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86–219 PDF 2003

S. HRG. 107–932

IMPLEMENTATION OF THE FARM SECURITY AND

RURAL INVESTMENT ACT OF 2002

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

SEPTEMBER 17, 2002

Printed for the use of the

Committee on Agriculture, Nutrition, and Forestry

(

Available via the World Wide Web: http://www.agriculture.senate.gov

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont

KENT CONRAD, North Dakota

THOMAS A. DASCHLE, South Dakota

MAX BAUCUS, Montana

BLANCHE L. LINCOLN, Arkansas

ZELL MILLER, Georgia

DEBBIE A. STABENOW, Michigan

BEN NELSON, Nebraska

MARK DAYTON, Minnesota

PAUL DAVID WELLSTONE, Minnesota

RICHARD G. LUGAR, Indiana

JESSE HELMS, North Carolina

THAD COCHRAN, Mississippi

MITCH MCCONNELL, Kentucky

PAT ROBERTS, Kansas

PETER G. FITZGERALD, Illinois

CRAIG THOMAS, Wyoming

WAYNE ALLARD, Colorado

TIM HUTCHINSON, Arkansas

MICHEAL D. CRAPO, Idaho

MARK HALVERSON, Staff Director/Chief Counsel

DAVID L. JOHNSON, Chief Counsel for the Minority

ROBERT E. STURM, Chief Clerk

KEITH LUSE, Staff Director for the Minority

(II)

(III)

C O N T E N T S

Page

HEARING(S):

Implementation of the Farm Security and Rural Investment Act of 2002 ......... 01

Tuesday, September 17, 2002

STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Chairman, Committee on

Agriculture, Nutrition, and Forestry .................................................................. 01

Lugar, Hon. Richard G., a U.S. Senator from Indiana, Ranking Member,

Committee on Agriculture, Nutrition, and Forestry ......................................... 02

Cochran, Hon. Thad, a U.S. Senator from Mississippi ......................................... 12

Leahy, Hon. Patrick, a U.S. Senator from Vermont ............................................. 09

Lincoln, Hon. Blanche, a U.S. Senator from Arkansas ........................................ 35

Stabenow, Hon. Debbie, a U.S. Senator from Michigan ....................................... 28

WITNESSES

Veneman, Hon. Ann M., Secretary, United States Department of Agriculture,

accompanied by Dr. J.B. Penn, Under Secretary, Farm and Foreign

Agricultural Service, Dr. Keith Collins, Chief Economist and Bruce Knight,

Chief, Natural Resources and Conservation Service ......................................... 02

APPENDIX

PREPARED STATEMENTS:

Harkin, Hon. Tom ............................................................................................ 52

Crapo, Hon. Michael ......................................................................................... 58

Leahy, Hon. Patrick ......................................................................................... 53

Lincoln, Hon. Blanche ...................................................................................... 60

Stabenow, Hon. Debbie .................................................................................... 56

Veneman, Hon. Ann M. .................................................................................... 62

DOCUMENT(S) SUBMITTED FOR THE RECORD:

Baucus, Hon. Max ............................................................................................ 74

Request from Senator Harkin regarding information on how states define

a dairy operation ........................................................................................... 77

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD:

Harkin, Hon. Tom ............................................................................................ 84

Lugar, Hon. Richard ......................................................................................... 89

Baucus, Hon. Max ............................................................................................ 109

Breaux, Hon. John and Hon. Mary L. Landrieu ............................................ 112

Cochran, Hon. Thad ......................................................................................... 113

Conrad, Hon. Kent ........................................................................................... 115

Crapo, Hon. Michael ......................................................................................... 118

Daschle, Hon. Tom ........................................................................................... 129

Fitzgerald, Hon. Peter ...................................................................................... 130

Leahy, Hon. Patrick ......................................................................................... 91

Lincoln, Hon. Blanche ...................................................................................... 133

Miller, Hon. Zell ................................................................................................ 136

Page

IV

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD—CONTINUED

Murray, Hon. Patty .......................................................................................... 138

(1)

IMPLEMENTATION OF THE FARM SECURITY

AND RURAL INVESTMENT ACT OF 2002

TUESDAY, SEPTEMBER 17, 2002

U.S. SENATE,

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY,

Washington, DC.

The committee met, pursuant to notice, at 10:04 a.m., in room

SR–328A, Russell Senate Office Building, Hon. Tom Harkin,

[Chairman of the Committee], presiding.

Present or submitting a statement: Senators Harkin, Leahy,

Conrad, Lincoln, Miller, Stabenow, Wellstone, Lugar, Cochran,

Fitzgerald, Thomas, Hutchinson, and Crapo.

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM

IOWA, CHAIRMAN, COMMITTEE ON AGRICULTRE,

NUTRITION, AND FORESTRY

The CHAIRMAN. The Committee on Agriculture, Nutrition, and

Forestry will come to order on the hearing on the implementation

of the new Farm bill.

The Farm Security and Rural Investment Act of 2002 was passed

with solid bipartisan majorities in both Houses of Congress and

was signed into law with a strong statement of support by President Bush. It is a balanced and comprehensive bill that restores

farm income protection, boosts conservation more than any previous bill, helps rural communities build economic growth and create jobs, and promotes farm-based renewable energy. It strengthens our support for trade, nutrition, food aid, and agricultural research.

Implementing this new legislation properly is, of course, of critical importance to rural America. The committee is pleased to welcome Secretary Veneman; Under Secretary J.B. Penn; Bruce

Knight, chief of the Natural Resources Conservation Service; and

Keith Collins, USDA’s chief economist. We look forward to a

progress report on carrying out the Farm bill and addressing issues

and questions that have come up in that process.

At the outset, I want to thank the many conscientious employees

at FSA, NRCS, Rural Development, and other USDA agencies for

all their work toward making the promise of the new Farm bill a

reality. I know in Iowa there have been a good number of informational meetings thanks to the USDA, the Iowa State University Extension and Farm and Commodity Organization. It all comes down

to developing reasonable and workable rules and regulations and

getting clear, consistent information out to those who need it.

2

USDA must also have open lines of communications for listening,

responding to suggestions, and answering questions.

As I see it, we have a shared interest and responsibility to work

together cooperatively to ensure that the Farm bill is implemented

well, maximizing its benefits for our Nation. One of the reasons for

this hearing is that I have heard in Iowa—and I have talked with

other members of the committee on both sides of the aisle, and we

have been getting certain conflicting reports back from the field

about how it is being implemented—a lot of questions. Now, some

of those were cleared up in the last couple of weeks with a letter

from the Secretary’s office, but I felt it was important for us to

have an open session with you, Madam Secretary, to go over the

implementation of the Farm bill and perhaps respond to some of

the questions that we are hearing from some of our constituents in

the respective States.

I would like to recognize Senator Lugar for a brief opening statement, and with the indulgence of the committee, I would like to

then just go right to the Secretary. I would ask that if Senators

have opening statements, just incorporate it with your first round

of questioning.

With that, I would recognize Senator Lugar.

[The prepared statement of Senator Harkin can be found in the

appendix on page 52.]

STATEMENT OF HON. RICHARD G. LUGAR, A U.S. SENATOR

FROM INDIANA, RANKING MEMBER, COMMITTEE ON

AGRICULTURE, NUTRITION, AND FORESTRY

Senator LUGAR. Well, thank you very much, Mr. Chairman. The

advice you have given to all of us is sound. We really want to hear

from the Secretary, and so I will reserve my questions until the

normal round. I appreciate the courtesy of your introduction, and

we welcome the Secretary and all of her valued associates from

USDA. We appreciate you very much.

The CHAIRMAN. Madam Secretary, welcome to the committee.

Your statements, all of them, will be made a part of the record in

their entirety, and please proceed.

STATEMENT OF HON. ANN M. VENEMAN, SECRETARY, UNITED

STATES DEPARTMENT OF AGRICULTURE,

ACCOMPANIED BY DR. J.B. PENN, UNDER SECRETARY, FARM AND

FOREIGN AGRICULTURAL SERVICE; DR. KEITH COLLINS, CHIEF

ECONOMIST; AND BRUCE KNIGHT, CHIEF, NATURAL RESOURCES

AND CONSERVATION SERVICE

Secretary VENEMAN. Thank you, Mr. Chairman and Senator

Lugar and members of the committee. I thank you for the opportunity to appear before you today to discuss the implementation of

the Farm Security and Rural Investment Act of 2002.

I am pleased that you called this hearing to provide USDA an

opportunity to share our hard work and progress on implementation of the new Farm bill. As you indicated, Mr. Chairman, we

have with us today our Under Secretary for Farm and Foreign Agricultural Service, Dr. J.B. Penn; our chief economist, Keith Collins; and our chief of Natural Resources Conservation Service,

Bruce Knight; and as well, we have a number of our other memVerDate 11-MAY-2000 14:17 May 27, 2003 Jkt 086219 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 86219.TXT SAG1 PsN: SAG1
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bers of our USDA team with us today, all of whom have been very,

very active in the implementation of this Farm bill.

Mr. Chairman, what I would like to do today is summarize my

formal statement and then respond to questions.

As you know, this new law contains many complex issues and

new programs that require a great deal of work to implement. This

includes writing new computer programs, implementing new regulations, a massive updating of bases and yields, extensive training

for USDA employees, working with producers to make sure they

understand the changes in the new law so that they can best utilize and receive the programs and the benefits.

USDA has had very short time frames to meet in terms of putting these new programs into place. Even with all of these challenges, I have to say I am very pleased and proud of the progress

that the Department has made thus far in implementing the new

Farm bill. The implementation planning that we did prior to the

bill being passed has helped in that regard, and as soon as the

Farm bill was signed by the President, USDA went into high gear

to implement it. We will get checks to farmers on time.

All this progress could not have been accomplished without the

dedication and the hard work and the commitment of USDA’s employees at every level around the country, and, Mr. Chairman, I appreciate you recognizing our USDA employees around the country

in your opening remarks as well.

Many times over the years our employees have been called upon

to assist our Nation’s farm economy. What we have seen during

these past few months of the Farm bill implementation is no different. USDA employees around the country have worked tirelessly

to implement the new Farm bill, and they deserve a great deal of

praise for their efforts thus far.

I also want to thank all the members of this committee as well

as Chairman Combest and Congressman Stenholm and other members of the House Agriculture Committee for their continued interest in our work during the past few months. We have conducted

several member and staff briefings and appreciated your input and

suggestions as we have moved forward.

We also appreciate the input from the farm community, particularly our farmers and ranchers who have made their views known

on implementation. We have a lot of suggestions, and we have conducted listening sessions around the country, which has been helpful to make sure that we were acting in the best interest of our Nation’s farmers as a whole, but at the same time taking into account

regional considerations.

We have been listening, and our recent announcement to provide

clarification regarding bases and yields is just one example of our

flexibility and desire to make the best available decisions as we implement the many changes required in the new law.

As soon as the new Farm bill was enacted, we moved quickly to

set up an internal structure for implementation, and we did this

with a two-pronged approach. We established our sub-Cabinet as

the Board of Directors, and then we created a working group which

was chaired by three people: Keith Collins, who is here with us,

our chief economist; Hunt Shipman, our Deputy Under Secretary

for Farm and Foreign Agricultural Service; and Scott Steele, who

4

is a senior person in our budget office and very knowledgeable with

farm programs. This group has coordinated the Department-wide

implementation process, and they, along with all of the people they

have worked with, have done a tremendous job.

I issued delegations of authority assigning the program responsibilities to various Under Secretaries and agency administrators to

ensure that quick actions would be taken, and we have developed

a Department-wide tracking system for all farm bill actions so that

we know the up-to-date status for each requirement under the law.

A top priority during this time has been to keep Congress and

the farm sector informed of our actions. As I said, we have held

many briefings with members and staff, over two dozen; we have

held at least 44 press briefings as well as farm bill implementation

meetings with producers throughout the country. As well, we immediately established a farm bill website that has a myriad of information, questions and answers, and program details available

for producers wanting to know more about the new law.

In addition, we have undertaken one of the most thorough training programs the Farm Service Agency has ever had, including a

train-the-trainer session in Chicago last July and another session

in New Orleans just last week. Training is critical to farm bill implementation, and we have made it a very top priority from the beginning.

Regarding the specific titles, we are very pleased with the overall

progress that we have made so far in implementing Title I. In August, we announced the sign-up for the Direct and Countercyclical

Payment Program will begin on October 1st, with payments starting soon thereafter. In order that producers can receive their payments, we are working closely with our State and local FSA offices

and eligible producers to update acreage bases and yields.

This will be the first time since 1985 that producers will have

had a major opportunity to update program bases and yields. In

this regard, we have recently issued special provisions for livestock

producers who graze their crops or harvest grain, silage, or hay for

feed.

Another new program we are working hard to move forward is

the milk income loss contract which provides countercyclical support payments to dairy producers. Thanks to the hard work by

USDA staff in DC and in the field, sign-up began on August 13th,

and payments are scheduled to start early next month.

The Peanut Program has gone through a historic overhaul. The

market quota system, in place since the 1930’s, has been replaced

with a Direct and Countercyclical Payment Program. Peanuts are

also eligible for the Marketing Loan Program, and we established

a national weekly market price for loan repayment purposes.

Peanut producers may sign up for the peanut quota buyout during the September 3rd through November 22nd time period. Payments will begin as soon as the rule is issued. All of these changes

will make peanuts a more market-oriented commodity and help the

industry become more competitive while easing the transition for

peanut producers.

Sugar is another very complex program, and I am pleased that

we are able to move forward quickly in implementing the new provisions. In August, we published a final rule on program details

5

and also announced the 2002 crop marketing allotment quantities

for beets and cane sugar.

Other implementation actions are moving along on schedule,

with final rules in various stages of clearance. We are working very

closely with OMB to ensure timely review and implementation.

Turning to conservation, we are pleased with the strong conservation emphasis contained in Title II. The changes in the conservation policy supports the administration’s commitment to a voluntary approach and provides the Nation’s producers with a true

portfolio of conservation options, including cost-share incentives,

land retirements, and easement programs.

We are now moving in a deliberate manner to continue those

conservation programs which were re-authorized in the Farm bill,

such as the Wetlands Reserve Program, the Wildlife Habitat Incentive Program, and the Farmland Protection Program. We are also

revising those programs with major changes, such as the Environmental Quality Incentives Program and the Conservation Reserve

Program, and we are initiating rulemaking on new programs, such

as the Grasslands Reserve Program and the Conservation Security

Program.

Our initial focus has been on getting the additional fiscal year

2002 funding authorized by the Farm bill into the system. Funding

has been made available for EQIP, WRP, WHIP, and FPP as warning letter as for ground and surface water conservation.

Funding for these conservation programs will exceed $750 million for the year 2002. We are also moving aggressively ahead with

the expansion of direct technical assistance to producers from the

private sector, the nonprofit sector, and State and local government

sources to supplement technical assistance provided by NRCS. As

we look ahead, we have scheduled the publication of proposed regulations in the near future for EQIP and FPP, for the 2003 programs, and an interim final rule for third-party technical service

provider certification.

We are also making steady progress toward the proposed rules

for the Conservation Security Program, ensuring that this newest

policy initiative is implemented properly. We are finalizing the delegation of authority for the Grassland Reserve Program.

For other titles of the Farm bill, we are also making progress.

While the time pressure is not as immediate as for Titles I and II,

we are still working aggressively in these other areas. A detailed

outline on progress for the other titles is in my prepared statement,

but I want to briefly highlight a few areas.

We are moving quickly ahead with implementing the provisions

that bolster our market development efforts overseas. On August

12th, we announced the allocation of an additional $10 million

made available for the Market Access Program for fiscal year 2002.

