesses. 

The current crisis has greatly impacted my business. I hope that 

today we can explore realistic solutions to the current situation. 

My name is Frank D. Formica, an Italian American baker proudly continuing over a century of family tradition in the baking industry. I am the owner of Formica Brothers Bakery in Atlantic 

City, New Jersey. Over the past 92 years, millions of customers 

have eaten sub sandwiches and bread made from Formica Brothers 

Bakery, including Frank Sinatra, the Beatles, Jay-Z and Garth 

Brooks, to name a few. 

On behalf of myself and the American Bakers Association, I appreciate this opportunity to highlight the critical status of our economy and the epidemic that is afflicting bakers and our customers 

across the country. In my case, over a century of family tradition 

is at risk of becoming extinct. 

The Formica Brothers legacy began over 100 years ago in the 

year 1900 when my grandfather Francesco and my grandmother 

8

Rosa emigrated from Sicily, Italy, and realized their American 

dream by building Formica’s Bakery in Atlantic City, New Jersey. 

I grew up baking Italian bread alongside my grandfather, my father and uncles, and today we produce 40,000 pieces of bread a 

day, creating roughly 200 different varieties of handcrafted European breads, which are sold both wholesale and retail in the greater Atlantic City market. 

Yes, I am one of the vendors he tries to get down, but I don’t deserve him. 

Our daily retail base of over 500 retail customers and 300 wholesale customers and roughly 55 families who work for our bakery 

depend on Formica 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 Formica’s and our customers. Formica uses 50,000 

pounds of flour a week. The price of flour had been relatively stable 

over a 20- to 30-year period, between about 11 and 17 cents, an average of 14 cents. Starting in September of 2007, the price jumped 

until it reached a peak of over 60 cents a pound. What did that 

mean for me? A year ago we paid $7,000 a week, $364,000 a year 

for flour. Today we are paying $20,000 a week, $1,040,000 a year 

for the same amount of flour. 

In addition to flour, all 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—and my family, my employees are the fact that we 

use 600 gallons of fuel oil to deliver gasoline to our wholesale customers. Last year those costs averaged 1,200 a week, 62,000 a year. 

This year it is 2,000 a week as we speak, $104,000 a year. 

In addition to the increased cost of flour and fuel, we have seen 

prices increase the entire inventory in products and services that 

we depend on to run our business. We have been able to pass on 

some of these increases to our customers through higher prices, but 

we absorb the majority of the cost, which has crushed our profit 

margin, a profit margin that I am fighting to keep above water for 

the first time in 92 years, and that includes the years of the Great 

Depression, which we operated straight through. 

Last year Formica successfully marketed high-protein whole 

wheat products to a school program manufacturer that was distributing to over 267 school districts on the east coast. We invested a 

half a million dollars in equipment and facilities to support this increase in business. As the price of commodities jumped, especially 

flour, and we had to pass these costs along to the manufacturer, 

the cost of producing these healthier products outstripped the already strained school budgets, and schools cancelled the program. 

As a result, I had to lay off many employees, try to recoup the costs 

associated with this lost contact. 

Other bakers have had similar experiences trying to provide 

healthy, low-cost meals to schools. High food and 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 

9

programs such as the ethanol program, which distorts the marketplace by subsidizing crops for fuel versus food. Also in our control, 

are government programs that 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 

Bakers Association action plan to ease the pressure on our 

foodstocks. Number one, the ABA urges Congress to ease ethanol 

mandates by immediately waiving the renewable fuel standard. 

That, coupled with eliminating the import tariff and the blenders’ 

credit on ethanol, will allow our country to make progress towards 

renewable fuels, which we support wholly, but not at the price of 

sacrificing foodstocks. 

At this time with the worldwide food shortages, why is the government continuing to incentivize corn for ethanol and not corn 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. cropland is already stretched 

to the limit. 

The ABA urges Congress to consider the needs of consumers 

when supplies of wheat and other commodities drop to dangerously 

low levels. Historically U.S. Wheat stocks have averaged a 3-month 

supply. Current estimates have our wheat stocks down to 24 days, 

which means there is 24 days’ worth of wheat based on our present 

demand, with an ever-increasing worldwide demand, the lowest 

amount since 1948. While recent USDA reports that the projected 

wheat plantings will increase by over 4 million acres, the USDA 

recognizes that any increase will be more than offset by the increased use and trade prospects which this government supports; 

meaning that the more wheat entering the food chain that we projected this year will do little to alleviate the current food crisis, let 

alone return us to the historical average stockpile, which was our 

cushion for bad weather. 

All of these assume normal weather patterns, but as farmers can 

tell you—I am sure they can—there is no such thing as a normal 

weather pattern. In fact, in March of 2007, the USDA projected 

similar positive outlooks; but that Easter weekend, a heavy freeze 

hit the Wheat Belt and devastated much of the anticipated crop. 

Unfortunately, our margin for error is gone. 

Lastly, the ABA urges Congress to address the increasing pressure on available farmland in the U.S. Currently 34.6 million acres 

of U.S. cropland lay idle through a conservation reserve program, 

a noble cause. A significant portion of CRP acreage is located in 

large wheat-producing States. ABA believes that as much as onethird of the acres under contract for CRP could be returned to production without sacrificing the environmental goals. 

[The prepared statement of Mr. Formica may be found in the Appendix on page 48.]

Chairwoman VELA ́ ZQUEZ. Thank you. Thank you, Mr. Formica. 

Our next witness is Mr. Daryl E. Thomas. Mr. Thomas is senior 

vice president of sales and marketing for Herr’s Foods, Inc., in Nottingham, Pennsylvania. Herr’s Foods, founded in 1946, is a leader 

in the snack food industry. Mr. Thomas will be testifying on behalf 

10

of the Grocery Manufacturers Association. For 90 years, GMA’s 

business initiatives have represented the industry interests. 

Welcome. 

