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35–046 PDF 2007

S. HRG. 110–121

NORTHERN PLAINS PRIORITIES

IN THE 2007 FARM BILL

FIELD HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

APRIL 3, 2007

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 

MAX BAUCUS, Montana 

BLANCHE L. LINCOLN, Arkansas 

DEBBIE A. STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

KEN SALAZAR, Colorado 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

SAXBY CHAMBLISS, Georgia 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

LINDSEY GRAHAM, South Carolina 

NORM COLEMAN, Minnesota 

MICHEAL D. CRAPO, Idaho 

JOHN THUNE, South Dakota 

CHARLES E. GRASSLEY, Iowa

MARK HALVERSON, Majority Staff Director 

ROBERT E. STURM, Chief Clerk 

MARTHA SCOTT POINDEXTER, Minority Staff Director 

VERNIE HUBERT, Minority General Counsel 

(II) 

(III)

C O N T E N T S 

Page

FIELD HEARING(S):

Northern Plains Priorities in the 2007 Farm Bill ................................................. 1

Tuesday, April 3, 2007

STATEMENTS PRESENTED BY SENATORS 

Coleman, Hon. Norm Coleman, a U.S. Senator from Minnesota ........................ 4

Conrad, Hon. Kent, a U.S. Senator from North Dakota ...................................... 1

Klobuchar, Hon. Amy Klobuchar, a U.S. Senator from Minnesota ..................... 5

Pomeroy, Hon. Earl, a U.S. Representative from North Dakota ......................... 7

Panel I 

Hoeven, Hon. John, Governor, State of North Dakota ......................................... 8

Panel II 

Johnson, Roger, Commissioner, North Dakota Department of Agriculture ....... 13

Panel III 

Carlson, Robert, President, North Dakota Farmers Union .................................. 22

Hejl, Bill, President, Red River Valley Sugarbeet Growers Association ............. 27

Hill, Jason, Research Associate, Department of Ecology, Evolution and Behavior, University of Minnesota ................................................................................ 33

Iszler, Jocie, on behalf of Mike Clemens, Chairman, North Dakota Renewable 

Energy Partnership .............................................................................................. 23

Kramer, Brian, on behalf of Eric Aasmunstad, President, North Dakota Farm 

Bureau ................................................................................................................... 31

Martin, Mike, Chairman, North Dakota Grain Growers Association ................. 25

Thomas, Paul, Director, Northern Pulse Growers Association ............................ 30

Waslaski, Kevin, President, Northern Canola Growers Association ................... 29

APPENDIX 

PREPARED STATEMENTS: 

Coleman, Hon. Norm ........................................................................................ 44

Conrad, Hon. Kent ........................................................................................... 46

Pomeroy, Hon. Earl .......................................................................................... 50

Aasmunstad, Eric ............................................................................................. 52

Carlson, Robert ................................................................................................. 57

Clemens, Mike .................................................................................................. 62

Hejl, Bill ............................................................................................................ 64

Hill, Jason ......................................................................................................... 67

Hoeven, Hon. John ........................................................................................... 69

Johnson, Roger .................................................................................................. 73

Martin, Mike ..................................................................................................... 88

Thomas, Paul .................................................................................................... 94

Waslaski, Kevin ................................................................................................ 102

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Dakota Resource Council, prepared statement ..................................................... 108

Page

IV

Gordon Bischoff, Farmer, prepared statement ...................................................... 113

Great Plains Food Bank, prepared statement ....................................................... 114

National Sunflower Association, prepared statement .......................................... 117

North Dakota Association of Soil Conservation Districts, prepared statement . 118

North Dakota Corn Growers, prepared statement ............................................... 120

North Dakota Stockmen’s Association, prepared statement ................................ 121

Northern Great Plains Working Group, prepared statement .............................. 126

Oilseed Producers, prepared statement ................................................................. 129

Rudi Bloomquist, Farmer, prepared statement .................................................... 133

Second Harvest Heartland, prepared statement ................................................... 134

U.S. Durum Growers Association, prepared statement ........................................ 136

‘‘Positions and Recommendations of the Northern Great Plains Working 

Groups’’ ................................................................................................................. 137

(1)

NORTHERN PLAINS PRIORITIES 

IN THE 2007 FARM BILL 

Tuesday, April 3, 2007

U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Fargo, ND 

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

201, Fargodome, Hon. Kent Conrad, presiding. 

Present or submitting a statement: Senators Conrad, Klobuchar, 

and Coleman; and Representative Pomeroy. 

STATEMENT OF HON. KENT CONRAD, A U.S. SENATOR FROM 

NORTH DAKOTA 

Senator CONRAD. The hearing will come to order. First we want 

to welcome everyone to the field hearing of The Senate Agriculture 

Committee. I want to especially thank the Chairman of the Agriculture Committee, Senator Tom Harkin for permitting us to have 

this hearing in Fargo, North Dakota. I want to recognize his staff 

person who is here from the committee, Kerri Johannson. Kari, 

welcome. 

Ms. JOHANSON. Thank you. 

Senator CONRAD. Also representing Senator Chambliss, who is 

the ranking member of the Senate Agriculture Committee, his staff 

person Cameron Bruett. Cameron, welcome, good to have you in 

North Dakota, and we have given you a special North Dakota welcome of this weather. We almost never have weather like this. 

Typically it would be 70, 75 degrees. 

Senator COLEMAN. Except in Minnesota right now. 

Senator CONRAD. I also want to very much welcome my colleagues, Senator Klobuchar and Senator Coleman. Senator Coleman and Senator Klobuchar are on the Agriculture Committee in 

U.S. Senate. We especially appreciate their coming to participate in 

this hearing. 

Also, Congressman Pomeroy who serves on the House Agriculture Committee as well as the House Ways and Means Committee because as, you know, we have got to write a farm bill in 

both chambers and it is going to be a significant challenge and a 

real opportunity. We want to make certain that we are in a position to take advantage of the opportunity. 

I also want to thank the witnesses who have come to be with us 

today. We have lost a couple of our witnesses due to the weather 

but they have been ably replaced by others. I think we are only 

missing one group that was going to be represented here today. So 

2

we are pleased that most of the witnesses are here even though the 

weather has been not cooperative. 

This is the part of the series of outreach that I have made on 

the Farm Bill. Many of you will recall last year we had an agricultural summit right here at the Fargodome. Incredibly well attended. We had really the leading agricultural policymakers from 

around the country come and participate in a 2–day event that was 

in preparation for the Farm Bill. 

In February I met with all the farm group leaders in Bismarck 

and we had a detailed review of where we are headed with the 

farm bill. That was very helpful. 

Then we have had a series of outreach meetings all across the 

state in town after town, 10 outreach meetings and now an official 

hearing of the Senate Agriculture Committee. We build a case for 

what is important for the next farm bill. 

The message from those meetings I think has been clear and consistent. The message has been built on the current farm bill. The 

current farm bill, by and large, is working well. It has been especially beneficial to our part of the country, but we also know there 

are areas that need to be improved. 

We need to strengthen crop insurance. I think we all know the 

crop insurance especially does not work well in the quality loss provision. 

We also need to do more to take advantage of the extraordinary 

opportunity in energy because we want the country to look to the 

Midwest instead of turning to the Middle East for our energy supplies. 

We also have a chance to put in a permanent provision on disaster assistance. Very often I am asked well, why do you need 

that? Why can’t crop insurance solve that problem? Very simply 

crop insurance is intended for periodic loss, not repeated loss. It is 

like if you had house insurance and your house burned down every 

year, house insurance would not work very well. Unfortunately, 

when you have a drought, very often those are sustained. They do 

not just come and go. And when you have loss like that, crop insurance does not work well. So while crop insurance is critically important, it is a place where we need improvement. It is never going 

to solve the problem of repeated loss from disaster. 

We also I think generally recognize that conservation programs 

need to be improved, especially for our part of the country. Do not 

work very well in our part of the nation. And we need to improve 

the fairness of the commodity programs. I was especially disappointed in some of the proposals that had come from the Administration with respect to reducing the counter-cyclical program and 

taking that money and giving it to cotton. If there is one place that 

has done very well already in terms of commodity programs it is 

cotton. It would not be, to me, the first, second or third place that 

I would move to provide more resources. 

We also face significant challenges, and let me just mention a 

few. I have got a couple of posters here that make the point. First 

is the hostility of parts of the national news media. And I would 

single out the Washington Post. They have run a series of stories 

that I think are unfair, that are misleading, that do not capture 

the reality of American production agriculture today and I think 

3

they have done an enormous disservice to farm and ranch families 

across the country. 

Second, the competition from the European Union. Make no mistake they are outgunning us by more than five to one in terms of 

their support of their producers. It is hard to believe that the most 

recent figures show that the European Union is providing $277.00 

an acre of support per year. Think of that. $277.00 an acre of support per year. We are at $48.00 an acre on an equivalent comparison. So they are outgunning us there more than five to one. 

On export subsidy they are outgunning us 87 to one. 87 to one. 

That is not a level playing field. That is not fair. It has got to be 

changed. 

But the EU is not the only culprit. We know that Brazil and Argentina and others, China, are gaining unfair market advantage by 

manipulating their currency values and this has had a very significant effect. It is a key reason we see Brazil now No. 1 in commodity 

after commodity. Make no mistake, they are securing market advantage by manipulating their currency value. 

Third major challenge we face are the budget pressures that the 

United States is under. Our debt has grown from $5.8 trillion in 

2001 to an estimated $9 trillion at the end of this year. I call it 

building a wall of debt. 

Unfortunately, this is happening at the worst possible time before the baby boomers retire and it is putting very significant pressure on all parts of the budget. In order to respond to that, we have 

tried to provide additional resources for the Farm Bill by way of 

a reserve fund. There is $15 billion in that reserve fund. But the 

only way it can be unlocked is if it is paid for. It has got to have 

offsets. There has got to be someplace else in the budget that we 

provide the resources to offset that money. 

Why is it important to have additional resources for a farm bill? 

Very simply because under the last farm bill, we are $23 billion 

below what the estimates were for what it would cost, and future 

funding is based on what you have spent in the past. One might 

disagree with that approach but that is the way it works under the 

Congressional Budget Office scoring of legislative proposals. 

So we are in the circumstance where we have $23 billion less 

than we had last time. If we are going to write a reasonable farm 

bill, there is going to have to be some additional resources. 

Finally, let me make very clear, agriculture is not responsible for 

our current budget problems. Farm programs spend one-half of 1 

percent of the United States budget. One-half of 1 percent. And as 

I have indicated, we are $23 billion below what was anticipated 

when the last farm bill was written. 

Well, those are challenges, but goodness knows we have overcome tough challenges in the past and I am confident we will in 

the future. 

Let me just say I think this hearing is important to establish a 

record that we can take to our colleagues as we write the bill about 

what are the priorities of our part of the country, of North Dakota, 

of Minnesota. What are the things that are critically important to 

us. And that is why I am especially pleased that our colleagues 

from Minnesota come to join us, Senator Coleman, Senator 

4

Klobuchar. Again, both of them are valued members of the Committee. 

And we also are delighted that Congressman Pomeroy is with us. 

I often say there are 435 members of the House of Representatives. 

We have only got one. I am so glad our one is Earl Pomeroy. 

We are pleased that all of these members are with us. Senator 

Dorgan sent his regrets. He told me the other day, ‘‘Kent, I am not 

going to be able to be there but you will do a good job of representing me.’’ Of course, Byron and I, as all of you know, work 

very closely together with Congressman Pomeroy, so we will convey 

what we learned here today to him. 

With that I want to call on Senator Coleman for his opening remarks. We will then hear from Senator Klobuchar and then Congressman Pomeroy, then we will get to our first witness, the Governor of North Dakota, Governor Hoeven. 

Senator Coleman. 

STATEMENT OF HON. NORM COLEMAN, A U.S. SENATOR FROM 

MINNESOTA 

Senator COLEMAN. Thank you. Mr. Chairman. 

Senator CONRAD. And welcome to North Dakota. 

Senator COLEMAN. Great to be here. These tough North Dakota 

winters. Not like that in Minnesota. 

I want to thank Senator Conrad, thank him for bringing this 

gathering together. The realities, the issues that we face in agriculture, they are not North Dakota, as separate from Minnesota. 

We are in this together. And the good news is you have got three 

senators here serving together on the Agriculture Committee. 

These issues really, I think, most of the time allows us to then 

put aside partisan divides, and we see so often the editorial pages 

and perhaps on CSPAN, and really figure out what is the best 

thing to do for our growers and producers. 

I associate myself with all that Senator Conrad talked about in 

regard to the Farm Bill and the challenges that we face and the 

opportunities we have. The 2002 Bill is a good template and so we 

start with that. But I just, I want to thank Kent. I want to say it 

is a great pleasure to be here today with Governor Hoeven. 

Mr. Chairman, I have a more extensive statement I would like 

entered into the record but let me just briefly highlight a couple 

of things. 

One, farmers should get credit for being fiscally responsible. 

They should not be punished for it. And so my concern is that as 

we look at the Farm Bill and we look at the baseline budget that 

we have, as Senator Conrad talked about, this is $23 billion less. 

The concern that I have as I look at that ideas on the table, including those from the Administration, is that we have got right now, 

these are some good times in terms of where prices are at and a 

lot of that is fueled by what I think is a wonderful transformation 

this country is undergoing. That is about energy. We have got to 

stop putting techno dollars in the pockets of bums and pirates like 

Chavez. Energy is a national security issue, it is not just helping 

a bunch of Minnesota corn growers or North Dakota soy bean growers. This is wheat, canola, this is energy, if it is grain it can be conVerDate 0ct 09 2002 11:43 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 C:\DOCS\35046.TXT SAG2 PsN: SAG2
5

verted to energy. We are going to get to a point we are going to 

see this thing go, the sky is the limit. 

But the reality is, and we have seen this, let’s not forget history. 