On September 10th, we published regulations for the new Technical Assistance for Specialty Crops Program and requested proposals for fiscal year 2002 funding.

For the nutrition title, implementing memoranda were sent to all

the States in June so that the food stamp provisions could be put

into effect according to statutory requirements. Also in June, we

announced the award of farmers’ market grants to States through

6

the WIC Farmers’ Market Nutrition Program and the Seniors

Farmers’ Market Nutrition Program.

The rural development title included a wide range of funding and

new authorities to improve the economic prospects and quality of

life in rural areas. One of the most important features of this title

is to provide funding for the backlog of water and waste projects.

This funding has already been awarded to 377 projects in 47 States

and Puerto Rico, totaling more than $700 million. In addition, we

expect to award $33 million in value-added grants in the near future.

Numerous other provisions of that title that expand our authority for financing telecommunications, renewable energy, business

and community projects are in the process of being implemented

through the regulatory process.

Under the miscellaneous title, we are developing voluntary

guidelines for country-of-origin labeling that will be released in the

near future. Also under this title, we are moving forward to appoint a new Assistant Secretary for Civil Rights.

Mr. Chairman and members of the committee, before I conclude,

let me discuss another issue of significant importance to our Nation’s farmers and ranchers who have been stricken by severe

drought conditions in many States around the country. This administration supports helping drought-affected farmers and ranchers

who are most in need, particularly our livestock producers who do

not have risk management tools to protect them during these difficult times. While the Congress has not completed work on a disaster assistance package for the President to consider, the administration has laid out its priorities for additional relief and is utilizing every available tool and program to help farmers and ranchers

in need within our existing authorities.

Through the heavily subsidized Federal Crop Insurance Program,

the Congress has already provided tools for drought relief for our

crop farmers. The crop insurance subsidy was increased dramatically in the year 2000 to avoid the need for disaster payments. The

vast majority of crop acreage in the drought regions is covered by

crop insurance. Almost 80 percent of the insurable acreage in the

U.S. is covered. Based on current crop conditions, our preliminary

estimates indicate that the program will provide $4.1 billion in indemnity payments for 2002 crop losses compared to $2.9 billion for

2001 and $1.5 billion for the 1990’s.

We have also responded swiftly and worked with States to expedite approval processes for declaring emergency disaster areas so

that farmers can receive low-interest emergency loans. We have expanded CRP haying and grazing eligibility nationwide and are

working to get Non-insured Crop Disaster Assistance Program payments out to farmers and ranchers.

Yesterday, we announced that $10 million of EQIP funding will

be directed to States severely impacted by the drought. The Emergency Conservation Program will also help landowners deal with

drought-related problems. Concerning livestock producers, we announced a $150 million Feed Assistance Program to help cow-calf

operators in Colorado, Nebraska, South Dakota, and Wyoming. In

these States, at least 75 percent of the pasture and range crop is

currently rated as poor or very poor. We also need to be concerned

7

about the long-term implications of the current drought situation

and efforts to cope with it.

First and foremost, we should not do anything that w be a disincentive for producers to participate in the Crop Insurance Program. Further, we need to continue working to improve and expand

the program particularly with respect to forage and rangeland livestock insurance products.

The Agricultural Risk Protection Act was an important step in

the right direction. It provided a substantial increase in Federal

funding for the Crop Insurance Program and important new authorities for improving the program. We have made substantial

progress toward implementing this legislation. For example, two

new livestock products were recently approved and are being pilot

tested. However, much more needs to be done not only by USDA

but also by the private insurance industry and producers groups to

ensure that new and better insurance and other risk management

products are developed and brought to the market. Producers

should not have to wait for emergency appropriations for relief

from natural disasters. They should have assurance of protection

against risk before it occurs through their participation in the Crop

Insurance Program. That is the goal that we are working toward.

Mr. Chairman, that concludes my overview of where we currently

stand on implementing the new Farm bill. Our team at USDA has

worked hard to implement the new Farm bill in an efficient and

expeditious and responsible manner to best help our farm and food

sector receive the intended programs and benefits. We are committed to continuing to do the very best job we can to deliver the programs.

We are also committed to continuing to work with Congress and

other stakeholders to ensure that legislation in implemented fairly

and properly.

Again, thank you for having us here this morning, and we would

now be willing to respond to your questions. Thank you very much,

Mr. Chairman.

The CHAIRMAN. Thank you, Madam Secretary. I will turn first to

Senator Lugar, and we will start this with 5-minute rounds first.

Senator LUGAR. Thank you, Mr. Chairman.

Madam Secretary, I would like to mention that in Indiana I visited with John Nidlinger, who is our Indiana Director of the Farm

Service Agency, and he has conducted over 140 meetings attended

by over 17,000 Indiana farmers, and the information that you have

suggested today and the network that you have talked about, I

simply want to make that report from the grassroots. It has been

very helpful in terms of mitigating all the questions that would

have come to our office otherwise, and that has been minimized by

this good process.

You mentioned that Congress provided authorization for USDA

to use the private sector for conservation technical assistance. You

mentioned in your opening statement work on that is continuing.

You may not know the date at the moment that the regulations for

the new authority will be ready, but if you could give me some notice after the meeting, I would appreciate it. There are many in our

State who are eager, really, to proceed, and you are eager to help

them.

8

Now, my major question comes down to on the 7th August I

wrote to OMB Director Mitch Daniels regarding food aid, and that

letter was signed by Chairman Harkin, and Senator Leahy was

copied, to you and to Dr. Rice because it expresses concern over the

administration’s food policy review. The administration is supposed

to limit the 416, 416(b) Surplus Disposal Food Program, and rely

instead upon P.L. 480, Title II. The concern has been that there

ought to be transparency and better regulation, and I understand

this.

The net effect, however—I look at it now from the standpoint of

the World Food Program, in which a colleague of mine, Jim Morris,

is now the deputy of Kofi Annan, going through Afghanistan, Pakistan, various places of great interest to us—has been to drop the

U.S. contribution from 6 million metric tons in fiscal year 2001 to

4 million this year or, rather, that is the estimate for, I guess,

2003, as we have the transition of this policy.

That is a dramatic decrease in the face of the African problems,

quite apart from our foreign policy situation in Afghanistan and

Pakistan, and this is why I have asked both you, Condoleezza Rice,

and the powers that be wherever, this is very, very serious, and we

really need to change the policy.

Now I am not certain how you can proceed to do that, but will

you please give me some indication of your first reaction to this crisis and how we are going to get from 4 to 6, which we have to do,

in one form or another. If we cannot improvise in this forum,

please advise me sort of where, maybe starting with the President

on down, we can do so because the humanitarian impact of this is

very substantial.

Secretary VENEMAN. Well, Senator, I do appreciate your concerns

that you have raised. As you know, USDA has a very active role

in food aid, but we do not act alone in food aid. It is an interagency

process that includes AID, the State Department, and the OMB,

the NSC, a number of agencies throughout Government that come

together in an interagency process to make determinations of food

aid.

This food aid review group entered into discussions about how to

create more consistent funding of the food aid, and it was believed

that through P.L. 480 that it was a better mechanism to administer food aid. What the group did, however, was recognize that because there are emergencies that are beyond what one can anticipate in any given year, that the 416 authorities would still be

available, and so that review committee continues to meet and look

at needs.

I am aware of your concerns about the WFP, and certainly we

are very pleased that Mr. Morris has come into that job and hit the

ground running. We will continue to work with you to look at ways

that we can satisfy the demands of the World Food Program, particularly during these times where there is a tremendous amount

of need around the world.

Senator LUGAR. Well, we are constrained by the time, but will

you please advise me what I can do personally to intervene because

I am prepared to do so at any level. This is really a drastic problem

and which people are going to die out there if we are not successVerDate 11-MAY-2000 14:17 May 27, 2003 Jkt 086219 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 86219.TXT SAG1 PsN: SAG1
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ful, despite our own bureaucracy and however efficient we thought

this might be. Please give the orders.

The last question I have deals with which agency will administer

the McGovern-Dole International School Lunch Program. USDA

and USAID have been suggested, maybe others. How is that sorting out?

Secretary VENEMAN. That is another issue that is still being discussed interagency between whether or not it would be USDA, who

has, as you know, been administering the program, or AID.

My recommendation of the Farm bill language on the McGovernDole Program, which is the Global Food for Education Initiative, a

replacement, is that the legislation itself did not specify who should

administer the program. That issue is still in discussion.

Senator LUGAR. Thank you.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Chairman Lugar.

Senator Leahy.

STATEMENT OF HON. PATRICK LEAHY, A U.S. SENATOR FROM

VERMONT

Senator LEAHY. Thank you, Mr. Chairman. Both thanks to you

and to Senator Lugar for holding this hearing.

I talked briefly with the Secretary before the hearing started,

and I wanted to remind her that in the legislation, the National

Dairy Program was designed to provide dairy farmers income support payments that are going to be virtually identical to what, for

example, Vermont dairy farmers received under the Northeast

Interstate Dairy Compact. Payments have be made retroactively,

coveringproduction and low prices since December 1, 2001.

Retroactive to that date, prices for Class I fluid milk fell below

the compact’s trigger level, $16.94, which is identical to this program, but prices have been below that trigger level ever since, and

they continue to fall.

We also note that the prices, as always happens in this, does not

go down at all at the supermarket. What the consumers pay for

milk is exactly the same. The prices drop precipitously to the farmers, and they are really getting a bad, raw deal. In fact, the farm

level milk prices are at their lowest levels in over 10 years. In fact,

only three times in the last 25 years have they been this low, and

we have had both flood and drought, the worst combination possible this year. A lot of farmers have poor crops. They are going to

have trouble feeding.

Now we designed the National Dairy Program to be farmer

friendly. It was designed to be easy to administer. We spent a lot

of time doing that. I believe that the Department of Agriculture

has taken this program that was going to be farmer friendly, they

made it overly burdensome, overly complicated, overly restrictive.

They are basically telling family farmers you better have a couple

of lawyers and a couple of accountants on staff to help you out

through this program. There are some accountants available right

now. This is not what was intended.

Now you and I have known each other for many years. I have

an enormous amount of respect for you, Madam Secretary. I was

going to tell you that during the Farm bill, the Department of AgriVerDate 11-MAY-2000 14:17 May 27, 2003 Jkt 086219 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 86219.TXT SAG1 PsN: SAG1
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culture fought us on the National Dairy Program every step of the

way in the House, and in the Senate, and during the committee

conference. That is your prerogative. We won, and the Department

lost.

Now I fear what you are trying to do is to undo administratively

what we accomplished legislatively. In effect, the Department of

Agriculture is trying to veto a bill that the President of the United

States signed, and that is wrong. We wrote a farmer-friendly dairy

program. You are making it farmer unfriendly.

The Department needs to maximize the payments, not minimize

it. You should encourage participation, not discourage participation. Every dollar is going to pass through the hands of our farmers. It is going to have a great impact in our rural communities,

and unless changes are made, thousands of Vermont dairy farmers,

but tens of thousands of other dairy farmers across the country are

not going to get what they should.

Let me ask you a couple of questions. Some we will probably

have to put in the record.

I am concerned about your failure to meet the congressionally

mandated deadline for implementation. Congress mandated that

the Department of Agriculture begin entering into contracts on

July 13th, but you did not allow producers to enter into a contract

until August 13th. Then they mandated the first payments to be

made no later than October 1st—less than 2 weeks from now.

Will producers start receiving their first checks by October 1st?

Secretary VENEMAN. I believe, Senator, that we will get checks

out during October. I am not sure about exactly on October 1st, but

I am going to ask Dr. Collins to talk just briefly about how we implemented this dairy program, and how we implemented it in a

way that we feel was fair to the most number of—— Senator LEAHY. Well, if we are going to do that, then let us also

go into the question of the beginning month for the transition payments because that has wiped out, wiped out, the way you are

doing it, a whole lot of dairy farmers.

I want to know, in answering that, did officials in the White

House Office of Management and Budget direct you to limit payments to dairy producers, either directly or indirectly, did anybody?

Doctor, be very careful in your answer on this because if it is not

accurate, you are going to have a chance to discuss this again before another committee that I am on.

Did anybody in the White House direct you, directly or indirectly,

to limit payments to dairy producers?

Mr. COLLINS. Senator Leahy, no one directed me, personally, to

limit payments to dairy producers.

Senator LEAHY. I am not talking personally. To your knowledge,

did anybody?

Mr. COLLINS. Nor to my knowledge do I know of the White House

directing the Department to limit payments to dairy producers.

What we have done here is implement—— Senator LEAHY. Well, then why did you take a plan that was

very clear in the legislation, change it all around to do something

entirely different than what we intended?

Mr. COLLINS. The plan was far from clear in the legislation. To

start with——

11

Senator LEAHY. It is a heck of a lot less clear now.

Mr. COLLINS. When you look at the dairy language, you have to

understand that you provided very complicated overlapping requirements. There is a transition period, and there is a contract period, and both are variable. The dividing line between the two is

any time between May 13th, 2002, and 2005, depending upon the

choice of the producer, and then over the top of these two variable

periods which you constructed in law, you require us to implement

an eligibility cap of 2.4 million pounds per producer on what they

can receive payments, and you further require that eligibility cap

to be enforced on a fiscal year basis, even though neither the transition period, nor the contract period, are on a fiscal year basis.

I disagree with you if you think that that is abundantly clear and

easy to implement.

Senator LEAHY. Well, but you are not allowing the producers to

select the beginning month for the transition payments, and they

could have.

Mr. COLLINS. That is correct. We did not.

Senator LEAHY. I do not think you are following the law in that

regard.

Mr. COLLINS. Well, there are grounds for discussion here. When

we first looked at the law, it was our belief that the law said the

transition period started in December, and then the contract period, having an enforceable 2.4-million pound eligibility cap on a

fiscal year basis, we figured the contract period and the 2.4 cap

would start on fiscal years in October.

When we first designed this program, we were going to have producers enroll in this program beginning in December 2001 for the

transition period, get payments until they hit the 2.4-million-pound

cap. Then, the following October, and each October after that, start

the clock again with a 2.4-million cap. That way producers would

not have had any choice whatsoever to pick a month.

We think that is consistent with the law, and it could have been

implemented that way. However, we chose not to implement it that

way. We chose to give producers the flexibility to pick the month

from 2003 on through 2005. We went beyond what a straight reading of the law could have implied by giving producers that flexibility.

It is true we did not give them the flexibility during the transition period. We said the transition period would start in December

2001, and the reason we did that was to provide, we think, consistency with all of our other programs, where once a price has been

established, we do not allow producers to look back and pick a

month to maximize a payment. We do not do it on LDPs for corn

or wheat or anything else.

Senator LEAHY. There are a lot of things you did not do. I mean,

you did not allow the sign-up time on the specific time that the

statute required. You were a month late on that.

Mr. COLLINS. We were a month late on that, and for that I can

say that having been at USDA for many, many years, and having

had to sign off on every significant, economically significant and

major regulation of the Department, I can tell you, with a law

passed on May 13th, having a regulation out by July 13th or July

12th is almost impossible.

12

Every regulation that you put out under the Administrative Procedures Act or under various Federal Executive Orders requires a

cost-benefit analysis, possibly an environmental assessment, possibly a risk assessment, an unfunded mandates assessment, a

Small Business and Regulatory Flexibility Act assessment, a civil

rights impact assessment and possibly an energy assessment.

That all flows from the fact that Congress did not want Federal

departments to regulate willy nilly and impose lots of requirements

on us to be sure that when we put out a regulation, when we put

out decisions, they are sound and well thought out.

