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82–537 PDF 2003

S. HRG. 107–746

LIVESTOCK ISSUES FOR THE NEW FEDERAL FARM

BILL

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

JULY 24, 2001

Printed for the use of the

Committee on Agriculture, Nutrition, and Forestry

(

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

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont

KENT CONRAD, North Dakota

THOMAS A. DASCHLE, South Dakota

MAX BAUCUS, Montana

BLANCHE L. LINCOLN, Arkansas

ZELL MILLER, Georgia

DEBBIE A. STABENOW, Michigan

BEN NELSON, Nebraska

MARK DAYTON, Minnesota

PAUL DAVID WELLSTONE, Minnesota

RICHARD G. LUGAR, Indiana

JESSE HELMS, North Carolina

THAD COCHRAN, Mississippi

MITCH MCCONNELL, Kentucky

PAT ROBERTS, Kansas

PETER G. FITZGERALD, Illinois

CRAIG THOMAS, Wyoming

WAYNE ALLARD, Colorado

TIM HUTCHINSON, Arkansas

MICHEAL D. CRAPO, Idaho

MARK HALVERSON, Staff Director/Chief Counsel

DAVID L. JOHNSON, Chief Counsel for the Minority

ROBERT E. STURM, Chief Clerk

KEITH LUSE, Staff Director for the Minority

(II)

(III)

C O N T E N T S

Page

HEARING(S):

Livestock Issues for the New Federal Farm Bill .................................................. 01

Tuesday, July 24, 2001

STATEMENTS PRESENTED BY SENATORS

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

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

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

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

Crapo, Hon. Michael D., a U.S. Senator from Idaho ............................................ 32

Lincoln, Hon. Blanche L., a U.S. Senator from Arkansas .................................... 30

Nelson, Hon. Ben, a U.S. Senator from Nebraska ................................................ 33

Thomas, Hon. Craig, a U.S. Senator from Wyoming ............................................ 03

WITNESSES

Caspers, Jon, National Pork Producers Council, Swaledale, Iowa ...................... 05

Davis, Eric, National Cattlemen’s Beef Association, Bruneau, Idaho ................. 07

Hermanson, Pete, Past NTF Chairman, National Turkey Federation, Story

City, Iowa .............................................................................................................. 15

McDonald, Dennis, Ranchers-Cattlemen Action Legal Fund, United

Stockgrowers of America, Billings, Montana ..................................................... 09

Moore, Frank, Vice President, American Sheep Industry Association, Douglas,

Wyoming ............................................................................................................... 10

Roenigk, William, Senior Vice President, National Chicken Council,

Washington, DC ................................................................................................... 12

Rosmann, Maria, Sustainable Agriculture Coalition, Harlan, Iowa ................... 18

APPENDIX

PREPARED STATEMENTS:

Harkin, Hon. Tom ............................................................................................ 46

Caspers, Jon ...................................................................................................... 48

Davis, Eric ......................................................................................................... 58

Hermanson, Pete .............................................................................................. 108

McDonald, Dennis ............................................................................................ 74

Moore, Frank .................................................................................................... 81

Roenigk, William .............................................................................................. 98

Rosmann, Maria ............................................................................................... 115

DOCUMENT(S) SUBMITTED FOR THE RECORD:

Letter to Hon. Richard Lugar from Chris Campany ..................................... 132

Statement of United Egg Producers ............................................................... 136

QUESTIONS SUBMITTED FOR THE RECORD:

Question from Sen. Pat Roberts to Eric Davis and Jon Caspers (Answers

were not provided) ........................................................................................ 142

(1)

LIVESTOCK ISSUES FOR THE NEW FEDERAL

FARM BILL

TUESDAY, JULY 24, 2001

U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC.

The committee met, pursuant to notice, at 9:06 a.m., in room SR– 328A, Russell Senate Office Building, Hon. Tom Harkin, [Chairman of the Committee], presiding.

Present or submitting a statement: Senators Harkin, Conrad,

Lincoln, Nelson, Dayton, Wellstone, Lugar, Thomas, and Crapo.

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

IOWA, CHAIRMAN, COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

The CHAIRMAN. Good morning. The Senate Agriculture, Nutrition, and Forestry Committee will come to order.

For the last several weeks, we have heard from a wide range of

interested groups about their ideas for the next Farm bill. We will

continue these hearings today at the full committee and then subcommittee levels mostly in August.

Today, we will hear from the animal agriculture industry concerning farm bill issues. Animal agriculture is a very important

part of our total U.S. agricultural picture. Cash receipts from the

livestock sector are projected to account for 53 percent of total cash

receipts from production in 2001 and nearly $11 billion of U.S. agricultural exports, about 20 percent of the total. That export total

amounts to more than a 50 percent increase in the last 10 years.

Livestock also plays an important part in my own State’s agriculture. Iowa is the No. 1 producer of hogs and eggs and has many

other animal agricultural products. I believe that Iowa’s prominence in animal agriculture is reflected by today’s panel.

I would like to welcome the three Iowans who are here, Jon Caspers, Vice President of the National Pork Producers Council from

Swaledale, Iowa, Pete Hermanson, who is former Chairman of the

National Turkey Federation from Story City, and Maria Rosmann

from Harlan, Iowa, who represents the Sustainable Agriculture Coalition.

Considering the importance of animal agriculture to U.S. agriculture overall, I believe it is time our farm policy accord animal

agriculture the attention it deserves. We should craft a farm bill

that addresses the concerns of animal agriculture across the nation. The next Farm bill needs to help livestock and poultry producers meet the challenges they face.

2

Just as an aside, I have often said that it seems like animal agriculture has always been sort of the stepchild of farm bills. We do

everything else and it is sort of an afterthought in animal agriculture. It is my intention, that this next Farm bill will, hopefully,

focus more attention on animal agriculture. It provides us multiple

opportunities for crafting support for the animal agriculture industry. We must encourage increased research on animal health and

diseases and new uses.

The next Farm bill must also provide increased opportunities for

livestock producers to expand their businesses, both domestically

and in the United States, through marketing, fair trade agreements, and value-added products. That means increased funding

for cooperatives and other private initiatives. I read all the testimony last night and I am particularly interested in the testimony

of Ms. Rosmann, who is here, and their experience on a family

farm structure in Iowa and what we can do to encourage more enterprises like that, as well as a strong export program like the

Market Access Program and how we can get, if you will excuse the

pun, beefed up a little bit.

As many of you know, I believe the Farm bill needs to expand

the conservation title. We need to strengthen programs like EQIP,

create new ones like the Conservation Security Act and others, to

provide incentive payments for farmers and livestock and poultry

producers to maintain and adopt conservation practices, like good

manure management.

We need to make a comprehensive review of EQIP that includes

looking at the current restrictions on cost share assistance for livestock owners. However, we must be careful not to go down the road

of subsidizing large livestock operations unfairly or financing technology, such as manure lagoons, that should soon be obsolete.

Moreover, we must carefully examine the consequences of government involvement. The wrong kind of government involvement

in the name of conservation could actually hurt the industry, or at

a minimum, distort production decisions or markets.

Again, animal agriculture plays an important role in our whole

agricultural picture. I look forward to hearing the panel’s testimony

and working with all of you on crafting sound and forward-thinking

aspects of the Farm bill as it deals with animal agriculture.

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

appendix on page 46.]

I would yield to my colleague, Senator Lugar.

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

INDIANA, RANKING MEMBER, COMMITTEE ON

AGRICULTURE, NUTRITION, AND FORESTRY

Senator LUGAR. Thank you very much, Mr. Chairman. I thank

you again for calling this hearing to consider livestock and poultry

issues in the next Farm bill.

In recent months, livestock, poultry, and other organizations

have requested that we consider their requests for action on matters related to conservation and environmental compliance, on

trade promotion, research, and other issues. Conservation deserves

a new focus in the next Farm bill and I applaud your efforts, Mr.

Chairman, to bring that about.

3

In 1985, 97 cents of every financial assistance dollar from the

USDA went to working lands. Three cents went to land retirement.

Today, the situation is nearly reversed, with some 85 cents going

to land retirement programs and only 15 cents going to working

lands. This funding balance must be addressed during our reauthorization of the Farm bill. I do not believe we can land idle our

way to environmental performance.

Today’s State water quality reports still name non-point sources

of pollution as the nation’s biggest water quality challenges. Nutrients and pathogens represent the largest environmental challenge

confronting most farmers and ranchers today, and the ones most

likely to result in costly new regulation. How we deal with these

environmental challenges will affect the commercial viability of

farming and ranching over the next decade.

In legislation I will soon introduce, a significant increase in the

EQIP funding would be authorized, and I appreciate your mention,

Mr. Chairman, of the EQIP program in your opening statement

this morning.

In the trade area, there have been calls for increased funding in

the export enhancement area, such as the Market Assistance Program. I would respectfully request that each sector represented

here today provide us with a written outline of their present export

strategy, hopefully by the beginning of August. We cannot approach the trade title from a perspective of increasing funding levels in each existing program. For the benefit of producers and taxpayers, a total review of all existing programs is essential.

As this committee considers the trade title of the next Farm bill,

I remind colleagues of an important issue to agriculture outside of

this committee’s jurisdiction, and that is trade promotion authority.

We should not have a narrow focus on a particular title of the

Farm bill without acknowledging the consequences for farmers of

ongoing Congressional inaction on this front. It is also important

to note the inevitable impact of commodity policy on the livestock

and poultry areas. During development of the commodity title of

the Farm bill, we must be mindful of the impact of these sectors.

In particular, we should avoid interventions in the grain market by

the Federal Government which would harm the livestock sector’s

international competitiveness.

Mr. Chairman, on a topic not likely to pertain to the Farm bill,

although important to agriculture, I would simply say, be assured

of my ongoing commitment to work with you and Senator Daschle

and other colleagues on the issue of interstate shipment of Stateinspected meat, a topic often before our committee.

Again, I thank you for holding today’s hearing and I look forward

to hearing from each of our witnesses.

The CHAIRMAN. Thank you very much, Senator Lugar.

Senator Dayton.

Senator DAYTON. I will wait for the witnesses. Thank you, Mr.

Chairman.

The CHAIRMAN. Thank you. Senator Thomas.

4

STATEMENT OF HON. CRAIG THOMAS, A U.S. SENATOR FROM

WYOMING

Senator THOMAS. Thank you, sir. I am very pleased that you are

having this hearing today, of course. In Wyoming, livestock is our

activity. Over 70 percent of our agriculture is there.

I want to particularly welcome my good friend Frank Moore here

from Douglas, Wyoming, who is Vice President of the American

Sheep Council and is a sheep producer and has been for a very long

time.

We had recently, during this last recess, a meeting in Wyoming

that we hosted with the Wyoming Department of Agriculture and

many of the producers from livestock were there, of course. There

were a number of things that they talked about and emphasized.

One is, the Farm bill is not a one-size-fits-all and that mentality,

we have to be careful about. Support for opening markets, export

markets, of course, was strong, high, there. Increased funding for

conservation and technical assistance, so that you could talk about

grasslands and open space and preservation of lands and technical

assistance. Also, a greater coordination among Federal agencies.

That, of course, is a broad thing to do, but it really has a lot of effect in agriculture in terms of Fish and Wildlife Service, EPA, and

others, so that is there.

The cattle industry, of course, is our leading one. They don’t ask

for price supports, but they do think they ought to be included in

agriculture, and I agree with that, particularly in trade and those

kinds of things.