This is a 5–year Farm Bill and we may have good years, one, two, 

and three. What happens in the year four? Something bad happens. I have been on the floor of this Senate many times with Senator Conrad and I got on the floor taking the lead on the issue of 

disaster assistance. He has been out there time and again and I 

stood with him. And we have got to have a long-term solution to 

that. We have to have in addition a safety net that is there if 

things change. You can not build a safe net and fund it thinking 

the sky is going to be sunny all the time. It may snow in April. 

So let us understand that. 

The 2002 Farm Bill is a good template. There are still some challenges. And I have heard, I have done the same outreach in Minnesota that Senator Conrad has done here. We have the same 

thing. Good framework, but we need support adjustments on 

wheat, barley, in particular soy bean farmers, increase in the sugar 

loan rate is important. We have got a zero cost to taxpayers sugar 

program. But there are challenges. NAFTA is a challenge out 

there. And I was not happy with the Administration’s handling of 

the Mexican issue last year just by discussing some of the prospect 

of increase supply into this country. Prices, all of a sudden, you 

know, the market is impacted. I do believe that in the end we need 

something to sop up or sponge and to sop up any excess sugar coming in, potentially may come in from the trade agreements, and 

that in particular. And so we should be looking at a sugar to ethanol program. 

Years ago the corn did not get started would get started without 

some support. So that where we are today, we have got some support. I just think we need to look to the future so that we are not 

subject to the whims and caprice of all the various trade agreements or Administration policy that may impact the livelihood, the 

livelihood, the life blood of folks in the shared community. 

I think the good news is that you have got three of us here on 

the Ag Committee. We have got Collin Peterson as Chair on the 

House side. We have got incredibly strong representation with Congressman Pomeroy. So I think we are well-positioned. It is not a 

matter of numbers, it is a matter of folks with an interest and a 

commitment, and again the kind of strong leadership that Senator 

Conrad has offered. 

So I am optimistic. We started at a good place but our work is 

not done, and coming here today to listen is really important and 

I certainly appreciate the opportunity to be part of this family. 

[The prepared statement of Hon. Norm Coleman can be found on 

page 44 in the appendix.] 

STATEMENT OF HON. AMY KLOBUCHAR, A U.S. SENATOR 

FROM MINNESOTA 

Senator KLOBUCHAR. Thank you. Thank you, Senator Conrad, for 

having us up here. Nothing would keep us away from the farm 

hearing. Not the Twins home opener. 

Senator CONRAD. You know, I am a Baltimore Orioles fan. I do 

not think we will have Senator Klobuchar say much more. 

6

Senator KLOBUCHAR. Let me proceed. I wanted to just quickly introduce to everyone our state director is here walking around in 

the back. Dave Fredrickson, stand up Dave. He is our ag person, 

former head of the National Farmers Union, came out of retirement. He said he wanted to work for me but then his wife told me 

she needed to get him out of the house. In any case, we are proud 

to have him on board. 

We are also opening a Moorhead office in the next few weeks and 

Andy Martin is currently working for Collin Peterson in Washington is coming over to head that up so that will make it even an 

easier job for us to work with all when we come up to northwestern 

Minnesota and to North Dakota. 

I am going to echo the comments of my colleagues. I first wanted 

to thank Senator Conrad for the work that he did on the bill. You 

can not imagine the effort he had to put in day in and day out. 

This is a national project where he made sure that the farmers in 

North Dakota and Minnesota were up front and center. He provided $50 billion in additional money for farm programs without 

raising the deficit. 

Those of you in North Dakota should be thanking him for that 

every day. 

I am concerned about the potential for details of the bill that are 

coming out that include disaster relief, including a recent bill we 

just voted on last week that includes disaster relief. It is noted the 

farm bill saved $25 billion rounded up from $23 billion. If you 

saved that much money, certainly there should be some money left 

for some disaster relief for our farmers in the upper Midwest, and 

I am going to continue to fight for that every single day when I am 

in the Senate. 

Other priorities for me include the continuation of the MILC program, the strong sugar program, I think I said up here, Mark, 

when I was here a few months ago we need sugar in the morning, 

sugar in the evening, sugar at the supper time. And we make 

sure—you have used that line. 

We have to make sure that we keep a strong sugar program. I 

am concerned about the sugar coming in from other countries. I am 

concerned about some of the suggestions that have been made and 

you can not let the sugar beet producers in the Red River Valley 

take a back seat to subsidized foreign imports. 

With renewable fuels and, I am not only on the Agriculture Committee but also on the Environment and Public Works Committee 

and the Commerce Committee and all these committees have some 

jurisdiction over energy issues and I would like to see expansion 

of our corn ethanol and soy beans but also looking at the other 

biofuels. That is what I am making sure there are things in there 

to promote cellulose, ethanol and next step is switchgrass. There is 

an interest in that now not only from farm States but also from 

States across the country who are considering the farm exchange 

issue. 

As Senator Conrad mentioned, the issues in our State and North 

Dakota is getting that CSP money and getting that CRP money. So 

many applications turned down. We have to refine those programs 

and focus them on things that are going to matter to this country. 

7

One of them, too, is growing switchgrass and prairie grass on marginal farmland. 

What we are going with E85 pumps? As you know there are 

something only over a thousand E85 pumps in this country. The 

last I looked there were 25 in North Dakota. Governor, you have 

updated statistics on that. And about 300, little over 300 in Minnesota. If we are going to expand renewable fuel, we are going to 

expand it across the country, we need to have the pumps. That is 

why we are working with Senator Harkin and others to try to get 

some money in for the Farm Bill so we can build that infrastructures that these fuels are available all across this country. 

Thank you for having me. 

Senator CONRAD. Thank you, Senator Klobuchar. 

Now Congressman Pomeroy, and thank you so much for being 

here. Thanks so much for all of your leadership on the farm challenges and opportunities. Nobody has been more aggressive on behalf of our part of the country than Congressman Pomeroy. 

STATEMENT OF HON. EARL POMEROY, A U.S. 

REPRESENTATIVE FROM NORTH DAKOTA 

Mr. POMEROY. Senator Conrad, thank you and thank you very 

much for allowing me to participate with three members of the 

Senate Agricultural Committee. I noticed this morning’s discussion 

represents bipartisan cooperation, bicameral cooperation, cooperation across the State lines to pull together on the new farm bill. 

Bipartisan cooperation, I flew over in the Governor’s airplane. I 

appreciate that, Governor. 

Senator CONRAD. Did the Governor get to fly, too? 

Mr. POMEROY. We talked about whatever the Governor wanted 

to talk about. 

Senator Coleman, great to have you on the panel. Whatever partisan differences we might have, we are building a safety net for 

farmers. It is my friend to the west, Collin Peterson who is chairing 

the House Agricultural Committee. It has been a long time since 

the northern plains led the House Agriculture Committee. Typically we have not had an opportunity to restore some to this farm 

bill. To me the core feature of the farm bill is price protection for 

farmers, insuring that family farms are the backbone of food production in our country. Farmers can not control what the farms are 

going to do. So this management assistance through the Federal 

Farm Bill has been a critical element of the farm policy. Crop insurance and disaster payments are there in case production fails 

which again is something beyond the reach of what a farmer can 

control. 

So I think we need to keep that in mind, especially in an attempt 

to recover cyclical price protection as a core item on this farm bill. 

There are a number of other titles, but it is going to require a lot 

of effort. 

We did get a budget allocation that I think will allow us to continue the existing farm bill. As work on these other titles such as 

conservation, rural development, research and energy, we need to 

remember that each of these titles offer really important elements 

to this farm bill package. We will have to figure out how to do it. 

8

This budget is going to come out of the Senate under Senator 

Conrad’s leadership as the chair and out of the House under the 

leadership of the House Budget Chair. It gives us a fair shot to get 

the funding. But you can not make a shirt out of a handkerchief. 

We have got a lot on the line whether or not we are going to get 

an allocation. So now we need to pull together. 

The disaster coverage, just a final note on that. We are able to 

reverse the previous policy and get the disaster funding committed 

in the House in the supplemental appropriation bill. In the past 

the Senate has, on a bipartisan basis, shown strong support for the 

disaster support for agriculture. Now we have got the House’s support as well. The disaster bill has got some controversy ahead of 

it. I hope for joint resolve in the House and Senate and in both parties for the disaster program for farmers to have a chance of seeing 

this passed. I think we have got a 60/40 maybe even better than 

that of making sure we have the disaster payment flowing, and 

build it very importantly without the caps, which means you do not 

have to get all the sign ups and then allocate and pro rate the 

amount and accelerate the ultimate flowing of relief much more, by 

a matter of months. 

So if we can hold what we pass, House and Senate, we are well 

on the way to getting relief. 

Again that concludes my comments. Thank you very much for allowing me to be here. 

Senator CONRAD. Thank you very much, Congressman Pomeroy. 

I think we should say on disaster relief, there was an attempt 

the take it out of the Senate package last week and we were able 

to defeat that move on a vote of 73 to 24. That was an overwhelming vote and I think that sent a very strong message and a 

hopeful one as well. 

Now we are going to turn on our witnesses. I want to again 

thank Governor Hoeven for being here. Very much appreciate, with 

the legislature in session, his coming to Fargo to be part of this 

hearing and to be our lead witness. 

Governor Hoeven, we have worked very closely on disaster aid 

and previous farm legislation. Thank you and please proceed with 

your testimony. 

STATEMENT OF HON. JOHN HOEVEN, GOVERNOR, STATE OF 

NORTH DAKOTA 

Governor HOEVEN. Thank you, Senator Conrad. And thank you 

for holding this field hearing. 

Welcome to you, of course, and also to Senator Coleman, Senator 

Klobuchar. Thank you for being here. 

And Congressman Pomeroy, did have a good ride over together 

so we talked about some farm policy on the way. 

I know some folks may see this as, snow storm as a bit of a problem or challenge here in North Dakota. It is no problem out west. 

We really appreciate the moisture. So it is great in that sense. We 

are trying to keep an eye on the Red River in the valley with the 

flooding problems. 

But again I want to welcome all of you, and also farm leaders 

from around North Dakota and probably South Dakota as well. Appreciate you being here and put the input to the Ag Committee on 

9

what is going to be an extremely important piece of legislation not 

just for farmers and ranchers but for our country. 

When we think about it, good farm policy is not just about our 

farmers and ranchers or producers throughout the heartland of 

America, throughout rural America, this is something that benefits 

every single American, every single American whether you live on 

the east coast or the west coast in a large city, small community, 

wherefore you live. 

Americans benefit from the highest quality, lowest cost food supply, safe, dependable food supply in the world in the history of the 

world. So we talk about writing a farm policy and allocating resources to a good farm policy, there is something that benefits 

every single American and it is important we do not lose sight of 

that. 

And as the discussion goes on in Washington, DC or New York 

City or Los Angeles or out here in the heartland, we have to remember this is about something that benefits every American of 

every age, and it is a sound investment in our farmers and ranchers, in rural America, in our country and in each of our countries. 

So again I appreciate being honored with testimony you get from 

farmers and ranchers from the associations that represent them is 

very important and we appreciate that. 

North Dakota is the leading producer of 12 major commodities. 

That includes things like spring wheat, durum, barley, oats, dry edible beans, flax, dry peas, lentils, sunflowers and canola and others. 

We are No. 1 in those. We are second and third in many other 

crops. Some of them you mentioned like sugar. We do get out every 

year with California to be No. 1 in honey. Soy beans, corn and 

many other products. The reality is we are part of the bread basket 

of America that feeds this nation and, to a large degree, helps feed 

the world and so this farm policy is extremely important. 

There are six or seven what I think are very key components to 

the farm bill, and I will touch on them briefly. I do have written 

testimony which I will submit for the record. I will paraphrase 

those comments. I will try to be respectful of keeping it within five 

or 6 minutes. I know there are people that are going to give very 

good testimony. I want to be respectful of their time as well. 

Those six or seven items I will list off and then I will touch on 

a couple of them in a little bit more detail. It is my belief that a 

bill is built on the success of the existing farm bill, and I remember 

you had a hearing out here six or 7 years ago and we went through 

this process. You know, really the Farm Bill that was put together 

in 2001 and 2002, in many respects, was a successful and effective 

farm bill. We talked about some of the numbers and the cost effectiveness of it. But some of the principles like the counter-cyclical 

safety net are vital in this next farm bill and we need to build on 

that success in this farm bill. It needs to be a long-term farm bill 

so our producers can plan for the future so that young people can 

get in the business of farming and make commitments and make 

sure they are able to carry through on those commitments and 

build a way of life in agriculture. 

We need to have planting flexibility so that our farmers and 

ranchers can produce for the market. That is not only important 

in terms of them generating income that is making sure that they 

10

are responsive to the needs, whether it is food, fuel or fiber, that 

they are meeting those market needs. 

Two of the things I think are the counter-cyclical safety net. We 

need to build on that. I think there are some adjustments that 

need to be made in making sure all commodities get a fair pricing 

structure under that counter-cyclical safety net. 

Senator CONRAD. You want more money for cotton? 

Governor HOEVEN. No. 

Senator CONRAD. I just wanted to get that in. 

Governor HOEVEN. And those are some of the adjustments that 

need to be made and can be made that I think can work well for 

the entire country. 

But in conjunction with that counter-cyclical safety net, we need 

better risk management safety tools. Absolutely vital in this farm 

bill that we coordinate crop insurance and/or a disaster title with 

that counter-cyclical safety net. Paramount importance. If there is 

one point that I can impress upon you today, we have got to have 

good risk management tools that are coordinated with the countercyclical safety net. 

Now USDA has, the Administration has put forward the concept 

of gap insurance that would work in tandem with crop insurance 

which, as you know, is a separate law. That is a concept that could 

perhaps work but USDA and Congress have got to make sure that 

they are working with our producers and the farm associations to 

make sure that if we are going to use that gap insurance coverage 

product that it works, that it is priced reasonably and fairly and 

it provides the kind of revenue coverage to make sure there is protection there both for quality and quantity losses so that when we 

have a natural disaster that farmers do not go backward. Think 

about it. Any other business you can think of the business person 

insures against risk so if they suffer a natural disaster of whatever 

kind or they have a fire or any kind of calamity, that insurance 

makes sure that they stay whole. They do not go backwards 30 percent that year or 40 percent that year or even 20 percent that year. 