Unfortunately, it took us until July 12th to come to that conclusion on dairy, and we regret that, but we still think that we got

it out in a fairly timely way by getting the sign-up period beginning

in August. In fact, even though we do not have our computer software done for the dairy program yet, we have started sign-up with

manual sign-up in order to get as close as we could to the July 12th

date.

Senator LEAHY. Mr. Chairman, I, obviously, disagree, and I will

submit a number of questions to the regard because we have a situation where medium-sized farms did not do as well as large farms

or small farms. They have left a huge gap in here.

Thank you.

The CHAIRMAN. Thank you, Senator Leahy.

[The Statement of Senator Leahy can be found in the appendix

on page 53.]

Senator Cochran.

THE STATEMENT OF HON. THAD COCHRAN, A U.S. SENATOR

FROM MISSISSIPPI

Senator COCHRAN. Mr. Chairman, thank you very much.

Madam Secretary, welcome to the hearing.

First of all, I want to commend you and your staff for the hard

work that you have turned in implementing this farm bill. It was

a huge undertaking, very little time available to you between the

enactment of that legislation and the sign-up periods that were

going to be occurring for this crop year. I commend you. You have

done an excellent job.

I happened to run into Mr. Penn the other day at the airport,

and we talked about some of the practical problems that were confronted, and the enormous burden that was really imposed on the

Department by the Congress to do this in a very short period of

time.

I know there are going to be some difficulties encountered, one

of which you mentioned in your statement on Page 3. You talk

about the fact that you have a schedule for sign-ups, announcements, payments to farmers. I wonder whether you can share with

us what the schedule is. We are asked by producers, when we go

back to our States when can payments be expected, when will all

of the sign-ups be scheduled. Is there anything you can tell us that

we can pass on to our producers in that regard?

Secretary VENEMAN. Well, we did announce last month that we

would begin sign-up on October 1st, with payments to be distributed shortly thereafter, and we continue to stand by that time line,

and we will be able to get payments out shortly after people sign

13

up, on or around October 1st. We are on schedule and that we will

get the payments out to farmers on time.

Senator COCHRAN. Well, that is good news, and I commend you

for that. I hope that we can cooperate with you if there is any way

that we can be helpful.

Now I know that a lot of these programs were changed in some

fundamental ways. Farmers have the option, for example, of providing information on yields, past production of lands. Some of

them are confused by what their options are and what the implications are. I know a lot of the Farm Service Agency offices are wrestling with how to answer the farmers’ questions. I know one farmer

told me he wished somebody could make that decision for him, that

he does not know how it is going to turn out. He might want to

change it, as a practical matter, later on, and would that be possible?

These are some fundamental difficulties that producers are encountering, and I know the employees in the Farm Service Agency

offices are encountering as well.

Is there anything that you can tell us that we can pass on to the

employees at the local level or the producers to help them address

this situation more effectively?

Secretary VENEMAN. Well, Senator, you are absolutely right

when you say that this has been very complicated to implement,

and because we knew it was going to be complicated, because there

were so many changes, we did several things.

First, we had a website up and running the first week, and we

keep adding questions and answers that come up to that, as well

as program decisions, time lines and so forth, and we hope that

this is not only helping producers, but people in our Farm Service

Agency county offices and anyone who wants information.

We have conducted training sessions for FSA, knowing that they

need to get the up-to-date information. We are doing a lot of joint

training with NRCS and FSA to make sure that people in the county offices have the same information because so many of this contact you should be able to get some general information from any

USDA employees in the field.

Of course, we have done, and I, personally, have participated in

several of these, but we have counted up all of the media briefings

we have done through farm broadcasters, particularly, who are a

wonderful source of getting information out to farmers and ranchers, and we have done, among all of our staff, 44 briefings on farm

bill implementation with the press, trying to get the word out on

how we can do some of these things because we know it is complicated. We are trying every way that we can.

For those farmers that do not want to go log on the website, they

can listen to the radio. We are doing radio spots through our USDA

all of the time to try to get word out to farmers. There are a lot

of complicated questions, and we are doing everything we can to

try to get people educated about what they need to do to sign up,

what kinds of information they need to bring in, and when they

can expect to have the final sign-up and their payment.

Senator COCHRAN. I know there is one difficulty that has developed between your department and the Office of Management and

Budget with respect to a portion of the funds for technical assistVerDate 11-MAY-2000 14:17 May 27, 2003 Jkt 086219 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 86219.TXT SAG1 PsN: SAG1
14

ance for conservation programs. I joined with Senator Herb Kohl

of Wisconsin in signing a letter yesterday—he is chairman of the

Appropriations Subcommittee for the Department of Agriculture— suggesting that it would be inappropriate to deny the use of CCC

funds for technical assistance for these conservation programs, as

OMB apparently is proposing without a reprogramming.

We provided funding that we thought would be useful for the Department to carry out the conservation programs in the area of

Conservation Operations. That is the name of the account. The

funds that were included in that were to be used for operations.

The technical assistance funding could come from CCC funds.

I hope that you are able to renew your discussions with OMB

and figure out some way to persuade them. I would hate to see us

have to go back through this and figure out a way to legislate an

answer to this problem.

Can you bring us up-to-date as to what the status of that disagreement is, and is there any hope for resolving it?

Secretary VENEMAN. Well, Senator, there has been a difference

of legal opinions, in terms of the new law and whether or not it

superseded Section 11 of the old law, as I understand it. The lawyers have been at complete loggerheads about how this particular

provision has been interpreted, and I know that some of the committee members have specific ideas on how it should be interpreted, as well as the appropriators, and we appreciate that fact.

We have our staff, particularly, Under Secretary Mark Rey, has

worked to try to come up with a short-term resolution for the 2002

year because we were coming upon the deadline, as you know, with

regard to the 2002 fiscal year, and we will continue to work

through this issue for the subsequent years, but we have worked

on a compromise for the 2002 year, which I can have our administrator talk about or our chief, I should say—sorry—talk about for

a moment, if you would like.

Mr. KNIGHT. Well, in brief, we have come to some form of resolution that will allow us to be able to move forward with implementation of the two programs that it was most important that we get

the money out and implemented. Those are the Wetlands Reserve

Program and the Farmland Protection Program. We announced

each of those, the allocations out to the States on both of those programs, two Fridays ago and are proceeding ahead very, very rapidly on implementation of that so that we can get the actual funds

on the ground for the conservation for the needs of the Wetlands

Reserve Program and be able to achieve the objectives of both of

those before the end of the fiscal year, and we will proceed with

further discussions for 2003.

Senator COCHRAN. Thank you very much, Mr. Chairman.

The CHAIRMAN. I have refrained from asking questions, but I

want to pick up on this that Senator Cochran brought up.

OMB released $5.9 billion, if I am not mistaken; is that right?

Mr. COLLINS. In technical assistance, that is correct.

The CHAIRMAN. My information is that that is not going to cover

the need. I do not know how far you expect that to go, but that if

your lawyers were to contact on both sides of the aisle, in the Senate and the House, you would find that there is a clear agreement

on both sides to supersede the 1996 bill by providing that, under

15

mandatory programs, technical assistance could be used out of

those mandatory programs.

The only thing that we allowed to continue under 2701(b) was for

transfers from CCC. That would still be subject to the Section 11

cap, but for the mandatory programs that we put in, it was very

clear.

I have been befuddled, Senator Cochran, by why it seems to be

confusing to lawyers. I have read it over. I know the problem. I

have asked my staff to give it to me. We have read it over, and

we have read it over, but as far as the mandatory programs go, I

thought it was very clear, and that we left only Section 11 caps on

the transfers from CCC.

Do you have anything to say about that?

Mr. KNIGHT. The most important thing for us, sir, was to be able

to move forward with providing the services on the ground this

year for Farmland Protection and the Wetlands Reserve Program.

We have a compromise worked out for 2002.

The CHAIRMAN. Well, our problem is with OMB and not you, I

assume. Senator Lugar and I have written twice to them informing

them what we intended to do and repeating the appropriate section

of the bill on Section 2701(a) as it provides that the Secretary shall

use the funds, and that 2701(b) was simply to keep the Section 11

cap on the transfers from the CCC.

We still need $20 million for the Wetlands Reserve Program

technical assistance. Where is that money? USDA asked for that

and OMB denied it. Where is the money, Madam Secretary? Or

anybody, where is the money? I mean, you asked OMB for it. They

denied it. We still have a problem with the Wetlands Reserve Program.

Secretary VENEMAN. Well, again, Mr. Chairman, as I indicated,

there has been a difference among lawyers on this issue, and in

order to resolve it, to the maximum extent possible, to be able to

get some of this technical assistance done before the end of the fiscal year, we did reach this compromise.

Now, I understand the frustration of the committee. There has

been a disagreement about what the language means, and we will

continue to work with the committee to try to resolve this for the

subsequent years.

The CHAIRMAN. Well, OK. Again, USDA asked for the $20 million

for technical assistance for WRP. OMB denied it. Senator Lugar,

I am sure, wrote representing the Senators on his side. I wrote representing the Senators on our side. I believe letters also came from

the House committee spelling this out for them. I don’t know why

there is any confusion. I just don’t understand that at all. We still

are missing the $20 million. That is why I asked about the $5.9

million that was going out. That is not sufficient. We know that.

I will have some more to say about that after a bit.

Senator Conrad.

Senator CONRAD. Thank you, Mr. Chairman, and welcome to the

committee, Madam Secretary and others from the Department. Mr.

Penn, we had a chance to meet last week, and Dr. Collins, Mr.

Knight.

16

First, I want to thank the chairman for calling this hearing. It

is critically important because there are things occurring here

which I find very disturbing.

Madam Secretary, in our system of government who makes the

law?

Secretary VENEMAN. I am sorry. I thought there was more to

your question.

Senator CONRAD. In our system of government, which branch

makes the law?

Secretary VENEMAN. Congress makes the law.

Senator CONRAD. Congress makes the law. No executive department makes the law. Is that correct?

Secretary VENEMAN. Well, the laws are made by the Congress

and signed by the President.

Senator CONRAD. Made by the Congress. That is exactly right.

That is not what is happening here. In item after item, example

after example, you and your Department are defying the law, are

defying Congress. I don’t know how it could be more clear.

Senator Leahy gave the examples in dairy. I would turn your attention first to the minor oilseeds. The statute says the loan rate

for a marketing assistance loan shall be equal—‘‘shall be equal’’—

in the case of other oilseeds to 9.6 cents per pound.

The managers’ report says for sunflowers, ‘‘In implementing the

Marketing Assistance Loan Program for minor oilseeds, the managers expect the Secretary to establish a single sunflower loan

rate.’’ A single sunflower loan rate.

That is not what you have done. For the first time ever, without

consultation, without public notice, without a hearing, you have decided that what Congress said to do, what Congress put in the law

is not acceptable to you, and instead you will establish a rate for

the oil types of 9.15 and for confections, 12.10. You are wreaking

havoc on this industry.

That is not what the law is. That is not what the managers said

to do. Why aren’t you doing it?

Secretary VENEMAN. Well, Senator, let me first say that as we

discussed, as Dr. Collins discussed with the Milk Program, there

is a lot in this farm bill that is not abundantly clear in the law—— Senator CONRAD. What is not clear about a statute that is—I

want to know, what is not clear about a statute that says—this is

as clear as it can be. For the other oilseeds, the marketing loan

rate shall be 9.6—not 12.10, not 9.15, 9.6. What is not clear about

that?

Secretary VENEMAN. Well, I was talking generally about the

Farm bill——

Senator CONRAD. I am talking specifically. I have asked you a

specific question.

Secretary VENEMAN. I am going to get to that, but I would like

to just be able to respond initially, and that we have had to make

a lot of judgments in implementing this farm bill. I believe that our

folks have done a tremendous job, and as I said in my opening

statement, they deserve a lot of credit for that. The chairman recognized that. Many other committee members recognize that. They

deserve a tremendous amount of credit. I am going to ask Dr. Penn

and possibly Dr. Collins to comment specifically on how we came

17

to the sunflower loan rate issue because it is a technical calculation

that this group came together as a committee and made.

Senator CONRAD. I am asking you. You are the Secretary. You

run that Department. This statute is as clear as it can be. The

managers’ instruction is as clears as it can be, only that is not

what you have done. I want an explanation from you: Why are you

not following the clear intent of Congress?

Secretary VENEMAN. Again, I would like to let our folks who have

gone through all the calculations respond to this question as to how

we arrived at this.

Senator CONRAD. Well, I am interested in your answer. You are

the Secretary. I want your answer. The people that I represent

want your answer. This is a devastating effect out in the country.

Farmers want to know. I mean, it is just as clear as it can be. The

intent of Congress—can you tell me what could be more clear than

a statute that says—and I will repeat the language. The statute

says the loan rate for a marketing assistance loan shall be equal

to, in the case of other oilseeds, 9.6 cents per pound.

Have you provided a loan rate for sunflowers of 9.6 cents per

pound or have you got a differential rate for confectionery and oil

types?

Secretary VENEMAN. I am going to ask Dr. Penn to respond to

this.

Mr. PENN. Senator Conrad, you and I have had this conversation

before, but I do think we should respond for the record. The portion

of the statute that you read is very clear. There are also, I am told

by the lawyers, other portions of the statute that gives the Secretary some discretion to adjust loan rates by quality and type and

other factors. This is a part of an overall process of establishing

loan rates for all of these commodities in the new Farm bill.

I would point out that we are establishing loan rates for 17 different commodities spread across 3,000 counties in the country. We

are trying to do this to take into account location and type and different market factors for each one of these products. It is a very

difficult task so that we don’t introduce distortion, so that we don’t

cause more harm than good with what we are trying to do here.

In the case of the minor oilseeds, we did try to adhere to the 9.6

for all oilseeds, but it is part of a broader effort to try to establish

individual loan rates for those commodities that have their own set

of market fundamentals, and confectionery sun seeds have a different set of market fundamentals than do oil-type sun seeds.

There has typically been a pretty substantial differential, historically about a $3 a hundredweight differential between the two, and

it just seems to make sense to not cause distortions, not cause

farmers to shift acres, not cause problems in the processing industry, nor with transportation and storage if you can delineate these.

That is what we have tried to do, not only with the minor oilseeds

but with the pulses and the other crops. We have tried to make

these as fair and as equitable as we can among farmers and to

minimize the distortions and enable farmers to be as efficient as

they possibly can.

Senator CONRAD. Let me just say, you have substituted your

judgment for the judgment of Congress. It is as clear as it can be

what Congress said to do, not just there, flaxseed, same thing, 9.6

18

percent is what is provided for in the statute. You have set it at

6.98 percent—6.98 cents, and I can tell you, I have one farmer who is going to lose $30,000. You announce without public notice, without hearing, without consultation, that you on your own, defying

the clear intent of Congress, go out and change the rules in the

middle of the game. One farmer from my State, it is going to cost

him $30,000. He acted in good faith. I don’t think you have. It is

just incredible to me that Congress gives you a clear direction and

you don’t follow it.

Well, we will have more chance—I have many more examples

that we are going to have a chance to go over before we end today.

The CHAIRMAN. I thank you, Senator Conrad.

Senator THOMAS. Thank you, Mr. Chairman. Welcome, Madam

Secretary. I know it must be a terrific job to implement this bill,

and I hope that at least you get an opportunity to respond here in

your own way.

A couple of fairly broad ones. EQIP is very important to us and

designed, of course, to promote production, environmental quality.

There seems to be some confusion with the implementation. Some

States are ahead of the Department in terms of doing it. Other

States are moving forward without the guidance, apparently.