We are particularly interested this morning, Mr. Chairman, with

our sheep industry. We are second in the Nation for sheep and

wool. It has suffered the worst price cycles probably in history since

the Wool Act was repealed in 1966. Prices have fallen from 70

cents to about 33 cents a pound for wool, which doesn’t cover the

shearing costs, of course. There are lots of factors in that, the Asian

financial crisis, competition from synthetic fibers, of course, the

U.S. dollar, and so on.

There are a number of proposals they are looking forward to.

One of them, of course, is the wool program, which we will be talking about soon in the supplemental or the ag dollar appropriation.

There are a number of things that they are doing in terms of trying

to put together a value-added cooperative so that the producers can

be involved in the product. That is one of the best things we can

do.

Hopefully, and I hear this a lot and I feel very strongly about it,

that it seems to me in our agricultural farm bill considerations, we

have to deal with the impacts of where we are now, of course, but

we ought to make sure that what we are doing is going to lead us

to where we want to go over a period of time. Too often, we end

up just dealing with the problem that now exists, and I understand

how easy it is to do that, and you have to do it, but at least a portion of that ought to go forward and us trying to visualize how we

can get agriculture where we want it to be, more self-sustaining

and those kinds of things.

At any rate, that is more than I should say, but I feel very

strongly about it. The Farm bill has traditionally, of course, been

largely program crops, but now that is a little behind us and we

5

are now looking at how we can deal with the general concept of agriculture, and in States like ours, that means livestock in many

ways. Thank you, sir. I appreciate it.

The CHAIRMAN. Thank you very much, Senator Thomas. I tend

to agree with just about everything you said there.

Senator THOMAS. I am glad I stopped when I did, then.

[Laughter.]

The CHAIRMAN. I didn’t know what was coming. Thanks, Craig.

The CHAIRMAN. We welcome our panel. We will just go down the

list. First of all, your statements will be made a part of the record

in their entirety. Rest assured, we have read them over. If you

could just limit your statement to maybe five to seven minutes— we have three, six, seven people—let us say around seven minutes

or so, and then we can get into questions, I would sure appreciate

it.

We will just go down the list. We will start with Mr. Jon Caspers

representing the National Pork Producers Council from Swaledale,

Iowa. Welcome, Jon.

STATEMENT OF JON CASPERS, NATIONAL PORK PRODUCERS

COUNCIL, SWALEDALE, IOWA

Mr. CASPERS. Thank you, Mr. Chairman. I am Jon Caspers. I am

a pork producer, as you mentioned, from Swaledale, Iowa, and I

serve on the Board of Directors of the National Pork Producers

Council.

Mr. Chairman, the country’s pork producers are extremely

pleased that the 2002 Farm bill debate is focusing on conserving

working agricultural lands, keeping them productive, profitable,

and at the same time, enhancing the environmental benefits that

they provide. Your bill, the Conservation Security Act, is one of the

big reasons that the debate has turned in this direction and we

welcome your efforts and commend you for them. We also note that

the committee’s ranking member, Senator Lugar, is working on a

conservation bill with many valuable policy proposals.

As we have stated before, livestock and poultry producers face or

will soon face costly environmental regulations as a result of State

or Federal law designed to protect water and air quality. In addition to the State requirements, the regulations will come from the

Clean Water Act TMDL program, the proposed CAFO permit requirements, and the Clean Air Act. While producers have done a

good job environmentally on their operations in the past, we want

to continue to improve, but in many cases, the costs are simply prohibitive.

A $1.2 billion a year increase for the EQIP program, which 50

percent would go to livestock and poultry producers, is a historic

step forward. However, as previous testimony from NPPC and

other groups has demonstrated, $1.2 billion is needed annually for

livestock and poultry producers alone. We, therefore, respectfully

request that the committee take full advantage of any opportunity

that may exist to expand EQIP funding further in order to meet

the pressing conservation assistance needs existing in all agricultural sectors.

There are several specific issues that we would like to address

as you prepare legislative language for the conservation title of

6

your farm bill. We feel strongly that livestock and poultry producers must be eligible for conservation cost share assistance regardless of the size of their operations. Family-owned or operated livestock operations come in all sizes, and all of these need cost share

assistance if they are to remain economically viable while providing

the public with the environmental benefits they obviously seek.

For example, the EPA’s analysis for the proposed CAFO rule assumes it will cost a 3,400-head farrow to finish swine operation in

the Midwest $332,000 in capital costs to comply with the proposed

rule. It will also cost approximately $26,000 a year for annual recurring activities for this operation to operate and to maintain its

new system.

Any EQIP provision that excludes operation simply on the basis

of number of animals will end up excluding thousands of familyowned operations struggling to remain as independent as possible.

The unintended consequences of a size cap is rapid consolidation of

the pork industry, and something, I am sure, this committee does

not want. It is our view that a payment limitation schedule comparable to that used in row crops is far more appropriate except

that payment should not be limited by year but by needs of the

overall EQIP contract.

Second, protecting air and water quality as it relates to livestock

and poultry manure management must be national priorities for

EQIP. While EQIP can provide benefits to wildlife, the Wildlife

Habitat Incentives Program, or WHIP, is the program for encouraging wildlife conservation on working agricultural lands and we support increasing WHIP funding.

It is important to ensure that the program allows for the participation of third-party, private sector, certified experts to supplement

the technical assistance to be provided by USDA. We note that

your CSA and Senator Lugar’s concept paper provide for the use

of such persons and we support your efforts. A voucher system is

one way that could be used to meet this need, but there are several

others.

We also feel that EQIP needs to be able to meet conservation priorities that are not defined on the basis of small geographic areas,

like a watershed, and that existing provisions of EQIP that add

considerable administrative burden with little associated environmental benefit should be scrutinized.

We also believe the new Farm bill should provide incentives to

help livestock producers fully develop the value of their nutrients.

One of the most promising possibilities for small and medium-sized

operations involves capturing methane and producing electricity.

Harnessing the energy from swine nutrients can meet farm electricity needs, provide added income as excess capacity is sold to

other power generators, enhance odor control, spur rural economic

development, and help reduce our nation’s dependence on foreign

oil.

Pork producers also support legislation that would grant tax

credits for the generation of electricity through the use of swine nutrients and other agricultural by-products. Mr. Chairman, we understand that you are developing farm-to-energy technology provisions for the Farm bill. We are ready to work with you and others

7

like Senators Crapo and Grassley, who recognize the value and

promise of farm-to-energy initiatives.

We have also long supported increasing the authorization of the

Market Access Program, or MAP. At least a doubling of the current

authorization, from $90 to $180 million per year, is warranted.

MAP and the Cooperator Program have been instrumental in helping boost U.S. exports.

Thank you for allowing us to testify today and we look forward

to working with your committee in the future.

The CHAIRMAN. Jon, thank you very much for your testimony. I

look forward to working with you and the National Pork Producers

Council on these issues.

[The prepared statement of Mr. Caspers can be found in the appendix on page 48.]

The CHAIRMAN. Next, we will move to Mr. Eric Davis of the National Cattlemen’s Beef Association from Bruneau, Idaho.

STATEMENT OF ERIC DAVIS, NATIONAL CATTLEMEN’S BEEF

ASSOCIATION, BRUNEAU, IDAHO

Mr. DAVIS. Thank you, Mr. Chairman, Senator Lugar, members

of the Senate Agriculture Committee. It is a pleasure to be here

today to give this testimony on behalf of the National Cattlemen’s

Beef Association.

I am a fourth generation rancher from Bruneau, Idaho. My family has been on the place we are on now for about 50 years. On

behalf of NCBA and my lifetime and my dad’s and some others

ahead of me making what we think are ecologically sound and economically viable uses of renewable resources, I am happy to be

here to present NCBA’s views on the Farm bill development.

I will mention only broad topics in my oral testimony. My written

testimony goes into greater detail in all these areas, and, of course,

I would be happy to address specifics later, should there be questions.

Chairman Harkin, the beef industry, NCBA, and NCBA’s predecessor organizations have traditionally taken the position of wanting less Federal intervention in farm policy. Nonetheless, the members of NCBA understand that farm programs are a major component of U.S. domestic policy and will remain so for the foreseeable

future. Therefore, NCBA will continue to focus on ensuring that

farm policy does not benefit one part of agriculture at the expense

of another. NCBA will not consent to U.S. farm policy that is financed out of the pockets of the beef industry.

With that in mind, we will be keeping a close eye on the following areas: Mandatory set-asides, acreage reduction programs and

production controls, farmer-owned reserves, non-recourse loan forfeiture, flex fallow type programs, and any Federal dairy buyout,

herd reduction program, or mandatory dairy supply management

program. Should proposals such as these become part of the Farm

bill discussion, NCBA will seek to mandate by USDA and the recognized research community the complete impact study of these

proposals on the beef industry. I would reiterate, NCBA opposes

any Federal farm program that has a negative impact on the beef

industry.

8

Now, with that said, Mr. Chairman, this committee’s commitment to conservation and the environment are of particular interest to the cattle industry. There are a whole host of conservation

initiatives that have been proposed for this Farm bill and we are

encouraged that the initiatives proposed all place an emphasis on

helping producers keep their operations and productive lands working and profitable while they move to the next level of conserving

the natural resources on these lands.

We appreciate this opportunity to provide you with our views

and observations as you craft the details of these provisions for

your farm bill package. NCBA wants to stress that whatever form

the final package takes, it is critical that the 2002 Farm bill make

a major new commitment to providing livestock producers with conservation cost share and incentive payments assistance in the context of voluntary incentive-based programs. This must be done if

we are to keep economically viable producers on the land, be able

to conserve our natural resources for future generations, and provide the environmental benefits being demanded from American

agriculture by the public.

Some specific priorities for NCBA are, No. 1, $1.2 billion per year

for EQIP or a new program similar to EQIP to assist producers

with the costs of Federal, State, and local mandatory manure management and water and air quality protection requirements. Producers must be eligible for this assistance regardless of the size of

their operations. A payment limitation system comparable to that

used in row crops should or could be adopted.

No. 2, EQIP’s effectiveness could be enhanced by establishing

priorities based on geographic and non-geographic parameters.

No. 3, the Conservation Reserve Program should be amended to

make it a priority to keep working lands working. This means that

emphasis must be placed on enrolling buffers. Whole field enrollment in the CRP program should be substantially limited.

Mr. Chairman, as you know, NCBA represents that segment of

agriculture that owns and manages our nation’s private grazing

lands. They contribute significantly to the quality and quantity of

water available for all of the many land uses and they constitute

the most extensive wildlife habitat in the U.S. Our next generation

farm bill must continue to recognize the contributions these grazing lands make to a healthy environment by providing financial

and technical support for grazing lands and grasslands conservation programs.

Specifically, we support reauthorization of the Grazing Lands

Conservation Initiative. We also support passage of the Grasslands

Reserve Program. Traditionally, farm bills have not recognized the

importance of grasslands. The Grasslands Reserve Program would

allow ranchers to continue economic activity while protecting natural resources.

The National Cattlemen’s Beef Association is currently preparing

comments on environmental regulations that will impact all segments of the industry. These regulations will add tremendous costs

to doing business and important modifications need to be made to

Federal programs to assist the beef industry in maintaining the

highest standards of resource protection.

9

Mr. Chairman, I thank you for the opportunity to comment here

today and look forward to any questions that may follow.

The CHAIRMAN. Thank you very much, Mr. Davis.

[The prepared statement of Mr. Davis can be found in the appendix on page 58.]

The CHAIRMAN. Now, we will turn to Dennis McDonald, Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America,

from Billings, Montana, R–CALF. Welcome.