The concept is that insurance is there to bring them back to whole 

so they can stay in business. 

Contrast that with crop insurance where our producers go back 

20, 30, 40 percent if they have a disaster, then if they can hang 

in there the next year their APH, their annual production history 

is lower so they get less coverage. What kind of a system is that? 

It needs to be addressed, so either to be addressed through this gap 

insurance product, if it is done right, and our producers have got 

to be involved in making sure that works and that it is reasonably 

priced so it works to properly insure in tandem with normal crop 

insurance or you have got to have disaster title so we are not in 

the situation of seeking ad hoc disaster bills like we have this year 

and very much need to get that done. 

I know you are working hard on it but we need to get that done. 

We need to have that kind of a program in place, proper risk 

management for producers so year in and year out they successfully in the business of farming and ranching. 

We need a good conservation title. Our farmers and ranchers are 

a good stewards of the land, they have a good track record. The 

conservation title needs to be a common sense approach that works 

11

for farmers ranchers out of the ground. We have got to avoid some 

of the red tape and bureaucratic challenges we have had in the 

past. So it is important but it is important that it be done right. 

We need to provide more help for the value added agriculture. 

The capital requirements for value added agriculture are so high 

we need to look at those programs and need to increase the assistance we provide to the producers to get involved in those businesses in terms of helping them with the investment and with the 

capital requirements that go to developing those value added 

projects. That can be a huge success story for rural America, not 

only in terms of more income for farmers but in terms of jobs in 

rural America. We need more with value added. 

Then the energy. We are talking about renewable energy that is 

good for our economy. It is good for our environment. It is good for 

national security. Already farmers in the area of renewable energy 

farming are making huge differences. There is so much more we 

can do, biofuels, well, cellulosic, whether it is biomass, that is the 

future. We are going there. That needs to be a huge part of this 

Farm Bill. 

Again, I will wrap up here. I think those are certainly key components that need to be in this farm bill. Senator Conrad and I discussed the fact. I know you are focused on those and I believe we 

have an opportunity. I think this can be a very good positive, very 

cost effective products for the nation. Has a tremendously positive 

impact on the future of our country. 

Thanks again for holding this field hearing. 

[The prepared statement of Hon. John Hoeven can be found on 

page 69 in the appendix.] 

Senator CONRAD. Governor, thank you very much for your testimony. You know I think you can tell from my opening statement 

the Governor’s testimony, we are very closely aligned on these 

issues, and it has kept us, very important for our State. I very 

much appreciate your taking the time to be here and be our key 

witness. 

Let me just say to my colleagues on the Committee, typically out 

of the respect to the office and respect for the person of the Governor, we do not subject the Governor to questioning but if somebody wanted to make a comment or discuss with the Governor in 

some way his testimony, that would certainly be appropriate. 

Senator Coleman, anything? 

Senator COLEMAN. I would note. I will note there is a division 

here and perhaps there is no question its cyclical programs, conservation and energy, energy. What I would suggest, raise the 

issue, is these are regional issues. I would hope that on a State to 

State level as we look at some of the research cellulosity, research 

in to, in addition, North Dakota does things that Minnesota does 

not do in terms of some of the research they are doing with coal 

sequestration. They are looking into Minnesota, not farm but the 

energy issue of coal gasification. I would hope that we would with 

our state university that we would look at that since we are on the 

cutting edge of some of the energy issues and conservation that we 

have some interests there and we have got to get to cellulosity 

quickly. I see ethanol plants in Kittson County on grass seed. But 

12

there are ways we can use our research facilities to find them I 

think it would be helpful. 

Governor HOEVEN. Absolutely. And our future in energy between 

North Dakota and Minnesota is closely aligned. We are huge energy producers in the state and we need each other. We are already 

working on those things and need to do more. 

Senator COLEMAN. Thank you. 

Senator CONRAD. Senator Klobuchar. 

Senator KLOBUCHAR. I appreciate what you said about the Farm 

Bill that has a safety net and I’m terribly concerned some of the 

members well we are here. I do say that in North Dakota things 

happen and very definite. I appreciate what you said. 

Also, I want to follow up on some of the situations of crop insurance and proposals and I want to say way that they have figured 

the offers and look at so that there is county wide offers and I 

know this is a concern of farmers. That is one of the things we are 

looking at improvement under the projection and, of course, I appreciate what you said about disaster aid and help Senator Conrad 

and Coleman. 

Senator CONRAD. Congressman Pomeroy. 

Mr. POMEROY. My transportation Governor, I felt his testimony 

was absolutely compelling. Absolutely. 

With the Farm Bill, during the time I have been there, we guarantee payments versus risk management. We come down on the 

side of risk management. Senator Coleman share this, I think we 

share a vision on this price protection. Again we want price protection as the core of the Farm Bill and that certainly means more 

help to farmers. 

Senator CONRAD. Governor, I noted that you have never given 

me a ride on your plane. 

Governor HOEVEN. I’d like to extend that offer to you then. 

Senator CONRAD. OK. That will be accepted. 

Governor HOEVEN. As well your fellow senators. It is beautiful, 

it is white. The wind is blowing a little. 

Senator CONRAD. Clear skies. 

Any final thoughts, Governor you would like to share for the 

record? 

Governor HOEVEN. Again, I think we really are building on a 

farm bill that has significant success and so if we can take the 

things that work, make some adjustments to improve them and 

add these other elements that we have emphasized here today, we 

can have a very good farm bill and I think very important that 

have to keep sight of in this discussion for you, all of us, we need 

to make sure as we discuss it around the country we emphasize its 

importance to each and every American, every single American 

benefits from this farm bill. 

Senator CONRAD. I hope the Washington Post is listening. You 

know, really I must say I have never been so disturbed by a reporting by a national publication as the Washington Post on the Farm 

Bill. I just think they have misled their readers to suggest that all 

the support is going to rich farmers, and then they talk about people earning $250,000 to $500,000 a year and they never indicate 

that that is gross income. Made it look as though that is people’s 

net income. They never indicate that all the expenses have to come 

13

out of that, you know, all the land expense, all the operating expenses, all the living expenses, you know, they make it look like 

these are people who are walking away with $500,000 in their 

pocket. We know that is not true. I think that does an incredible 

disservice to present farm policy in that way. 

Again, thank you, Governor, thank you very much for coming 

here and providing your testimony and we look forward to working 

with you in the days and weeks ahead as we try to write a strong 

farm bill for this country and for this region and especially for our 

State of North Dakota. Thank you, Governor. 

Next we’ll call to the witness stand Roger Johnson, Commissioner of Agriculture of North Dakota. Commissioner Johnson has 

been selected by his colleagues as the head of all agriculture commissioners in the country at this critical time. When we wrote the 

last farm bill, Mr. Johnson had been selected by his colleagues to 

be their leader on writing a new farm bill. I can say without hesitation, Mr. Johnson played one of the most constructive roles in the 

writing of the last farm bill. I spent hours and hours and hours 

with Commissioner Johnson on how we would first write the last 

farm bill and how we would negotiate it and he played just a pivotal role and I think that is why the commissioners have chosen 

him to be their leader as we go into this farm debate. So welcome, 

good to have you here and please proceed with your testimony. 

STATEMENT OF ROGER JOHNSON, COMMISSIONER, NORTH 

DAKOTA DEPARTMENT OF AGRICULTURE 

Mr. JOHNSON. Thank you very much, Senator Conrad, for those 

kind remarks. It has certainly been a pleasure over the years to 

have the opportunity to work with you and our delegation and our 

friends across the river in doing public policy that is important and 

good for family farmers and for all of us. As the Governor I think 

so aptly put it, this farm policy is not about farmers, it is about 

all of us as Americans. 

My comments are fairly extensive so with your permission, I am 

going to kind of skip around and summarize them a bit and hit just 

a few high points. They are a compilation of obviously all things 

that I believe, but much of what I am about to say is also contained 

in our national association farm bill proposal which we had the 

honor of presenting you with, Chairman Conrad, last week, I think, 

when we were out in Washington D.C. 

Those recommendations number something over 200, very specific recommendations and they are available on the web and will 

be made available hopefully to begin the task of writing this Farm 

Bill. The highlight of those recommendations are also attached to 

my testimony and I would be remiss if I did not begin by also saying thank you for the hard work that you and everyone on this 

panel have done in passing ad hoc disaster relief. I know it is not 

law yet, but certainly this is the furthest it has come in a long, long 

time. 

At the heart of my testimony is really going to be talking about 

permanent disaster relief, and I will get to that in just a moment. 

This singular event of getting ad hoc disaster assistance passed 

and the length of time in which it took to get it passed and tenacity 

with which you had to continue to work to get it passed underVerDate 0ct 09 2002 11:43 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 C:\DOCS\35046.TXT SAG2 PsN: SAG2
14

scores more than anything else the need for having a permanent 

disaster title. 

In terms of background, you already heard a lot of the background from the Governor. Agriculture is the No. 1 sector in North 

Dakota’s economy. Over $4.7 billion in cash receipts annually. We 

lead the Nation in the production of 14 different commodities. We 

have got 30,000 farmers and ranchers in our state. We are also an 

energy state, as Senator Coleman talked about with respect to coal. 

In this energy business is providing an enormous opportunity for 

us in agriculture this time around with this particular Farm Bill. 

In North Dakota right now we have four operating ethanol 

plants. I know it is small by comparison to our neighbors across the 

river, 135 million gallons of annual production, but we have got another 300 million gallons scheduled to come online. When that happens we will be very close to 100 percent of our current corn production converting into ethanol. Dramatic changes are in store 

here. 

The same thing can be said about bio diesel and other kinds of 

renewable fuels. There is an enormous potential for biomass production, and I certainly endorse all the suggestions about cellulosic 

ethanol and the need to significantly wrap up research and developed efforts in that arena. That is an area where North Dakota 

again would be able to see significant success and we lead the Nation in the production, in the potential to produce perennial energy 

crops. 

But as has been said, what undergirds everything in this Farm 

Bill in my judgment is a solid safety net. The cyclical programs, the 

marketing loan programs have performed quite well. It certainly 

needs to be rebalanced as has been discussed and clearly this feature of the Farm Bill has been directly responsible for this Farm 

Bill saving taxpayers the $23 billion that has already been talked 

about. It needs to be continued and improved. We are all coping 

with the higher prices that we currently are facing in agriculture 

but I think all of us in this room would also recognize that when 

prices go up, prices can go down and we had that experience once 

before, not with the current Farm Bill but with the prior Farm Bill 

where lots of folks were saying we had high prices structure we 

were facing in 1996 is going to be here for as long as far as the 

eye can see and it did not last 2 years before we were in the depths 

of trying to deal with ad hoc disaster assistance in a whole new 

area. 

Economic assistance, we need to make sure that we maintain 

and that we improve this safety net in the upcoming Farm Bill. 

One reason we need to bring the lower prices and target prices 

higher. 

In my testimony, I give you a table that shows some of the cost 

increases, just two of them, fuel and fertilizer costs alone over the 

last 3 year period have gone up by 85 and 79 percent respectively. 

You can not farm and sell commodities for the same prices that you 

did in 2002 with the kind of escalating cost structures that family 

farmers and ranchers are faced with. 

I do want to suggest that because of the hard work, Chairman 

Conrad, that you have done on the Budget Committee, you understand probably more than anybody else in this room how difficult 

15

it is going to be to put all the features and everything that everyone is talking about in the Farm Bill inside the confines of the 

budget constraints that you have. 

So let me offer a suggestion, and there are not a lot of folks, I 

think, who have made this suggestion quite as directly as I am 

making. The direct payment feature which is the remnant of the 

old Freedom to Farm Bill is a significant part of the current Farm 

Bill in terms of cost and is in fact one of the parts that the Administration has proposed to increase. I, in fact, would propose the opposite. I think it ought to be significantly decreased and the money 

savings from those features should be used to bring the safety net 

higher and put in place a permanent disaster title for the Farm 

Bill. 

Let me just refer to this chart. I only did one for you, Senator 

Conrad. I know how much you enjoy charts, and I tried to make 

sure that this was in color and everything. It is a very, very important thing about how a permanent disaster title should be configured. 

Senator CONRAD. Can I just say, you know, I do not like that 

rust color. 

Mr. JOHNSON. For the record, I think it is red. 

Let me explain what this rust color is. First of all, the bottom, 

these are three different scenarios of levels of crop insurance that 

would be provided on a mythical farm, if you will, or sample farm, 

and so the bottom chunk is the revenue that would be received 

from the crop sales in the event that we suffered a 50 percent production loss, so that is constant in all three scenarios. 

At the lower level of insurance, the first rust colored bar is the 

insurance indemnity payment that comes if you carry 65 percent 

coverage and on the far one 75 percent. Obviously your indemnity 

payment will be higher if you carry a higher level of protection. 

But the next chunk is something that everybody talks about but 

I do not know that I have ever really seen sort of described in some 

sort of detail, and there is a lot of detail that we put together, Senator Conrad, Scott Stofferahn with your staff and folks from FSA, 

from risk management, from the insurance industry and others is 

to develop this proposal. 

The green chunk would be the payment received under a permanent disaster title as we are proposing it. And what is noteworthy 

about it is it is always just a little bit less than what total income 

would have been had there been a normal crop, which I think is 

appropriate because actually in a different scenario get right up to 

the top of that, which would be appropriate. But what is most important about this is that this system does not in any way undermine crop insurance, and in fact it does the opposite, it encourages 

folks to get higher and higher levels of crop insurance, which is 

precisely what we want them to do because in the long term that, 

of course, will reduce government exposure. 

Senator CONRAD. That is critical. We can not undermine crop insurance. We are all committed to crop insurance, we are all committed to providing incentives to crop insurance. How does this encourage people to continue and even buy enough? 