What is the process the States are following with the rules of

EQIP to get that program into place?

Secretary VENEMAN. Well, as you know, Senator, the Farm bill

put substantial amounts of new money into EQIP even for the 2002

year. We moved quickly to announce the availability of that money

so that it could be utilized for projects that had been applied for

and yet funding was not yet available.

I am going to ask Bruce Knight to comment specifically on your

question about how we are implementing it in the various States.

Mr. KNIGHT. We are using the existing rules and regulations to

a large degree with very few minor—minor modifications for 2002

so that we could implement the additional funding authority that

we have, that you granted us in the Farm bill.

For 2003, we will move forward with a rather robust, open, rulemaking process that will give us an opportunity for folks to make

further comments on where to move forward on EQIP with the

2003 process.

Senator THOMAS. Grassland Reserve is also one that there has

been some debate and some discussion as to whether that is going

to be done under the jurisdiction of the Farm Service Agency or

whether it is going to be done under NRCS or whether, in fact, it

is going to be divided. Would you comment on that, please?

Secretary VENEMAN. There are some programs like the Grassland Reserve program where we are still working out where the

oversight and where the administration will take place. What I can

tell you is that we have made it a strong policy in USDA that our

agencies should work together because our constituents need consistency and availability of services from our people in the field, no

matter who they are. Both Jim Little, who is our administrator of

FDA, and Bruce Knight have been strong advocates of working together, making sure that our programs are administered effectively

and efficiently out in the field, and that NRCS and FSA particularly are working together in the administration of these. How we

19

are actually going to administer the Grasslands Reserve Program

we are still working on, but it is one of these things that we are

working closely in terms of the employees that have jurisdiction or

responsibility for these areas.

Senator THOMAS. I have talked about it with some people before,

actually, not during this implementation, but where Farm Service

is doing the rental contract portion and NRCS is doing implementing the easement portion. Even though I agree with you they ought

to work together, it does make it difficult when they split the responsibilities between two agencies, and perhaps it is something

that the major responsibility ought to be with one. They can write

the checks, I guess, over in the other one.

Secretary VENEMAN. Well, we are trying to bring our agencies together in terms of computer software and hardware and programs

so that we should be able to take all of these data bases that have

been kept by these agencies on paper, and as we can bring them

together into a common computing data base, we will be much

more able to administer these programs effectively across agencies.

Senator THOMAS. I am sure that is right. Still, the responsibility

needs to lie somewhere. The Rural Marketing Program, when do

you think those assistance loans and deficiency payments, when

will that program be finalized?

Secretary VENEMAN. I am actually not sure when we are looking

at the implementation of that program.

Mr. COLLINS. I have to look up the calendar. We have a timetable here. We can certainly—— Secretary VENEMAN. We can get that answer to you.

Senator THOMAS. I appreciate it.

Just one other final question. In the Livestock Feed Assistance

Program contained in the new drought amendment, will people be

able to use their new payments for feed they have already purchased here in the past?

Secretary VENEMAN. In the drought—I am not sure which

drought amendment you are—— Senator THOMAS. I am talking about the one that is now in the

process here. Just generally in drought, the payments don’t get

there for a good long time, and the operators have had to already

spend the money to feed the livestock and so on. I presume those

dollars will be available for what maybe that rancher has already

spent.

Secretary VENEMAN. Yes, I—go ahead.

Mr. PENN. It depends on the language that is put in the final legislation, but I’m told that historically it has been true that farmers

have been allowed to use the payments for feed that has already

been purchased because of the timeliness of questions——

Senator THOMAS. It is pretty important because the critters are

going to be hungry before that allocation of money is made. All

right. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Thomas.

Senator Miller.

Senator MILLER. Thank you, Mr. Chairman. Obviously, it is a

very timely hearing, and thank you, Madam Secretary, for being

here with your staff. Thank you for all your hard work. I know that

it has been a difficult task to implement this farm bill.

20

I guess it will come as no surprise to you. My question has to

do with peanuts. I am about as predictable as Senator Leahy with

his dairy questions.

[Laughter.]

Senator MILLER. One of the main thrusts of the Peanut Program

that we worked so hard on was to enhance our peanut producers’ ability to export. If we continue with this formula that has been set

up, it is going to be very difficult to do that. In fact, it is going to

drive U.S. producers completely out of the export market.

I have two or three questions, but my first question has two

parts. Would someone please explain how this formula for the loan

repayment rate for peanuts is calculated? Does the administration

believe that the process of U.S. competitors should be used in developing the loan repayment rate?

Secretary VENEMAN. I am going to ask Dr. Penn, who has been

intimately involved in the Peanut Program, to get into the technical issues.

Mr. PENN. Well, Senator, first let me say, as Chairman Harkin

indicated in his opening statement about having lines of communication, this farm bill was passed late in the year, made applicable

to the 2002 crop year. We were given the authority to go to, as you

know, what is called interim final rules. We didn’t have an opportunity to do the normal procedures which would be to promulgate

some draft rules, make them available for comment, and then revise them and publish them in final form.

What we have done at the Department is to try to have open

lines of communication. In fact, in my office we have had meetings

with anybody. Any group that has requested a meeting to give us

their views on how these programs should be implemented, we

have certainly met with them. That has been the case with the

peanut industry. I am happy to say they have taken us up on that,

and we have had numerous meetings with all aspects of the industry trying to get their views on how this program should be implemented, because as you noted, this is essentially a brand-new program. I mean, it is an industry that was in place, had a particular

program for almost 70 years, and then all of a sudden it is

changed. It is made into a Marketing Loan Program just like we

have for the major commodities. The industry itself hasn’t made all

of the changes.

We quickly got the quota buyout part of the program into place,

and then following that, we started implementing the Marketing

Loan Program. There is a marketing loan rate of $355 a ton for all

peanuts that is in the statute. The question then becomes what is

the loan repayment rate, and unlike soybeans and corn and all of

the other commodities, there are no cash prices for peanuts. What

is one going to use as the loan repayment rate?

Well, we think that after a while, after the industry is allowed

to adjust to the new program, there will be cash markets emerge

and that we will have reliable cash prices that can be used to determine the LDPs or the loan repayment rate, just like for the

other commodities.

In the meantime, as you have suggested, that has forced us to

try to develop some sort of composite or national posted price to determine the loan repayment rate. Frankly, we called in all of the

21

various portions of the industry. We have heard from them. We

have heard from their experts. I am aware of the problem with trying to make our products competitive to try to get to the export

market, and that too is our objective. I mean, we certainly want to

do that, and we understand that that was the objective in basically

reformulating this program. We have to go through this transition

period here in which the markets begin to operate.

In the meantime, we are publishing, as you noted, this weekly

price. We use a whole variety of sources. We explored sources for

peanuts, peanut prices all around the world. As you can imagine,

for the European price, the prices of our competitors, they varied

greatly by quantity, quality, type, and reliability of the price estimates are not always very good. We talked to a lot of traders. We

talked to a lot of people who prepare the prices in Rotterdam and

other places, and they tell us they are subject to manipulation. We

couldn’t just very well take one of those prices with any confidence.

What we have done is to utilize information from a whole variety

of sources. We get every transaction that we possibly can on peanuts in the United States for all purposes, those that are sold into

the export market, those that are sold for the domestic crush for

every single purpose. We try to take into account the prices of Argentinean peanuts and others in that formula.

Now, this is not a formula that I can write down and hand to

you. It has quite a bit of judgment in it. We call, we ask about

transactions, and if we think that there is something suspicious

about those, we exclude them. We are doing the very best we can

in this interim period here to indicate what we think are the value

of peanuts at this point in reference to this loan rate, and I note

that our formula—we have published four now—has moved around

a fair bit, several dollars a ton, and that we think that after a

while it will begin to reflect the true cash prices. Not many of the

new crop peanuts have been sold into the market yet, so we are

waiting to see that.

Senator MILLER. Let me try to get this question in before my

time runs out. We all agree that the goals associated with the loan

repayment rate are to minimize potential loan forfeitures and to

minimize accumulation of stocks and to minimize the cost of storage and storage.

Does the administration agree that the current repayment rate

will lead to large government stocks of peanuts and increased cost

to the Government?

Mr. PENN. Well, we are certainly aware of that problem, and the

last thing we want is for a big portion of this year’s crop of peanuts

to go under loan and to be forfeited to the Government. I mean,

we don’t want to be in the inventory management business. We

want those peanuts to go into the market.

We are going to try our best to make sure that that happens, and

the loan repayment rate, as I noted, is changed every week. As

there are more transactions of new crop peanuts that are in the

harvest process now, we think that a cash price will soon be established, and that that will reflect the opportunities to sell peanuts

in the foreign markets and for the different purposes in the U.S.

market. Our objective is the same as yours. We don’t want any peanuts. We want to expand our exports. We want this new program

22

to work for this industry because it is very market-oriented, it is

a step in the right direction.

Senator MILLER. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Miller.

Let’s see. Senator Hutchinson.

Senator HUTCHINSON. Thank you, Mr. Chairman.

I agree with my colleagues in recognizing the great challenges

the Department has and am sympathetic with the short timeframe

and the great pressures that you are under to get this done.

One of the questions that my farmers have raised that I would

like if you could give us some help on, for the five options producers are given for base acres, is the Department willing to look at

regulations with regard to crops that are rotated or are taken out

of production for a year? In Arkansas, if a farmer rotates rice acres

into soybean acres due to red rice infestation, my understanding is

they would then have to average a zero year for their rice base. In

Freedom to Farm, farmers were led to believe that they could shift

planting choices and not be penalized for doing so. Rotating rice

with soybeans or not planting now causes the resulting base to be

substantially reduced. At one time this acreage could have been declared considered planted for program purposes, but under the new

regulations, only a prevented planting declaration can be used in

determining planting acreage and determining those base calculations.

Obviously, having to figure in a zero because you are doing some

good conservation practices, that creates a real problem in using

that option. Is there any flexibility, is there any way to address

this concern that our farmers have, Dr. Penn?

Mr. PENN. Senator, yes, we are very much aware of that problem

of the planted or considered planted portion of the regulation.

There are several of these situations that are very particular to

certain areas, certain kinds of rotations, corn-soybean rotations

where the whole farm is in a rotation, that just weren’t anticipated,

in the broad regulations that were promulgated and issued. There

is some flexibility. We are looking at this. I understand the argument, and we are going to try to have an answer on this fairly

soon.

Senator HUTCHINSON. Could you let me know what is going on?

We are getting a lot of calls on that concern.

Mr. PENN. We will keep you posted.

Senator HUTCHINSON. Many of the farmers in my State are concerned about having to get a new power of attorney to make decisions for the new Farm bill. As you know, they cannot make decisions or receive payments until those documents are available, and

farmers only have, I understand, until April 1, 2003, to get that

done, to get all the paperwork finished.

Are there any plans or contingencies for farmers who have difficulty dealing with out-of-State landowners, which is a big problem

in Arkansas?

Mr. PENN. Well, on that one, let me say as well that we have

heard concerns expressed, and in every opportunity where we can

explain what our objectives are, most people, most of the farmers

agree that a little bit of extra trouble is probably worth the effort.

23

The last time we requested that the powers of attorney be updated was 1996. That was a fairly simple farm bill, as you know.

This one is much more complex, and it requires decisions to be

made on updating the acreage bases and the yields where the

farmers only get one chance to make that decision for the entire

life of the Farm bill. These are too important to not be taken very

seriously, and what we want to avoid is a case where a year later

somebody comes in and says, Why am I in this situation? Who

made that decision for me? It was done under an old power of attorney.

When we explain to farmers that this is something they need to

do, that it is really important, that we need to get the records updated, that there are new programs and new decisions in this farm

bill that were never envisioned under the previous farm bill and

under the old power of attorney, that we really do need to have the

new up-to-date legal records. It is well worth the effort.

It is some difficulty, I know, for people to chase dow numerous

landowners or to go to the nursing home to find people because

there are a lot of landlord-tenant situations. It will be well worth

the effort in this case.

Senator HUTCHINSON. Madam Secretary, in making many of the

decisions on commodity options, there is a need to access the Internet so they can use the various models to determine which option

is going to be the best that is going to serve them the best.

In Arkansas, only 26 percent of the State has Internet access,

and most of that Internet access is in the urban areas, not out with

our farmers. What is the USDA doing, what efforts are you undertaking to make these resources available to these rural areas? Are

there alternative forms or means by which the best option can be

determined for our farmers?

Secretary VENEMAN. Well, Senator, it is an important question,

and there are a couple of things I would like to bring up in that

regard. One is that we have tried to put together some Internet

programs so that you can actually try to figure out which scenario

is best for the particular farmer. It works like retirement planning

programs that you can get on Quicken or something. That is an important tool for farmers and ranchers, something we have not been

able to do in farm bill implementation before.

Now, we can make these programs accessible through the Farm

Service Agency office for people who don’t have their own Internet

access. This also brings up another important part of the Farm bill,

and that is, in the rural development title, there is a recognition

that rural America should not be left behind with regard to Internet access, broadband availability and so forth. In that regard, we

are also working to try to bring some of these services to rural

America, but in the meantime we will work through our Farm

Service Agency offices to work with farmers who don’t have the

availability in their own operations.

Senator HUTCHINSON. Well, thank you. That is the key. Most of

what I am hearing is that implementation of the Farm bill, the

time allowed, the paperwork required, while trying to operate their

farm operations, that it is just very, very difficult unless there is

going to be assistance and flexibility shown by the Department.

That is my plea. Thank you, Mr. Chairman.

24

The CHAIRMAN. Thank you, Senator Hutchinson.

Senator Wellstone.

Senator WELLSTONE. Thank you, Mr. Chairman.

First of all, Mr. Chairman, let me ask to have a complete statement in the record.

The CHAIRMAN. Without objection.

Senator WELLSTONE. Second of all, let me just take note of the

fact that my colleague Senator Dayton would be here, but there is

a Senate Armed Services security closed hearing with Secretary

Rumsfeld and others, and that is why he is not here, and he wanted me to make that clear to you, Madam Secretary.

As long as we are talking about Senator Hutchinson’s last question, don’t forget the telework provisions in this bill, too, which are

really going to be important to greater Minnesota and rural America in terms of making sure that we are not left behind in this information technology economy.

I want to, first of all, say to you, I want to thank all of you for

being here. I want to really echo the words of Senator Leahy on

dairy and just make the following request rather than getting into

a big battle with you, which is, first of all we are now 950 and we

need to get these countercyclical payments out ASAP; and, second

of all, to call on you to really make some adjustments here in terms

of the formula because I really do think that the mid-sized dairy

producers are now at a disadvantage in terms of the formula you

have, and I that is a big mistake, and it goes against what we

clearly intended, the legislative intent. I would urge you all to take

that into account.

Madam Secretary, the big question I have for you as a Senator

from Minnesota goes to the vote last week on the Senate floor,

which was 79 to 16, 31 Republicans voting for the disaster relief

bill. I want to try to get you on the record and see where you stand

in relation to this. I was in northwest Minnesota this weekend, and

time is not neutral. People are absolutely desperate and, of course,

there was such support for this because in a lot of parts of the

country it is the same story.

The one quote I have here is from White House spokesman Scott

Stanzel, and I quote from the article, and he says, ‘‘We support the

disaster aid, but it’s going to come out of the pot of money earmarked for subsidies for Midwest corn, soybeans, and wheat, and

for rice and cotton grown in California, Texas, Arkansas, and Louisiana.’’