STATEMENT OF MR. DARYL E. THOMAS, SENIOR VICE PRESIDENT, SALES AND MARKETING, HERR FOODS, INC., NOTTINGHAM, PENNSYLVANIA, ON BEHALF OF THE SNACK 

FOOD ASSOCIATION 

Mr. THOMAS. Thank you very much. Madam Chair Vela ́zquez, 

Ranking Member Chabot and other distinguished members of the 

Committee. We thank you for the opportunity to come and to share 

with you today. I am also here today—I currently serve as chairman of the Snack Food Association, And so I am also representing 

those constituents. 

To do some background on Herr’s, Herr’s is a family-owned and 

-operated food company that was started 62 years ago by James S. 

Herr, my father-in-law. He too. Served as chairman of the Snack 

Food Association, and more recently served at chairman of the National Federation of Independent Business. 

Herr’s employs 1,250 full-time employees. We are a full-line manufacturer of salty snacks, including potato chips, corn-based tortilla 

chips. And I will say that the corn we use to make our tortilla chips 

looks like that corn, except it is off the cob. So it is a corn product 

like that. Our wheat flour-based pretzels—our company and our industry manufactures a broad spectrum of products, using the raw 

materials of wheat, corn, vegetable oil. Our products are affordable 

nutrition for consumers. They provide energy and also pleasure. I 

am here today to share the impact of rising fuel and commodity 

prices are having on our industry and on our business. 

Our cost to 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 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. 

Herr’s and our industry currently are facing unprecedented commodity price increases. Typically we have seen a 2 to 3 percent increase over the years in rising costs, and in a pretty predictable 

fashion have been able to pass a lot of that on to the consumers 

to protect our bottom line and the well-being of our shareholders 

and our stakeholders at Herr’s. This year our costs are up 15 percent. Corn itself is up 30 percent. Vegetable oils that we cook with 

is up 124 percent, and wheat flour is up 82 percent. So all these 

commodities are seeing a dramatic increase. This current situation 

demands that we pass these higher costs of doing business on to 

our customers and the consumer. 

Thus far this fiscal year that we are in, we had to increase our 

prices 3 percent and anticipate another 5.6 percent on top of that 

to just break even on our commodity prices that have skyrocketed. 

There has 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 and not necessarily all unwelcomed. However, there is one thing that is most 

11

controllable and we believe requires immediate attention, and that 

is the Federal food-to-fuel or biofuels mandate. 

Last year the U.S. devoted roughly one-quarter of its corn harvest to ethanol production. That number is expected to surpass 30 

percent this year and will keep growing if the alternative fuel mandates are met. Displacing such large quantities of our corn harvest 

in the fuel production is clearly having an impact on the stability 

of our food supply. If there are to be any additional unforeseen 

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 Herr’s, of the Snack Food Association and the Grocery Manufacturers Association, I am hopeful that 

Congress and our legislatures will act quickly to revisit the mandate schedule and bring relief to the food manufacturers and consumers. 

I appreciate the opportunity to come and share with you, And I 

look forward answering any questions that you might have. Thank 

you. 

[The prepared statement of Mr. Thomas may be found in the Appendix on page 55.]

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Thomas. 

Our next witness is Mr. Bob Dinneen. Mr. Dinneen is the president and CEO of the Renewable Fuels Association, the national 

trade association for the U.S. ethanol industry. Mr. Dinneen became president of RFA in July of 2001. Organized in 1981, RFA 

provides advocacy and industry data to its members, Congress and 

Federal and State government agencies. 

Welcome, sir. 

STATEMENT OF MR. BOB DINEEN, PRESIDENT, RENEWABLE 

FUELS ASSOCIATION 

Mr. DINNEEN. 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 in terms of food price inflation. 

I am very sympathetic to the plight of the witnesses here. I have 

been to Chef Geoff’s restaurant. I disagree with him. I think he is 

a magician. And Mr. Thomas the snack food association has no bigger fan than Bob Dinneen. Their pain is real. The solutions they 

are suggesting are misplaced. 

As has been discussed already today, including in the Chair’s 

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 wheat 

supplies. It is 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 $2.50 corn on $4.50 

diesel. And the fact of the matter is eliminating the ′′food-to-fuel′′ mandates, which might be a very clever phrase that some highpriced PR firm came up with, is really not based in reality. 

The production of ethanol is actually producing food and fuel because we are only using the starch in the production of ethanol. 

What is left from that ear of corn when we are done with it is all 

12

the protein, all the vitamins, all the minerals, and much of the feed 

value, which is then fed to livestock and poultry markets across 

this country. That is a very important point, because it is not simply we are utilizing so much of the corn crop, we are passing along 

most of the feed value from 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 in inflation all across this 

country, including most specifically food price inflation, and recognize that the only thing that we have available to us to address 

that effect are biofuels. Ethanol is here today. The ethanol industry 

today is 147 small businesses across this country that are producing 8-1/2 billion gallons of high-quality renewable fuels that are 

blended into 7 percent of the Nation’s motor fuel—I am sorry, 70 

percent of the Nation’s motor fuel. Ethanol itself represents 7 percent of the U.S. motor fuel supply. If you were to eliminate that 

supply, the price of oil, the price of gasoline would skyrocket even 

further. 

A Merrill Lynch analysis that was quoted a few weeks ago suggested that crude oil prices would increase about 15 percent without world biofuel supplies. This morning we are looking at the 

highest gasoline prices in our Nation’s history, on average $3.77. 

Where would they be were it not for the supplies of ethanol across 

this country? An Iowa State University analysis completed a couple 

of weeks ago showed that gasoline prices across the country would 

be 30 to 40 cents higher today if it were not for ethanol being 

blended into gasoline. 

Just yesterday the International Energy Administration noted 

that 63 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. A refinery hiccups in this country, and gasoline prices skyrocket. Take 7 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 Geoff, it will hurt food companies all 

across this country, it will hurt consumers directly, and hurt poor 

consumers most specifically. 

We have to continue the movement that this country has made, 

the commitment that this country has made to domestically 

produce renewable fuels like ethanol. It is the only tool that we 

have to provide a hedge against skyrocketing energy prices across 

this country. 

Thank you. 

[The prepared statement of Mr. Dinneen may be found in the Appendix on page 59.]