Mr. JOHNSON. What it does is we developed a factor that is 

based, I think we base it on everybody is carrying 65 percent level 

16

of crop insurance. You can arbitrarily pick whatever level you 

want. If people carry more than that, the factor is more than one. 

If people carry a lower level, than that base level and the factor 

would be less than one. And that factor is applied to the level of 

the loss, the actual loss that is incurred and that thereby means 

that your disaster payment is going to be a little smaller than the 

65 percent level of coverage than it will be if you carry 70 percent 

level of coverage and it will be a little larger still if you carry a 

higher level of coverage. I think that is the critically important feature of how disaster assistance ought to be structured. 

Let me take this moment to say that it is this kind of a deliberative approach that I would encourage the committees to take as 

you write this permanent disaster title unlike trying to get ad hoc 

disaster assistance where you have to put together a coalition, and 

we all understand that. We may have an enormous disaster in the 

upper Great Plains but without hurricanes someplace or the red 

tide in the far east or forest fires in the west or whatever, you just 

can not often assemble enough of a coalition to get something 

passed. So this sort of deliberate exposure is something I think is, 

it is just something I hope you will spend some time and give serious consideration to. 

There are a lot of other provisions, recommendations that are 

provided in my testimony. I am going to skip through a lot of those 

because I know that time is getting away from us. 

Let me say a word about payment limitations because I think, 

too, the headlines, Senator Conrad, that you talked about before 

that are so prevalent on the east coast newspapers, in particular, 

I think foretell the future of farm programs if we do not get a handle on how some of those benefits are disbursed, and frankly the 

language that we have in the Farm Bill dealing with payment limitations is twofold and it needs to be tightened up. 

My fellow Ag commissioners actually agree with me for the first 

time ever in all the years we have spent talking about farm policy, 

this north/south divide, and southerners, as you know, never want 

to talk about payment limitations, most of us up here support 

them. 

The single recommendation that we would make is you need to 

eliminate the three entity rule, you need to tighten up the provisions, you need to pull all benefits in under the limitation so the 

limitation, whatever it is, whatever level you establish it at, is a 

credible limitation so people can not just sort of get around it at 

will. That, in my judgment, is so important if we are going to restore public confidence in farm programs so that is one recommendation I would make. 

I spent a lot of time in my testimony talking about renewable energy and some of the opportunities but in the interest of time I am 

just going to suggest that hopefully you are all, everybody is talking about energy in this next Farm Bill and I think that we all see 

this opportunity that really has not been here for a long, long time. 

We have some real prosperity in agriculture. We need to do that 

by making sure we have got a safety net and do the right things 

in the other areas I recommended. 

Finally, let me suggest that in the area of livestock I would hope 

that country of origin labeling is something that remains in the 

17

Farm Bill, hopefully is implemented very soon. That I would argue 

that a livestock indemnity program needs to be part of the permanent disaster program as well. 

Finally, I know that everybody at the table here has been supportive of removing the ban on interstate shipment of state inspected meat products. I hope that that, certainly is a high priority 

with my fellow commissioners across the country and I hope you 

would do that. 

In addition, I have not talked a lot about conservation programs 

or the nutrition title. Those are both just enormously important, as 

you know, but in the interest of time let me just quit there and 

hope that if there is a single message that I am able to leave is 

the safety net is important, enormously important part of the safety net in my judgment is doing something with a permanent disaster title. 

I would be happy to respond to any questions. 

[The prepared statement of Mr. Johnson can be found on page 

73 in the appendix.] 

Senator CONRAD. First of all, Mr. Johnson, once again for acceptance of your testimony and extraordinary effort and energy you put 

into your recommendations. 

Let me say to you I appreciate you recognizing the budget pressures. I know there are people in farm country who expected when 

I became Budget Committee Chairman that I was just able to wave 

a magic wand and provide whatever resources people thought they 

might like to have in a Farm Bill. You know, as much as I might 

like to do that, I cannot do that. I cannot just write a blank check. 

I cannot write a blank check for any part of the budget because the 

truth is we are in very serious financial straits. We added over 

$500 billion of debt last year. We are going to add another $500 

billion to the debt this year. This is before the baby boomers retire. 

I can not be writing blank checks for any part of the budget and 

I hope people appreciate that. 

We did provide the additional $15 billion but it has to be paid 

for and, you know, I do not minimize the difficulty of doing that. 

I also know there are places it can be done and I have told my colleagues, I have given them some ideas where we might do it. 

But it is critically important we be fiscally responsible. I mean, 

this is, you know, agriculture has got to set a good example, and 

the rest of the budget has got to be much more serious about what 

we are doing in terms of spending peoples’ money. So I appreciate 

your recognition of that. 

Let me turn to Senator Coleman for questions he might have. 

Senator COLEMAN. Thank you. Thank the Chair. 

There are two areas I want to follow up on the energy. I know 

you have written testimony and some of it you have gone through. 

I want to support with you, we are talking about the energy opportunities but there are some challenges. One of them you talked 

about in your testimony is there is a reality. We have got corn, you 

testified, we have got CRP land and conservation. But we reached 

the point and possibly continue to make that point it has to be economically beneficial to some of our farmers to take the penalty, 

take the land out of CRP and plant corn. 

18

So the question becomes how can we allow the use of lands for 

CRP and at the same time biofuels, particularly as Senator 

Klobuchar talked about the switchgrass, and there are some opportunities. In your testimony you talked about support the use of conservation reserve program lands for the production of energy and 

biobased crops with commensurate payment reductions. You talk a 

little bit more about that. You see a future in which particularly 

we get to cellulosity. That we can maintain the conservation and 

maintain the CRP lands and at the same time allow growers to be 

able to benefit from some of the biofuel opportunities. 

Mr. JOHNSON. Senator Coleman, there are two specific recommendations dealing with that question. One says to take portions of CRP and use them for cellulosic energy as you have aptly 

described. Another one is think about even creating a new program 

for CRP, like program that says, you know, let’s encourage some 

of these, some of these farmers to put land into permanent vegetative cover and use that product for cellulosic energy. We are faced 

with a very difficult dilemma here in that we do not have any cellulosic energy production yet happening in this State or region and 

it is kind of a chicken and egg issue. 

One of the world’s leading cellulosic ethanol producers that told 

me repeatedly the single most important thing we can to do encourage them to build cellulosic ethanol plants is to demonstrate 

that we can grow and can find enough geographical area, enough 

perennial vegetation to feed a plant. It is an enormously important 

issue because this cellulose is basically dried up hay and that is 

about the way it will haul. It is going to be difficult to transport 

so you have to do it in a confined area. And so that is what those 

recommendations are trying to do. They are trying to get ahead of 

the curve and say let’s design some programs to encourage folks to 

grow these crops even though we do not have an ethanol or cellulosic energy plant yet here and see if we can’t attract them. 

Senator COLEMAN. You think it is important we do not pitt our 

energy needs against somehow being a conflict without resolution 

of our conservation needs? 

Mr. JOHNSON. I could not agree more. Here is one of the challenges that you have as policymakers. It is very true what you just 

said. There are folks who have CRP lands that if we do not provide 

the kinds of opportunities we have just been talking about, they 

are going to take the land out of CRP and put it in corn. Much of 

that land probably should not be in corn. Much of that land is more 

fragile land and just probably should not be used for that reason, 

so you could legitimately use it for perennial crop production. 

It is certainly a better conservation use of the land, and those 

kinds of things I think benefit everyone in the conservation community as well as the energy, security issue that everyone talks 

about. 

In my judgment it is very important, we do not want to just, I 

know there are those arguing just get rid of CRP because we have 

got $4.00 corn and these high prices are going to be here forever. 

That would be exactly the wrong direction to go in my judgment. 

We need to be mindful of conservation needs. We need to be encouraging the industry to get on with the development of cellulose. 

19

Senator COLEMAN. Certainly conservation programs allow the 

farmers to work in concert with folks concerned about habitat. 

One other line of inquiry. Again this issue of opportunity that is 

created by energy but at the same time presents some conflicts. 

You talk to some of the local ownership. The reality is that Wall 

Street is involved in energy. There is money to be made. There is 

a hassle out there. To maximize that, that is a good thing, but we 

all know that money that is kept in the community, spent in the 

community, there is a value added for that, tremendous value 

added. Do you have any thoughts on how we can maintain some 

aspect of local ownership to keep money in the community as we 

welcome, you know, the influx of capital into the ethanol, soybean 

biofuel, cellulosity? 

Mr. JOHNSON. Senator, some of the recommendations that we 

provide in detail in the documents do precisely that. They talk 

about tax incentives, for example, that can be used by individuals 

to set up large companies as ways of attracting local ownership and 

there are other recommendations that are as well. 

But you are so right that having local ownership is so important 

to these local communities. It is not to say we do not all celebrate 

when we get a big energy company coming in and developing the 

industry. But the economic multiplier effect is so much larger if 

you have local ownership, and so I would be happy to share all 

those recommendations with you. 

Senator COLEMAN. You have given my one possibility, that 35 billion fuel standard. Possibility of setting aside a percentage X billion 

gallons to be locally owned. 

Mr. JOHNSON. Sure. Sure. 

Senator COLEMAN. That something you looked at. 

Mr. JOHNSON. That would be a good example of one of the things 

we talked about. 

Senator COLEMAN. Love to support that. 

Senator CONRAD. Senator Klobuchar. 

Senator KLOBUCHAR. Thank you. Thank you, Commissioner 

Johnson. Appreciated your comments on the country of origin, and 

I just think that we should be talking about not where is the beef 

but where is the beef from and that has been, to me when I looked 

at this I now understand that this has just been a delay in implementation. I think just as much will help Minnesota and North Dakota. 

Can you expand a little bit on the issue in terms of how you 

think you can push this, what is in store from your perspective? 

Mr. JOHNSON. Well, I think we simply need to send a strong message to the Administration that we want to get more energy. Everybody knows the reason it keeps getting pushed back is there has 

been pressure and in the form of Congress as well there was just 

folks got along and said well, just do not write it another year, another 2 years, another 3 years and here we are, another 2 years. 

I think the America people, surveys have shown, overwhelmingly 

in the 80 plus percentile want to know where their beef is coming 

from. I think it is such an important issue we just frankly need to 

have the will to do it, the political will to do it, so I guess I would 

turn that question back to you as policymakers in Congress to simply do not delay it any longer. Insist that the law that was passed 

20

as part of the Farm Bill that we currently operate under gets implemented before the Farm Bill expires. 

Senator KLOBUCHAR. Very good. Last question is just to follow up 

on some of your charts here on the disaster payments and then the 

relationship with the crop insurance. I talked to the Governor 

about some of the Administration proposals that how they had gotten lost. Can you talk a little bit about that, better do it on individual basis or what you see in North Dakota? 

Mr. JOHNSON. Absolutely. This feature works on an individual 

farm basis and it is based on total revenue on that farm. This example is far too simplified to really capture what happens in the 

real world, but the idea is that that $140,000 number up there, 

that is total revenue for the farm from all sources, from all crops, 

and if you have, for example, a 50 percent loss in one commodity 

but your insurance payment does not even kick in on that commodity, the disaster payment will be there even though the insurance payment may not. 

So this concept to me is about how do you get whole farm coverage on an individual basis. In fact the Administration’s proposal 

which we have carefully looked at on their counter-cyclical revenue 

part, they talk about that on a national level instead of a local or 

individual level and, I mean, the concept makes a lot of sense but 

if you have a pocket in the country where there is no production 

and the revenue then is much lower, there is no advantage to calculating these numbers on the national level. You need to get it to 

where the need, and that I think should always be the purpose of 

disaster payments. Let’s get it to where folks actually suffered the 

disaster and let’s be careful that we try not to spread it to anybody 

else. 

Senator KLOBUCHAR. Thank you. 

Senator CONRAD. Can I just emphasize how important that is. 

One of the things we got to get out of these Washington Post stories is precisely that. We are casting too broad a net. It is undifferentiated assistance and we are always going to get told that it 

is wrong. 

Mr. JOHNSON. It is. 

Senator CONRAD. We have got some of our colleagues, we will not 

say what part of the country they are from, they are not from our 

part of the country, who want disaster assistance when they have 

not suffered a disaster. We have had a very, very tough fight with 

those folks. That is not right. That is going to kill the whole approach when we have got colleagues who want disaster aid when 

they have not suffered a disaster. 

Congressman Pomeroy. 

Mr. POMEROY. Commissioner, you talked about how I have to 

zero in on the core purpose in the Farm Bill, which is to protect 

family farms. They have to have some kind of meaningful payment 

and not dilute the assistance to most family farms. It politically exposes the program and frankly they underwrite the consolidation 

of the farms, and help chase the family farms out of existence. I 

think it is extraordinary you were able to get consensus across the 

Ag commissioners for payment limits. You have not been very successful in getting acceptance across the Ag Committee for payment 

limits. 

21

In testimony 2 weeks ago before the House Agriculture Committee, a very diverse group of commodities did have consensus 

against the Administration’s proposal where on adjusted gross income less than $200,000 is needed to be eligible to participate in 

the Federal farm program. We thought that was too stringent. Do 

you have a formula? 

Mr. JOHNSON. Well, one of things that we recommend, Congressman Pomeroy, is that the very first step in payment limitation is 

that your calculations have got to be solid. You can not have all 

the enormous loopholes around them. That is, in my judgment that 

is step one. 

You can talk about squashing that number down to, any number 

you want, if in the end people can get around it by creating multiple entities on top of multiple entities and getting a limit on top 

of a limit, on top of a limit, on top of a limit, it does not matter 

what the number is. 

So how we got consensus among the Ag commissioners, what we 

really did on this issue, I mean, it was unusual in this Farm Bill 

and the last time on the current Farm Bill we tried and we could 

not get any, I mean, we basically have a rule if somebody really 

strongly disagrees they get to field the idea, so among all the 50 

States we agreed that the most important thing is let’s be honest 

about what the numbers are and let’s make sure that you get rid 

of these loopholes, the three-entity rule, let’s bring in the trading, 

certificate trading opportunities under the limitation so that they 

all count. 