My question for you is whether or not you support the disaster

relief assistance that passed in the Senate because that is disaster

relief assistance taken out of the Farm bill. That is the way we always do disaster relief assistance. We take it out of general revenue. We don’t take it out of agriculture. We don’t take it out of

highway.

Do you or do you not support this vote in the Senate, this effort

to get the money to farmers?

Secretary VENEMAN. Senator, let me say a couple things about

the disaster situation, and as I said in my opening statement, both

in the written one as well as my oral one, we recognize the severe

drought situation in the country.

25

Senator WELLSTONE. In our case it is flooding. In other cases it

is fire.

Secretary VENEMAN. We have certainly had to deal with a lot of

fires this year as well, as you know.

The administration has made it clear that we do support disaster

relief, particularly for those who don’t have risk management tools

available. As I indicated in my opening statement, about 80 percent of the cropland is covered by crop insurance, so we are really

looking primarily at those producers, especially in the livestock

area, that don’t have the risk management tools available that others have.

We have also—and I want to reiterate what I did in my statement, the proactivity that this administration has taken with regard to the drought. Early on we began designating disaster areas

as quickly as possible so that low-interest loans would be made

available. We did CRP haying and grazing very early on. We then

extended that from August 31st to November 30th. Then just a

week or so ago we extended that to the entire country.

We have had the Emergency Conservation Program funds for

States to develop water resources. We just announced yesterday

another $10 million in EQIP funds for severely affected States. We

announced this innovative 150——

Senator WELLSTONE. Could I interrupt you just for 1 second,

Madam Chair, because I am going to run out of time. I appreciate

what you have done, but there is a disconnect here. First of all,

even for those producers that have crop insurance, they are lucky

if it covers 70 percent; a 30-percent loss is the end for a lot of our

independent producers.

My question is whether or not—I understand some of the things

you have done, but it doesn’t, frankly, have any bearing on what

we are dealing with in northwest Minnesota. My question is: A, do

you support the Senate amendment? Are you going to support this

disaster relief assistance, 79 votes? Yes or no?

Secretary VENEMAN. We have——

Senator WELLSTONE. You are the Secretary of Agriculture.

Secretary VENEMAN. The Senate amendment that was passed, we

did send a letter to Senator Daschle which clearly lays out the administration’s position on that. This is not a bill that is passed out

of both Houses of Congress and is on the President’s desk to sign.

We don’t have a bill that has been passed and is conferenced, and

we will continue to work with the Congress for appropriate disaster

assistance within the principles that we have laid out as an administration.

Senator WELLSTONE. Can I just take 30 more seconds? I know

there are lots of people here that are interested and there are journalists, and I am not trying to grandstand, and I will try to say

it quietly. I just think this is disingenuous—not dishonest. You are

not a dishonest person and you work hard. The administration—

this is a little disingenuous because if you as the Secretary of Agriculture support this amendment passed by 79 Senators, with only

95 there and we all know darn well that the House will move this

forward. We need your support now. I can’t for the life of me understand your resistance.

26

I will tell you—I mean, I don’t know, maybe you could start outlining exactly how much you are going to take out of corn, how

much you are going to take out of soybeans, how much you are

going to take out of wheat, how much—CBO won’t let you do it,

anyway. I mean, you are not going to be able to get the scoring

that way. You could support this. You won’t. If we don’t get the

support from the President and from the Secretary of Agriculture,

I am really worried that the help will not be there for people. Then

they will go under.

Are you sure you can’t today say ‘‘I support this,’’ it had strong

bipartisan support, it is the right thing to do? You can’t do that as

Secretary of Agriculture?

Secretary VENEMAN. I understand your concern, Senator, and,

again, I will reiterate that the President has been clear on the

principles that he had laid out for disaster assistance, and we continue to want to work with the Congress on disaster relief which

is consistent with those principles.

The CHAIRMAN. Thank you.

Senator Fitzgerald.

Senator FITZGERALD. Thank you, Mr. Chairman. Following up on

Senator Wellstone’s questioning, I just want to say I disagree with

Senator Wellstone, and I actually agree with the administration. I

want to compliment you for having the courage to say that we

ought to give this relief within certain principles, and there is no

easier way to score political points in Washington than just giving

money to everybody. Everybody who comes in my office every day

wants more money. Everybody wants more money. Somebody has

to pay for it, and the money that we are giving out around here

is not manna from heaven. It actually comes from the taxes and

paychecks of people who work every day, and so we have a responsibility to treat that money very carefully and not just get out the

ladle and not ask questions. I want to compliment you for your

very careful approach in that regard.

Madam Secretary, I authored a section of the new Farm bill that

establishes a commission on the application of payment limits for

agriculture, and it required the members of the commission be appointed 60 days after enactment, and I believe it was enacted July

13th. I am wondering if your Department has turned its attention

to the appointment of commission members, and would you be able

to give me an update on where the USDA is in the nomination

process?

Secretary VENEMAN. I would be happy to, Senator. As you know,

this is a commission that is going to consist by law of ten members,

one of whom the Congress appointed itself, and he is sitting right

next to me. We do have one member appointed, but they are appointed three by the Senate, three by the House, and three by the

Department of Agriculture.

I can tell you that with regard to the—we have not received any

announcement on the three by the Senate or the House. I have had

meetings with my staff just this week on this very issue. We are

very close to making final selections on individuals that we believe

will do a good job on this commission. We would hope to be able

to announce the USDA selections in the very near future.

27

Senator FITZGERALD. Well, I appreciate that, and I am glad you

are on top of it, and I just thought I would ask.

I had hoped that the Farm bill would have included stronger limitations that I sponsored with Senator Grassley, and I do think it

is at least good that we are having a commission to look into the

effect of essentially unlimited payments to certain very large farmers.

It has been called to my attention that the USDA has been in

the business of buying mountains of nonfat dry milk that costs— we were talking a little bit earlier about it costing the taxpayers.

This is costing the taxpayers millions of dollars every week for purchases and for ongoing storage. While the USDA has the authority

to adjust the tilt twice a year, many have been surprised that the

Government instead has chosen to continue to buy milk powder.

My question is, Madam Secretary, when, if ever, will USDA decide

to get out of the nonfat dry milk business?

Secretary VENEMAN. Well, Senator, as you say, we do have

mountains of it. We have over a billion pounds, maybe 1.4.

Mr. PENN. 1.3.

Secretary VENEMAN. 1.3 now, 1.3 billion pounds of nonfat dry

milk in storage. I use this a lot when I talk to people, and they

are shocked. I have actually been out to Kansas City and seen

some of this milk stored in the caves. It only stays in condition

about 3 years, and then we have to sell it for pennies on the dollar

for pet food.

Fortunately, we were very innovative—and I commend our staff

at USDA for coming up with this Livestock Feed Assistance Program where we have been able to use just a small fraction of that

milk, but it was an innovative way to help our livestock farmers

and use some of that milk.

We have issues like the tilt under consideration constantly at

USDA. As you know, there is a tremendous amount of interest in

this by various groups within the industry, the broad sense of the

industry, from producers to processors and so forth. It is an issue

that we continue to take under consideration, and even I have had

some of the producers come to me as well and say we do need to

figure out a way to get a handle on the amount of nonfat dry that

is going into storage because it is a cost to the Government and the

taxpayer, and so we are continuing to look at that very carefully.

Senator FITZGERALD. Why do we buy it?

Secretary VENEMAN. Why do we buy it?

Mr. PENN. Well, this is a price support program. As you know,

the Congress mandates that we support the price of milk at $9.90

a hundredweight, and since we can’t physically buy milk, we have

to buy products. We buy nonfat dry cheese and butter as a way to

hold the price of fluid milk at $9.90. This is a price support program like any other, and the Government is the market of last resort.

Unfortunately, these products, much like we were talking about

loan rates, each product has its own set of market fundamentals,

and oftentimes they get out of whack and they need to be adjusted.

Nonfat dry is a case where we have had an excess supply, more

supply than was demanded. The Government has been the market

for that.

28

If we adjust, we have to be careful that we don’t adjust too far

in the other direction. Then we just buy cheese or butter instead

of nonfat dry. It is a very precarious balance that we are trying to

maintain there, and we are watching this very closely, as Secretary

Veneman said.

Senator FITZGERALD. Well, if there anything we can do to help

you get off this treadmill, please let us know. I certainly would be

glad to assist you.

It looks like I am running out of time, so I just want to thank

you very much, Madam Secretary. I really appreciate your hard

work. You weren’t given a lot of time to implement this farm bill,

so I want to compliment you and your staff for all that you have

done to implement a very complex bill under a very short, tight

deadline. We thank you for your good work for our Nation’s farmers. Thank you, Madam Secretary.

The CHAIRMAN. Thank you.

Senator Stabenow.

STATEMENT OF HON. DEBBIE STABENOW, A U.S. SENATOR

FROM MICHIGAN

Senator STABENOW. Well, thank you, Mr. Chairman.

First I would ask that an opening statement be inserted in the

appropriate place in the committee’s minutes, and thank you for

holding the hearing.

First, to Madam Secretary and your staff, I have heard many

positive comments about your website, so I want to thank you for

putting that together. It has been something that people in Michigan have found very helpful, and I hope you will continue to expand that.

Michigan, because of its diversity, is impacted by every title in

the Farm bill. Every provision, what colleagues have raised as

issues are of concern to me in a wide variety of ways. I won’t speak

to other things that colleagues have raised, but I do want to emphasize the disaster bill, and also the impact that it has on the one

question that I wanted to focus on.

When we look at disaster relief and, Madam Secretary, when you

talk about crop insurance and 80 percent of the insurable land

being in crop insurance, the problem is that we have uninsurable

land. In a State like Michigan, with a high level of specialty crops,

our fruit and vegetable farmers do not have a comprehensive program. We have a few pilot programs that we are experimenting

with that I was involved in helping to create in the last number

of years, but we are talking about part of agriculture that doesn’t

have the full, comprehensive impact of crop insurance, which is of

great concern to me. In Michigan, we have seen not one but 2 years

for our grape growers now that are devastated, apples, cherries. In

some cases on our orchards, we literally do not have enough cherries for one cherry pie, which is—it is incredible what is happening

for folks.

We are very much impacted. We appreciate in Michigan low-interest loans but our farmers, frankly, have enough loans. This disaster package is very, very important.

As it relates to the Farm bill—and I realize it is complicated in

many provisions, and I appreciate the hard work that it takes to

29

put it together. I share the concern about provisions in the Farm

bill where we were very clear and where our expectation is that,

in fact, these will be implemented. I speak, as no surprise, to areas

of specialty crops and the commodity purchase. I am pleased to be

co-chair of the Produce Caucus along with Senator Gordon Smith.

We have faxed a letter to you signed by 31 Senators expressing

great concern that the commodity purchase provisions that really

are historic—because, again, fruits and vegetable growers are not

part of the Farm bill traditionally. They are not program crops, as

you know. This commodity purchase is very important to them, and

it was historic that we were able to get this into the Farm bill.

I am concerned that—we said two things in there. We said that there would be a minimum of a $200 million purchase made every

year, and in addition to that, we were very clear—and I would

read—‘‘The managers’ intend that the funds made available under

this section are to be used for additional purchases of fruits and

vegetables over and above the purchases made under current law.’’ This is very important. We know that there are purchases made

every year under Section 32, and we want to make sure that this

is a new program of an additional amount of $200 million a year.

I would like to know from you if, in fact, you intend to follow

through on this provision that is in the Farm bill, that is so important to a group of people who aren’t covered on other pages of this

document and who also find themselves in disaster situations

where they aren’t covered by crop insurance, and then they get hit

on all sides. This is a very important part of agriculture in Michigan. While we are very diverse, this is an important part of agriculture for us. I am going to do everything in my power to see that

the Department follows through on this language in the Farm bill

as it relates to the commodity purchase, and I would like to know

your intent.

Secretary VENEMAN. Well, thank you, Senator. As someone who

comes from California, you know that in my home State we hear

a lot of the same concerns about some of the specialty crops that

you are expressing from your constituents in Michigan.

Let me first address the crop insurance issue that you raised.

One of the things that we have continued to do since the implementation of the 2000 crop insurance reform and through our Crop

Insurance Board, which we just appointed in the last several

months, which is very active, looking at new products, new tools for

crop insurance. Dr. Collins has been very involved since the 2000

bill was implemented and could comment more if you would like,

as well as Dr. Penn, who oversees the Risk Management Agency.

I do appreciate your issues about crop insurance. Crop insurance

has been expanded to more and more commodities. We are constantly looking at new tools both in the specialty crop areas as well

as the livestock areas, because these are—we do need to look at

risk management opportunities here.

With regard to the purchases, I am aware of your letter and the

number of people who have signed it and the concern. As you

know, we purchase a tremendous amount of product under Section

32, primarily for our school lunch programs. My information is that

for 2002 we have purchased $187 million already, as well as another $50 million through DOD for fruits and vegetables, and we

30

are going to continue to purchase the maximum amount that we

can through Section 32.

I understand the managers’ language, and there has been some

disagreement about what this means in terms of the language of

the bill versus the managers, but we are continuing to work that

out with our lawyers.

Senator STABENOW. Well, if I might just say, traditionally in the

Congress language put in through the managers has been followed

as a part of the statute. My position is that that is, in fact—we

agreed, everyone sat around the table and agreed that, in fact, this

was in addition. This is $200 million in additional dollars, and it

is very, very important that this be viewed in that light.

Let me also just say, back to crop insurance and all of the areas

that are being looked at now, I know that there has been some discussion saying that our specialty corps could qualify under NAP.

Let me just also say on their behalf that these farmers don’t normally go to the FSA office, so they are not aware of what is available there. We had only 20-some farmers, 20 or so that signed up

through there because that is not the structure through which they

work. It is very important in looking at these farmers to do this

in a way where they are informed, where it is really something

that is going to work for them, and we are not yet there. I really

encourage you, as we are expanding crop insurance, to be aware of

those mechanisms.

Finally, I would just say—and I know my time is up. I would just

say that from my perspective and on behalf of the fruit and vegetable growers that we are very concerned that there be a maintenance of a strict enforcement under restrictions that were in the

1996 bill and in the 2002 bill as it relates to planting fruits and

vegetables on program crop acres. I know I have a different position than the leadership on the committee, but I have to say on behalf of our fruits and vegetable growers, they are very concerned

that the restrictions and the enforcement of those remain in place.

Thank you, Mr. Chairman.

[The prepared statement of Senator Stabenow can be found in

the appendix on page 56.]

The CHAIRMAN. Thank you, Senator Stabenow.

Senator Crapo.

Senator CRAPO. Thank you very much, Mr. Chairman. In fact, I

am going to follow-up. My very first question was exactly what

Senator Stabenow just finished on, and that is, the question of the

prohibition on the planting of fruits and vegetables on acres enrolled in commodity payment programs. As you know, that was in

the 1996 Farm bill. We continued it in the Farm bill we just

passed. I am disturbed by reports that I am hearing that the

USDA may be considering weakening those rules and the regulations and penalties relating to that prohibition. Can you provide

me assurance that the USDA is not intending to weaken these prohibitions?

Secretary VENEMAN. On the——

Senator CRAPO. This is the prohibition on planting of fruits and

vegetables on acres that are enrolled in the commodity payment

programs.

31

Secretary VENEMAN. Right. We are maintaining the restrictions

that were in the 1996 Act. I know there has been a lot of concern

about that, but we are continuing to maintain those restrictions because we believe that is the intent of Congress.

Senator CRAPO. Good. I appreciate that. I just wanted to be sure

that I covered that with you.