Chairwoman VELA ́ ZQUEZ. Thank you very much to all of you for 

being here this morning and providing important insights into this 

important issue. 

Let me just say that the role that this Committee plays goes beyond small businesses sometimes, and in the sense that anything 

that is happening in Congress regarding legislation that is considered in other Committees where we can show that it impacts small 

businesses, we can play a role, and we can seek referral of those 

13

legislation to this Committee. And as an example, I will mention 

that both myself and my colleague, Ranking Member Chabot. We 

both were conferees on the farm bill. 

So with that, I just would like to begin asking each panelist to 

take a moment to discuss your thoughts as to what is driving the 

higher food prices. Some will point—and we have seen it this morning—to one particular thing, while others will suggest it is many 

different factors creating the perfect storm. So what do you believe 

is causing high food prices? And what do you see as an immediate 

solution? Mr. Buis? 

Mr. BUIS. Thank you, Madam Chair. And thanks for all your 

hard work on the farm bill, you and Mr. Chabot. We appreciate 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 costs. And 

food is very energy intensive from the farm all the way to the consumer. 

The second thing is definitely weather on wheat. You know, I 

hear about egg prices going up. I don’t think anyone mentioned 

that. That was a disease in the laying industry that caused a lot 

of chickens to be put into the food system as opposed to use for laying eggs. It is not corn ethanol again. 

I also think you have got the problem with the weak dollar, without a doubt. We set record export levels on 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 are buying with the cheap, weak U.S. dollar. 

So I think that is the big factors. You can’t—you can control a 

lot of them. I mean, by the time that food gets to the chef’s table, 

there is also a lot of other factors, labor costs, health care. We can 

do something about health care in this Nation. We have ignored 

that for decades as well as the energy policy. 

Chairwoman VELA ́ ZQUEZ. But do you see any type of action that 

can be taken to address any of those factors that we are seeing? 

Mr. BUIS. Absolutely. Again, open the Strategic Oil Reserve. Dip 

into it. Take that pressure off of an already short market. 

Number two, I think you can start to address some of the factors 

of distribution. We are getting ready to start a wheat harvest here 

in 2 weeks. We are going to have a good wheat crop, which will 

take pressure off of wheat, which is in short supply because of the 

weather. You know, sometimes you kind of have to be a little patient. 

One response to roll back the RFS would be the biggest mistake 

that Congress could make, because, number one, 30 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 be 

pulling the plug on those future-generation biofuels feedstocks like 

cellulosic. 

Chairwoman VELA ́ ZQUEZ. Mr. Tracy. 

Mr. TRACY. Well, I am a chef, business owner. I don’t understand 

these global economic situations. It is a very complex situation. I 

just know how it impacts me. And I guess if there is anything that 

14

can be done, I would ask people to consider every single option 

and—because it is multifaceted. And look at every single one. And 

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 nonfood sources, nonfood sources. 

So that is just—I just keep looking at these numbers, and they 

keep going up, and they are really aggressively going up, and ultimately I have to pass these prices on as a business owner because 

otherwise I am just not—I am not going to stay in business. Otherwise I am taking it out of the pocket of every American. 

Chairwoman VELA ́ ZQUEZ. Mr. Formica. 

Mr. FORMICA. Thank you again, Madam Chairman. 

Again, I just think it is simple. It is supply and demand. If there 

is not enough acres to grow the wheat here, and we are exporting 

it under our programs, and the demand is high, we have got to find 

a way to grow more wheat. To grow more wheat we need more 

acres. 

I want to make one statement about weather. Last year we came 

down here, March 12th, and we met with the USDA—I guess, department—Mr. Schafer—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 18 cents because 

it went up from 16, and we are going to get a good crop; 3 devastating months later it was at 36. So weather is no the solution. 

And I think definitely relieving tariffs on importing ethanol is 

hurting the objective. If that is our objective is to get more ethanoldependent in this country to get off of foreign imports, 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. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. Thomas, do you have any comments? 

Mr. THOMAS. Yes, thank you, Madam. 

I think the idea of reducing our dependency on foreign fuel and 

coming up with an alternative commodity is a commendable endeavor. I think the problem is that there was a failure to accurately assess the cost of that strategy. 

You know, there is a lot of things that have been listed as causes 

for the current situation that we are reporting to you on today. It 

has been described as the perfect storm with surging demand, 

weather, speculation, you know, all of these things have contributed. But to me one of the basic things that comes to mind is we 

are taking 30 percent of our corn crop and moving it out of the food 

supply. That has to have an effect on the prices of corn. When you 

take that much out of the market, there is going to be a shortage 

of corn. That is going to drive the price up, supply and demand. 

As the price went up, farmers are changing—naturally so—they 

are changing their crop strategy. They are moving from growing 

corn—or from wheat into these other products. And it has been exacerbated by the weather and the droughts that we have seen 

around the world. 

There is a lot of—all these things probably go together to contribute to the problem that we face, and the question in my mind 

is how can we quickly respond and bring relief to food companies, 

to consumers, because I think that we are on an upswing here, and 

15

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—it is diluting our bottom line, and I think it is going to 

have dramatic impacts that we are not going to like, and it is just 

going to continue to get worse unless we take a quick response. The 

easing of the mandate, I think, is the quick response that makes 

sense. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. Dinneen. 

Mr. THOMAS. Madam Chair, just quickly, because I know it is not 

Mr. Thomas’ wheelhouse, but it wasn’t actually 30 percent of the 

corn crop last year; it was 22 percent. And again, that is of corn 

use. And you have to consider the feed value as well, and that is 

ignored in that comment. 

In terms of what we can do, $125 barrel oil, that is what this 

is about. This isn’t about food to fuel. It is about the crude-to-food 

connection. 

Chairwoman VELA ́ ZQUEZ. Let me ask you, either Mr. Dinneen or 

Mr. Buis. And you mentioned it, but it caught my attention, that 

Brazil, while we were sleeping at the switch, they were producing 

ethanol and invested a lot of money and effort and research in 

achieving energy independence. Can you—do you have any insight 

as to how is the situation in Brazil with food prices at this point? 

Mr. BUIS. What it would put the prices at? 