So the assistance that is provided really is limited by whatever 

the number is that you folks choose is appropriate. 

Mr. POMEROY. Thank you. 

Senator CONRAD. Thank you. Thank you, Commissioner Johnson, 

deeply appreciate you talking the time to be here and presenting 

testimony. 

Next I am going to call the third and final panel. Robert Carlson, 

President of the North Dakota Farmers Union; Jocie Iszler, representing North Dakota Renewable Energy Partnership; Mike Martin, Chairman of the North Dakota Grain Growers Association; Bill 

Hejl, Red River Valley Sugar Beet Growers Association; Kevin 

Waslaski, President of the Northern Canola Growers Association; 

Paul Thomas, Director of Northern Pulse Growers Association; 

Brian Kramer, Director of Public Policy representing the Farm Bureau; and Dr. Jason Hill, Department of Ecology, Evolution and Behavior; University of Minnesota. 

Let me indicate to you we are asking each of the witnesses to restrict your testimony to 5 minutes. Your full statement will be 

made part of the record. We also indicate we have a clock on the 

table to your left and the timer will hold up a 1–minute card when 

you have 1 minute remaining. Where is our timer? 

We want to indicate that because of the weather the Stockmen’s 

Association, their president could not get here because of the 

weather. We certainly understand that. And Jocie is here replacing 

Mike Clemens, who could not come because of the weather. And 

Brian Kramer is here replacing Eric Aasmunstad who I understand 

had a family emergency. 

Robert, welcome. 

22

STATEMENT OF ROBERT CARLSON, PRESIDENT, NORTH 

DAKOTA FARMERS UNION 

Mr. CARLSON. Thank you, Senator Conrad. Thank you, Senators 

Coleman and Klobuchar and Congressman Pomeroy for being here 

as well and for this opportunity to address the issues surrounding 

the new Farm Bill that is currently being developed in both the 

House and the Senate. 

Let me just get right at it. I will summarize the written testimony that has been submitted to your Committee. 

In general, the 2002 Farm Bill is popular among farmers and 

ranchers in North Dakota. It needs some updating, it needs some 

improvement in some areas, some increase in the loan rates and 

so forth. The biggest lack was the, or biggest deficiency was the 

lack of a permanent disaster program and we need to fix that in 

this Farm Bill. We need a permanent disaster program and we 

would suggest, as did the Ag commissioners, that a source of revenue for that program could be to take some of the, a couple payments we are currently getting, which I think runs at a little over 

$5 billion a year average, funding disaster program, I am told if we 

fund we have in the past would probably run about $2 billion a 

year. 

So maybe a portion of that, unless we sweeten the disaster program and take more, a portion of that, a couple payments could be 

used for funding permanent disaster programs and we would support that. 

On farm program changes, the most important thing in the farm 

program is a counter-cyclical safety net. Farmers do not need Government support when prices are good and production is good, we 

do need it when prices fall. 

And again, like a lot of farmers, we also tend to think when we 

have prosperity and when we have got prices they are going to last 

forever. Never in my history, which is getting to be a little bit 

longer than it used to be, have we ever had sufficient prices. So we 

need to be ready to provide a safety net in those times when prices 

drop again, as they surely will. 

A popular myth, Senator Conrad, you mentioned this a little bit, 

a popular myth in the urban press is that farmers get money from 

the Government just because they can. They really do not understand the counter-cyclical nature, the economics of agriculture and 

they think that somehow Government funding and Government 

programs are making farmers rich, and I would like to address 

that for just a minute. 

According to USDA, in 2005 the average farm income was about $76,000 but what wasn’t considered is that 80 percent of that total 

was off farm income, leaving just around $12,000 to account for actual farm income. We can do better than that. Farm policy should 

insure the producers can earn the income equivalent to families in 

other sectors of our national economy. In the current Farm Bill the 

counter-cyclical safety net approach works well and should be continued. 

The loan program, we believe, is the most important part of the 

counter-cyclical safety net and according to NDSU, the Center for 

Ag Policy and Trade Studies, the impact of the loan program is 

much larger than other parts of the farm program in terms of proVerDate 0ct 09 2002 11:43 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 C:\DOCS\35046.TXT SAG2 PsN: SAG2
23

viding a safety net to farmers, $16.00 an acre for medium sized 

farm. 

Probably just as important is some sort of indexing of loan rates, 

or payment rates to account for the increasing cost of production 

especially in times of high-energy costs. In the past loan rates were 

based upon historic prices, an average of past market prices. We 

believe this formula is out of date due to vastly higher production 

costs and escalating energy prices. We call for the loan rate to be 

based on the cost of production and we would call for the loan rates 

to have equity among commodities. 

Wheat, for example, has a loan rate right now at 70 percent of 

the cost of production. Barley is, or corn is at 85 percent. Some of 

the oil seeds are close to a 100 percent. We need to find a formula 

that achieves equity in the loan rates and we need to increase 

those loan rates based upon the cost of production. 

On conservation, very briefly, we want to see the conservation security program funded fully. We believe that does hold some promise for producers in our state. We would like to see CRP continued 

but only on the most environmentally sensitive lands, and we 

would like to see a CRP program that would offer shorter contracts 

for specific conservation needs. We would also encourage a conservation program that rewards producers for adopting practices 

that reduce greenhouse gases. 

On energy, we would like to see an energy title in this Farm Bill. 

It should include provisions, as we have talked about, or talked 

about somewhat already that would incentivize local ownership of 

the value added energy products, whether projects, what would 

they be, ethanol, biodiesel, or wind energy, cellulosic production, 

and so forth. We think that is important that ownership should be 

incentivized to be local. 

And, finally, members of the Committee, our vision of the success 

of any Farm Bill has to be the level of net income that is provided 

for producers. Farm policy should not be developed for multinational corporations, processors, importers or exporters. The family farm is the keystone for a free progressive democratic national 

societies as well as the strong America. 

Above all, the farm policy needs to recognize and build on the 

strengths of our nation’s agriculture. 

Thank you. 

[The prepared statement of Mr. Carlson can be found on page 57 

in the appendix.] 

Senator CONRAD. Thank you, Robert. Welcome. Thanks for taking over this assignment on short notice. We appreciate it very 

much. 

STATEMENT OF JOCIE ISZLER, ON BEHALF OF MIKE 

CLEMENS, CHAIRMAN, NORTH DAKOTA RENEWABLE ENERGY PARTNERSHIP 

Ms. ISZLER. Thank you, Senator Conrad and members of the 

panel. I appreciate this opportunity to testify on behalf of the 

North Dakota Renewable Energy Partnership. 

Mr. Clemens, who is from Wimbeldon, North Dakota was unable 

to be with us today, and I do feel comfortable being here because 

last year I was here as well. 

24

It has been my privilege, Mr. Clemens and I have served as chair 

to this group. North Dakota Renewable Energy Partnership consists of a cross-section of over 55 organizations representing both 

public and private sectors and has devoted enormous amounts of 

time and energy to promoting the development of renewable energy 

in North Dakota. 

Included in the written testimony is a list of partnership’s members. The memberships range from private citizens to groups representing a large consistency such as Xcel Energy, North Dakota 

Association of Rural Electric Cooperatives, and the North Dakota 

Farmer’s Union. The membership represents a significant portion 

of agricultural groups; however, the benefits of developing North 

Dakota’s renewable energy positively affects every North Dakota 

citizen’s life. Increased use of renewal energy means cleaner air for 

all citizens in North Dakota, not just farmers. And it will be all 

citizens, not just farmers, who will benefit from the higher paying 

jobs and additional state tax revenue and enjoy reducing our dependence on foreign oil. 

I would like to start referencing a study that the North Dakota 

Renewable Energy Partnership conducted this last summer in cooperation with the North Dakota Department of Commerce. The 

study, conducted by the UND Department of Governmental Affairs, 

assessed the opinions of 600 North Dakotans regarding renewable 

energy in North Dakota. The results indicated that 93 percent of 

the North Dakotans surveyed believe that renewable energy should 

be a priority for our State legislature. 96 percent believe that we 

should reduce our dependency on foreign oil by promoting renewable sources of energy and energy conservation. 

And all of the results of this study are summarized in this document which is provided in the back of the room. 

81 percent would support a law requiring utilities to generate 10 

percent of their electricity from renewable sources. Only 13 percent 

favored fossil fuels for new electricity if they had to choose only one 

source, while 80 percent preferred wind or other renewables and 

energy conservation. More than half are concerned about out-ofstate interests owning North Dakota wind projects. 

In response to the results of this survey, the Partnership’s main 

focus this legislative session has been Senate Bill 2288. The main 

objectives of this bill are the establishment of a comprehensive renewable energy policy for North Dakota, a Renewable Energy Research Counsel has developed a fund incentive and appropriations 

for those provisions by the State of North Dakota. The original legislation called for $20 million. The original, the written testimony 

includes 22 projects that could be funded via a competitive process 

established by the Renewable Energy Research Counsel and many 

of these projects do refer to a State and Federal partnership. 

First of all, funds advanced renewable energy commercialization. 

Provide competitive rewards to companies that would assist in 

commercializing promising technology in North Dakota, and I think 

that what Commissioner Johnson referenced in terms of glycerin is 

an appropriate project that fits with this. Eligible awards would include front-end engineering and design for a cellulosic ethanol and 

nanowhiskers project. These projects could range in the category of 

$2.5 million to $5 million. 

25

Another project is a dairy waste anaerobic digestion demonstration project. Mature technology now exists to provide low cost renewable energy to dairy farms that handle their manure as liquids 

and slurries. The EPA’s AgStar program estimates that many anaerobic digester bio gas systems can be installed with a simple payback of three to 7 years. A range of investment would be $200,000 

to $300,000. 

Another project is cost-share assistance for the installation of infrastructure to sell and distribute ethanol blends greater than 10 

percent and biodiesel with a range of $570,000. 

Support of ethanol processing for hydrogen production-system in- tegration. A range of $30,000 to $50,000. 

The message of the NDREP to your Committee, distinguished 

guests, is that North Dakota citizens are very aware of the State’s 

potential to producing renewable energy and are very supportive of 

using public funds for the develop of renewable energy. The Partnership is passionate about the growth of renewable energy in 

North Dakota and looks forward to supporting and advancing your 

work toward growing the nation’s renewable energy resources and 

the energy title of this next Farm Bill. 

[The prepared statement of Mr. Clemens can be found on page 

62 in the appendix.] 

Senator CONRAD. Thank you very much. 

Next we’ll hear from Mike Martin from the Grain Growers. 

STATEMENT OF MIKE MARTIN, CHAIRMAN, NORTH DAKOTA 

GRAIN GROWERS ASSOCIATION 

Mr. MARTIN. Thank you, Mr. Chairman. Welcome members of 

the Ag Committee and Congressman Pomeroy. 

Senator CONRAD. Can you pull your microphone a little closer to 

you, Mike. 

Mr. MARTIN. Sure. In recent testimony I provided to the Congress’ Subcommittee it was demonstrated that Specialized Wheat 

farms saw a 58 percent deficit in net income compared to other 

wheat farms. The disparity between the two wheat farm types is 

quite apparent. It cannot be attributed to any one factor. 

However, it does indicate that Direct Payment and Target Price 

levels need to be adjusted in the upcoming Farm Bill. Recent estimates by USDA painted a similarly gloomy outlook for the next 10 

years for the industry in general. All wheat net income for the 10–

year projected timeframe comes in at 49 percent of the average of 

competing crops. 

It has been acknowledged by the Secretary and numerous Congressional leaders that wheat was not treated equitably in the 2002 

bill. The 2007 Farm Bill proposal endorsed by our association and 

our national organization would bring some equity back to the 

wheat industry. The proposal would raise direct payments and target prices. 

We at North Dakota Grain Growers feel this is justifiable in 

order to maintain a healthy and sustainable state of wheat. 

Recent studies performed at Texas A&M indicate that without 

upward revisions and price support mechanisms for wheat in 10 

years, even wheat producers who are in healthy financial condition 

will be at the point ever financial collapse. So the question of what 

26

direction farm policy takes in the near term will inevitably determine the future existence of North Dakota Dakota’s No. 1 agricultural commodity. 

Mr. Chairman, another concern I have with the 2007 Farm Bill 

is the direction it takes concerning environmental policy. 

I feel the safety net that past farm bills have provided may well 

be lost to conservation programs. Commodity titles such as LDP’s 

and CCP’s provide the safety net that is sorely needed when producers face a negative market fluctuation. They not only provide financial stability to producers but also allow agriculture export 

trade and infrastructure to perform more efficiently. 

In addition it must be required that all climate change legislation be based on sound, peer reviewed science. 

The recent move toward biodiesel and ethanol only emphasizes 

the good decisions made in the past Farm Bills. The ability of our 

nation’s producers to respond to the market factors such as the 

corn demand for ethanol and oilseeds for biodiesel would not be 

possible without planting flexibility afforded in recent farm bills. 

The America farmers has shown throughout history are built to 

raise adequate amounts of food, fiber and now bio energy fuel supplies. 

In return for this adaptability, it is appropriate that our Federal 

Government provide an adequate safety net to agriculture when 

situations such as market aberrations caused by weather, disease 

and yes, even political decisions both here and overseas throw 

curve balls at our producers. 

In the very near future our producers will be asked to enter into 

a new phase of the food, fiber and fuel equation. The cellulosic ethanol industry will not be able to grow and develop without the aid 

of committed producers. It is therefore imperative that forward 

thinking industry leaders be supported when new ideas are introduced to this infant industry. One such effort includes a proposal 

that has been spoke of by Commissioner Johnson. 

NAWG has embraced this policy and it is promoting it nationwide. In a nutshell this proposal may well solve the perceived question of which comes first, the chicken or the egg, when it is determined where and when industry will develop new cellulosic ethanol 

production areas and plants. 