Let me move to pulse crops next. On September 3 of this year,

the USDA announced the loan rates and loan repayment rates for

peas, lentils, and chickpeas. You know where I am headed. Unfortunately, it appears that the loan rates are based on No. 1-graded

products, whereas Congress spoke clearly in establishing the loan

program that it should be based on feed peas, No. 3 grade lentils,

and on No. 3 grade chickpeas. Congress based these rates on these

lower grades to provide a broader safety net and to create a system

with less forfeiture and prevent the need for discount schedules.

Growers recognized the need for a broader, less disruptive safety

net and supported this approach.

It is troubling to me that the USDA is acting contrary to congressional direction and without consultation with the pulse industry,

and I would like to ask you what steps you are going to take to

reverse this announcement on September 3 and do what Congress

directed in the Act.

Secretary VENEMAN. Again, as Dr. Penn pointed out maybe before you got here, there has been a complex calculation on the

number of loan rates that we have had to do in USDA, and I am

going to have him comment directly on the way that we arrived at

the pulse loan rates and how we calculated those.

Senator CRAPO. Dr. Penn.

Mr. PENN. Well, let me say that this is the first time ever that

pulses have been included in the loan program.

Senator CRAPO. Correct.

Mr. PENN. Most of this crop is contracted, and it is not a set of

crops that USDA normally gathers information for because it has

been contracted. There is not very much information available on

acreage, on production, on prices, on utilization.

To start a loan program from scratch, required that we have to

go and find all of the information that we possibly could. We were

not able to implement this program in the same detail that we

would have liked to, and so we announced the national loan rate,

no regional loan rates for these products, but we intend to do that

in 2003, and we have announced that we are going to have a series

of meetings with the various stakeholders, the producers, the processors, the contractors and others to try to develop this information

and to try to make regional loan rates where possible. That is part

of the background.

To get to the specific point, this is another one of those topics

that Senator Conrad and I have had some discussions about, and

he has expressed the same concerns that you have.

I have to tell you that there is an honest misunderstanding with the respect to the pulse loan rate. For instance, the $6.33-number

that is put in the statute as the loan rate for dry peas is way above

the market price for this crop for a long time. I mean, it has been

several years since this crop reached that price. In fact, it has only

been at that level in 2 out of the last 11 years. Because that was

32

so much above the market prices, we thought that was the food

price, rather than the feed price. We thought that was the price of,

No. 1, dry peas, rather than feed quality peas.

What we want to do, in establishing the loan rate, is to make

sure that we have the loan rate and the repayment rate the same.

We set the loan rate and said that is for food quality, and then we

set a loan repayment rate for food quality as well.

Senator CRAPO. What you are saying is you do not believe that

Congress clearly directed that we focus on feed peas, and No. 3-

grade lentils, and No. 3-grade chickpeas?

Mr. PENN. I understand that is what is in the managers’ report,

but I am saying because that price, the $6.33 was so far above

where market prices had been, we thought that was the food-grade

price, rather than the feed-grade price.

Senator CRAPO. Well, you are hearing from us that that is not

what we meant.

Mr. PENN. Well, as I said, we are trying to work with the various

producers and with the trade association for this set of crops and

to gather information so that in 2003 we can make changes in this

program as are required.

Senator CRAPO. Do I understand you to say, then, that you are

intending to move in 2003 to the feed peas, No. 3-grade lentils, and

No. 3-grade chickpeas?

Mr. PENN. We certainly want to follow the intent of the Congress, as Senator Conrad reminds me over and over. We certainly

do. In this particular case, unlike the sunflower case, I mean, it

was just a misunderstanding about that. Because these prices are

so high, I mean, you understand it is going to cause acreage distortions, it is going to distort the economics among the various crops,

it is going to draw acreage perhaps from wheat and other things

because the guaranteed price is so high. We just did not think that

that would be the intent, to tell you the truth.

Senator CRAPO. I understand. There can be quite a debate on

what the impact of your decision will be as well, and the program

was put together with a lot of careful facts. I appreciate your comments, and I am going to work together with my colleagues to see

that we get this where we intended it with Congress.

One last quick question. First of all, I have a lot of questions I

will not get to, and I would appreciate the chance to submit them

to you for response.

The last quick question is that I do commend you for your implementation, Madam Secretary, of the sugar program. There is one

part of that implementation I am a little concerned about, and that

is that in the Farm bill, Congress eliminated the 1-percent surcharge on CCC interest rates on sugar nonrecourse loans. Unfortunately, it appears that in implementing this rule, USDA has not

eliminated the sugar loan rate.

Do you intend to take action to correct that?

Mr. PENN. No, Senator. This is a case where again, there is going

to be a disagreement as to what is allowable in terms of implementation, but if I remember correctly, the statute allows us the discretion as to whether or not to lower this interest-rate charge by 1

percentage point, 100 basis points.

33

In effect, when the CCC operates the loan program, the 1996

Farm bill obligated us to increase the interest rate by 1 percentage

point over the cost of borrowing money from the Treasury, and we

do that for every commodity, and it is required in the law. It is only

for sugar and only in this farm bill that the language was changed

that you may not charge that for sugar.

Because we wanted to keep consistency and fairness among all

of the crops, and we wanted simplicity in implementing the program, we elected to leave it as it had been in the past.

Senator CRAPO. Even though Congress directed that we eliminate the surcharge, because we did not specify the loan rate, you

are going to continue to apply the surcharge?

Mr. PENN. It said we may or may not charge the additional 1

percent. It did not mandate that we do that, Senator.

Senator CRAPO. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Crapo.

[The prepared statement of Senator Crapo can be found in the

appendix on page 58.]

Senator Conrad.

Senator CONRAD. Thank you, Mr. Chairman.

I would like to go back to the pulse-rate question and put up—

again, I hope you understand the frustration, after spending hundreds of hours writing this farm bill, and basically you all fought

us every step of the way, we get the job done in a way that we intended, and now we see you undoing what we spent hundreds of

hours crafting.

On the pulse crops, Senator Crapo has raised, and I appreciate,

Senator, your raising the subject because it is another example of

defying the intent, a clear intent of Congress.

This is the managers’ language with respect to the pulse crops,

and this is language that I wrote. I do not know how it could be

more clear. The conference substitute established a marketing assistance loan program for pulse crops, dry peas, lentil and small

chickpeas. The loan rate for dried peas is based on U.S. feed pea

prices. The loan rate for lentils is based on the price of U.S. No.

3 lentils, and the loan rate for small chickpeas is based on the price

of chickpeas that drop below a 20/64 screen.

That is what Congress said. That is what Congress directed. The

statute specifies the rate, but that is not what you have done. You

have created this differential.

Now I heard in the responses to Senator Crapo what I hope to

be an opening here. Madam Secretary, will you reconsider the actions that have been taken with respect to the so-called pulse

crops?

Secretary VENEMAN. Well, as Dr. Penn indicated, that it is clear

from his answer that we will take another look at this, as we look

at these for the 2003 crop year.

Senator CONRAD. You will not reconsider for 2002.

Secretary VENEMAN. Well, we are in a position where we have

tried to implement this farm bill, as has been indicated by a number of the members here, in a very short amount of time. Our people have done yeoman’s work trying to do that and make the calculations. We are learning things from it, and we will reconsider

34

certain things for the 2003 crop year. There is no question about

it. Dr. Penn has indicated that.

Let me——

Senator CONRAD. Can I just ask why were those of us who wrote

it not asked? We are a phone call away. The intent of Congress,

you have already acknowledged, should prevail. Why did anybody

from the Department not pick up the phone and call us up, if you

were confused about it, and just ask?

Secretary VENEMAN. Let me just say, Senator, and this is very

important, every meeting that our folks have had on the implementation of this farm bill has been attended by our lawyers. We are

doing nothing contrary to what our lawyers advise that we can do

with regard to the implementation of this farm bill. I just do not

want people to get the impression that we are not following the law

here because we are taking every action.

There is, as I said before, a lot of discretion that the Department

has to determine with regard to this farm bill, but I feel very

strongly about getting legal advice, and our folks have had lawyers

at every single meeting.

Senator CONRAD. You have said, Madam Secretary, you have

said the lawyers disagreed. There was a disagreement among the

lawyers. The lawyers do not run USDA, you run USDA. You make

the decision, you have been appointed by the President, confirmed

by the Congress to make those decisions.

I would say to you, Madam Secretary, if you have lawyers that

are confused on this point, you need new lawyers. It could not

be——

Secretary VENEMAN. I did not say lawyers were confused on this

point. I talked about lawyers not agreeing on the Section 11 issue

with regard to technical assistance, and that was not——

Senator CONRAD. Are you saying that your lawyers consistently

have advised you, all of your lawyers are telling you that what you

have done is what Congress intended on sunflowers, on pulse

crops? All of your lawyers are telling you that that was the intent

of Congress?

Secretary VENEMAN. Our lawyers are telling us that what we are

doing is within the scope of the law that has been passed by Congress.

Senator CONRAD. Well, I will tell you, that is truly, it is unbelievable to me. I mean, I have read from the statute with respect to

the oilseeds. I have read to you from the managers’ report with respect to pulse crops. I wrote the section. There is no question whatever on what was intended. Everybody who participated in those

talks knows what was intended, but that is not what you have

done, and I find that very troubling because you have decided just

to go your own way and defy what Congress has said.

It is pretty clear you took $165 million out of this farm bill that

Congress intended farmers to receive. Because when we went to

CBO and asked them what it would cost to reverse course, they

said it is $165 million. You took, on your own, $165 million right

out of the minor oilseeds. I do not know what other conclusion one

can come to. That is, this administration, through you, this department, you, you are the one that made these decisions, saying to

35

Congress, ‘‘We do not care what you guys say. We have our own

view of what makes sense,’’ and that is wrong.

Mr. PENN. Senator Conrad, let me just respond that it is certainly not our intent—you talk about the intent of the Congress— but it is not our intent to violate the intent of the Congress. I

mean, what we are trying to do, as the Secretary said, is implement these programs in the most fair, equitable, efficient way that

we can.

This conference was a long, drawn-out, protracted process. We

had people in the conference, in all of the sessions. We had lawyers

there. We had program analysts there. All of our people were privy

to all of the discussions, and as Secretary Veneman said, our lawyers are not saying go against the intent of the Congress, we are

just trying to interpret the statutes in the best way we can and use

the flexibility that we have to try to put together these programs

in a way that makes sense, and so we are trying to carry out the

intent of the Congress. It is just that we do not always agree as

to exactly what you intended, and there is not always unanimous

intent among the Members of the Congress as to what was intended.

Senator CONRAD. I could just say to you, in conclusion, with respect to these provisions, I was there for every minute. I wrote

these provisions. It is just as clear as it can be what was intended.

The language is clear, and I hope we are able to resolve it.

Mr. COLLINS. Could I just join this party for 1 second? I am not

going to comment on your legal interpretation, Senator Conrad, but

the impacts that you have described are something that I am not

sure that we would agree with. We have been fortunate, for perhaps unfortunate reasons, to have very high oilseed prices this

year, prices that are above loan rates.

The description you gave earlier of a farmer who is losing quite

a large amount of money because of this decision or the costs that

you just gave of our decision, in terms of leaving $160 million on

the table, quite frankly, I do not think I could support those kinds

of estimates.

Senator CONRAD. That is what you told CBO.

Mr. COLLINS. I never told CBO any such thing.

Senator CONRAD. Well, USDA told CBO that it would cost $165

million. That is where the number came from.

Mr. COLLINS. That may be somebody’s version of baseline scoring, but in the real world, oilseed prices are well above loan rates

right now, and we are not going to see those——

Senator CONRAD. Well, I will tell you it would be helpful if you

had not told when Congress moved to put in place what they intended in the first place, that you did not act to subvert it by putting in a high score. You told them it would cost $165 million.

The CHAIRMAN. Senator Lincoln.

STATEMENT OF HON. BLANCHE LINCOLN, A U.S. SENATOR

FROM ARKANSAS

Senator LINCOLN. Thank you, Mr. Chairman.

Once again, Mr. Chairman, thank you for bringing us here this

morning and for your continued leadership on the Farm bill process.

36

Thanks to our panel, particularly Secretary Veneman, for coming

to the Hill today to visit with us and answer our concerns about

the Farm bill implementation process. We have all spent some

months at home in August with our farmers and our agricultural

industries, and we are full of questions and concerns, and we do

want to work together to resolve them.

Like all of my colleagues here on the committee, I have been

watching closely the Department’s efforts to put our farm bill back

into action. Farmers in Arkansas have been waiting anxiously for

an implementation process that accurately and faithfully reflects

the Farm bill that Congress passed; the reason being is that we

worked closely with our producers when we were working hard on

that farm bill.

When we came to those committee meetings and when we came

to those conference meetings, we came with the concerns of our

producers and our agricultural workers. Many of those farmers

really have made their planting and financing decisions based on

what we discussed and what we fought hard for. That is where a

lot of our really deep concerns come from is that we fought these

battles based on what our farmers told us they absolutely had to

have. They based their decisions on the fact that we passed that,

and so here we find ourselves in a situation where we want to do

what is best for the producers and the agricultural community of

our country.

Now we have the harvest is already upon our farmers in many

parts of the country. Ours comes earlier than most in planting, and

now we are already at harvesting. It is vitally important that the

implementation rules be made and set into motion. If there is anything that frustrates farmers, it is being left in limbo, and for years

they have been left in limbo, and that is what we want to resolve.

The crisis that spurred Congress to an early rewrite of the old

Farm bill still exists. These farmers are still confused. They are

still not sure. They are still doubtful that Government understands

their concerns and their problems. It has only been further exacerbated by the natural disasters that we have talked about. You have

mentioned drought, flood, disease, of which we are all very, very

aware.

The anxiety that is surrounding the implementation process

comes on top of all of these other existing problems, and being a

farmer’s daughter and from a seventh-generation Arkansas farm

family, I know what it does to the family and to everybody else in

the community when these crises exist, as well as these anxieties

build.

Farmers from my State are increasingly alarmed by the direction

implementation seems to be taking in the Farm bill. Frankly, many

of them are wondering what kind of farm policy the USDA is going

to give them, and our hope is that you will work with us for a better understanding of what our intent was. Again, that intent definitely comes from the work that we have done with our producers

and the constituency that we serve, and our hope is that you would

want to serve that same constituency and making sure that we do

implement it in a way that is consistent with what our intent was.

They are still hurting, just as they were last year, and they wonder if the new farm policy is going to help them out. There is not

37

a great deal of faith in the ag community as to what Government

is going to provide them.

With this in mind, I would like to voice my concerns about some

specific implementation issues. I am sorry. I came earlier, I had to

leave, and I am back, and I know everybody has been here for a

long time. If I can just touch on a few of these, if you have some

answers there. If there are others, we can certainly submit them

in writing.

One issue that many farmers back home are very worried about,

and I believe Senator Hutchinson may have been brought this up

earlier, was in regard to the calculation of updated base acreage,

particularly involving soybeans. The point of including soybean

acreage into an updated base plan was to enable the support payments to reflect the crop a current farmer would grow, a current

farm would grow.

It is vitally important that USDA try to get a fair picture of oilseed acreage history so that a farmer can receive the full support

intended for him or her by the Farm bill.

I also strongly urge you to work with farmers and help them

come up with a fair way of updating their base. We had a few panic

attacks when we were home in August with farmers who had gotten word that they were going to have to have their updated base

acreage in by the end of August. Then we found out later, that that

was just the beginnings of the process and that the deadline was

not until later in early spring. Still, they are going to have to have

the assistance of FSA and USDA to help them work through that.

Similarly, I also want to urge you to work with farmers to find

the fairest way of providing updated yields. That is going to be a

critical part of what they have to do as well. Again, it is your field

staff that is out there working with them, and I hope that they are

going to get the correct directive from you.