Chairwoman VELA ́ ZQUEZ. On food. 

Mr. BUIS. They are a big food producer, as we are, but you have 

to keep in mind also we are also big food exporters. And while Mr. 

Thomas, with all due respect, is talking about how we shorted the 

food market on corn, that is 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 3 billion bushels more. Now, that 

equates to about the amount that went into ethanol. But on top of 

that, we exported the largest amount of corn ever in our Nation’s 

history, almost 2-1/2 billion bushels of corn. We can produce. 

An older farmer once told me the best solution for higher prices 

is higher prices, and we are going to see it. You are seeing transformation of corn acreage back to bean acreage this year. So soybean prices will come down. You saw more acreage go into wheat. 

Madam Chair, we can do all. And for those naysayers that say the 

sky is falling from corn ethanol, they need to take a long, hard look 

at the real facts. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. Chabot. 

Mr. CHABOT. Thank you, Madam Chair. 

Let me begin by just asking Mr. Buis on behalf of the farmers 

union and Mr. Dinneen on behalf of the Renewable Fuels Association—let me make sure I have got this straight. Both of you gentlemen believe that the—one of the major reasons for prices going up 

on food and wheat and everything else we have talked 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 

16

prices have gone up, having that go to ethanol basically. You 

would—you disagree with that premise; is that correct? 

Mr. DINNEEN. 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 of those other factors that have been discussed today. 

Mr. CHABOT. So an impact, but not a significant impact when 

you compare it to the other things? 

Mr. DINNEEN. Nowhere close. And again, it gets right back to oil 

as being the driving force. 

Mr. CHABOT. And I will get to that. 

Mr. Buis, you would agree with that? 

Mr. BUIS. I do agree. I testified over in the Senate a few weeks 

ago, and next to me was the chief economist at USDA who said the 

same thing. 

Mr. CHABOT. Mr. Tracy and Mr. Formica and Mr. Thomas, you 

gentlemen don’t buy that, correct? You believe that is a significant 

part of it, the diversion into ethanol and others? 

Mr. FORMICA. Based upon the fact of how many acres that were 

planted by corn that previously were wheat, I mean, it is just a 

question of supply. 

Mr. DINNEEN. Wheat acres actually went up last year, though. 

And they went up the last 3 years. 

Mr. CHABOT. Let me get the other two gentlemen. 

Mr. TRACY. I guess on my side I think there are many, many 

causes. And I just think that the ethanol issue, the corn-driven ethanol as opposed to other nonfood sources of ethanol, is just one reason. 

Mr. CHABOT. Would you say a significant reason? 

Mr. TRACY. I have no idea. 

Mr. CHABOT. Mr. Thomas? 

Mr. THOMAS. I would say it is a significant reason. When you 

look at the crop reserves, they are at an all-time low. That went 

someplace. And it obviously has an effect on supply and demand 

on driving the price up. 

Mr. CHABOT. Let me just stop there. I have got another question 

now. 

So there is just a disagreement on that particular issue relative to the fact that oil being so high right now, $125, $126 a barrel 

right now. It has been going up when people—it was thought that 

it could actually get to $100 a barrel, and we are beyond that now, 

and it wasn’t that long ago. But obviously that is running up the 

price at the gas pump that consumers are paying. 

But the fact that oil is so high, then—that we are so reliant upon 

foreign energy, you would all agree that that is a big problem; is 

that correct? I am noting by the nodding of the heads that everybody agrees with that. Also you, Mr. Dinneen? 

So that is a problem. And I would argue—not necessarily argue, 

but make the point that I think to a great extent we are 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 ANWR up in Alaska and 

the Outer Continental Shelf; that we have made it virtually imposVerDate 0ct 09 2002 15:44 Jun 17, 2008 Jkt 033615 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\40865.TXT LEANN
17

sible to build refineries in this country. We haven’t built one since 

1976. 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 and that area makes it tougher to get the supply 

around efficiently. Not building nuclear power plants in 20 years 

in this country. France has 75 percent of their electricity generated 

by such facilities. So a number of decisions that the government 

made up here in Washington, D.C. That has affected these. 

Is there anybody that would disagree with the premise that that 

is one of the major problems that we are all facing now in these 

high costs at the gas pump, heating our homes, and what we are 

paying for food, a restaurant, whatever? Is there any disagreement 

on that point amongst the panel members here? Does everybody 

agree basically? I think everybody is affirming that they do. 

Let me—if I go to the restaurant industry, Mr. Tracy, how significant did the minimum wage increase have on your business? 

Was it a factor? Was it insignificant? What would you say? 

Mr. TRACY. I am—fortunately my wages are well above the minimum wage for all of my employees, and, you know, with the exception of if it had increased dramatically for tipped employees, which 

earn a lot more than minimum wage, but that has always been 

kept down to a level—a dollar increase on tipped employees would 

be a very significant cost. But over the last 5 to 6 years, there 

hasn’t been any dramatic effect. Our wages have stayed well above 

minimum wage. 

Mr. CHABOT. In your conversations with others in the restaurant 

industry, do you believe there has been an impact? 

Mr. TRACY. Minimum wage is something that the restaurant industry on a whole is concerned about. We have a lot of sort of beginning, entry-level members of our workforce. 

Mr. CHABOT. Thank you. 

Mr. Formica, I think you were going to say something there. 

Mr. FORMICA. Similarly, we are well above minimum wage, and 

we have 300 accounts that are restaurants or delis or grocery 

stores, and it has never been discussed as a major issue. 

Mr. CHABOT. Okay. And I am almost out of time here, but I do 

want to mention—I know we have been getting a lot of letters and 

phone calls from our local bakers making us aware—not that we 

are not aware of it, but making us even more aware of the impact 

that the high cost of wheat—I think you mentioned on average 14 

cents, and now it is up to 60 plus. 

Mr. FORMICA. It was 60. It is 40 right now. But I appreciate that. 

Mr. CHABOT. So I would commend your colleagues for their effort 

to make us aware of it. 