Mr. Chairman, in summary we must take a hard look at history 

when looking to the future regarding agricultural policy. The recent 

relative strength in commodity prices must not be assumed to be 

a new plateau in prices. We need only to look at a historical wheat 

chart to prove that point. It is quite apparent that the price levels 

we are now seeing have been exceeded twice and equalled once in 

the last 30 years. The decline in prices following those price peaks 

shows the need to be prepared for what most certainly will occur 

in the future. 

Mr. Chairman, thank you again for this opportunity. 

[The prepared statement of Mr. Martin can be found on page 88 

in the appendix.] 

Senator CONRAD. Thank you, Mike, thank you for that excellent 

testimony. 

Bill Hejl, Bill is known in North Dakota as a television star. 

Commercials and a campaign. 

27

STATEMENT OF BILL HEJL, PRESIDENT, RED RIVER VALLEY 

SUGARBEET GROWERS ASSOCIATION 

Mr. HEJL. Members of the Committee, Congressman Pomeroy. I 

am Bill Hejl, a farmer from Amenia, North Dakota and serve as 

President of the Red River Valley Sugarbeet Growers Association. 

We represent the farmers that grow sugar beets for American 

Crystal Sugar Company. Sugarbeet growers look forward to working with you to develop viable sugar provisions in the next Farm 

Bill. 

We also appreciate Chairman Conrad working with others in 

leadership in maintaining accurate baseline funding for the new 

bill. Additionally we understand the importance of a united agriculture and work shoulder to shoulder to develop commodities that 

allow American farmers to provide our nation’s food security. We 

support the no net cost structure of U.S. sugar policy and oppose 

corporations $1.3 billion a year subsidy plan we are certain subsidy 

checks for sugar would not result in lower grocery prices. 

The sugar industry in our region is comprised of three farmer 

owned cooperatives operating 10 factories in four states. Growers 

have owned these cooperatives since the 1970’s. We invest in new 

equipment and technology to efficiently produce and process our 

crop to keep U.S. sugar prices lower. The U.S. sugar industry has 

not had an increase in our support rate in 20 years. Yet our costs 

for fuel, fertilizer, and virtually every other input have increased 

substantially over that time. This has taken a toll on the America 

sugar farmers and the people who turn our crops into sugar and 

we have lost thousands of American jobs and more than 35 beet 

and cane factories have closed. The Farm Bill must address these 

higher costs. 

As we struggle with higher costs, we also fight to keep a share 

of our own market. Trade Agreements threaten us with more and 

more subsidized foreign sugar. We fight because without adequate 

raw materials our production costs increase dramatically. 

The current example of this fight is the trade relationship with 

Mexico. Our sugar prices have plunged since last year when the 

Administration committed to import 250,000 tons of sugar from 

Mexico and another quarter million from our WTO trade partners. 

This action on top of a bumper crop in the United States has significantly over supplied our market. Mexico does not have excess 

sugar to ship to us so they are buying it from neighboring countries. They are shipping sugar they do not have and we do not 

need. That just is not right. It especially is not right when American farmers have stored 300,000 tons of American sugar this year 

to balance ou r market. We could send it to Mexico but they have 

a 12 cent a pound tariff. The U.S. tariff on Mexican sugar is only 

a penny and a half. 12 cents versus one and a half cents, once 

again that is not right. We believe that the USTR and USDA 

should ask the Mexican government to increase its duty free tariff 

rate quota for U.S. sugar to 100,000 metric tons raw value and give 

the U.S. sugar producers duty free right of first refusal to fill any 

additional Mexican needs. If Mexico refuses that would clearly call 

into question their commitment to NAFTA. 

Our growers are also deeply concerned about Mexico’s long history of noncompliance with their sweetener trade obligations. Our 

28

government must insure the trade between our nations allows no 

cost sugar policies to continue. Failing that our Government must 

act swiftly as no industry can wait months or years to seek justice. 

There is no justice or victory in winning if you watch your businesses die. 

Finally, beet farmers are deeply concerned that the developing 

nations that export 75 percent of the world’s sugar do not have the 

same labor, safety and environmental laws we do. Those foreign 

producers will gain an advantage simply because of trade agreements. Please watch trade negotiations closely. Do not allow any 

agreement to ignore these differences. 

With the 2007 Farm Bill we agree with USDA’s proposal to retain the basic no cost structure in the existing sugar program. 

However, we object to the USDA’s request they be given sole discretion to reduce domestic sugar production. Secretary Johanns 

and USTR Ambassador Portman pledged to dispose of the surplus 

imports to balance the market only for the current Farm Bill. Now 

Secretary Johanns proposes instead to balance the market on the 

backs of American farmers. He should look out for American farmers and extend his commitment to dispose of surplus foreign sugar 

for the life of the new Farm Bill. 

Efficient U.S. farmers should not take a back seat to subsidized 

foreign sugar producers. As the world’s second largest sugar importer, it is trade agreements, not U.S. producers that over supply 

the American market. Therefore, we need a mechanism to efficiently use surplus sugar if we are to remain no net cost. U.S. producers are in the business of providing sugar for the food market. 

However, when the market is oversupplied as a result of excessive 

access provided by trade agreements, one of the few alternative 

uses for that sugar may be bio-fuels. Sugar, as an addition to 

America’s bio-fuel needs will take some time to develop, and may 

require Government interventions similar to those used in competing countries such as Brazil and the European Union. 

Finally we are working to make the sugar program more predictable to improve the Secretary’s ability to properly administer it. We 

will share those details with you in the near future once we finalize 

our recommendation. 

Thank you for this opportunity to share our views. 

[The prepared statement of Mr. Hejl can be found on page 64 in 

the appendix.] 

Senator CONRAD. Thank you, Bill. Appreciate very much your 

testimony and we all know we have got challenges in various sectors of the industry. We have got special costs for our neighbors 

from the south in Mexico. Been a series of what I would characterize as misrepresentations by them in our negotiations and we 

simply have to adjust for that in the new Farm Bill. 

Next is Kevin Waslaski, President of Northern Canola Growers 

Association. I hope I pronounced your name right. 

Mr. WASLASKI. Yes. 

Senator CONRAD. You tell me how do you say it. 

Mr. WASLASKI. Waslaski. 

Senator CONRAD. Welcome. 

29

STATEMENT OF KEVIN WASLASKI, PRESIDENT, NORTHERN 

CANOLA GROWERS ASSOCIATION 

Mr. WASLASKI. Thank you. Thank members of the panel for inviting me here. 

I would like to thank you at this time for your funding of these 

farm research projects and as you know they are earmarked so we 

did get funding. Very valuable piece of work for us and keep that 

in our Farm Bill every commodity can use research funding. 

And we also like to thank you for your continued effort on the 

disaster. It shows a need for crop insurance reform and disaster 

title. 

Oilseed producers support the basic structure of the 2002 Farm 

Bill. However, they are not satisfied with the level of support provided oilseeds under the 2002 act, and urge Congress to adjust 

these levels. 

There has been no counter-cyclical payment to oilseed producers 

under 2002 Farm Bill. These distortions can cause major shifts in 

planting decisions between crops. To address these inequities, oilseed producers support adjusting marketing loan rates and target 

prices upward to common percentages of recent average prices. The 

5 year period of 2000 to 2004 is selected because it includes several 

low price years as well as several high price years. An olympic average of season average prices. 

For the marketing loan program, the proposal sets loan rates not 

less than 95 percent of the Olympic average. The counter-cyclical 

program target price would not be set less than 130 percent of the 

2004 Olympic price average. 

On the energy title of it, the Northern Canola Growers supports 

authorizing a biodiesel incentive program under which the Commodity Credit Corporation would make commodity reimbursements 

to domestic biodiesel producers to offset foreign government incentives provided to biodiesel exported to the United States. 

Unlike ethanol, biodiesel does not have an import tariff to offset 

the value of its tax incentive. Biodiesel importers who pay U.S. 

duty of only 4.5 percent are eligible for the one dollar per gallon 

agri-biodiesel tax credit. We are starting to see ships coming into 

our gulf with T–100 and they are getting the tax credit, blending 

it, sending it back overseas. It is not even used in our domestic 

uses. Is so we need to support this biodiesel incentive. Argentina 

taxes biodiesel exports at 5 percent but they tax exports of soybean 

oil at 24 percent so they are supporting 19 percent, having it 

crushed over in their own country and shipping it over as biodiesel. 

There is a differential there. 

Under the expiring bio energy program, biodiesel incentive program would authorize CCC to use eligible commodities to reimburse U.S. biodiesel producers on all domestic biodiesel production. 

The reimbursement would equal the 43 percent per gallon benefit 

to biodiesel exported under Argentina’s DET export subsidy program. 

The biodiesel incentive program would also help new U.S. biodiesel industry survive periods when the price relationship between 

soybeans or canola oil diesel and petroleum diesel is negative for 

biodiesel production. This is particularly important as investors are 

30

responding to the new biodiesel tax incentive by building biodiesel 

plants in rural America. 

And last I would like to mention a little bit on the beginning 

farmer. I do not see a lot of people my age that their sons are graduating from high school even considering letting their kids start 

farming. They are all pushing away from farming. We need to get 

incentives there to keep the beginning farmer. 

[The prepared statement of Mr. Waslaski can be found on page 

102 in the appendix.] 

Senator CONRAD. Thank you, Kevin. 

Next, we will hear from Paul Thomas, Director of the Northern 

Pulse Growers Association. Welcome, Paul. 

STATEMENT OF PAUL THOMAS, DIRECTOR, NORTHERN PULSE 

GROWERS ASSOCIATION 

Mr. THOMAS. Thank you, Chairman Conrad and members of the 

Committee. I am providing testimony for the Northern Pulse Growers who is a member of the U.S. Dry Peas and Lentil Council. We 

work together with growers in Montana, Minnesota, South Dakota 

and across the northern tier. They come together with a united 

front for representing our program. 

First of all, I would like to say that you know a lot of us in our 

industry and in our neighborhood are starting to use the P word 

again. That P word is not necessarily yellow pea or green pea but 

it is profit. That is here now. We believe that that is not always 

going to be here. That is why we need to keep the fundamental 

parts of the Farm Bill the way they are now with the counter-cyclical provision, the loan rate and build off that success and improve 

upon that. 

The 2002 Farm Bill was the first time our crops peas, lentils and 

chickpeas were included in the farm program. There are loan rates 

support payments that we as producers of peas, lentils and chickpeas support the current levels of the loan rates in the farm program right now and we would like to maintain those levels where 

they are at for our specific crops. In the 2002 Farm Bill, one crop 

that did not get provision in that was the large chickpeas. Small 

chickpeas are supported but the large chickpeas were not. We 

would like to resupport removing large chickpeas from the fruit 

and vegetable list and including them with the support price in 

this next 2007 Farm Bill. 

In my testimony I have the support levels that are there and support levels we are proposing on chickpeas which is $18.00 and 

go through how we came up with that in the support levels of justifying that. 

Also, in that last Farm Bill the pulse crops were not included 

with the direct and counter-cyclical payment provisions. Now if 

there are ways that we can work with the Committee and involves 

pulse crops in those direct payments levels we would like to make 

that equal to wheat payment levels, and then also the counter-cyclical provision that royalty groups are proposing are very supportive of that. 

One new concept that we have in the pea, lentil and chickpea industry developed is called the pulse energy conservation incentive 

payment and we even got Nate Ackerman to support. 

31

Senator CONRAD. That is the Nate Ackerman? 

Mr. THOMAS. Yes. 

Senator CONRAD. We will take your word for it. 

Mr. THOMAS. In order to reduce our incentives on foreign oil, we 

certainly support energy enhancement programs that support renewable energy developing renewable energy projects. We also 

think there should be a provision that supports reduction in the 

use of fossil fuel and in fertilizers and programs such as that. And 

we feel that pulse crops, ones that do not require adding fertilizer, 

nitrogen, phosphorous should be produced should also be rewarded 

in reduction on the nonreliance on not natural materials that we 

have to purchase through energy making products. So we have developed a program that is in our testimony there, too, with the 40 

pound rate of nitrogen credit saving at nitrogen levels that would 

pay producers $15.00 an acre for producing pulse crops. 

Senator CONRAD. Your group came and presented this proposal 

some weeks ago. I really think you have been very creative. It is 

a new approach. You know, anything new is going to be extremely 

difficult to get but there is a strong rationale for what you put forward and if it fits into the basic concept of this Farm Bill, it is 

going to be very energy oriented, so I salute you and your group 

for being creative. 

Mr. THOMAS. With the Ackerman group? 

Senator CONRAD. No. 

Mr. THOMAS. So in summary on the main things, we are very 

supportive of where we are at and be included. 

There is a couple other things I would like to note that our organization would really like you to consider is an increase in MAP 

and FMD funding. We are proposing increases of MAPs of $325 

million, FMD of $50 million. Those marketing programs really help 

us in promoting our crops overseas and helping to compete with 

other countries. 

The other thing is food aid. Our crops sustain food aid and the 

inclusion of the aid programs and we are strong supporters of remaining, or keeping that program, purchasing U.S. commodities 

with cash and not just providing that cash out there. 

We noted a couple and, in my testimony I have got a lot more 

things. I appreciate the opportunity to speak today. 

[The prepared statement of Mr. Thomas can be found on page 94 

in the appendix.] 

Senator CONRAD. Thank you, Paul. 

Next we will hear from Brian Kramer from the Farm Bureau. 

Brian, again thanks for filling in on short notice. 

STATEMENT OF BRIAN KRAMER, ON BEHALF OF ERIC 

AASMUNSTAD, PRESIDENT, NORTH DAKOTA FARM BUREAU 

Mr. KRAMER. Thank you Chairman and members of the Committee. 

As Senator Conrad said, my name is Brian Kramer and I am 

standing in for our state president today. We certainly thank you 

for holding the hearing here in the State of North Dakota. 

The Farm Bureau believes that a continued maintenance of the 

structure and funding that we have in current Farm Bureau, or 

current Farm Bill is a high priority. The Bill provides a safety net 

32

for producers, provides leverage for the trade negotiators and provides needed conservation program support. 