There are a variety of ways to indicate reliably a farm’s production of a given crop from past years, so it seems really unnecessary

to restrict the types of records that a farmer can use to do so. I

hope that you will be flexible in that and you can work with them.

I am also concerned about the ongoing problems with payments

from settlement of the Pickford lawsuit. I do not know if anyone

else has brought that up; the minority class action lawsuit that

was settled a couple of years ago. To me, this is precisely the sort

of issue for which we created a new Assistant Secretary of Civil

Rights position. I would really like to know where the administration is in filling this new position. Are we moving forward?

I know that there have been some demonstrations of the minority community of how important this is to them at your FSA offices

and other places. I do not understand why we cannot move forward

and resolve some of this and certainly find someone for that position. We created it. Let us utilize it.

Finally, while I was pleased to see that the administration

agreed to indemnify the poultry growers whose flocks were destroyed due to the avian influenza outbreak, I am extremely disappointed that USDA will apparently withhold a large portion of

the money that was originally approved for the indemnification.

Given the degree of damage this outbreak has unleashed, I urge

you to review your decision on that, and release the full amount

38

that was dedicated. This is a critical case where something could

just devastate us. It did in many regions. If we do not act promptly

on these, if the growers do not act promptly, it can become a nightmare nationwide, and many of them did act quickly, and we want

to make sure that they know that USDA and the Government supports them in taking the correct kind of action.

Just a short list of my concerns, Mr. Chairman. I am sorry. I

know my time is up, and I just wanted to bring them up to you

face-to-face, and if we have time, you can answer any of those or

if you would like, you can also write me.

The Chairman.

The CHAIRMAN. Thank you, Senator.

[The prepared statement of Senator Lincoln can be found in the

appendix on page 60.]

The CHAIRMAN. Senator Crapo, do you have any follow-up questions?

Senator CRAPO. Yes, Mr. Chairman. I have a bunch, but I will

submit them. I just have one I would like to ask.

Madam Secretary, the 2002 Farm bill creates a National Dairy

Market Loss Payment Program, as you know. Also, as you know,

I strongly opposed this program. I continue to have strong reservations that this program is not going to help dairy producers, and

that recent studies lend credence to these criticisms that this program will result in lower prices for dairy producers, increased cost

for the taxpayer, and sadly will do nothing to stop the number of

failing dairies in the Northeast and the Midwest.

Nonetheless, if we are to be saddled with this program, that its

implementation ought to be fair. One of the concerns I have—I understand it has been raised, an issue that has been raised earlier

by Senator Leahy—that in the outyears, you have indicated that

the dairy producers will be allowed to choose the month at which

they will begin the program.

The question I have is with regard to the transition period and

why that same approach will not be utilized in this initial transition period because it seems to me that it discriminates against the

mid-sized dairies, the very ones that the argument was made it

should have been created for.

Is there anything that is going to be done to allow producers to

choose the month that their payments begin in the transition period?

Secretary VENEMAN. Senator, Dr. Collins addressed the dairy

program in some detail, but the thing that we tried to do with regard to the transition period is make it the most fair that we possibly could, and so the decision was made to go back to December

of 2001, which is the retroactive period for this particular program,

the only one that is retroactive in operation.

The fairness issue revolved around the fact that you already

knew the prices, when you have a retroactive program, and that we

do not do that with any other program, and that is why we said

it would be fairest to everyone to put them back to the initial time

period, and so that is why there was not a choice, and yet for 2003,

and beyond, the producers will be able to choose because they will

not have the benefit of knowing what the price is already going to

be for the subsequent months, and so that is why the decisions

39

were made. Dr. Collins went into that in much more detail, and we

can have him do that again if you would like.

Senator CRAPO. Go ahead.

Mr. COLLINS. If I could, at the risk of stepping into one more controversial issue. A criterion that people are using to judge our decisions as being unfair is the statement that large producers are benefiting more than small- and medium-sized producers.

Senator CRAPO. Right.

Mr. COLLINS. Unfortunately, the way this program is constructed, that is the expected case no matter what you do, not only

for this year, but for future years as well.

Senator CRAPO. I agree with you on that.

Mr. COLLINS. The reason for that, of course, is that there is a 2.4-

million-pound eligibility cap, not a payment limit. Congress could

have chosen a dollar payment limit. Instead they chose a volume

cap. That means, for a large producer, they are going to reach their

cap within 1 or 2 months. By giving a large producer, and all producers, an opportunity to choose the starting month so that they

can maximize their payment, guess what? The large producers

market the whole 2.4 million pounds in the months with the weakest prices. They will choose April and May or whatever to start the

clock under 2.4 million pounds.

It is inevitable that the expected value of this program is the

large producers will have a higher average payment rate than

small- and medium-sized producers. There is no way around that.

People keep criticizing us for that being an outcome of this program; it is endemic, it is inherent in the way the program was constructed.

Senator CRAPO. Doctor, I understand that. In fact, when we debated this, that was one of the arguments I made about the unfairness of the program and the impact that it was going to have.

That having been said, it seems to me that at least we ought to

try to do what we can within the flexibility of the program to minimize that impact, and that is the reason for my question.

Mr. COLLINS. Fair enough.

Senator CRAPO. Thank you, Mr. Chairman.

Secretary VENEMAN. Senator or Mr. Chairman, if I might, just

for a minute, respond to Senator Lincoln’s questions just quickly,

and we can provide more for the record.

I absolutely agree with you. We want to do the right thing with

regard to implementation and do it as fairly as possible. Obviously,

we are having to work under very quick time frames. Your colleague from Arkansas, Mr. Hutchinson, raised some of these issues

as well, and we responded that we are working through our FSA

offices to help producers make the kind of decisions that you have

talked about in terms of bases and yields and the kinds of things

that need to be updated and that they will need assistance from

FSA.

We have computer programs. Senator Hutchinson brought up the

fact that not everybody has access to computers, but we can make

that available through FSA, and we will do that and work with our

FSA folks.

40

Senator LINCOLN. Even our FSA offices, some of their computers

does not even coincide with the software that you send them, so

they have to take it home.

Secretary VENEMAN. We have a massive undertaking in terms of

common computing environments. As I have testified at some other

hearings, where USDA was on just computer hardware and software, I mean, we have a long way to go, but it is a very big focus,

and one of the main reasons for the focus is because, if we do it

right, we can better deliver programs to farmers, and we need to

make them farmer friendly. That is a big area of concern.

You raised the poultry issue, and I have to say, with regard to

this avian influenza, USDA stepped in and took over basically the

control of this disease because it was so quickly spreading. I have

to say that I believe that was the right decision. It is normally left

to the States to deal with this, but because of the speed with which

this disease was spreading, we came in and took that over.

We are now in the process of compensating the producers who

were impacted, and there were, in terms of the amount of money

that OMB approved, it actually anticipated that we had slaughtered more birds than we actually did in the end, which is why

there is some discrepancy.

I just want to emphasize that I could not agree with you more

that these programs of eradication are absolutely critical to what

we do in this country in agriculture. Whether it is avian influenza

or it is a Medfly outbreak or it is the threat of foot and mouth disease, this is a major focus of what we do at USDA. We are working

to do everything we can to make sure that the affected producers

get their payments, and we are going to continue to do that.

Senator LINCOLN. Can I just comment that that is so important

because it builds the faith so that the next time, if we go to, and

we need the eradication, they actually believe that we are going to

come through for them after they eradicate their——

Secretary VENEMAN. We need to continue to work with industry

so we do not get these outbreaks again because, as you know, it

affects our exports and a whole variety of other things that we do,

and so it is critical.

The Pickford settlement issue has been something we put a tremendous amount of focus on, and I want to commend so many people, including FSA, and my chief of staff, Dale Moore, who have

spent a tremendous amount of time on not only the Pickford settlements, but dealing with some of the civil rights issues because we

take them very seriously.

We are restricted, in many ways, on these Pickford settlements,

by the very terms and the structure of the settlement itself. It is

not a USDA issue as much as the structure of the settlement.

Within the structure of that settlement, we are doing absolutely everything we can to get everything done as quickly as possible.

We have spent millions of staff hours or thousands of staff hours

and millions of dollars in trying to get these cases settled and this

behind us and move on, and we are looking at new and innovative

programs. I just set up, having met with some of the affected farmers, I know that they are concerned about whether or not they can

get the kind of information they need from their FSA offices, so we

have set up a hotline so they can call Washington directly.

41

We are trying to address the issues in every way that we can,

and we do take them very seriously.

Senator LINCOLN. How about the appointments?

Secretary VENEMAN. Oh, I am glad you brought that up again.

Civil rights, I have been interviewing candidates. We have not yet

selected a candidate, but I started interviewing candidates probably 6 weeks ago, if not 2 months ago. We have been actively engaged.

The CHAIRMAN. Thank you. Thank you.

Madam Secretary, I want to pick up a little bit on the point that

Senator Conrad has been making, and I want to focus it on the

conservation provisions. Now I heard you talking about some discrepancy in the legal opinions regarding conservation or Section 11.

Well, let us walk through it. Dr. Penn, Dr. Collins, let us walk

through this.

In the 1996 bill, Section 11 was added or created. At that time,

EQIP was taken out and was not subject to the cap under Section

11 for technical assistance. It was specifically provided for EQIP

and the authority separate from Section 11.

Do we agree on that point? I just want to make sure we agree

as we go down this ladder here.

In the 2002 bill, we put all of the conservation programs on the

same footing as EQIP by specifically providing the technical assistance apart from Section 11. Hence, all programs are exempt from

any Section 11 cap on technical assistance, as long as the technical

assistance money is provided through the authority separate from

Section 11.

Now, again, I am going to read a couple of things; one, the law.

Section 1241. ‘‘For each of fiscal years 2002 to 2007, the Secretary

shall use the funds, facilities and authorities of the Commodity

Credit Corporation to carry out the following programs under Subtitle (d), including the provisions of technical assistance,’’ and then

we list them all. ‘‘Conservation Reserve Program, Wetlands Reserve Program, Conservation Security Program, Farmland Protection Program, Grasslands Reserve Program, Environmental Quality Incentives Program, and the Wildlife Habitat Incentives Program.’’

Now there is a paragraph (b). It says that ‘‘Nothing in this section affects the limit on expenditures for technical assistance imposed by Section 11 of the Commodity Credit Corporation Charter

Act.’’

This was added to say that, when we talked with your people

while we were developing this, we wanted to make it as clear as

possible, and that is why we separated out and listed them separately, the conservation programs. That is why we said in the opening paragraph, including the provision of technical assistance for

all of those programs and then we added paragraph (b).

Paragraph (b) provides technical assistance under CCC for other

things, for computers and other kinds of things outside of conservation. We asked for, and we obtained, from your general counsel, the

memorandum to you, dated August 15th—(Nancy Bryson).

‘‘In passing the 2002 act, Congress intended to provide a new

funding authority for the technical assistance that is to be made

available to the participants in the seven listed programs,’’ which

42

I read for you. ‘‘That is, funding from the program funds authorized

by Section 1241(a).’’ That is what I read. They intended an ‘‘adequate level of funding...’’ That is our wording. ‘‘...not one subject to

the arbitrary limit contained in Section 11 of the CCC Charter

Act.’’

‘‘The conference managers rejected the Senate’s approach of leaving technical assistance funding under Section 11, but exempting

such funding from the cap to obtain adequate funding levels. Instead, they took as their guide,’’ and this is key, ‘‘the funding mechanism for technical assistance under EQIP, which was outside of

and not restricted by Section 11. Not only is this apparent from the

text of Section 1241(a) ‘including the provision of technical assistance,’ but it is stated as the intent of the conferees in the conference report accompanying the Conference Bill H.R. 2646.’’ ‘‘It is clear from the text of Section 1241(a) and the underlying

legislative history, that Congress intended the various programs

made available under the section to be the primary source of funding for the technical assistance related to the respected programs.’’ Now I will say that in the back of this is an addendum from

OMB saying they disagree, but you run the Department of Agriculture. I want to know why the legal opinion of the USDA general

counsel is invalid and why it is disregarded by you in this provision.

Secretary VENEMAN. Mr. Chairman, I have not disregarded the

opinion of our general counsel. As you point out, you have the documents. There is a disagreement between the general counsels, and

we have tried—— The CHAIRMAN. Between the general counsel and whom? There

is no disagreement. I just read it to you. I have the whole thing

from the general counsel. There is no disagreement.

Secretary VENEMAN. Well, you said you had another memo that

disagrees from OMB.

The CHAIRMAN. That is from OMB. That is right. I am just talking about why you are disagreeing with your general counsel’s position.

Secretary VENEMAN. I am not disagreeing with my general counsel, sir.

The CHAIRMAN. You agree with general counsel.

Secretary VENEMAN. Well, my counsel has given me that advice,

and I do not disagree with the advice.

The CHAIRMAN. Then what you are saying is that for those seven

programs, that they do not fall, and according to you, they do not

fall under Section 11 caps.

Secretary VENEMAN. That is the advice we have been given by

our general counsel.

The CHAIRMAN. You agree with that advice.

Secretary VENEMAN. I have no reason to disagree with that advice.

The CHAIRMAN. Well, then, why was technical assistance then

provided for EQIP and WHIP, two of them that were listed here,

but not for the WRP and the Farmland Protection Program? USDA

requested it, by the way. Why was it not?

Secretary VENEMAN. Mr. Chairman, as I indicated, there has

been a disagreement among the lawyers of the two, of USDA and

43

OMB, on the interpretation of this section, and as a result of that

disagreement, a compromise was worked out for the 2002 year because the time was growing very short, and we would welcome the

opportunity to continue to work with you and other Members of

Congress to try to resolve this issue for the outyears, but we felt

it was in the best interests of getting some of this technical assistance out to agree to this compromise for the 2002 year because of

the shortness of the time.

The CHAIRMAN. Well, this letter from Phillip Perry, whoever he

is, at OMB, I hope he is not a lawyer. He is doing a disservice to

his law school wherever he went, if he is indeed a lawyer, because

he says, in his response to you, he refers to a colloquy between me,

Senator Lugar and Senator Cochran. ‘‘I assured Senator Lugar, on

this colloquy on the floor,’’ and he puts it here, ‘‘that funding for

technical assistance will no longer be affected by Section 11, as it

pertains to these programs.’’ Then this guy, whoever he is, Phillip Perry, he says that ‘‘Although this colloquy adequately reflects the Senate’s position and

its version of the bill, the Senate’s position had already been rejected by the Conference Committee, which dropped the Senate’s

amendment to Section 11 and added language that Section 11 limitation was not affected.’’ Is Phillip Perry sitting here? Well, maybe we have to have him

up here. That is not worth the paper it is printed on as an opinion.

Your general counsel is absolutely right. Senator Lugar believes

that and so does Senator Cochran. Like I said, we sent a letter earlier last month. We sent it to OMB, and they have not responded.

OMB will not respond to a letter sent joint by Senator Lugar.

Now what am I to take of this? What is going to happen with

the CRP program next year? Will the CRP program fall under Section 11 cap? Can you tell me?

Secretary VENEMAN. Again, Senator, we are continuing to work

on this issue with regard to 2003. As I indicated before, we would

be happy to work with you and other Members of Congress to try

to resolve this issue. Again, the reason we wanted to work out an

agreement for the 2002 year is because the time was running

short.

We cannot spend the money without OMB’s approval because

they have to sign the apportionment, and therefore we thought it

was in the best interests of the farmers and ranchers who are

going to depend on this technical assistance, to get some agreement

on the 2002 year, rather than sit at a stalemate because of the inability to come to agreement.