STATEMENT OF DENNIS McDONALD, RANCHERS–CATTLEMEN

ACTION LEGAL FUND, UNITED STOCKGROWERS OF

AMERICA, BILLINGS, MONTANA

Mr. MCDONALD. Thank you, Mr. Chairman. I am a rancher from

South Central Montana, the small town of Melville. My wife, Sharon, of 25 years, and our four children operate a cow-calf operation.

We breed 850 or so mother cows. We background our calves, sometimes finishing the steers to slaughter weight. We breed 100 or so

quarterhorse mares annually for working cow horses.

I am here on behalf of R–CALF, an organization dedicated to

representing grassroots cattle producers around the country. We

have members in 38 States. I serve on the Ag Trade Advisory Committee and had the opportunity to speak before this committee a

month or so ago when you were focusing on trade issues.

The light cattle prices at the ranch presently, I am pleased to report, are strong. I am optimistic our industry can remain vibrant,

provided we have the basic tools that will allow us to market our

end product at home and abroad. To that end, we are urging that

a cattle chapter be written into the new Farm bill.

Mr. Chairman, I heard your comments loud and clear about,

often, livestock being the stepchild in previous farm bills. That

thought occurred to me several months ago and I thought maybe

a solution might be to designate a cattle chapter or livestock chapter within the Farm bill that would focus attention on the issues

peculiar to our livestock industry.

With cattle in all 50 States generating $35-plus billion annually,

it seems a cattle chapter is needed. We have over one million producers contributing to our rural communities and, I believe, providing a cultural foundation for our nation.

The viability of our industry is challenged on several fronts. Concentration in the marketplace is one such area, with four major

processors ultimately slaughtering 80 percent of the finished cattle.

As a result, the reduced leverage in the marketplace have, in recent years, caused the elongation of the down wave of the cattle

cycle. R–CALF is convinced that a cattle chapter within the Farm

bill could help restore greater equilibrium to pricing and, thus, help

the market function in a more rational manner.

We are aware of legislation supported by both parties that addresses some of these issues. One such issue is the cattlemen’s fair

share of the retail dollar. In 1970, cattle producers enjoyed approximately 70 percent of the retail dollar. That shrank to 50 cents by

1996, and that trend is continuing. Obviously, we are experiencing

a shrinking share of that retail dollar.

R–CALF is convinced this trend might be reversed if the Farm

bill contains provisions addressing some of the issues I have outVerDate 11-MAY-2000 12:54 Jan 22, 2003 Jkt 082537 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 82537.TXT SAG1 PsN: SAG1
10

lined in my written testimony. Those include speaking to the issue

of unfair contract prices, a call for enforcement of antitrust laws,

as well as enforcement of the Packers and Stockyards Act. Further

transparency in the marketplace is of vital importance, and we

have taken a major step with the mandatory price reporting legislation and the recent rule changes that will help implement that

legislation. Country of origin labeling and restriction of our USDA

grade stamp, and I will return to those subjects in a moment.

Senator Lugar, you mentioned the interstate shipment of inspected beef, a critical issue to cattlemen around the country, particularly as we attempt to add value to our product and attempt

to take our product directly to the ultimate consumer.

The only funding request that R–CALF is suggesting is an experimental fund that would help fund those efforts as we form co-ops

around the country to attempt to get into that retail market. We

are asking for a $200 million fund for that purpose.

Country of origin labeling, we would hope would be addressed in

the Farm bill. R–CALF strongly supports Senator Tim Johnson’s

proposal, the Consumer’s Right to Know. A strict labeling law will

allow producers to differentiate our product from all of the other

beef products that are imported from around the world. For beef

to carry the USA label, it should be processed from a calf born,

raised, fed to finished weight, and processed in this country. Any

deviation from that definition should be labeled as such.

Likewise, with the USDA grade stamp. That is a mark of excellence that the cattle producers of this country have awarded themselves over the last century by producing the best, most nutritious,

healthiest product in the world. That USDA Choice grade stamp is

seen as a fairness issue among producers across the country. It

should be our brand, a brand of excellence that will help differentiate our product from the other products around the world.

Finally, to compete, we as producers need to own our cattle from

the gate to the plate, from the ranch to the restaurant. I had made

reference earlier to an experimental fund, moneys that could be

used to promote co-ops and to allow us to market our product directly into the marketplace. Hopefully, I have delineated that

thought with more particularity in my written submission.

Finally, I just want to say on behalf of all grassroots producers

across the country what an honor to be invited to speak before you.

I thank you for that opportunity.

The CHAIRMAN. Mr. McDonald, we are honored to have you here

and your organization, which I know is growing very rapidly all

over the Western part of the United States.

[The prepared statement of Mr. McDonald can be found in the

appendix on page 74.]

The CHAIRMAN. Next, we turn to Mr. Frank Moore of the American Sheep Industry Association, previously introduced by Senator

Thomas, from Douglas, Wyoming. Welcome.

STATEMENT OF FRANK MOORE, VICE PRESIDENT, AMERICAN

SHEEP INDUSTRY ASSOCIATION, DOUGLAS, WYOMING

Mr. MOORE. Thank you, Chairman. I appreciate the opportunity

to be here. I am a fourth generation rancher from Douglas. I have

11

been in the sheep and cattle business all my life, as our family has

for over 100 years.

I had the fortunate experience of traveling with the Senator yesterday and sitting on the ground waiting for planes for quite a

while, so we visited a little bit about the Farm bill and what you

need to do.

The CHAIRMAN. In Chicago?

Senator THOMAS. Denver.

[Laughter.]

Mr. MOORE. I am going to deviate a little bit from my statement.

We have our written testimony that should specifically talk about

the issues that we think need to be covered and go into detail

about how we feel the sheep industry should be included in this

Farm bill. I certainly agree with your opening statement, as several of the Senators have said, that livestock needs to be included.

The wool and lamb markets are way down. Our wool is at a 30-

year low. Thirty-three cents last year was the average price for

wool. It has been 1971 since we have seen those prices. That is not

including anything for inflation. That is just your basic price. That

is a significant decrease. Obviously, it is pretty tough to compete

in today’s market and be stable when you have got prices like that.

The lamb markets are currently down.

Those of us that are left in the sheep business, we believe in the

sheep business. We intend to stay in the sheep business. We think

that the ones that are left are the ones that have the true heart

for the business, are the efficient producers, the ones that are able

to compete in the world market.

What we want to do is remain in business and we are tied to

government. We are tied to government. All of agriculture is tied

to government, whether we are receiving any programs or not. We

have got our cheap food policies. We have got endangered species

regulations. We have got environmental regulations. We have got

a strong dollar that significantly impacts us when imports start

coming into this country. Our high standard of living—we want to

maintain that high standard of living.

In the European Union, they have a $2 billion support and subsidy program for their sheep industry over there. That is billion

with a ‘‘b’’. In a lot of cases, that is 50 percent of their revenue

from their sheep industry, from the sheep enterprise.

Australia and New Zealand, Australia’s currency has been devalued by over 40 percent in the last five years compared to the

strong dollar. We appreciate the fact that we have a strong dollar,

but it gives them a significant import advantage when they bring

products into this country.

When we are competing on a world market, we can compete in

production, we can compete in efficiency, but it is pretty tough to

compete against subsidies such as those and the strong dollar.

What we are asking for in this Farm bill is to be sure that we are

included, be sure that we have some kind of floor and safety net

so that there is a little bit of stability.

We appreciate your concerns with conservation. We are very confident that the sheep industry is an environmentally friendly animal and we don’t have any problem with conservation and the environment. We are comfortable in those areas.

12

We are making changes. We have been working significantly over

the last few years and since we lost the Wool Act in 1993. For

those of us that remained in the business, we have made significant changes to become better producers, to provide more valueadded products. We are doing a lot of cooperative type of efforts,

and I agree with what Mr. McDonald said. We need to make sure

that those cooperatives have a chance to get up and running and

be efficient.

We are working on scrapie eradication and some other programs

to make our product as healthy and as health conscious as possible.

We are doing a lot of quality improvements.

One thing I want to make sure that everybody understands,

what we are asking for with our assistance program that is in the

Farm bill, we are not talking about going back to the old National

Wool Act. This is a modest safety net, a floor, just to make sure

that there is a little bit of stability in the industry.

We have a couple of other issues with the U.S. Government that

are important that we need to get off the ground so that our industry can get going. We have had a program for a promotion program

at USDA since February of 2000. We need to get that up and running. That the industry, once it starts putting some money into

self-help, will make some progress. We need your support in getting that up and running as quickly as possible. We expect to see

that out any day.

Mandatory price reporting, we hope that issue can be taken care

of. We think that is one of the problems we have had in the last

few months with our decreased lamb prices. Since the mandatory

price reporting went into effect, we have had virtually no lamb

market reports. We need to make sure that there are some changes

made there so that the price reporting comes out and helps us and

gives us some significant information that we can use.

The Market Assistance Program that we have been included in

in the last couple years has been what has cash-flowed a lot of

sheep operations. We appreciate your support on that and we want

you to know that that has been a help. It has kept a lot of people

in business and it keeps them moving forward.

We will work with you in whatever way we can. As the Senator

and I talked about yesterday, we are trying to fit into the Farm bill

as you have it right now. We will work with you in whatever way

you want to go to make sure that our policies are looking to the

future.

I appreciate being here, and thanks for all you guys are doing.

The CHAIRMAN. Mr. Moore, thank you very much for your testimony. Rest assured, we recognize the importance of the sheep industry and the wool and mohair industry in this country. We will

get into that more in the questions.

[The prepared statement of Mr. Moore can be found in the appendix on page 81.]

The CHAIRMAN. Mr. William Roenigk, National Chicken Council,

Washington, DC, Mr. Roenigk, welcome to the committee.

13

STATEMENT OF WILLIAM ROENIGK, SENIOR VICE PRESIDENT,

NATIONAL CHICKEN COUNCIL, WASHINGTON, DC

Mr. ROENIGK. Good morning. Thank you, Mr. Chairman, Senator

Lugar, members of the committee. The chicken producer/processors

appreciate this opportunity to present our recommendations and

comments on the important issue of poultry fundamentals for the

next Farm bill. The National Chicken Council appreciates the

chairman’s invitation to be part of this very vital discussion.

I am Bill Roenigk, Senior Vice President of the National Chicken

Council. I concur with the chairman’s opening comments this morning. I also concur with Senator Lugar’s comments on the export

and international trade situation. They are of great interest to us

and we would be pleased to submit our export strategy program to

you as you requested.

The National Chicken Council represents the vertically integrated companies that produce, process, and market about 95 percent of the young meat chicken in the United States. Both the domestic and international marketplaces are of great importance to

our industry. The industry’s long tradition of being market-oriented

has served consumers, taxpayers, and crop farmers, as well. Being

focused on the market provides a better opportunity to meet the

dynamics and challenges of the changing market for food and, thus,

grow our business.

Accordingly, we strongly support Federal farm commodity programs and policies that are not only market-oriented, but encompass the capacity to take full advantage of future market opportunities, both here in the United States and overseas.

The National Chicken Council supported the 1996 Farm Bill and

continues to believe the principles and objectives of the FAIR Act

provide the best path to pursue. In the long-run, market-based policies help make American agriculture stronger. To have policies and

programs that are otherwise, at least for those of us who must

market a substantial portion of our production in a global marketplace, means our fundamental competitiveness is jeopardized.

The National Chicken Council is a member of the Coalition for

the Competitive Food and Agricultural System, CCFAS. Like the

other 120 members of this coalition, we are committed to having

a farm bill that is based on market-oriented policies and programs.