Since the WTO talks were suspended it is uncertain and it is uncertain whether they will resume. We seek an extension of the current Farm Bill. 

Senator Conrad spoke of some of the talk in D.C. and Washington Post in their taking a hit at producers for farm program 

payments, but we need not apologize for our farm program payments to our farmers. Farm program payments are a public investment in the nation’s food, environmental and economic security. 

They help provide some measure of stability to a volatile business 

of food production and keeping the Americans supplied with the 

safest and most affordable food in the world. The consumers think 

they are getting a good deal by spending less than 12 percent of 

their disposal income on a nutritious, safe and quality food supply, 

then they should conclude that it is a good policy to provide a 

measure of stability in our food production system. 

There has been some talk of the Farm Bill payment limitations. 

The Farm Bureau opposes changes in the current Farm Bill payment limitation. One of the primary objectives of the Farm Bill was 

to improve the financial safety of our farmers. Proponents argue 

that Farm Bill causes farmers to enlarge their operations. This 

oversimplifies farm economics. Farmers expand in order to achieve 

economy of scale and to be competitive in domestic and international markets. Limitations and increased regulatory burdens do 

not promote efficiency or competitiveness but they do increase the 

cost. 

Despite the big payments that are always highlighted in the 

press reports, the vast majority of farm program payments go to 

family farm operations. 

I would like to turn now to conservation programs. The current 

Farm Bill is the greenest Farm Bill in history in terms of authorized conservation funding. Improved environmental practices will 

benefit everyone through improved soil, water and air quality and 

wildlife habitat. Voluntary and incentive-based programs have historically worked the best for our producers. 

We need to be careful as we consider a more conservation-based 

program to keep in mind the income support that the current program provides. Conservation programs are not a perfect substitute. 

Consider the CRP program. It could be argued that it actually displaces farm income on a dollar-for-dollar basis. Working conservation programs such as the EQIP program and CSP program share 

the cost of environmentally friendly investments in farm capacity. 

Conservation programs are critical but they have to work in conjunction with rather than as a substitute for current commodities 

programs. 

We expect working land programs to become linchpins of conservation titles. As such they must be made available to all producers and adequate funds must be appropriated to make it effective programs. CSP in North Dakota has not been made available 

to all of our producers. And there have not been adequate funds for 

that program. A lot has been talked about renewable fuels. Renewable fuels, renewable energy must play a major role in the next 

farm Bill. Funding for projects, research and biodiesel and wind enVerDate 0ct 09 2002 11:43 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 C:\DOCS\35046.TXT SAG2 PsN: SAG2
33

ergy are very important. Expansion of renewable energy in North 

Dakota is encouraging. The opportunity for ample agriculture must 

be considered in light of that. 

Mr. Chairman and members of the Committee, there is a number 

of other things that I have listed here but it is in our complete testimony and with that I will stop. 

[The prepared statement of Mr. Aasmunstad can be found on 

page 52 in the appendix.] 

Senator CONRAD. Thank you, Brian. Thank you for your testimony. Thanks again for filling in for Eric, who had a family emergency. 

Next we will hear from Dr. Jason Hill from the Department of 

Applied Economics for the University of Minnesota. Welcome to Dr. 

Hill. 

STATEMENT OF JASON HILL, RESEARCH ASSOCIATE, DEPARTMENT OF ECOLOGY, EVOLUTION AND BEHAVIOR, UNIVERSITY OF MINNESOTA 

Mr. HILL. Thank you very much, Mr. Chairman, and members of 

the Committee. Thank you for the opportunity to speak with you 

today about the research on biofuels my colleagues and I conducted 

at the University of Minnesota. 

There I am part of a diverse team of economists, agronomists, engineers, ecologists and policy experts who are collaborating to better understand the various facets of renewable energy production. 

The rapidly expanding biofuels industry in this nation has been 

led by corn ethanol and soybean biodiesel. Together these have offset a portion of our gasoline and diesel use while boosting farm 

profits and reducing greenhouse gases. Although both of these 

biofuels are and will continue to be integral parts of our transportation energy portfolio, we need to expand and diversify our biofuel 

supplies. We need to develop biofuels produced from feedstocks 

grown on land other than our most fertile farmland. We need to do 

this in ways that benefit both farmers and the environment. 

Our work has identified one such system that is ideally suited 

to production on our marginal and degraded lands. We found that 

biofuels with tremendous energy, economic, and environmental advantages can be produced from mixtures of native prairie plants including grasses, legumes and other wildflowers. Allow me to briefly 

describe the experiments we have conducted. 

This is our plot in East Bethel, Minnesota. Each one of those little squares there is 10 yards by 10 yards. 

We wanted to learn which mixtures of native prairie plants are 

best for producing biofuels such as ethanol. Which mixture, for example, would produce the most energy and which mixtures would 

reduce greenhouse gases the most. Also how much new energy and 

greenhouse gas reduction would a mixture of species provide compared to a single species such as switchgrass? 

To answer these questions we planted 168 plots with either a 

single species like switchgrass or a mixture of species (2, 4, 8 or 

16) on this agriculturally degraded farmland. For over a decade we 

measured the total amount of biomass each plot yielded and the 

total amount of carbon dioxide that each plot removed from the air 

and stored in the soil. 

34

We found at our study sites mixtures romoved large amounts of 

16 native prairie plants species produced 238 percent more energy 

on average than a single species such as switchgrass. We also 

found the highly diverse mixtures of carbon dioxide from the air 

and stored it in the soil, but that a single species did not. Why do 

we see these trends? Essentially highly diverse mixtures use available resources more efficiently—resources such as light, water and 

nutrients. 

Also in highly productive mixtures legumes, such as pulses, purple praireclover and wild lupine, were able to pull nitrogen from 

the atmosphere and make this important nutrient available to 

grasses such as big bluestem and little bluestem, which grew much 

larger as a result. 

The environmental benefits of producing biofuels from diverse 

prairie biomass are striking. Most amazingly producing and using 

ethanol from diverse prairie biomass can actually reduce the 

amount of carbon dioxide in the atmosphere. This is because a diverse prairie removes more carbon dioxide from the air and stores 

it in the soil than is released into the air when fossil fuels are 

burned to farm prairie biomass and convert it into ethanol. 

Senator CONRAD. How much of an advantage is there? What are 

we talking about, 5 percent or 10 percent? 

Mr. HILL. With a single species we saw no carbon dioxide removed, but with 16 species we found it was many tons per acre. 

So there is a definite benefit to the synergy of the species in carbon 

storage. 

Senator CONRAD. So it really works. 

Mr. HILL. It really does. There is a copy of the paper. 

Senator CONRAD. What page of your testimony would have that? 

Mr. HILL. It would be, I have a handout here that summarizes 

the results from this paper that has the actual numbers behind 

this. If you are interested——

Senator CONRAD. That has already been published. 

Mr. HILL. This has already been published and peer reviewed 

and made the cover of Time. 

Senator CONRAD. That is great. 

Mr. HILL. The carbon dioxide prairie plants removed from the atmosphere is stored as soil organic matter. This, along with the nitrogen added to the soil by native legumes——

Senator CONRAD. You are doing better work down at this University of Minnesota. 

Senator KLOBUCHAR. And I also wanted to note just to make it 

worse, Dr. Tillman works for Dr. Hill and also had an article in the 

Washington Post. 

Senator CONRAD. The back page. 

Senator KLOBUCHAR. They actually had gotten beyond the scientific journal and we are very helpful to be helping us in Washington as we develop the cellulosic ethanol. 

Mr. HILL. We certainly appreciate it. Should I quickly summarize 

the rest of this or is there time to keep going? 

Senator CONRAD. This guy may be running for the U.S. Senate. 

Briefly summarize. That is very good. 

35

Mr. HILL. The conservation benefits can be maintained if we 

mow prairie at the end of the growing season and leave portions 

for wildlife. It positively affects both wildlife use and energy use. 

The advantages for producing prairie biomass both to farmers 

and the biomass industry are remarkable. We can grow this on 

marginal and highly erodible lands such as those often put into 

CRP or CSP, and leave fertile farmland for traditional crop production. 

Also an acre of prairie biomass grown on marginal land can yield 

as much or more net energy in biofuels as an acre of corn ethanol 

produced on fertile cropland. This is because the fossil fuel energy 

requirements for growing prairie biomass and converting it into 

ethanol are so low relative to the amount of energy, fossil energy, 

to grow corn and convert it to ethanol. Once the prairie is established, it can be grown at considerably less expensive to farmers 

than either corn or switchgrass. This is because a prairie needs to 

be planted once, and maintaining it requires no pesticides or herbicides and only trace amounts of fertilizer. 

The advantages are clear. How can we best promote cellulosic 

biofuels such as ethanol from diverse prairie biomass as valuable 

complements to our existing crop-based biofuels. The question has 

taken on particular importance now that high corn prices are enticing farmers to take marginal lands out of conservation programs 

and place them back into corn production. This acreage shift has 

negative consequences not only for erosion and wildlife habitat but 

also for the carbon cycle. This is because land taken from conservation programs and returned back to production loses its ability to 

sequester carbon, even if no-till or reduced-till corn cultivation 

practices are followed. 

Making diverse prairie biomass ethanol or any other next generation biofuel a reality hinges upon recognizing that land can provide valuable ecosystem services such as carbon sequestration and 

soil restoration. We must reward those who treat the land in ways 

that provide these services to society. Incentive support may flow 

either to the farmers who manage the land or to biofuel producers 

who purchase biomass grown in environmentally beneficial ways. 

Such incentives may be in the form of direct support for farmers 

who grow diverse prairie biomass and I have seen drafted in legislation that Senator Klobuchar is putting forward. I am very 

pleased you are taking the lead on turning this opportunity into reality. 

We are now at a time when the rapidly expanding biofuel industry has effectively wed together three of our fundamental needs, 

energy, food and the environment. Our challenge is to find and promote solutions that mutually benefit our nation on all three fronts. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Hill can be found on page 67 in 

the appendix.] 

Senator CONRAD. Thank you, Dr. Hill. Were you raised on a 

North Dakota farm? 

Mr. HILL. No. I was raised on a Minnesota farm. My father sold 

corn seed for a living. 

Senator CONRAD. We appreciate very much your testimony. I appreciate this entire panel. I know Congressman Pomeroy has to——

36

Mr. POMEROY. The Governor is taking an airplane so I am driving. We have a meeting in Grand Forks tonight. 

This is very diverse and the prospectus is being extremely illuminating to us. I thank you and thank you again for your participation. 

Senator CONRAD. I would like to ask the panel, now the whole 

thrust of this Washington Post series is that farm program is a 

waste of money, that it’s going to buy rich farmers and they are 

getting paid to do nothing. What would your answer be to people 

who are really, frankly our colleagues are reading this and those 

who do not know, are not intimately familiar with agriculture policy, they are wondering gee, has the Washington Post got this 

right. Robert, what would you say? 

Mr. CARLSON. Well, the Washington Post, obviously, does not 

have it right. They are, as you suggested, printing very misleading 

statistics in talking about the total number of U.S. farms and what 

percentage of those get farm program payments and, of course, you 

can make it look as if a few large farms, and do not often define 

what they call a large farm. So it is misleading, it is inaccurate. 

If they took a sample, let’s say they took a sample of a county in 

North Dakota or in Minnesota and said where do these farm program payments go and what is the average, that would be a truer 

picture and I wish they would do that. The other thing they do that 

really, I think is also threatening, they being the Washington Post 

and New York Times and Los Angeles Times is saying our farm 

program keep the Third World or developing nations in poverty, 

nation’s farmers in poverty and a lot of cases those Third World 

countries 70 percent or more of the population lives pretty much 

on a subsistence basis in rural areas and not technically farmers. 

That is not true either. We demonstrated that. 

We had a large group in last week, Senator, in Washington, DC 

from around the world, Africa, Asian farmers who were saying basically Cargill does not speak for me and your farm programs are 

not hurting our farmers. It is what the trade agreements did to us 

that are hurting us, requiring us and the developing countries import foods that they had been more self-reliant with producing 

themselves. So there is a lot of misinformation out there. We have, 

I think farm organizations need to do a better job of explaining 

what these programs actually mean to our producers. 

Senator CONRAD. I am going to go right down won’t too ask this 

question. This is your area. I would ask the other go right down 

and we will go to Senator Coleman. What would you say to the 

general thrust of these Washington Post articles? 

Ms. ISZLER. I think it is important to fight misinformation with 

solid facts and I think the facts that the average American totally 

spends 9.9 percent of the disposable dollar on food versus Europeans at 18 percent speaks volumes. You have the cheapest food 

supply in the world and people need to be reminded of on that. 

Senator CONRAD. Very good point. 

Mike. 

Mr. MARTIN. Thank you for the question, Senator. 

Perhaps this issue will never go away so we must address it 

straightforward and honestly. The biggest question is the percentage of cost of food for our people in our country. And one of the 

37

things we might want to really take a hard look in defending that 

policy is the experience we just had these past 3 weeks regarding 

dog food and cat food from imported wheat by-products, not domestic products. 

Senator CONRAD. Very good point. 

Mr. HEJL. Thank you for asking the question, Senator. I have got 

a political cartoon showed up in the local paper recently. I retired 

from 34 years, almost 34 years of military service recently and I 

do not appreciate the misery of farmers being associated with the 

denying of our troops funding. It is a disaster of some of these national articles. The misery of farmers should have nothing do with 

funding our troops. If they go that far, you know they are telling 

lies about the rest of it. Thank you. 

Senator CONRAD. Thank you. 

Kevin. 

Mr. WASLASKI. Yes. Thank you. 

I have farmed for 27 years now and I would dare say that of all 

the years most of my input and what I get out of this crop is it 

takes most of my input. What I have received from Government 

payments has been my farm income most of those 27 years. Without that farm income I think I would have a net farm loss every 

year. 

Senator CONRAD. Well, that is a pretty powerful point. 

Paul. 