Now, for the 2003 year, we will work with you and other Members of Congress to try to get this straightened out.

The CHAIRMAN. Madam Secretary, we are going to have a real

problem here, and it is a problem for Senator Conrad. I mean, we

know what we wrote. We wrote a letter to OMB. Now what does

Congress do? I am speaking past you, now, but what is Congress

to do when the executive branch, through OMB, thumbs its nose

at what we said, wrote, and what we clearly intended? What do we

do?

This is very frustrating. It is very frustrating. Maybe I should

come to some conclusions that the administration, A, does not supVerDate 11-MAY-2000 14:17 May 27, 2003 Jkt 086219 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 86219.TXT SAG1 PsN: SAG1
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port conservation; that this administration, for all of their talk

about supporting conservation, really does not support conservation, and this is the way they are going to get at it. They are going

to bleed it dry because they will not provide the technical assistance mandatory that we provided in the bill. Again, I am talking

past you.

I hope that the people at OMB hear this, and if I have to, we

will have them down here, and we will subpoena them. If they will

not come, we will bring them down here, and I want this to be loud

and clear. This is unconscionable what they have done in this.

You are right. You are right, and your counsel is right. Senator

Lugar, Senator Cochran, I found no disagreement on this in the

way we structured this and what we intended. I do not find one

disagreement in it. I cannot speak for the House side, but I do not

find one disagreement over here.

Again, I just wonder is CRP going to be subject to the cap for

next year? Will the Conservation Security program be subject to

the cap next year? That was never our intent. We have a real problem here when OMB just thumbs its nose at you and at us. I mean,

you guys can fight amongst yourself, I mean, the administration,

but when they thumb their nose at us, then we have a real problem.

It is just frustrating, and I do not know that much about the

pulse crops and everything, but I am sure that that must be frustrating for Senator Conrad, also.

Let me pick up a couple of other things before I end my time

here.

Senator Hutchinson brought up this point about the rotation

with the rice and the soybeans. Well, we have a similar problem

with soybeans and corn. I have made the suggestion—I make it to

you openly now—it seems to me, and I have asked our staff, and

our legal people here, to see if there is any problem with this. They

tell me there is not. Why do you not just use the 4 years? Rather

than trying to segment it year after year after year, why do you

not just take the 1998 to 2001 and just average it over the 4 years?

It would seem to me that would give you a better reflection of the

base that you need for the program crop, in our case corn; evidently, in their case rice. Why can we not just use the 4 years?

Mr. PENN. It would probably cost more money, and OMB would

not let us do it.

[Laughter.]

The CHAIRMAN. Now there is an honest man.

[Laughter.]

Mr. PENN. That was a joke.

[Laughter.]

Mr. PENN. I am aware of that issue, and just like the question

of the rice, soybean, wheat rotation in Arkansas, we are looking at

that. We will try to find something practical. I mean, our objective

is the same as yours. I mean, we have all of these rules and regulations, and we always find situations that do not exactly fit, and we

want to do what is practicable and workable, so we will take a look

at that.

The CHAIRMAN. Well, I do not know, if we have to do something,

maybe we will have to do it, maybe we can do it in Ag AppropriaVerDate 11-MAY-2000 14:17 May 27, 2003 Jkt 086219 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 86219.TXT SAG1 PsN: SAG1
45

tions or something, but it just seems to me the 4 years makes

sense. It makes sense to everyone I have talked to. It seems to be

the most equitable way of doing it because then you do not penalize

someone for maybe doing a total rotation every year rather than

a 50/50 rotation every year.

It just seems to me to make sense, and the most equitable. I do

not know. Maybe we will have to get a cost estimate on it or something. I do not know, but it seem so to me that we have to work

on that, and I look forward to working with you to find out how

we answer that.

On the drought bill, again, I will only say this. I read your letter,

Madam Secretary, that you sent up on the drought assistance

measure. I know a lot has been talked about here, 79 votes here

in the Senate. In it—I do not have it in front of me—but in it you

stated it was the administration’s position not to exceed the $180

billion that was in the Farm bill for the 10-year period of time.

I did not ask you to bring this with you, but do any of you here

have some estimate now, a later estimate of about how much we

are going to save on LDPs this year? The last I saw it was $5.6

billion. Is that still ballpark, maybe a little bit more?

Mr. PENN. The number that Senator Conrad obtained is the last

one that I have seen.

The CHAIRMAN. Is that about right?

The point I made at the time is it seems to me then what we

envisioned in the Farm bill is working, that we have a countercyclical payment, that our farmers, and some, God bless them, are

going to get good prices for their corn and their beans in Iowa and

other States this year—in Illinois, too, and other places—so then

we do not pay them Government payments. That is the way we intended for this to work. If the prices are high, you get it from the

marketplace, no Government payments.

In the savings that accrue if there are some farmers hurting

someplace because of acts of God, because of droughts, and floods,

and tornadoes, and hurricanes and whatever else not, that it would

seem to me we could take that savings, and rather than putting

it back in the general fund, use that savings. We had $180 billion

allotted to agriculture. Why could we not take that savings and

apply it to the drought, which is estimated to be around about $6

billion?

What I am saying to you, Madam Secretary, is that I do not believe we are going over the $180 billion. We are simply using it to

respond to a legitimate hurt and a legitimate need that many farmers and ranchers have in this country. That is why I was a little

dismayed at the letter. I was dismayed because it was opposing it,

but to say that somehow we were not going to exceed the $180 billion. Why should the General Treasury take back the savings in

LDPs? Why can we not use that for farmers that are hurting?

It is just an open question? Why can we not use the savings from

the LDP?

Secretary VENEMAN. Well, again, these are complicated scoring

issues that involve CBO and what can be counted as a saving and

what cannot be counted as a saving, much beyond my capability to

explain at this point. Again, we have laid out fairly clear principles

for the drought assistance both in the letter and in numerous comVerDate 11-MAY-2000 14:17 May 27, 2003 Jkt 086219 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 86219.TXT SAG1 PsN: SAG1
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ments that we have made, including at this hearing, and we want

to assist the producers that are most in need.

It is important to point out, as I did in my testimony, that the

Congress hasn’t passed a drought relief bill, but what the USDA

has done in the absence of a bill is we have taken every tool that

we possibly can find to try to provide as much relief as we can

under the circumstances. That is what we have continued to try to

do at USDA, and we are continuing to look at even more tools if

they are available. For example, this $150 million Feed Assistance Program was

very unique. It was very innovative. It helped, as was brought up

earlier, to use some of our dairy stocks. Everyone from—it is the

first time haying and grazing has ever been opened up nationwide.

We have tried to be very flexible in what we have done to try

to address the issues of particularly the drought this year but other

disasters as well.

The CHAIRMAN. I compliment you on that. You have acted aggressively within whatever things you have available to address

these issues on haying and grazing. Quite frankly, there needs to

be some funds out there, too, because no matter how much haying

and grazing you open up this year we still have the problem of last

year’s, both prevented planting and drought that we had last year

that we tried to put in the Farm bill. We didn’t get it in. We

thought we were going to come back again and we did. There are

a lot of farmers today still paying interest rates and paying back

loans that they took out last year because they thought they were

going to get a drought or a prevented planting assistance last year.

They didn’t get it, and then they thought, well, they were going to

get in the Farm bill, and they didn’t get it, and so there is still that

2001 that has to be taken care of, and there is nothing you can do

about that unless we have the money.

Secretary VENEMAN. Well, and as you know, the administration

supported drought assistance within the context of the Farm bill.

We made that clear last year—or during the farm—— The CHAIRMAN. We don’t want to get into that.

[Laughter.]

Secretary VENEMAN. OK.

The CHAIRMAN. We just really don’t want to go down that road.

Let me ask you about the Conservation Security Program. Can

you assure us that USDA is moving forward with implementation

of the Conservation Security Program as an uncapped national program consistent with the Farm bill’s legislative language and congressional intent?

Secretary VENEMAN. We are moving ahead to implement this

provision. I might ask Bruce Knight to talk about what our timeframe is on this provision, but we are looking at all of the various

issues that needed to be resolved in order to implement this program.

Mr. KNIGHT. We are continuing to move forward on implementation in keeping with the direction that was provided to us in the

law. As we proceed forward with this, it is a very innovative, very

new program. Every step we uncover more areas that we have to

look at. We are now looking wide-ranging at what sort of standards

need to be reviewed internally both for CSP and other programs

47

that may result of having to look at these things, going through

systematically to ensure that any efforts and every decision that is

done here has to be done right. We believe strongly that it is more

important to do it correctly than to do it rapidly and are trying to

move forward in a very responsible, fiduciary manner in developing

all these rules and regulations.

The CHAIRMAN. Can you give us some idea of when we might see

the first proposed rules? Because the final rules under the law are

supposed to be issued next February. Do you have some idea of

when we might see some proposed rules?

Mr. KNIGHT. Quite honestly, sir, I have been much more focused

on getting the dollars out on the 2002 programs than moving forward with 2003 in the priorities that were provided by Congress

in the direction that they had given—you had given us with the

third-party technical service providers, then following systematically with those in as rapid a manner as we can. In that context,

the CSP on the publication status that we have thus far appears

that we should be able to come out with proposed rules late fall of

this year.

The CHAIRMAN. That would be good. Will your staff work with

my staff to keep my office up-to-date on the schedule for implementation and developments in the process and so forth on this. I appreciate that.

Regarding on the Grasslands Reserve Program, there is a lot of

interest in the Grasslands Reserve Program. Have you made any

decisions as to what agency is actually going to administer this?

Secretary VENEMAN. No, we—someone else brought that up as

well, Senator, and we are in the process of having FSA and NRCS

work together on that issue and make the determinations of how

the agency responsibilities will be defined, and I am sure we will

get that decided in very short order.

The CHAIRMAN. A lot of interest in that.

One last thing here. Someone mentioned the website. Very good.

Excellent. I compliment you highly on that. It is very, very good.

Of course, there are a lot of people out there who don’t have Internet access, but we did put something in there to expand broadband

access, so I hope that is going ahead.

This is a question that I encounter all the time. What is the

mechanism in place for a local FSA official to forward a farmer’s

comment and/or questions on to the appropriate bodies within

USDA? If, for example, the FSA official does not know the answer

or it is a comment or suggestion for implementation, I have had a

lot of farmers say, well, we went to the FSA office and we asked

this question and they didn’t know, but they were going to find out,

and we have never heard back. Do you have a mechanism in place

so that farmers, when they go into the FSA office and ask a question and this question has gone up the ladder, they get a return

on it somehow? Do you have a mechanism in place for that?

Mr. PENN. Well, Senator, I don’t know if we have a formal mechanism that has a name, but—— The CHAIRMAN. No, I don’t care about that, just as long as—— Mr. PENN. All of the people in the county FSA offices have been

urged to send questions for which they don’t have answers to

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tor, or they can pick up the phone and send it directly. Now, of

course, with e-mail they can certainly send them in. We have been

taking special pains, when we see two or more questions on the

same topic, to try to as quickly as we can prepare an answer, get

it back to the people who posed the question, but, more importantly, put it on the FSA website in the Q&A column there so that

it is available to everybody all over the country.

We appreciate your compliments on the website because we have

really tried to use that as a new medium this time to disseminate

information.

The CHAIRMAN. Good.

Mr. PENN. It gets picked up by the press. It is picked up by the

extension services. It is utilized by lots of people.

I don’t know if we have a formal mechanism, but we have encouraged everybody when they run into something they don’t know

about to get it to somebody who does, and we try to prepare an answer and make it available widely.

The CHAIRMAN. I appreciate that.

I just have two other things. One, on the Rural Business Investment Program—and I am concerned about how we are moving

ahead on that. The Farm bill has been passed now 4 months. I understand that USDA still has not signed an interagency agreement

with the SBA toward development of rules and management of this

important program. Again, can you give me some idea of how we

are moving on that? I know you have a lot on your plate. I understand that. The need for investment capital in rural America is

drastic. Can you give me some idea of how we are progressing with

the SBA on this?

Secretary VENEMAN. Senator, we will get you a response on this

issue. I can’t give you an exact timeframe, but I know that you and

I agree on the importance of these rural development programs and

investment in rural America. You mentioned our Broadband Program which is new in the Farm bill. We have a tremendous number of grants out with new funds that were provided by the Farm

bill in the rural development areas, and we will check on this and

get an answer back to you as to what timeframe.

The CHAIRMAN. OK. I appreciate that. I have some, again in my

own State—that is what happens when you go out for a month.

You hear all these things, and what I heard was that people are

looking at this provision and they want to know when they can

start applying for some of this assistance. We have had some farm

credit organizations, even some banks in Iowa, have asked me

about it. I said, well, we just—I am sure that soon we will have

some regulations out on it and get this agreement made with the

SBA to move ahead on it. I hope that, again, your area of rural development that is doing this will move ahead expeditiously, working with the SBA to get this agreement made.

I will close on a good note. I just want to personally thank you

and your staff, particularly those at the Food and Nutrition Service, for your outreach and preliminary implementation work on the

nutrition title. I have heard back really good things on it. You have

made some terrific strides in simplifying program rules and expanding food stamp benefits. Now just make sure States know

about the various options available to them and implement the food

49

stamp changes and other programs like the free fruits and vegetables. I am getting a lot of interest in this free fruits and vegetables

program, and, again, my staff has told me and I have experienced

it at least a couple of times where your people in FNS have been

really very good at getting information out and support and that

type of thing. Thank you for that.

Well, Madam Secretary, do you have anything else that you

would like to add before I adjourn?

Secretary VENEMAN. Well, Mr. Chairman, I would just like to

thank you for holding this hearing. Again, I know there are disagreements in some areas, but I just want to say that the USDA

staff at every level, from the top to the county office staff, have

done a tremendous amount of work to implement this Farm bill in

a very short amount of time, and our farmers and ranchers and all

of us owe them a tremendous amount for everything they are doing

to try to do the best job they possibly can.

The CHAIRMAN. Well, I thank you. I would just note for the

record that in your statement you said the bill includes 10 titles

and over 400 pages. I just want you to feel good. The 1990 Farm

bill had 25 titles and 751 pages.

[Laughter.]

The CHAIRMAN. We are making some progress, I guess.

Well, thank you very much, Madam Secretary. We look forward

to working with you, but we do have these problems in terms of

carrying out what we believe is the law and the intent. Senator

Conrad went over his; I went over mine, my problems with OMB,

and this cannot stand. This cannot stand. Our Government operates—I am not going to give you a lecture on Government. You

have been in it as long as I have, practically speaking. We only operate on comity and recognizing our spheres and where we act. We

pass laws, and we put our intents. We write our reports to give

clear indication of what we intended. If the administration—and I

don’t mean this one, any administration—thumbs its nose at us,

that breaks down the structure of our Government, breaks down

the structure in which we operate. I don’t like to see a Government

operate where we are clashing all the time and continue to clash.

That just breaks down, the very structure that has enabled our

Government to succeeed for so long. OMB is on a dangerous course

here. To the outside observer, that might seem small, well, this is

just agriculture, what the heck? I am telling you, it is big. We are

going to have to have some real serious meetings with OMB to get

them to understand this.

Thank you very much, Madam Secretary.

Secretary VENEMAN. Thank you, Senator.

[The prepared statement of Secretary Veneman can be found in

the appendix on page 62.]

The CHAIRMAN. Thank you. The committee will stand adjourned.

[Whereupon, at 12:48 p.m., the committee was adjourned.]

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DOCUMENTS SUBMITTED FOR THE RECORD

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