We believe in this commitment because, given the proper operating

environment, U.S. agriculture can grow, which, in turn, will stimulate the farm economy and provide increased employment across

the United States, especially in smaller towns and cities.

Earlier this month, CCFAS presented its statement to this committee regarding policy fundamentals for the next Farm bill. I will

not repeat all the points and issues addressed by that statement,

but I will emphasize certain aspects that are of particular interest

to our segment of agribusiness.

The National Chicken Council believes it is especially important

that the Marketing Loan Program provide for adjustments in loan

rates that better reflect average market prices and that producers

be allowed to continue to benefit from crop planting flexibility provisions. At the same time, our organization does not support any

further supply management measures, nor the creation of a new inventory management reserve.

14

Further, while the concept of countercyclical income provision

may sound good in theory, it is very difficult to properly execute

in practice. Thus, the countercyclical payment programs beyond

certain provisions in the current law that provide for this type of

income balance are not supported by the National Chicken Council.

We recommend a market-oriented farm program because, as the

economic analysis conducted by the CCFAS has found, both commodity producers and users benefit and benefit more than supply

management policies and programs.

The growth market is not the mature U.S. marketplace, but the

global marketplace. Furthermore, a robust international market allows U.S. poultry processors to better balance supply and demand

for the various poultry parts. Thus, being able to compete in the

global market allows U.S. poultry producers to better balance supply with a broader range of consumer demand. In world markets,

no animal protein has a better competitive price advantage than

U.S. chicken leg quarters.

Basic to being competitive in the world market is the ability of

the U.S. poultry producers to purchase corn, soybean meal, and

other feed ingredients at costs that are not artificially above world

levels. The FAIR Act helps to provide the opportunity to be competitive.

During the 1990’s, U.S. poultry producers benefited from a tremendous growth in exports. Chicken export volume increased nearly fivefold over the decade that just ended. Last year, well over 18

percent of U.S. chicken production was sold in international markets. Currently, U.S. chicken exports are running 20 percent ahead

of last year. Future increases in world consumption of poultry are

predicted to be truly significant. The potential for U.S. poultry producers to supply a part of this substantial increase in global demand for poultry is tremendous, if given the competitive opportunity to do so.

Your support, however, is needed to help us increase these exports, along with other farm exports. The United States must continue to work aggressively and boldly for more liberalized world agriculture trade. All countries must be challenged if they do not live

up to their trade agreements. Renewal of the President’s trade promotion authority would be a good first step.

Devoting more resources to value-added agricultural exports to a

level that at least matches the percentage used by the European

Union and other major competitors would be a prudent investment

by the U.S. Government. The next Farm bill provides an excellent

opportunity to help put the United States in a leadership position

for value-added exports.

Turning to conservation and environment, as agricultural production expands, the challenge of protecting soil, water, air, and

other natural resources becomes greater. Farm policy that provides

incentives promoting sound stewardship for the environment is a

positive approach. Conservation measures to protect the environment and environmentally sensitive lands are, of course, appropriate. However, it would not be appropriate in the name of conservation to restrict good, productive farmland, especially in times

when the market signals are calling for more supplies. Locking

away cropland in the Conservation Reserve Program to manage

15

supply is counterproductive. Enrolled acres in the CRP should be

truly environmentally sensitive, with the emphasis on the benefits

to natural resources.

An important part of the environmental protection and conservation practices is the sound scientific handling of agricultural animal wastes. The Environmental Quality Incentives Program, as

mentioned by at least one or more of the speakers this morning,

is an important part of helping poultry and livestock farmers to

meet their responsibilities with respect to the Clean Water Act,

CAFO, and Clean Air Act. Authorizing adequate funding for EQIP

and designating at least 50 percent of the annual funding for animal agriculture would be important for these producers to continue

to be good stewards of the environment.

As more attention is focused on the next Farm bill, it is clear

that we are at a real crossroads in agricultural policy, where a continuation on a road toward market-oriented farm programs and not

a return to the road that guarantees government price supports,

coupled with restrictive measures to manage supply. While the government-guaranteed road has greater appeal because it may have

fewer bumps and turns, it is a road that provides all who travel

it with few rewards in the end.

The next Farm bill should be designed and written to take full

advantage when a healthier world demand for food occurs. A farm

bill that does not anticipate and encompass the expanding international opportunities for the American farmer is a farm bill that

will miss a golden opportunity.

The National Chicken Council looks forward to working with the

committee to assist in crafting a new farm bill that allows market

forces to reward efficiency, encourage productivity, improve risk

management, better allocate resources, and maximize net farm income.

Thank you, Mr. Chairman, for the opportunity to present our

statement.

The CHAIRMAN. Thank you very much, Mr. Roenigk.

[The prepared statement of Mr. Roenigk can be found in the appendix on page 98.]

The CHAIRMAN. Now, we turn to Mr. Pete Hermanson of the National Turkey Federation from Story City, Iowa. Pete, welcome.

STATEMENT OF PETE HERMANSON, PAST NTF CHAIRMAN,

NATIONAL TURKEY FEDERATION, STORY CITY, IOWA

Mr. HERMANSON. Thank you, Chairman Harkin, Senator Lugar,

and members of the committee for the opportunity to discuss the

impact of the upcoming Farm bill, it will have on the turkey industry and to present the industry’s suggestions for the bill.

My name is Pete Hermanson. I am part of a family farm operation in Story City, Iowa, where we raise 200,000 turkeys each

year and grow corn and soybeans. In the last few years, I have become involved in turkey processing, as well. I am a founder and

board member of the Iowa Turkey Growers Cooperative, which

owns and operates West Liberty Foods, one of the nation’s top 20

turkey processors. I want to thank Chairman Harkin for the vital

support he gave the cooperative during the creation of West Liberty

Foods. We will talk more about its progress a little later.

16

I am here today on behalf of the National Turkey Federation,

NTF. NTF represents 95 percent of the U.S. turkey industry, including growers, processors, breeders, hatchery owners, and the allied industry. I am proud to be a past chairman of the organization.

The committee is to be commended for conducting this hearing.

Today, I would like to look at three ways the bill could significantly

affect the turkey industry in Iowa and around the country.

One of the biggest challenges facing the turkey industry in my

area is the cost of complying with environmental regulations. The

current rules and the ones we expect soon from EPA could cost producers with more than 50 animal units a combined total of $12 billion or more for the next 10 years. The National Turkey Federation

advocates increasing funding for the Environmental Quality Incentive Program, EQIP, to $2.5 billion annually in the next Farm bill,

with the money split evenly between crop and livestock producers.

Additionally, EQIP should be expanded so that USDA can assist

producers with single-year projects and can cost-share on planning

activities, like drafting of comprehensive nutrient management

plans. EQIP should no longer be restricted to producers with fewer

than 1,000 animal units, which is equal to 55,000 turkeys. A turkey grower in Iowa who produces 55,000 turkeys is not a big farmer or a rich farmer. Rather than limit participation by farm size,

it would be better to set a limitation on the payments any producer

can receive in a single year.

NTF recognizes much of the Farm bill debate will revolve around

the commodity title. We also know that many on this committee

have been critical of the market-oriented reforms in the 1996 Farm

bill. I would like, though, to talk about how the previous Farm bill

affected Iowa turkey growers and West Liberty Foods.

The Iowa Turkey Growers Cooperative was founded in 1996

when the turkey industry was in the midst of a slump, having lost

money for 30 consecutive months. The turkey plant in West Liberty, Iowa, had closed, and the livelihoods of many turkey producers and plant workers were at risk. Thanks to strong guidance

from Chairman Harkin and his staff and a loan guarantee from

USDA, our co-op was able to purchase the plant and create West

Liberty Foods. It has gone on to become a real success story. If a

different type of farm bill had been passed in 1996, we might not

have survived. Let me explain.

Feed accounts for 70 percent of the cost of turkey production. By

late 1995, the country’s historic policy of propping up farm prices

by controlling production was harming turkey producers and others

who raise livestock and poultry. Demand for feed grains here and

around the world was increasing, yet U.S. stocks were declining. In

the midst of these soaring grain prices and depressed turkey prices,

West Liberty Foods was struggling to make a profit. As Chairman

Harkin knows, we were in bad shape in 1997.

Turkey prices began to strengthen in 1998, but the price increase

alone wouldn’t have made us profitable. We needed grain prices to

reflect world markets, and the 1996 Farm Bill accomplished that

goal. If grain prices once again fall out of line with world supply

and demand, as they did in the mid-1990’s, the future of many

Iowa turkey growers and of West Liberty Foods will be in jeopardy.

Also in danger will be the jobs of the 1,100 workers we employ at

17

our plant and the 200 other workers we employ at a further processing plant we just purchased.

I want to make it clear that neither NTF nor I are here to advocate a cheap grain policy. I am a grain farmer, too, but I want

grain prices to be strong because of the global market, not artificial

domestic programs dictate strong prices. West Liberty Foods would

not have struggled as badly in 1997 if $5 corn had been the world

price, but we were feeding our turkeys $5 corn and competing

against foreign competitors who are paying far less for their grain.

Therefore, the National Turkey Federation believes it is important to avoid market-distorting programs in the next Farm bill.

The planting flexibility of the last Farm bill is critical to farmers

being able to respond to market demand for feed grains.

NTF is sensitive to the committee’s desire to protect farmers during periods of low prices. We know many want a countercyclical

program in the next Farm bill. Beyond adjusting in the loan program, creating a countercyclical program that maintains market

flexibility is probably not practical. A better solution is to ensure

that the AMTA-style payments are at a level that provides farmers

sufficient income protection during the widest possible range of economic conditions. The NTF would support payments in the range

of combined AMTA and market loss assistance payments for fiscal

year 2001.

Finally, an appropriately crafted farm bill can boost farm income

by increasing the competitiveness of U.S. poultry in the international markets. It takes about 2.5 pounds of feed to raise a

pound of turkey. Every additional pound of turkey we can produce

for the overseas markets increases demand domestically for feed

grains, oil seeds, and similar feed ingredients.

The NTF strongly recommends the next Farm bill bolster funding for value-added export promotion. The United States is lagging

further and further behind our competitors in promoting these

products. New Zealand reinvests in market promotion five cents for

every export dollar it learns, while we invest less than one penny.

The next Farm bill must structure our export promotion program

such as the Market Access Program and Foreign Market Development Program so that our spending levels are comparable to our

foreign competitors.

In summary, we recommend providing the financial assistance

necessary to help poultry and livestock producers comply with the

environmental regulations. Maintaining the market-based farm

policy will help farmers during periods of low prices and bolstering

commodity prices by ensuring a stronger commitment to valueadded export promotion. The National Turkey Federation and its

many members appreciate the opportunity to share our concerns

and recommendations with you. Thank you.

The CHAIRMAN. Mr. Hermanson, thank you very much for your

testimony, and thanks for your great leadership on West Liberty.

They are doing great.

[The prepared statement of Mr. Hermanson can be found in the

appendix on page 108.]

The CHAIRMAN. Now, we come to Ms. Maria Rosmann, Sustainable Agriculture Coalition of Harlan, Iowa. We welcome you here.

18

I remember being on your farm a few years ago. I haven’t been

there lately, so I will have to go out.

Ms. ROSMANN. You are always welcome.

The CHAIRMAN. Reading your testimony yesterday, it looks like

you have made quite a bit of progress, so welcome to the committee.