I can’t honestly say that Congress has acted to the degree it really needs to act to do really do something about that, but I would 

completely agree with the entire panel here that I think it is 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, and it was like 3.69 a gallon. By the 

time I went to the airport a few hours later, all the ones that I had 

passed had gone up to $3.95 in Cincinnati, and it is really hurting 

an awful lot of people, and we absolutely need to do something 

about it. So thank you very much, and I yield back, Madam Chair. 

18

Chairwoman VELA ́ ZQUEZ. Thank you. 

Ms. Hirono. 

Ms. HIRONO. Thank you, Madam Chair. Is this on? Thank you 

very much. 

I think one thing that this panel does point out is 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 ethanol production has, et cetera. So I think it is really important as we proceed that we need to have fact-based solutions. We 

should not go charging off into so-called solutions that really may 

not address the problem accurately. 

I do want to note that Mr. Buis—is that how you pronounce your 

name? 

Mr. BUIS. Buis. You can tell I am bias. 

Ms. HIRONO. Yes. I noted that you suggested that one of the 

things we should do is cut the subsidies, multibillion-dollar subsidies, to Big Oil, and that is a start. I would be curious to know 

what the other panelists think about that as an immediate kind of 

a thing that Congress could do. 

Mr. TRACY. Well, again, energy policy is not my level of expertise, 

but, you know, again, I think a comprehensive review of all of the 

factors is very critical. And as you said, so that we have some hard 

numbers and some real data so that we don’t just act and then 

have to deal with the, you know, negative or positive results down 

the line, that we make some real positive and sort of long-term 

plans. 

Ms. HIRONO. And that is what we are attempting to do in many 

of our Committees, not just this Committee, but the Transportation 

and Infrastructure Committee, the Energy Committee, all of these 

Committees. But as a start in a situation where Big Oil is making 

multibillion dollars in profit, record profits, does it make sense to 

you that we continue to give them huge subsidies, taxpayer subsidies? 

Mr. FORMICA. It depends if the subsidies were put in place for 

them to perform in the marketplace. They were supposed to go out 

and find other sources, find other resources, do search—I mean, I 

would not know, again, similar to a restaurant owner or the baker 

owner, not having the expertise, but certainly knowing good business practice, if the government put those subsidies in place so that 

it could stabilize our oil supply, maybe it is just the enforcement 

of what they are getting the subsidies for that would solve the 

problem. 

Mr. DINNEEN. I guess I am shocked 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 find that hard to believe when we are looking at $125-a-barrel oil. 

I agree with you, Congresswoman. We ought to be looking at this 

issue and from a fact-based standpoint. But as some people have 

suggested on this panel, and Governor Perry from Texas has called 

for eliminating the renewable fuel standard as the thing that is 

going to help reduce food price inflation—in fact, we looked at that 

very closely, and we determined that if you were to eliminate the 

19

renewable fuel standard in the way that Governor Perry from 

Texas has requested, gasoline prices would actually increase from 

$3.68 to $4.79. Now, I got into this business because I was never 

very good at math. But I think that is $1.11 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. 

Ms. HIRONO. Mr. Thomas, did you want to add something to this 

discussion? 

Mr. THOMAS. I would just echo that that is not my area of expertise either. I think any and all things should be looked at, and I 

think your point of the fact-based—there is information that I 

think at—we need to also keep in mind with the biofuel issue, and 

one of the points that was not brought up that I would like to just 

mention is that there is a lot of question around the efficiency of 

that as a real fuel source. I have seen a study reported on CNN 

that it requires over 20 percent more fossil fuel to manufacture, refine and actually burn one of these biofuels. 

So I think the other piece is looking at the shortage. We can say 

that it is all of these petroleum products and the profits that these 

companies are making that is driving the fuel—the food price up, 

but the fact of the matter is there is a shortage. We have an alltime low reserve on our grain products. In fact, it was just recently 

reported that a national retailer is having to ration some of their 

products to their customers and stuff. I think there is a shortage, 

and it comes back to the supply and demand thing. 

Mr. BUIS. I have to correct the record. There is not a shortage. 

In fact, we added to the surplus of production almost every year. 

We are short in wheat. We are short in some specialty rice that is 

imported into this country, not because of our production of rice. 

We have more rice than we have had in the last 3 years in the 

United States. 

Ms. HIRONO. I think my time is almost up. Again, this discussion 

we are having points out how important it is to get our facts 

straight. I appreciate your comments. 

Mr. FORMICA. Just one comment, Madam Chair. I am just surprised that the Renewable Fuel Association wants to get rid of the 

subsidies for the oil companies, but wants to keep them for themselves, and I find that making my argument. Thank you. 

Chairwoman VELA ́ ZQUEZ. Ms. Fallin? 

Ms. FALLIN. Thank you, Madam Chair. 

It is an interesting discussion. We appreciate all you gentlemen 

joining us here today. It is quite evident that the cost of food is rising for our families and our consumers and our businesses and the 

cost of fuel—

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 spends so much money—it is estimated to 

be about $500 billion—in buying foreign energy from foreign countries and that we import about 62 percent of our energy needs for 

our country. To me, that is a national security threat and an economic threat to your businesses and our country itself. 

But I am very concerned about the cost of food and families and 

the price of gasoline and how it is affecting everyone. So I am interVerDate 0ct 09 2002 15:44 Jun 17, 2008 Jkt 033615 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\40865.TXT LEANN
20

ested in all your discussions about do we have enough corn? Do we 

not have enough corn? Are we taking away from the wheat market 

and the land that is producible for wheat? And is that driving up 

the cost that affects the food supply and everything else? 

But I was interest in your comment a minute ago—is it Mr. 

Dinneen? 

Mr. DINNEEN. Dinneen. 

Ms. FALLIN. Tell me again the costs if you were to eliminate ethanol corn production. You said the price of gasoline would go from 

$3 something to $4 something? 

Mr. DINNEEN. When the analysis was run, the price of gasoline 

was $3.68 a gallon. That was a week ago. It is now $3.77. It was 

run based off of Governor Perry’s request, which would be to eliminate 4.5 billion gallons of the 9 billion gallon renewable fuels 

standard. So only half. Some of the gentlemen have today testified 

that it should all go away, but just eliminating half of that and 

having to find 4.5 billion gallons of replacement energy would drive 

up gasoline prices $1.11 in the near term. 