Mr. THOMAS. Kind of like to reiterate what Kevin said. I worked 

for 7 years for commodity groups in North Dakota before returning 

home to the family farm 3 years ago. 

Senator CONRAD. Where is your place, Paul? 

Mr. THOMAS. Velva, North Dakota. 

You know, I have always heard what Kevin just said, and after 

working for commodity groups and hear that and hear that, it does 

not really mean that much to you until you are actually there and 

full time and your life depends on that income from that farm, and 

after 3 years I know our family would not be there if it was not 

for Government support. 

Senator CONRAD. Brian. 

Mr. KRAMER. Thank you. As I said earlier, we do not need to 

apologize for our farm programs. U.S. consumers reap many benefits from our farm programs and payments we receive for those, including a top quality stable economical food supply, including an 

environmental security that is next to no one in the world, including an economical food supply, better soil and water quality, air 

quantity, those types of things. If the American public wants those 

types of things and wants an inexpensive, very good food supply, 

then we need to have a farm program. 

Senator CONRAD. I appreciate that. I appreciate the answers by 

all of you and I appreciate the passion you bring to this and the 

effort and energy you have put into helping agriculture be successful in this State and in this region. 

Senator Coleman. 

Senator COLEMAN. Thank you, Senator. That was a great question. I’m going to delve into a part of it. I think you summed it up. 

Great question and thank the panel. 

38

I do have another thing to factor into it. If you had a pulse energy conservation and nitrogen credit program you can have a 

cheese cake program which would be very powerful. Lots of ideas 

that are out there. One of the number of constants I want to share 

with you throughout these panels, one, obviously the reports of a 

safety net and the sun does not always shine. I think we got that 

message so we will be able to act on it. 

The other obviously is energy issue and the energy opportunities 

that are out there. 

Dr. Hill, how soon do you think we could move to some commercialization of some of the cellulosic opportunities that are out 

there? 

Mr. HILL. We can begin today. One of the things we are putting 

together is on the back of the handout I have here—is using biomass in existing ethanol facilities to provide process heat and electricity. This helps us resolve that chicken and the egg scenario 

where we have a market already existing for biomass. When the 

processes for making cellulosic ethanol come online, biomass will 

alreasy be available. Ethanol plants can make that transition later. 

So we need to begin establishing the prairies, the lands today 

and provide incentives for ethanol producers to utilize the biomass 

as an energy source in their current production. 

Senator COLEMAN. The ability to pull together energy and food, 

environmental its just pleased I am at the center of all the topics. 

Mr. Hejl, I wanted to comment on, I had the Undersecretary of 

Farm and Agricultural Services, Dr. Keanon come before our committee for confirmation. I asked him about the issues you talked 

about, the resolution the dispute resolution of his predecessor handled and he apologized in front of me. Said that, and these are his 

words that they at USDA had underestimated sugar yields based 

on estimates. They allowed more imports than they needed. The reality, of course, is these people’s lives are affected by this. I think 

the actions of the predecessor outrageous and hopefully we have 

learned from that experience. 

Also on the energy issue, I have raised this issue, sugar ethanol, 

and I notice there is concern about doing anything that undermines 

the validity of a no course program, no course tax base. Kind of 

hold your breath. The reality, and that has to be preserved. At the 

same time I do not see any conflict with that. I guess my question, 

it is not in conflict but the reality with these trade agreements, 

with NAFTA, in 2008 we face the prospect of significant input of 

Mexican sugar, that we need something to soak it up so we keep 

our sugar program in way that continues to be so important to taxpayers. There has been a lot of discussion about that. What is your 

position on the prospect of the sugar ethanol program, something 

that we should take a look at. 

Mr. HEJL. Sugar ethanol or any biofuel program is something we 

are currently talking with our brethren about and we are not quite 

ready with a national position on that. We are certainly looking 

forward to working in a bipartisan way with the Committee on that 

when you come up. 

Senator COLEMAN. I am told that 100 million gallons of sugar 

ethanol production would take could be, in Florida, but could take 

care of all the conditions of imported sugar and allow us then to 

39

preserve that no course program. I look forward to working with 

you. 

Mr. HEJL. We look forward to working with Congress and every 

Member of Congress. 

Senator COLEMAN. Mr. Martin, your full testimony is in your oral 

testimony, your written testimony. Again, looking at cellulosic, you 

recommended 40 percent the cost of cellulosic feed stock for the 

first year of cellulosic ethanol refineries life be offset. I would like 

two questions on that. 

One, the 40 percent figure, where does that come from? And do 

you think that will be enough of an incentive in year terms, question is, in year terms two to 3 years investment in cellulosic ethanol products? 

Mr. MARTIN. The 40 percent is a figure that can be raised, can 

be lowered. We have to start somewhere in trying to decide how 

we can solve this problem of developing cellulosic energy. I was 

very encouraged not necessarily by who got the funds but recent 

grants from the energy department to Iogen and to several different companies to help move forward with a cellulosic initiative. 

Now companies such as Iogen are looking at additional funding, 

loan guaranties for their ventures. Iogen itself has been looking at 

starting their plant in Idaho last fall. Now it has been put off to 

next spring. We are encouraging quick action in order for them to 

move forward with their pilot program, and we are also encouraged 

by work we are seeing in Iowa where a corn based plant is being 

converted into a cellulosic plant. 

Senator COLEMAN. One other question. You know if there is survey in Minnesota similar to what, I would suspect Minnesotans 

would have the same strong public support for renewables. Are you 

aware of any similar data on a regional basis or is it simply something you have done in North Dakota and they have not done in 

Minnesota. 

Mr. MARTIN. Are you speaking of the energy title? 

Senator COLEMAN. The survey work. I am trying to find out what 

Minnesota, and I like to if strong public overwhelming some of the 

numbers, including, by the way, North Dakotans looking at obviously renewables over the oil based platform, but the numbers 

were pretty extraordinary. Do you know if there is any work in 

Minnesota? 

Mrs. ISZLER. I am not aware of a similar survey in Minnesota. 

I think that the North Dakota survey was, an inspiration behind 

doing the survey was to confirm what many people in the industry 

believe to be present in public opinion. Of course, Minnesota has 

been very much a leader in actually doing some of the things that 

North Dakota is working on. So perhaps the survey was not necessary in Minnesota. 

Senator COLEMAN. She should be a senator. 

Senator CONRAD. Wait a minute. Wait a minute. You know, you 

know, we are so pleased with the representation. 

Senator COLEMAN. I could ask many more questions but I am not 

going to ask you any questions. I see Kevin from the Minnesota 

Farm Bureau is here. I ask him questions all the time. I will do 

that off the record. 

40

Thank you again. Extraordinary panel. If we had time I would 

have more questions. This has been very, very great help for us 

and we have questions and we will take this back to Washington 

and what you said here will make a difference. 

Senator CONRAD. Thank you. Thanks for being here, Senator 

Coleman. 

Senator Klobuchar. 

Senator KLOBUCHAR. Thank you and thank you, Senator Conrad, 

for making my first farm field hearing so pleasant. 

I just wanted to talk to our Minnesotans down there, Dr. Hill. 

To expand a little on Senator Coleman’s question about when can 

we start seeing some commercial use and you talked about how we 

could see it now. But my question is more about how, why we need 

support for this project. 

You can not just put it out there on market, but my understanding you do not reap the benefits immediately from the 

switchgrass in terms of the harvest and it takes time to do that. 

Can you expand on that a little bit? 

Mr. HILL. It does take some time for the farmers to establish the 

perennial prairie system. It is a system that requires essentially 

killing off what is on the land already and planting seed and reestablishing it in native species and waiting for a few years. Mowing 

it every so often at first gives some biomass, but not as much as 

you get later as the prairie becomes more established. So it is the 

sort of thing where you begin establishing the land to produce biomass at the same time that industry is moving forward on the efficiency of converting biomass to ethanol and other biofuels. Together they will progress one along side the other. 

Senator KLOBUCHAR. Thank you. Thank you for your work on the 

issue. You know we are proposing some legislation that not only focuses on some incentives and work for farmers but continues with 

your work and land grant researchers, I think, Dr. Hill. Thank you. 

With Minnesota and North Dakota we need to focus on these 

issues. 

Mr. Hejl, I wanted you state earlier talking about the issues related to the fact there has been some violations, Mexico sending 

their sugar up and at the same time they might be taking sugar 

from other countries. I heard Guatemala, but other countries have 

got cheaper sugar. Could you talk the effect that would have on 

farmers and families in the Red River Valley? 

Mr. HEJL. I can talk about the effect it is having already. It 

dropped our sugar prices dramatically since the announcement was 

made last August. It depressed the market in United States since 

that announcement was made. If the same thing continues to happen after January 1 it is going to be that much more devastating. 

Continuing to ship sugar they do not have and we do not need up 

here, it is just not right. 

Senator KLOBUCHAR. You called it to the attention besides us 

today of the Administration should be enforcing this agreement. 

Mr. HEJL. We have. We appreciate the bipartisan support we are 

getting to try to fight this issue, especially with a 12 cent tariff 

going that way and penny and a half coming back here. That is 

crazy. 

41

Senator KLOBUCHAR. I also wondered about this issue of the E85 

pumps and attempt to try to get more ethanol pumps in our field 

stations across the country and I wondered if, Mr. Martin, do you 

have any comments you would like to make about that and what 

happened where North Dakota and efforts to try to spread the 

availability of renewable fuel pumps at the stations. 

Mr. MARTIN. I will defer to Jocie, our expert. 

Ms. ISZLER. In terms of expanding the E85 stations, your question was in terms of the nationwide or in North Dakota? 

Senator KLOBUCHAR. I wonder if there was effort going on in 

North Dakota and any thoughts you had to expand the availability. 

Ms. ISZLER. I think the biggest challenge that North Dakota has 

had in E85 expansion of stations goes to availability. Much of the 

expansion that we experienced a couple years ago when we had 21 

cent tax break was due to the fact that our stations were sources 

of ethanol from Minnesota and South Dakota. That was abruptly 

shut off when ethanol prices went to $3.00 a gallon because those 

ethanol plants did need to provide for their spot markets which 

made good economic sense. They could not afford to be generous 

with North Dakota stations anymore, and so when that ethanol 

supply went away and ethanol prices went through the roof, unfortunately at the same time as our tax breaks, and so that really did 

account for some of the stations that came on during that time, so 

availability——

Senator KLOBUCHAR. I wanted to thank all the panel for your forward thinking and all of the information we have gotten. Like Senator Coleman, I take away from this the shared idea we have to 

make a strong safety net. You think with the Commissioner Johnson who talked about we can not bet the farm, with high prices so 

good prices in the place we have to have a strong safety net. I want 

to thank you Mr. Carlson and other North Dakota farmers for the 

Agaria restaurant in Washington, DC and what a great idea that 

is. I hope to eat there again soon. 

Senator CONRAD. I thank my colleagues, Senator Coleman and 

Senator Klobuchar to be here and thank you for the service on the 

Senate Agriculture Committee. 

We are going to work shoulder to shoulder on the Farm Bill as 

we fought for disaster assistance. They will be successful. I think 

you will be pleased with the results. 

This hearing has been important for your efforts. I want to thank 

the witnesses starting with the Governor, Commissioner Johnson, 

this third panel of some of the best farm group leaders and best 

farm thinkers in the upper Midwest. I deeply appreciate your taking the time to be here. 

I understand there is Dewy and wants to introduce Scott 

Stofferahn. Scott Stofferahn is the former head of the Farm Service 

Administration in North Dakota. Jim Miller was the clever numbers person in the last Farm Bill for the National Farmers Union. 

I was able to attract him to my Budget Committee staff. They are 

two lead negotiators, Scott was a lead negotiator in the last Farm 

Bill. 

We could not have a better team and I am extremely confident 

about the team that we are putting out on the field in this fight. 

Scott and Jim are just outstanding. So they are people you will 

42

want to be communicating with as we go through this. And, of 

course, I am always open to your suggestions and comments on 

questions as well. 

I want to indicate that the record will remain open for five business days. Additional testimony will be accepted until April 10th. 

And may be submitted to my myself and I will make certain it is 

forwarded to the appropriate committee. 

With that I again want to close by giving special thanks to Senator Harkin, the Chairman of the Senate Agriculture Committee, 

who has permitted this official hearing in North Dakota today. It 

was very good of him to do that. And to thank both Senator Harkin 

and Senator Chambliss for sending key aides to this hearing today 

so they could hear firsthand the concerns of people of North Dakota 

and Minnesota. 

With that we will conclude the hearing. Thank you all. 

[Whereupon, the Committee was concluded.] 

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88


35046.045
89


35046.046
90


35046.047
91


35046.048
92


35046.049
93


35046.050
94


35046.051
95


35046.052
96


35046.053
97


35046.054
98


35046.055
99


35046.056
100


35046.057
101


35046.058
102


35046.059
103


35046.060
104


35046.061
105


35046.062
106


35046.063
(107)

DOCUMENTS SUBMITTED FOR THE RECORD

APRIL 3, 2007

108


35046.064
109


35046.065
110


35046.066
111


35046.067
112


35046.068
113


35046.069
114


35046.070
115


35046.071
116


35046.072
117


35046.073
118


35046.074
119


35046.075
120


35046.076
121


35046.077
122


35046.078
123


35046.079
124


35046.080
125


35046.081
126


35046.082
127


35046.083
128


35046.084
129


35046.085
130


35046.086
131


35046.087
132


35046.088
133


35046.089
134


35046.090
135


35046.091
136


35046.092
137


35046.093
138


35046.094
139


35046.095
140


35046.096
141


35046.097
142


35046.098
143


35046.099
144


35046.100
145


35046.101
146


35046.102
147


35046.103
148


35046.104
149


35046.105
150


35046.106
151


35046.107
152


35046.108
153


35046.109
154


35046.110
155


35046.111
156


35046.112
157


35046.113
158


35046.114
159


35046.115
160


35046.116
161


35046.117
162


35046.118
163


35046.119
164


35046.120
165

Æ