STATEMENT OF MARIA ROSMANN, SUSTAINABLE

AGRICULTURE COALITION, HARLAN, IOWA

Ms. ROSMANN. Thank you, and again, you are always welcome to

visit. Good morning. I thank you again for the opportunity to testify this morning. My name is Maria Vakulskas Rosmann. I am

from rural Harlan, which is West Central Iowa. I am testifying

today on behalf of the Sustainable Agriculture Coalition. It is a network of organizations who represent farmers, environmentalists,

and rural people who come together to formulate practical, effective

approaches to agricultural problems.

My husband, Ron Rosmann, and I farm a certified organic farm.

It is a 600-acre operation, both grain and livestock. Our crops and

livestock include corn, oats, barley, soybeans, turnips, alfalfa. We

raise beef, we raise pork, we raise poultry—no sheep, no turkeys

yet. We have a cow-calf herd which numbers 100 cows. We feed out

all our calves. We raise farrow to finish about 400 hogs annually.

I raise about 400 to 500 chickens annually, as well.

Two years ago, I left my position in rural school development to

begin the marketing of Rosmann Family Farm’s labeled meat and

poultry. Neither my husband nor I have any off-farm employment,

which is important to share with you today. We employ one fulltime hired person, and during the summer months, we are assisted

by our three teenage sons, two of whom are in high school, the

third a student at Iowa State University.

Our crops have been certified organic since 1994. The beef operation was certified in 1998, and we have been farming what I consider sustainably since 1983. My husband has been farming since

1973, following his graduation from college and return home to the

family farm.

Recently, my husband was elected President of the Board of Directors of the Organic Farming Research Foundation based out of

Santa Cruz, California. The mission of this foundation is to sponsor

research related to organic farming practices, to disseminate this

research appropriately, and to educate the public and policymakers, such as yourselves, about farming issues related to

organics.

In one year, one year alone, from 1999 to the year 2000, the

number of certified organic growers in the United States increased

18 percent, from 6,600 to 7,800. A recent survey by the National

Marketing Institute estimates that 43 percent of our population

has used organic foods or beverages in the past year, and those figures are high.

A study by OFRF indicates that the nation’s land grant universities, however, are failing our organic farmers and ranchers. Of

the 885,000-plus acres available for research in the land grant system, only 0.02 percent, 151 acres, is devoted to certified organic research. An earlier study by this foundation found that less than 0.1

19

percent of Federal agricultural research dollars were being spent

on organic farming research.

The coalition supports the continuation of competitive grant

funding through the Initiative for Future Agricultural and Food

Systems and the coalition also supports the addition of either a

specific category for organic farming research or a directive that a

percentage of initiative funds be targeted to organic research. We

also contend that the certification fee structure must continue to be

weighted in a manner that allows family farmers, such as myself,

to compete in the organic marketplace. The coalition also strongly

urges the committee to expand USDA’s recent announcement of

cost-share assistance for organic certification, and our farm is being

certified at this hour at home, pursuant to the crop insurance bill,

from the 15 pilot States to the entire country.

In 1998, we did something very, very unusual for us. We added

value to our livestock. Currently, all of our livestock is sold on the

organic market. However, we had made the decision to go with our

own business, our own marketing, and become our own middleman.

Our product is a certified organic, boneless, dry-aged, frozen packaged product available in grocery stores in Des Moines and Ames,

Iowa, available through private sales from people primarily in Central Iowa, numbering currently over 110 folks, currently available

through the Food Systems Project at Iowa State University through

Practical Farmers of Iowa, whereupon all Iowa meals are part of

the large catered events in the Des Moines and Ames area.

We also serve or make available the larger amounts for homes,

and it is being served this weekend in California at a large event.

When I get home, I will be shipping out a substantial amount of

steaks to be served at the Claremont Hotel in San Francisco. You

can also see who our clients are, what kind of meat that they prefer, and why they prefer it, and that is part of the testimony.

We believe that the new Federal Farm bill needs to include a

program that focuses on production ag as a basis for rural development, and we believe strongly that ACRE serves that need. ACRE

proposes that a relatively modest proportion of mandatory Federal

agricultural funding be dedicated to research, training, and business and marketing assistance, such as what we undertook by ourselves, that it work for both the farm and ranch income. What is

really neat about ACRE is that it is a competitive collaborative

grants program that can mobilize existing organizations and agencies to provide coordinated assistance in direct response to the

needs of agricultural producers.

I have a letter to support this in my testimony, but I wish to

strongly state and add our strong support for the inclusion of a

competition title in the new Farm bill. Our farm, you can pick out

on the flight pattern from Omaha to Minneapolis. I saw my farm

yesterday when I flew in, and it was important to say that because

I can see the diversity from the airplane, looking down to see the

various crops, and it is sad to say that government programs, we

feel, have failed miserably to foster good stewardship of the land.

They have done the opposite. They have encouraged over-production. They have discouraged crop diversity. They have discouraged

crop rotations.

20

We strongly support the Conservation Security Act introduced by

Senator Harkin and Senator Gordon Smith. We also included our

recommendations for existing conservation programs in my testimony. However, I strongly, strongly encourage that all farm and

conservation programs in this new Farm bill include payment limitations, include stripping all loopholes, and include the increased

fraud and abuse penalties.

Finally, I would like to address, if I may, please, the idea of

fewer and fewer farmers. Who will farm the land? Who are around

anymore to farm the land? The new Federal Farm bill needs a beginner farming and ranch development program, and I have detailed it in my testimony.

Again, I invite you strongly—Senator Harkin, you are welcome

anytime on our farm to see organics that work. I would strongly

encourage each and every one of you to find the organic, certified

organic farms in your area and see that they, indeed, work, and

they work for the betterment of our society. Thank you very much.

The CHAIRMAN. Thank you, Maria.

[The prepared statement of Ms. Rosmann can be found in the appendix on page 115.]

The CHAIRMAN. Thank you all very much for your testimonies. I

am going to be in Iowa in August. Maybe I will stop by. Like I said,

I have been on your farm before, but it has been a long time; I

would like to see your latest development. Please give my best to

Ron and the family.

You said you now direct market your own beef and stuff. That

is something new that I didn’t know about. Who slaughters it and

who prepares it?

Ms. ROSMANN. This is done at Amend Packing in Des Moines. It

is a federally inspected plant. Kent Weis is a fourth-generation

butcher. It is done—we are taking animals on Friday of this week,

so it is all done in Des Moines and stored in Des Moines. What it

does, it is aiding another group. It was very difficult, sir, to find

a federally inspected plant that wanted to do work with a smaller

producer. We have been with them now three years.

The CHAIRMAN. You said that organic growers increased by 18

percent last year?

Ms. ROSMANN. Again, certified.

The CHAIRMAN. Certified.

Ms. ROSMANN. Certified, the third-party agency coming in to

prove what you have claimed.

The CHAIRMAN. You said that only one-tenth of a percent of Federal agricultural research money goes to organic systems research?

Ms. ROSMANN. Yes, sir.

The CHAIRMAN. Well, if that is growing that rapidly, maybe we

ought to take a look at that, too, and see about that.

Ms. ROSMANN. What might be interesting, we have compared our

yields, our proven yields on the grain end of it for the past 10 years

with Iowa State University Extension. We match in Shelby County

the corn yield, 135 bushels an acre. We match that average yield.

We are down one bushel for soybeans, 43 versus 44.

If I may take the opportunity to say, when discussing about the

livestock as part of a farming program, livestock need to be part

21

of the total systems approach to agriculture. It is a vital part. It

can’t be just corn and beans, beans and corn.

The CHAIRMAN. What do you do with all your manure? You have

got chickens, you have got hogs, and you have got cattle. What do

you do with all the manure?

Ms. ROSMANN. Manure is spread. In fact, we have to seek other

sources for our manure for fertility.

The CHAIRMAN. You do apply it all?

Ms. ROSMANN. Oh, yes. It all gets applied. We compost it and

apply it. We do not have confinement systems, but we still obviously have the manure.

The CHAIRMAN. How many acres are you farming now?

Ms. ROSMANN. Six hundred.

The CHAIRMAN. Both you and your husband, and you have one

full-time hired person?

Ms. ROSMANN. Three. God bless them, boys.

[Laughter.]

Ms. ROSMANN. It is labor intensive, of course, it is, and right now

we are in the middle of oats and barley harvest. It is labor intensive. We are fully employed.

The CHAIRMAN. I also appreciate what you said about the need

for USDA to provide assistance to develop direct marketing and

value-added enterprise. It sounds like you have done very well, but

most people who farm, I mean, direct marketing, that takes time.

Not too many people have marketing degrees or know how to market and that can be a real problem. When you started doing this,

did you get any assistance at all from USDA for marketing?

Ms. ROSMANN. No, sir.

The CHAIRMAN. None whatsoever?

Ms. ROSMANN. Each of us had taken a marketing class in college,

which does not make a marketer. We intentionally started slow.

We intentionally started small so that we could learn as we went

along. We do not need—we hardly advertise. The advertising that

I provide is to let clients know when I will be in Des Moines and

when they can place their orders, and our clients are broad.

It is a broad base. It is a broad economic background. They are

people who want not only organic product, they want a hormonefree. We have a lot of cancer, radiation, and chemotherapy patients

who are able to digest our meat—their claim, not mine—and they

are able to tolerate our meat. For whatever reason, we feel fortunate. On the other hand, we are dealing with people of all economic

backgrounds and people who want to support family farms.

The CHAIRMAN. Thanks. I will get back to you.

I have one question for all of you, basically. I want to talk about

the EQIP program, because this is vital to all of you. Many of you

specifically mentioned the need to eliminate caps on the level of

payments a producer can receive and to eliminate the restriction

that prohibits cost-share money for the larger livestock operations.

Again, we have got to look at all of the aspects of EQIP. First

of all, I agree that we have got to get more money into EQIP, and

we are going to do everything we can to do that.

However, I am concerned about creating a program that would

unfairly subsidize large livestock operations. Now, we have seen

how large payments to program crop producers have gone predomiVerDate 11-MAY-2000 12:54 Jan 22, 2003 Jkt 082537 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 82537.TXT SAG1 PsN: SAG1
22

nately to large farms and helped them grow larger. There are

enough studies to show that maybe what we have done inadvertently, not just in the last Farm bill but for farm bills going back

for a long time, is that by supporting every bushel, bale, and pound

that is produced, obviously, always the bigger get more. The bigger

you are, if it is every bushel, pound, and bale, then the bigger you

are, the more you get, and that widens the gap all the time, because the percentages will widen that gap.

We see that, for example, in terms of land prices, by some of the

things we have been doing, the bigger you are, the more money you

get, and the bigger land owners can then out-bid the price of land

so that younger people can’t get involved. They can’t get into that

bidding process. The bigger you are, you can bid up the price of

land, and we have discussed this a lot here in this committee about

how we have maybe inflated land prices through some of these programs that we have had.

Again, maybe we see the same thing happening now with larger

feeding operations. On the other hand, we want the larger feeding

operations to be environmentally sound. I am on the horns, if you

will excuse the pun, of a dilemma here. I want to help the larger

operations to meet environmental concerns because that is of a societal benefit. On the other end of that horn is if we provide EQIP

money without any caps, more will generally go to the larger producers. Because they are bigger, they will consume more, and,

therefore, it will give them a competitive advantage.

How do you do this and make sure that the EQIP money is distributed fairly? I see it as a great dilemma, and I am not sitting

here telling you I have the answer. I don’t know. We are going to

try to figure it out, and any suggestions and help that you have

would be most welcome. How do we provide for an equitable distribution of EQIP payments for livestock owners? If we don’t have

caps, how do you keep it all, most of it, from generally going to the

larger producers?