In the longer term, the marketplace would adjust and the impact 

would only be about 13 percent. But, nonetheless, it would still 

have a dramatically negative impact, and the skyrocketing effect in 

the beginning would be very painful. 

Ms. FALLIN. Well, my question was, in looking at $1.14, and I 

hope I read your—I was trying to follow the testimony. But didn’t 

someone say that ethanol makes up about 7 percent of the fuels in 

the United States? 

Mr. DINNEEN. Yes. I did. 

Ms. FALLIN. So if it makes up 7 percent of the fuels, why would 

we have such a large increase in the cost of gasoline if we did away 

with it or even cut it in half? 

Mr. DINNEEN. Because refinery supplies are so tight. There just 

isn’t an additional 4.5 billion gallons of fuel supply to suddenly satisfy the increased demand. 

Ms. FALLIN. And we have been talking about the increased demand of fuel. 

I have a report here—it is kind of interesting that it is from the 

U.S. Energy Information Administration—that states that if we 

discovered the renewable oil in ANWR it would give the United 

States 10.4 billion barrels of economically recoverable oil, which is 

twice the proven oil reserves in all of Texas, Mr. Gohmert. And I 

guess my question is, do you feel that if we were to allow more exploration production in the United States that it would help reduce 

the price of fuel, open up more supply in the marketplace and 

maybe have an effect upon food costs? 

Mr. DINNEEN. Well, I absolutely believe that we need to be encouraging all forms of energy, particularly renewables, but all 

forms of energy. And our energy crisis right now is so significant 

we need to take aggressive steps to assure that we are maximizing 

supplies. 

I do think, though, that with respect to ANWR it would be 10 

years before you would see any gasoline from that region; and you 

have to look at what is available in the near term and what the 

consequences of actions might be in the near term. 

21

Ms. FALLIN. You know, it is interesting that you say that. I was 

reading some reports from 1991, 1994 and debates in Congress 

about whether we should drill in ANWR or not; and back then one 

of the congressmen said that it is not economically feasible to drill 

in ANWR because a barrel of oil is $17. Well, if you look at it 10 

years today when we didn’t do it 10 years ago, now it is $124 a 

barrel. And 10 years ago we didn’t think it would be worth it then, 

and here we are today in the mess we are in. 

Mr. DINNEEN. Good point. 

Ms. FALLIN. And, actually, we did pass it in Congress; and it was 

vetoed in 1994. 

Mr. DINNEEN. And in 1990 they also didn’t envision a renewable 

energy industry in this country as significant as it is today. But, 

thankfully, we made the investment then; and we need to continue 

it. 

Ms. FALLIN. That is right. 

I think my time has run out. Thank you. 

Chairwoman VELA ́ ZQUEZ. Mr. Gohmert. 

Mr. GOHMERT. Thank you, Madam Chair. 

Let me ask, you use the 10-year figure. I am on the National Resources Committee as well. And the most recent data that we have 

gotten makes me ask you, how recent is your data that says 10 

years? That has been said for 10 years, but that is not the most 

recent data. How recent and current—I mean, you were testifying 

that 10 years—how recent is that information that you have? 

Mr. DINNEEN. I think the last time I saw a figure might have 

been a month ago. But I would defer to your expertise on that. The 

fact of the matter is, it wouldn’t happen in the near term. 

Mr. GOHMERT. People in Alaska have said we now have a pipeline 74 miles from there, and we could have it online in 3 years 

now. So that was the most recent information in the past week 

that I have heard. And I didn’t know if yours was more recent than 

that. 

We just this week did a nice thing. We passed a bill that would 

hold up putting any—you know, 40,000 barrels a day into the Strategic Oil Reserve. Nice gesture. If we brought ANWR online, then 

you have a million to a million and a half barrels a day. 

We are playing around the edges with this thing. Natural gas—

national farmers, you know what that does to the price of fertilizer. 

I mean, I am hearing from my farmers, the fertilizer is killing us. 

It is not just the corn that has gotten more expensive. The fertilizer 

is more expensive. And in some areas we have had too much rain; 

other areas we have had drought. 

In my area, we have more livestock, raise a lot of chickens, a lot 

of beef. Not so much the row agriculture. 

But it just seems that we have 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 that I have heard in the last few 

weeks, it is no secret that some—that the so-called experts are saying 20, 30 percent of the price of a gallon of gasoline is speculation, 

and the speculators aren’t stupid. They are looking at what we 

have done in the last 17 months and they are saying, gee, everything you are doing puts your own energy off limits. 

22

We have made it more difficult to go after coal. We have put 

more of that off limits. 

We had a report in the last couple of weeks—some indicate there 

may be a trillion barrels of oil left in the entire Middle East. 

Schlumberger says if they would be allowed to go for it, they can 

recover 3 to 5 trillion barrels of oil from the shale in Colorado, 

Utah and Wyoming. 

We have got people that we thought were going to be onboard for 

doing what France did. And I am not an advocate for doing what 

France does on anything, but nuclear seems to work over there. 

And we have made that too difficult. We keep making it harder 

and harder to bring refineries online. 

So I did want to ask—and tell me how you pronounce your name. 

Mr. BUIS. Bias. 

Mr. GOHMERT. You touched on this in the written statement, it 

seemed. But how much acreage of corn is used for food stock versus 

that used for energy production right now? Do you know? 

Mr. BUIS. Last year, it was 22 percent used for corn ethanol of 

which you still had a third of that value that went back into livestock feed. There is about I think 8 or 9 percent that goes into food 

uses. The biggest food use is fructose corn syrup. 

You know, I think, contrary to a lot of public opinion, what we 

are talking about using for ethanol is not sweet corn. It is not 

canned corn. There may be some tortilla snack food chips made. 

But tortillas and that tortilla protest in Mexico last year that corn 

ethanol got blamed for it, it is made out of white corn. And the 

United States is prohibited from providing Mexico with any more 

than 2 percent of their white corn needs under trade agreements. 

It is not used to make beer. Last year, before the Fourth of July, 

which is probably the biggest beer-drinking holiday in America, the 

beer breweries all blamed corn ethanol for raising the price of beer. 

Beer is made out of rice and barley. I am a corn farmer originally 

from Indiana, and I know they make drinking spirits out of corn. 

It is called whisky. It is not called beer. 

Mr. GOHMERT. And it depends on the beer. 

Mr. BUIS. Right. 

Mr. GOHMERT. I don’t drink alcohol, but I had a friend that said 

they sent in some beer—they were concerned about it—to be analyzed. And a report came back, we are sorry to inform you your 

horse has diabetes. So you never know what is in this stuff. 

But, anyway, this hearing is short. You have come a long way 

to give us your time and your information, and we will be looking 

at that. But it doesn’t have to stop at this hearing; and I know, 

Madam Chair, we welcome their input after the hearing. Please 

don’t let your thinking stop here. We need your help. We need your 

information. Put it together and try to come up with something 

that helps all of us. Thank you for your time. 

Thank you, Madam Chair. 

Chairwoman VELA ́ ZQUEZ. I have some other questions. 

Mr. Formica, in the Farm Bill that we passed yesterday, there 

is a program called the Conservation Reserve Program, which is a 

land retirement program. Farmers agree to not produce crops on 

this land for a duration of time because that land previously had 

23

been overused. There has been a lot of talk lately about opening 

acreage of that land to plant crops. Would you favor that? 

Mr. FORMICA. Absolutely. 

Chairwoman VELA ́ ZQUEZ. And do you believe that that will help 

alleviate some of the pressure on the market by planting the crop? 

Mr. FORMICA. Just by the mere fact we are only at a 24-day 

wheat supply when we usually depend on 3 months, that would 

have to add to our cushion in the case of another perfect storm 

down the line that we could depend on. 

Chairwoman VELA ́ ZQUEZ. Does any person on the panel have a 

different perspective? 

Mr. BUIS. Absolutely, Madam Chair. 

The Conservation Reserve Program was created in the mid-1980s 

to stop soil, wind and water erosion on farms. Much of the land 

that has been removed from production was done so because it 

wasn’t suitable for farming. And now we have had some land come 

out of production. It is not at its all-time high. We are probably at 

the limit of what could come out and be reasonably farmed. 

That is 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 wheat acres, that has occurred since 

the 1980s. Where a farmer can plant a higher value commodity like 

corn or soybeans or rice or cotton, they will do so because of the 

economics of it. And I don’t know how you force people to plant a 

crop that they are not going to make a decent return on their investment. 

The wheat acreage 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 is 

silt 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 is a big mistake. 

If the market says to that producer, I can make more money 

growing wheat than I can make growing corn, the farmers will 

grow wheat. We have just subsidized the end user of wheat for so 

many years. And we can see by that chart on the bagel. Even at 

today’s record high prices on wheat, we are 7 cents out of that 95 

cents. And the reason I used the bagel was The Washington Post 

had a headline story complaining that a bagel shop in Bethesda 

was going to have to raise the bagels from 95 cents to $1.15 because of corn ethanol. No connection whatsoever. We could give 

them the wheat. They were raising it by more than that. 

Chairwoman VELA ́ ZQUEZ. Mr. Formica. 

Mr. FORMICA. I just wanted to ask, we are talking about two 

things. The Conservation Reserve Program is an environmentally 

sensitive program, is that not correct? So I am not talking about 

replacing wheat for corn. We are talking about farmers getting subsidized not to plant on their land at all. And studies have shown 

by smarter gentlemen than me and ladies than me that some of 

this land can be released out of the program for wheat production. 

I don’t see how that impacts, you know, the corn for fuel program. 

And my question is—and I will defer to Mr. Buis—are there not 

farmers right now contracted in the reserve program that now at 

24

the price of wheat per bushel could make money by farming that 

for wheat? 

Mr. BUIS. If you guaranteed them that speculative price we had 

in February and March, you might have. But, right now, wheat 

prices are barely above the cost of production. 

Mr. FORMICA. There was some interest in that not only 6 weeks 

ago. 

Mr. BUIS. This has to be factual based, and anyone who thinks that every farmer is getting $20 a bushel for their wheat is mistaken. The price in central Oklahoma today is $7.80. 

Chairwoman VELA ́ ZQUEZ. I will be the one asking questions. 

Mr. Formica, let’s go back to corn and ethanol. Yesterday, in the 

Farm Bill that we passed, there is a provision contained in the 

Farm Bill that reduces the ethanol tax incentive by 6 cents and 

creates a program for cellulosic ethanol made from grasses and biomass. Wouldn’t this approach encourage alternative inputs by taking pressures off corn markets? 

Mr. FORMICA. Well, I don’t pretend to understand the mechanics 

of that. But if anything—I don’t know—it would seem that it would 

when I read this report. And I just was curious as to if we relieve 

the tariff import on ethanol, we really wanted to relieve the stress 

of this country, dependent on taking the 7 percent and maybe getting it to up 9 percent, couldn’t that be done by importing through 

ethanol? 

Chairwoman VELA ́ ZQUEZ. Okay. Mr. Dinneen, do you believe this 

will solve part of the problem, by shifting from corn to alternative 

imports? 

Mr. DINNEEN. There is no question that the industry is continuing to evolve. The foundation of the industry today is providing 

the base upon which a cellulosic second-generation ethanol industry will indeed develop. The legislation that you have introduced 

will encourage research into cellulosic ethanol, will certainly help. 

I would point out, however, that you are 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 really quickly, because Mr. Formica has mentioned the 

secondary tariff on ethanol a couple of times, you should know that 

we actually do import a fair amount of Brazilian ethanol today. We 

imported about 450 million gallons last year. We are likely to import significantly more this year. 

The secondary tariff is not there as any barrier to entry. It is 

only there to offset the tax incentive that they then get. And if you 

were to eliminate the secondary tariff as he is suggesting, it just 

means that the U.S. taxpayer is subsidizing already highly subsidized Brazilian ethanol, and I am not sure that makes a great 

deal of sense. 