Do you understand what I am saying, and what my problem is

in wrestling with this? We want to help the larger producers because I want to help them meet environmental problems, which

helps us all, but not to the detriment of the smaller producers who

also need that help. I don’t know how we do that, and any thoughts

or suggestions any of you have, Jon or anyone else, I would be

more than welcome to take any advice or suggestions. I didn’t

mean to pick on you, you were just first in my eyeline of sight

there, Jon.

Mr. CASPERS. I will be picked on. I will go first. What I suggest

in my testimony and what we have suggested in the past is that

we would support a payment limitation of $200,000 per contract

and then the elimination of the size test.

The CHAIRMAN. You are saying a cap not on the size, but on the

money.

Mr. CASPERS. Right, but just on the money. I guess the current

program—— The CHAIRMAN. That might work.

Mr. CASPERS [continuing]. I see eliminating too many of my

neighboring producers from participation in the program at that

cap. To address your question further, and I would like to talk speVerDate 11-MAY-2000 12:54 Jan 22, 2003 Jkt 082537 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 82537.TXT SAG1 PsN: SAG1
23

cifically about some of the rules and regulations that are coming

fairly quickly to our industry and across agriculture, specifically

EPA’s CAFO regulations, the cost of implementing those regulations as proposed by EPA is going to be substantial, and I take

some numbers from EPA in the Midwest.

They are anticipating for some different sized operations the 10-

year costs of operation for a 1,460-head swine operation of

$281,000, 10-year cost. Now, as you go higher in numbers, they

have got a 3,400-head operation, the cost of almost $600,000 over

a 10-year period, and a 13,800-head operation, which would be a

large operation, of almost $2.2 million. Now, if those operations all had access to $200,000 in assistance

for a contract to help implement, to install and implement and operate those systems, obviously, you could bring all those operations

under that program and the public could gain the environmental

benefits. Certainly, $200,000 is going to represent certainly a much

larger benefit for the smaller operation than it does the bigger operation. At the same time, you include them in the program, so you

gain the environmental benefit.

The CHAIRMAN. Did you have an idea of how much that might

cost us? Maybe you put that in your testimony, I don’t know. If you

did a $200,000 amount, what would that be over 10 years? We will

figure it out.

Mr. CASPERS. Yes. I guess what we have called for is $1.2 billion

to be put into the program for livestock and poultry.

The CHAIRMAN. Per year for 10 years?

Mr. CASPERS. Yes.

Senator THOMAS. Mr. Chairman, are you talking about confined

feeding regulations, is that it?

The CHAIRMAN. Yes.

Mr. CASPERS. We are talking about, yes, the CAFO regulations

that EPA has promulgated.

The CHAIRMAN. Concentrated animal feeding operations.

I will yield to my colleagues now, but I want to get back, John,

and talk about the methane that you have talked about, and perhaps some of the others, also, want to talk about methane production and energy, that type of thing that I am interested in, also,

perhaps including in the Farm bill. I will yield to my ranking member, Senator Lugar.

Senator LUGAR. Thank you very much, Mr. Chairman. I just

jotted down, as you did, that the payment limits issue is clearly one

that we have to come to grips with. The $200,000 limit is probably

a good idea, but I suspect that this is very different from the sorts

of limits that we have had in the past and I am not certain where

this leaves everybody with regard to the types of operations they

have.

You have the problem with all of our programs, whether it is the

commodity title or the EQIP situation with livestock, where there

has been great debate in the Congress in the past about payment

limits. Essentially, the trend has been to raise those in recognition

of larger operations that are efficient in the country and I have

supported that. I appreciate the opposing point of view, which says,

essentially, that it does mean a larger amount of Federal money

goes to larger farmers.

24

The Sparks report that we often cite indicates that eight percent

of operations in the country are doing about 72 percent of the business, whether it is livestock or commodities. We have a pretty high

degree of concentration in American agriculture as it stands and

probably growing larger as our younger farmers rent land from

people who are in the States or elderly people and so forth, who

in effect have larger operations, even if they don’t have an equity

in the land, and that is the way to get a middle-class income, essentially.

At some point, the payments issue is one that has to be resolved

by the committee and I appreciate your sort of highlighting that in

your colloquy.

Another point that three of you have raised, and maybe more of

you would have if we had sort of raised this as a basic issue, is the

cost of feed as a part of the picture. As I recall with the turkey situation, 70 percent of the cost comes from feed, 70 percent of the

cost of turkey production. The testimony there is that the historic

policy, as you have termed it, or propping up farm prices by controlling producers is doing great damage to turkeys and others who

are in the livestock and poultry business.

Others of you may have differing sorts of situations, but there is

a basic tradeoff here with regard to our attempts to, as we do

around this table frequently, the low cost of corn and wheat and

prices for beans and what have you, try to think of how we can

imagine those going higher. Now, as you imagine them going higher, why, this has a very different sort of impact, as a matter of fact,

if we make a concentrated effort to do that. Some would contend

the bill the House is considering now with sort of a third layer of

pricing, with another target price situation, really achieves, at least

temporarily, a higher price, however you get there. That is probably bad news in terms of operations if you are a livestock and

poultry person.

At some point, we have to come to grips with the commodity title

and the livestock titles in some harmony, or some wholeness, because they are sort of a part of the same picture. Now, most of you

are suggesting that the market works and that, essentially, you are

prepared to see a more market-oriented situation governing your

feed costs. Perhaps as you think through that, you might have further refinements on your testimony and maybe some recommendations with regard to the commodity titles, because this is likely to

be a very large issue for the committee.

Then finally, there is mention in most of the testimony about the

need for trade promotion authority for the administration. There is

mention that NAFTA made an enormous difference, that huge increases have occurred in poultry, in turkeys, in pork, and they

have. Of course, that is the ball game in terms of the volume and

the movement, the dynamics of the business. If you can solve somehow the feed problem and EPA, in one form or another, these are

sort of the parameters of having some future, making some money

in the prospect.

My own biases are more toward market solutions in the commodity situation, toward fewer limits with regard to payments in terms

of EQIP or with regard to anything in the business, and very

25

strong trade promotion. I mention those to begin with so you have

some idea of where we are coming from.

What advice can you give us just off the top of the head today,

in the time that I have to ask you this question, about the commodity title? Really, some of you are involved in addition to livestock

or poultry, in producing corn or beans or wheat or something else

in addition. What is the tradeoff here and what should we be looking at philosophically as we take a look at the commodity title?

Does anyone have more testimony on that? Yes, sir?

Mr. HERMANSON. If I could just make a comment, I guess my

concern as we look ahead, I have been in Brazil a couple of times,

have friends of the family down there, been there a couple times

in the last three years, and my concern—I love the people and I

love to see them develop and grow, but I am concerned that they

will end up with our meat production. I mean, they have got hundreds of thousands of acres that haven’t been developed yet and

they are working infrastructure. That is what I am concerned

about, is that we don’t lose agriculture in the U.S.

Senator LUGAR. Trace that through. Why does Brazil end up——

Mr. HERMANSON. What I am saying is if we have an artificially

high price of grain here, that will encourage them to develop more

grain.

Senator LUGAR. I see.

Mr. HERMANSON. If grain is cheaper, which it is, there is expansion now in the hog production and turkeys are getting down there,

too. We have to work in the world arena, I believe.

Senator LUGAR. Well, that is the basic argument of having a

competitive price, that it doesn’t give away either our grain exports

or our meat production prospects, because if our prices for grain

are too high, then other countries have lower costs and lower prices

and take away those markets, and as you are suggesting, may also

induce a meat production or poultry production situation utilizing

that differential in world price.

That is a part of our dilemma. There are a good number of farmers who come before this committee and they would say, well, the

world out there is a big place, but I have got a farm here now and

I want a guarantee of a price that covers my cost, whatever it may

be. Now, the rest of you folks will have to do the best you can, but

nevertheless, looking after No. 1, we have got to pin this down, all

four corners. There are a good number of such farmers, as you may

have seen in your associations.

I thank you very much——

Mr. HERMANSON. As a grain producer, at that point in time, it

is nice to have good prices, it surely is.

The CHAIRMAN. Balance, get a balance.

Senator Conrad.

Senator CONRAD. Thank you, Mr. Chairman, and thanks to this

panel of witnesses. You have really been excellent witnesses and I

have enjoyed the testimony.

I have a series of questions about EQIP and CRP, but before I

get to that, there is something that is very much on my mind that

I would like to especially ask the first four witnesses about, and

that is the question of what we are doing with respect to foot and

26

mouth disease and whether or not we are providing adequate protection to our industry.

I was recently in England and literally every day in the newspaper, there were scare headlines with respect to mad cow disease,

with respect to foot and mouth disease, with respect to other supposed problems, GMOs and all the rest. I would just like your impression at this point, whether or not we are doing everything we

should be doing to protect our livestock industry. Mr. Caspers.

Mr. CASPERS. Well, we have certainly felt the effects of that. We

canceled our World Pork Expo this last summer due to concerns

with all the foreign travelers and foreign visitors. We have, typically, 1,500 or 1,600 foreign visitors attend World Pork Expo every

summer, and certainly, we just couldn’t find any way really to assure that we could guarantee that they had the proper separation

in terms of time away from animals in foreign countries with the

potential exposure to animals at that show. We had to go ahead

and cancel that show this last summer.

Now, I understand the President in his budget has requested

some additional dollars for the inspections at the ports of entry,

and that is extremely important that we do that. We, on our Swine

Health Committee, which I served as chairman up until recently,

continue to get reports of people traveling through ports of entry

and really trying to test the system as they come through to make

sure that they took proper precautions, that they disinfected their

shoes and went through all the proper procedures, and they continue to report, at least at that time, that you almost had to be insistent that somebody do something or assist you in that process.

We were, I guess, a little disappointed in that, and hopefully, with

some additional funding and people, those inspections could be

beefed up and that will happen if there can be additional resources

put to that.

Certainly, it is a concern and it is still a concern. FMD is endemic in many parts of the world, in Africa and many parts of

Asia, Southeast Asia. For some reason, those breaks in the past

haven’t made the headlines like we have seen coming out of the

U.K. with the break there, but certainly, there is risk from many

parts of the world.

Senator CONRAD. Mr. Davis.

Mr. DAVIS. I guess, basically, I would echo the previous witness.

Yes, we have to keep in mind that we have not had FMD in this

country for over 70 years, so what we have been doing certainly

hasn’t been a failure. That is not to say we don’t need to continue

to be concerned, beef up inspections. That is part of why we support that.

Part of our plea for increased research dollars speaks to that

issue, particularly as it regards the disease research center at

Ames. It is badly needed. There is still more that we don’t know

than what we know, folks, and we can’t afford to get behind on

doing those things that give us the answers as best we know how

through sound science to further beef up our confidence.

Senator CONRAD. All right. Mr. McDonald.

Mr. MCDONALD. Yes. To answer your question, we are probably

not doing enough. One area of concern to me is the reporting of

these diseases by our trading partners. I am thinking of the inciVerDate 11-MAY-2000 12:54 Jan 22, 2003 Jkt 082537 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 82537.TXT SAG1 PsN: SAG1
27

dents last year where Argentina was declared foot and mouth free

and we started setting up the protocol for importing cooked beef

from Argentina, and lo and behold, in late summer last year, we

started hearing rumors of the disease in Northern Argentina. Yet,

it wasn’t reported to the WTO until January. That lapse of time

potentially, at least, could have caused great harm. The same situation occurred with BSC in Europe. When I participated in the

business forum in Buenos Aires in April, I was urging that any

trade agreement provide a specific protocol for verification and reporting of these various diseases.

The comments earlier about the protocol that we have instituted

in our airports and travel facilities is good. Does it go far enough?

I don’t know where the good science and practicality meet, but it

is certainly a potential disaster to the live cattle industry.

Senator CONRAD. Mr. Moore.

Mr. MOORE. Thank you. I would agree with the others, that it

obviously is a real concern. It is a concern for all of the livestock

industry. We can be very thankful that we haven’t had it in this

country for 70 years. Obviously, we are doing something right.

Definitely, APHIS needs as many inspectors as possible to make

sure that they can cover all of the airports and other points of

entry and that we are addressing the issue as a serious potential

problem.

We have a disease in sheep of scrapie that we need scrapie eradication. Those rules have been worked on. We need to get them published. As Mr. McDonald said, we have to make sure that the partners that we deal with around the world are following the same

protocol as we are as far as reporting the diseases and as far as

how we accept their statements and they accept ours.

Senator CONRAD. I thank you for those suggestions and comments. As I have looked at it, the risk that is associated, is enormous. I really think as part of our review here we should seriously

consider strengthening protections against hoof and mouth. Being

in England and seeing the devastation to their industry, it is very

sobering, seeing people lose everything, and that is what is happening there. It ought to alert us all that we have got to take this very

seriously. I thank the chairman.

The CHAIRMAN. Thank you. Mr. Roenigk, I know that you wanted

to comment.

Mr. ROENIGK. Senator Conrad, if I could just briefly add, fortunately, poultry does not get foot and mouth disease. However,

USDA is talking about a six-mile quarantine in case there is an

outbreak. I guess they have different options. If poultry is within

that six-mile quarantine, we cannot feed our birds, we cannot take

our birds out, we cannot take our products out. I don’t think USDA

has fully addressed that, and it would be devastating for people

who don’t have the disease but at the same time would bear all the

burdens of someone who did have the disease, and so I would like

to bring that to the attention of the committee. Thank you.

Senator CONRAD. Thank you for that.

The CHAIRMAN. That is interesting.

Senator CONRAD. I didn’t know that.

The CHAIRMAN. I didn’t know that, either.

Senator Thomas.

28

Senator THOMAS. Thank you, Mr. Chairman.

Frank, I want to followup just a little bit. I will be brief. You,

having served in the legislature, know it is important to be brief

in the answer.

You pointed out that it is necessary to continue the wool pay- ment, hopefully in this $5.5 billion thing. What specifically are you

doing? I am impressed with what your industry is doing to move

yourselves forward. Could you recite those one more time?

Mr. MOORE. Senator, we have done a lot of things in the last few

years. We filed the Section 201 case against Australia and New

Zealand to put in place some kind of relief period so that our industry had a little stability. We have worked on scrapie eradication.

We have got rules at USDA that are just about to be published and

we are going to get that disease under control and that will be a

significant step as far as the industry and our image is concerned

around the world.

We are working on value-added products. We are working on, in

the six-State region that Wyoming is included in—Idaho, Montana,

South Dakota, Utah, Colorado—we are also working on what we

call a third-generation cooperative, to start a program where we

are doing what Mr. McDonald referred to. We are taking care of

our product from the gate, at the ranch, to the consumer’s plate.

Some of these issues are going to change the way we market

lamb and the way we market wool, and these are the kinds of

things that our industry has been working on for a long time. We

need stability right now to make sure that we can get these things

up and running. It is difficult to change an industry, but we are

working on it.

Senator THOMAS. You are doing promotion and carcass classifications and so on?

Mr. MOORE. Yes. What we are working on is a number of things.

We are trying to go to a grid pricing structure so that we have

something that the product is sold based on the quality rather than

just on a commodity price.

Senator THOMAS. It is interesting, the problems that you have

had with this mandatory price reporting. Why hasn’t that come out

of USDA and what has been the result of it not coming out?

Mr. MOORE. Well, for the last three months, we have had basically no reports whatsoever. We used to have a voluntary program.

Now with the mandatory program and then you put in the restrictions so that there is confidentiality, with the concentration of

packers we have in our industry, it is very hard for a report to

come out under the current formulas that doesn’t immediately

identify which players are in the marketplace that day. USDA is

trying to address those issues and hopefully will come out with

some revised formulas for the reports in the next few days. Definitely, without market reports, we are all kind of working in a vacuum.

Senator THOMAS. That is because there are so few processors

that if they reveal it, it is an intrusion into private information, is

that concept?

Mr. MOORE. Yes.

Senator THOMAS. That is interesting.

Mr. MOORE. Three major packers in the industry.

29

Senator THOMAS. Mr. Davis, I admire your commitment to your

industry. You said you are going to beef up inspections.

Mr. DAVIS. As soon as I said it, I was afraid somebody would get

that.

[Laughter.]

Mr. DAVIS. Further improve, is that better?

Senator THOMAS. Whatever. It is good. You could turkey them

up, too, couldn’t you?

[Laughter.]

Senator THOMAS. What would you say, you guys in the beef,

what would be your first two priorities in this bill for the beef industry? Both of you—either one of you.

Mr. MCDONALD. I would say country of origin labeling and restriction of the USDA grade stamp. That is a cornerstone of our

ability to be able to compete in this global market. We need to distinguish and identify our beef.

Senator THOMAS. Thank you.

Mr. DAVIS. I guess those are also policies of ours, but I am not

sure I would, in the context of where we sit today, that I would

name them as No. 1 and No. 2., with the backlog in the EQIP program and the regulations that are coming down on CAFOs or

whatever you call them the biggest need for help is there as the

No. 1 priority, and I go back to our research priorities. It is kind

of like, in my opinion, maybe more mine than the industry’s.

Senator THOMAS. Research on land management or on your product?

Mr. DAVIS. On our—no, as pertains in this bill on disease research and food safety and those types of things.

Senator THOMAS. I see.

Mr. DAVIS. In the big picture, research has been much like livestock has in previous farm bills. It kind of tends to drift down, and

I guess I would like to see it stay up a little higher.

Senator THOMAS. OK. The concentration problem, I wonder, is it

legitimate to ask the chairman something about jurisdiction? The

monopoly jurisdiction, does that go in the Farm bill? Is that something that ought to be there? Some of the things we are talking

about here, country of origin, are those things that we have jurisdiction over in the Farm bill?

The CHAIRMAN. Some of it has to do with the Justice Department’s jurisdiction. We can set up some policies within the Department of Agriculture to try to address it, but not in the legal aspect.

The Justice Department has that jurisdiction.

What was the other one?

Senator THOMAS. The country of origin, those trade issues and so

on.

The CHAIRMAN. Well, I don’t know if we would have the jurisdiction for mandating country of origin labeling or not. I don’t know.

Senator THOMAS. We probably share it with the Finance Committee, I suppose.

The CHAIRMAN. If we do it, they would probably ask for referral.

Senator THOMAS. Well, we want to have some power there.

The CHAIRMAN. Craig, let me just say this. We are ready to

break new ground, so—— [Laughter.]

30

Senator THOMAS. I am sorry to ask that, but as we talk about

some of these things, apparently, they don’t all go in the Farm bill,

of course, jurisdictionally, but they should be brought out and we

can do something with it. Thank you, sir. I appreciate it.

The CHAIRMAN. We can always try it.

In order of appearance, Senator Lincoln.

STATEMENT OF HON. BLANCHE L. LINCOLN, A U.S. SENATOR

FROM ARKANSAS

Senator LINCOLN. Thank you, Mr. Chairman, certainly for your

leadership, and also you have set this committee on a very aggressive schedule to review our current farm policy and to look at what

we can do in a positive way to work with our producers. Certainly

with what the House is doing, they go to markup later this week,

perhaps, to mark up their farm bill proposal, so it is entirely possible that we will see the completed House bill by the time we

leave on the August recess. That means we have got a lot to do and

I know that we can do it and that is all the more reason why it

is so important to have you all here to work with us. We appreciate

the witnesses’ participation. The commodity group was here last

week. We appreciate that.

I come from a State where I do try to balance very much because

we have great pork producers, our cattlemen’s association, obviously poultry, and certainly a great group of turkey growers in Arkansas, balancing with the commodity groups that we represent.

I just would like to put a plug in, as well, that there are some

short-term needs that we are addressing more immediately here.

We are very anxious, all to put together an emergency market loss

assistance package that will respond to the immediate needs of our

farmers and our rural communities, and, ultimately, the clock is

ticking on that because September 30 is rapidly approaching. We

are going to be working with the chairman. I appreciate his leadership in pushing the committee toward a resolution on this and I

hope that we will come up with something that can be very beneficial to everyone, because short-term is obviously very essential to

all of our producers.

Beyond the short-term, however, we do need to look at farm policy and a new farm bill that responds to all of agriculture, both

producers and livestock producers. Our farmers, our livestock farmers particularly are an essential part of the agricultural community

that produces the safest, most abundant, and affordable food supply in the world. I say that regularly because I like the way that

it sounds and I want more and more people to understand that.

Coming from a seventh-generation Arkansas farm family, I have

lived it and breathed it all my life.

As we look at the issues that we are faced with, and I know that

Mr. Hermanson brought up some of it in terms of balancing the interests against the row crops and the row crop farmers as well as

the livestock producers, I would certainly be interested—Senator

Lugar mentioned it a great deal, as well, but if you all have recommendations of how we can better balance.

I know for us, you mentioned Brazil. For row croppers, the fact

that we have exported a great deal of technology and allowed those

row croppers down there to be very efficient, not to mention the inVerDate 11-MAY-2000 12:54 Jan 22, 2003 Jkt 082537 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 82537.TXT SAG1 PsN: SAG1
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vestment we have made in infrastructure that allows them to get

their products to that global marketplace that we have talked

about. I have to say that, Senator Conrad is not here, but he always puts up an unbelievable chart that indicates the amount of

subsidies, export subsidies particularly, that the governments of

the EU provide their producers, which put us at a tremendous disadvantage in that global marketplace when you take into account

the input costs, the increased input costs particularly that we have

seen over the last couple of years and our costs of production

through environmental regulations and others.

Is there anybody on the panel that has a good suggestion to how

we balance between our row croppers and our livestock producers?

I have got a vested interest in this.

Ms. ROSMANN. Make them all organic.

[Laughter.]

Ms. ROSMANN. Your prices, ma’am, will increase. The prices for

our grains and our—why are we able to sustain otherwise a family

of five and a full-time hired help just doing it the way we do? Multiply that by many, many people. Multiply that by the people whom

you hope will replace us in the next generation and maybe you will

have the beginnings for a very sound answer to this dilemma.

Senator LINCOLN. Well, I do believe that it is important to recognize the sustainable farming and the organics that are involved

there and what the marketplace can sustain. No pun intended, Mr.

Hermanson, but I don’t think we can go cold turkey. I have got way

too many——

[Laughter.]

Senator LINCOLN [continuing]. In terms of the producers that are

out there and the elements that we face, particularly in the area

of the country that we farm, with unbelievable pests, not to mention the humidity, the moisture, sometimes the drought, other factors that we have to take into consideration in the capital-intensive

crops that we grow. They are very different, and the perspective

that we have to take sometimes has to be somewhat different.

I do agree that there is a place and that there is room for us to

begin to look at more in terms of that, but in terms of balancing

that?

Mr. HERMANSON. It is a challenging opportunity that this committee has because I don’t think there is an easy answer. The thing

that you need to have at least a safety net for the crop farmers.

I mean, we need that, and obviously if you are only in crop production, if you could have $10 soybeans and $5 corn, you think you

would be happy, but it doesn’t work in the whole balance and, of

course, we have to work with this global. I don’t believe we can

build a wall around the U.S.