Chairwoman VELA ́ ZQUEZ. Okay. Mr. Gohmert, do you have any 

other questions? 

Mr. GOHMERT. Yes. Thanks, Madam Chair. Just to follow up. 

And, actually, you stopped them going between themselves. I was 

enjoying them doing it instead of us up here. 

Chairwoman VELA ́ ZQUEZ. We will be here tomorrow at this time. 

Mr. FORMICA. We might still be here ourselves. 

25

Mr. GOHMERT. But it does point out the problem we have. I 

mean, we disagree on the different ways to do things, but everybody here wants to be able to say we had the successful plans. So 

it is not like anybody is going into anything to fail. Everybody 

wants it to work. And you know, there is a great point that if the 

money is there, people are going to grow the crop. 

I have seen a presentation on Jatropha. Have you heard of that? 

It is a plant that grows in some areas where a lot of stuff won’t 

grow, supposedly 10 times more efficient at producing ethanol. It 

is an impressive presentation. But I am sure there is a disagreement over that, too. 

But any solutions anybody has to propose we would welcome. Because one thing seems clear. It is going to take everything—there 

is no one silver bullet. It is going to take everything we can. 

With regard to—I mean, coming back to the corn again, I mean, 

obviously, that has caused a great disagreement. And we have people on both sides of the aisle that disagree on that as well. I would 

just like to figure out what the truth is. 

So I would like to ask, any other thoughts? 

Yes, sir, Mr. Thomas. 

Mr. THOMAS. Just one of the things that occurs to me—I mean, 

it is interesting. We are all sitting here, and with due respect to 

each of our individual organizations and companies, I mean, there 

is an economic incentive that, you know, 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 

are getting a higher price for their grain products; and they want 

to protect that. I think the Renewable Fuels Association is likewise 

protecting the interests of their industry. 

It is interesting that I think that we are sitting here, though, 

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 would be having this argument. So I 

do think there is a force out there that has absolutely reduced the 

supply of corn. It is driving the prices up. 

And, Madam Chair, you mentioned about it, some suggestions, 

some ideas as to alternative things we might do. The concern is is 

that the mandate says 25 percent I think this past year, 30 percent 

this year, and that number continues to go up, whether or not 

those ideas will help to ease the burden. 

But there is also going to be an increasing burden as we go 

along, and I would just plead for a quick response in whatever 

manner we can to bring the relief to the industry. But you know, 

I think, we appreciate your taking the weight of our concern; and 

it seems like you have personalized it as well. So thank you. 

Mr. GOHMERT. Well, and I appreciate that. 

One of the things that seems could be the most immediate effect 

on the price of gasoline would be if the people who are driving the 

price up by 20 or 30 percent by speculating that it is going to go 

up were all of a sudden to think, uh-oh, Congress is really getting 

serious about this. They are really going to address this. Well, then 

the speculation takes the 20 to 30 percent out, you know, in a 

week’s time. 

26

So it would be nice if we could come up with a game plan that 

the leaders in Congress, Speaker Pelosi and Leader Reid, could announce that might just take that dollar off of gasoline right off the 

top quickly. 

But, Mr. Formica, do you have a—

Mr. FORMICA. I appreciate it once again. 

I think it is great. I mean, 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 on my mother’s side of the family—I told you about my father’s side. We had the largest farm in 

western South Jersey at the turn of the century. So we come from 

farmers on my mother’s side, bakers on my father’s side. 

I am sure, regardless of what anybody doesn’t like about fuel industries, Mr. Dinneen’s 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 very base level of society, something necessary. If Congress was to come up with something that would at least put in a stop gap, when we go below 23 

days, 20 days, whatever the intelligent people tell us, that Congress will step in and maybe do something about the speculating 

for commodity wheat. You know, I am even talking about corn or 

fuel now. I am just saying that we have got to do something that 

can maybe interlace all of the programs to stop the supplies from 

getting low. 

Mr. GOHMERT. Regarding the bakers, one of the concerns that I 

hear—and we have really diverse interests up here pushing both 

sides—sugar. Any comments about that? 

Mr. FORMICA. Well, sugar right now is like people do not—unfortunately, everybody can’t just raise their prices and pass them on. 

People are changing recipes, getting out of different—making products. Sugar looks like it is going to go through the roof based on 

the most recent bill passed. And I can’t even begin to, you know, 

know what prices are going to do. But, yes, it is a huge concern. 

Mr. GOHMERT. Are you talking about the Farm Bill yesterday? 

Mr. FORMICA. Right. Right. What was done with sugar in that 

Farm Bill, again, just coming out as a reader of it, not an architect 

of it, looks unconscionable for people that depend on that commodity. 

Mr. GOHMERT. Thank you, Madam Chair. 

Chairwoman VELA ́ ZQUEZ. Mr. Buis? 

Mr. BUIS. I would like to comment about the sugar program. Actually, the way it is designed we are about to have a flood of imported sugar from Mexico because of the NAFTA agreement. And 

to help not disrupt the U.S. sugar production, that is going to be 

diverted to ethanol production. It is going to go into corn ethanol 

or to help relieve the pressure on corn. 

So, you know, we hear these fears all the time about high sugar 

prices; and you know it is—it is a domestic industry that has been 

here a long time. And just to displace it with imported sugar that 

is produced with labor standards way below the United States, environmental standards and health and safety standards that are 

not up to par with us does not make a lot of sense either. 

Chairwoman VELA ́ ZQUEZ. Okay. Mr. Cuellar, do you have any 

questions at this point? 

27

Well, gentlemen, let me just say that this has been one of the 

most exciting, enthusiastic, spirited hearings that we have held in 

this committee; and definitely we will continue to monitor the food 

price situation. 

Also, we will look at exercising our oversight role regarding some 

of the Farm Bill implementation impacting farmers and impacting 

small businesses. 

I want to thank you all for being here today, and I ask unanimous consent that members will have 5 days to submit a statement 

and supporting materials for the record. 

Without objection, so ordered. 

This hearing is now adjourned. Thank you. 

[Whereupon, at 11:34 a.m., the committee was adjourned.]

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