We have to be in the world market, but by the same token what

we have been doing has been some benefit as far as there has

been—if a farmer in Iowa grows a crop, with the transition payments and the LDP, there has been cash-flow for him. Feed costs,

it has been very beneficial, of course, to the turkey industry because we have had economical feeds and it has given us an opportunity in this co-op that we have, that we have gotten on our feet

and we are doing well.

32

Again, it is not an easy thing, but we have to recognize that

there are parts of the world that are just waiting to develop. Of

course, I don’t think the European common market, even though

they subsidize a lot, I don’t think that is where our competition will

come from. It is the area that they haven’t developed yet.

Senator LINCOLN. That may go to a lot of what you have already

commented about in terms of making sure that our playing field is

fair and certainly to the jurisdiction of trade issues. It is going to

be critical. I know for us, in our State, the catfish issue that we

have got in terms of labeling, misleading labeling that is coming

from the catfish production or the basafish production out of Vietnam, the problems we are having with our poultry industry in Africa, South Africa, in terms of the dumping cases that they are

claiming, we have got some real concerns there and we have got

to be able to stand up for our producers. I do it at the risk of being

called the ‘‘fish woman’’ and a few other things, but it is very important.

Any other comments about our trade issues there or your perspectives of whether we can see more clearly or not whether there

is going to be this robust growth in global demand for U.S. agricultural exports that we kind of based the original Farm bill on in

1995? I mean, we instituted that farm bill with the basis that there

was going to be this international marketplace and this robust

growth in demand.

Mr. ROENIGK. Senator, if I could address that. Yes, I agree, the

1996 Farm bill was based in large part, or some part, that there

was going to be this robust growth in international trade for basically all U.S. farm commodities, and to some extent, that happened, but to a large extent, it didn’t. I don’t think the next Farm

bill should say, well, it didn’t happen, therefore, it can’t happen. It

has a more likely chance of happening now. We have seen it already in poultry. As China comes into the WTO, as people’s income

around the world increases, the first thing they turn to is animal

protein, whether it is poultry or some other animal protein, so we

need to give ourselves an opportunity to really take advantage of

that.

It goes back to the words we were using this morning about balance. Senator Lugar used the word ‘‘harmony.’’ I don’t know that

we will ever achieve harmony, but the balance is difficult. I don’t

have an answer other than to say if prices are too high for grains,

it jeopardizes our competitiveness, but also, too, those higher prices

get worked into the price of farmland so that larger farmers see

higher prices coming, they go out and perhaps bid on this land and

bid it up, and pretty soon, whatever price corn is, it is still not high

enough because the corn land costs so much.

At the same time, sometimes users are accused of wanting prices

too low for grains, and that is not true because if farmers are not

rewarded for their work and their risk, then they go out of business

and it is certainly not something we want. We want a good, steady,

adequate supply of all feed ingredients and just give us a chance

to compete in the world. I appreciate the question. Thank you.

Senator LINCOLN. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much, Senator Lincoln.

Senator Crapo.

33

STATEMENT OF HON. MICHAEL D. CRAPO, A U.S. SENATOR

FROM IDAHO

Senator CRAPO. Thank you very much, Mr. Chairman. Unfortunately, I am going to have to leave in just a couple of minutes to

a live interview that starts right at 11 o’clock, so I am not going

to be able to ask the questions I had. I did want to introduce my

constituent and good friend, Eric Davis, who is here representing

the National Cattlemen’s Beef Association. He is representative of

all the cattlemen that we have in Idaho, and I suspect across the

nation. He runs a cow-calf operation and feedlot and runs cattle on

State, private, and Federal land in Owyhee County and his family,

I believe, has been in business, your operation, over 50 years.

When we talk about environmental regulations and the other impacts that people in the livestock industry face and who is helped

by our conservation programs and the like, we are talking about

Eric Davis.

I told him beforehand that I was going to grill him with questions. Really, what I had was a bunch of softballs to throw at you,

so if the chairman would allow, I would like to submit those questions in writing and have them responded to.

The CHAIRMAN. Whatever your desire is.

Senator CRAPO. I will do that, and I just want to also say before

I conclude here that I have reviewed all of the testimonies. I particularly focused on yours, Eric, since you are a good friend and

constituent, and I want to thank you not only for your testimony,

all of you, but for your testimony that focuses on the importance

of maintaining free and fair markets. As we develop the farm policies of this country, domestically as well as internationally, we

need to recognize that we will get the greatest benefit by focusing

on markets and helping them to work effectively. I thought it was

truly refreshing to see that kind of testimony and that perspective

on how we approach our farm programs.

With that, I am going to have to run or else they are going to

start the program without me, but I do have a series of questions,

Mr. Chairman, that I will submit for the record and for written answers.

The CHAIRMAN. Thank you very much, Senator.

Senator CRAPO. Thank you.

The CHAIRMAN. Senator Nelson.

STATEMENT OF HON. BEN NELSON, A U.S. SENATOR FROM

NEBRASKA

Senator NELSON. Thank you, Mr. Chairman, and thank you to

the panelists for sharing your thoughts with us. Obviously, this is

a shared adventure that we are on, trying to find some of the answers to many of the most difficult problems that we are going to

face within our economy in the near future. Certainly, it has been

an adventure over the last four-plus years.

I am pleased that we are taking time to focus on the whole question about livestock or animal agriculture, because so very often,

the discussion seems to be about commodities and other issues, not

focused specifically on animal agriculture.

From my perspective in Nebraska, our livestock industry accounts for about 60 percent of our cash receipts, so it is an exVerDate 11-MAY-2000 12:54 Jan 22, 2003 Jkt 082537 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 82537.TXT SAG1 PsN: SAG1
34

tremely important part of what we do in the State of Nebraska.

Our cattle industry alone is responsible for about one out of every

eight jobs in our State. At home, we like to remind people that we

have more cows than people. More than 40 percent of the feed

grains that are raised in Nebraska go into feeding livestock, and

we call that adding value, so it is extremely important as we face

the writing of the Farm bill, as we move forward, that we keep in

mind the relationship between animal and non-animal agriculture

as it relates to a sound program that achieves harmony and balance, if we are successful.

The impact of the Farm bills in the past, I suspect, has had some

direct impact on agriculture and now it is not just simply taking

into account the price of feed grains, but also the policy that affects

conservation practices and other trade practice and whatever it is

that we do to develop more markets for agriculture in general.

To wed together the importance of animal agriculture and our

commodities agriculture, I came across an article in Top Producer

magazine that was timely for this hearing. It is about export competitiveness and the new Farm bill. The author, Marcia Zarley Taylor, says farm bills can’t fix it. That is always scary. She argues

that the Farm bill has little to do with our international competitiveness, but that other policies do, EPA, a lot of other issues that

affect us, the value of the dollar against every other currency in the

world, that these do have a lot to affect this.

She says that we really need to embrace livestock. She reminded

me that the grain fed to livestock is the most important use of commodities that we produce, and certainly it is when it is such a large

percentage. It has also been an extremely important component in

rural development, especially in the South and the Great Plains.

The article goes on to point out that United States companies are

already some of the largest poultry and hog producers in Brazil,

and many of you have already commented on Brazil and Argentina

as competitors. The point that she makes is if we chase more of our

processors and livestock offshore because of what we do or don’t do

here at home, no government welfare program yet invented will replace corn and soybean volume channeled domestically. We cannot

afford to drive our agriculture offshore. We must, in fact, embrace

it. I am very anxious to have you help us understand how we bring

together a policy that will do that.

We have already had some discussion about how you deal with

the whole field of livestock in the Farm bill and if we create this

eligibility for conservation cost share or the incentives assistance

that we are talking about and that applies regardless of size, how

we are going to be able to make this all come together and balance

the dollar against the value that we are seeking to achieve for agriculture.

I leave you with that. I, too, have another obligation, but we are

going to have to rely on your knowledge, your experience, to help

us find a way to make all this happen, to balance the interests for

environmentalism, the interest for international trade, the barriers

that we face in many corners of the world, many of them not that

far from here, the challenge we have with animal disease and how

we bring this all together, because if we don’t achieve that balance,

I can assure our ranking member that we won’t get that harmony

35

any way we try it. He already knows that I am worried that he is

in a transition period with his farm and I want to make sure we

are transitioning him up, not out.

[Laughter.]

Senator NELSON. I thank you very much, and I will leave you

with that. We look forward to more input from you as we move forward. Thank you.

The CHAIRMAN. Thank you very much, Senator Nelson.

To all of you, I made my intentions clear to try to include an energy title in the new Farm bill. I was picking up some interest in

various sectors. There has been a lot of attention, of course, paid

to ethanol and soy diesel, other bio-based kinds of lubricants and

fuels. I heard in recent weeks about the potential for using animal

products for bio-fuels. I had not thought about that in the past, but

obviously, it looks very promising. I talked to a group representing

some of our rendering plants around the country and heard how

much can be obtained just from the animal fats and by-products

that could be used in terms of bio-fuels.

Mr. Caspers mentioned the use of methane. I ran across someone

the other day who is using, if I am not mistaken, an ethanol plant

and they are taking methane from both a landfill and a large animal feeding operation and they seem to have a lot of years of supply of methane for the heat processes that they need.

As I look out around the landscape, especially in our State of

Iowa, where we have a lot of large hog confinement facilities it has

been very contentious in terms of the environment and how we

handle that. They used to be looked upon as great energy producers, in terms of capturing the methane from those operations, both

in swine and in cattle. It is being done in some places, but I don’t

know that we are doing much to help assist that from the Federal

standpoint. I don’t know that we are putting much research money

into that, either.

Those are my thoughts on what we might do in the Farm bill.

If any of you have any thoughts about that, either today or if you

talk with your organizations, and have some thoughts on how we

might utilize animal agricultural in energy production, I am very

receptive to that. Anything you have to add today, I would be glad

to hear, or anything later on, I would be glad to hear, too.

John, you mentioned it, methane production. Obviously, there is

a lot of methane in those large confinement operations.

Mr. CASPERS. That is certainly possible. With a little help and

some incentives of some kind, whether it is through some additional dollars for research, whether it is for tax credits or whatever,

that could certainly be encouraged and is certainly a ready source.

It needs some other environmental benefits and certainly can help

be one thing that would address the energy shortage and our reliance on imported oil.

The CHAIRMAN. If I am not mistaken, help the environment, too.

Mr. CASPERS. That is correct. That is correct.

The CHAIRMAN. You get a lot of bounces off that, maybe some additional income to the producer. I am looking for thoughts and suggestions as you go along. Does anyone else from the livestock sector

have any thoughts? Pete.

36

Mr. HERMANSON. Last month, some of the people from the turkey

industry met with some of your staff members regarding burning

of poultry litter to create electricity, and they are working on something in Minnesota, maybe some possibilities, some others. It is a

matter in some areas where you can argue that there is a better

use for that organic nutrient, but in some areas, it is a challenge

because of a place to get rid of it. We would support that continuation of that credit in that area as part of a solution, again, of getting some energy and taking care of a problem byproduct.

The CHAIRMAN. I was in England a couple of years ago and I visited a couple of power plants over there, one smaller one that had

been operating for some time and a new one that had just come

online, and that is all they are doing is burning chicken litter. That

is all they are doing. Well, chicken, turkey—poultry litter is what

they are burning. I thought they built one in Delaware. Do you

know anything about that, Mr. Roenigk?

Mr. ROENIGK. Yes, Mr. Chairman. There is one proposed and it

is planning to come onstream.

The CHAIRMAN. In Delaware, isn’t it?

Mr. ROENIGK. Yes. If you look at the projects that are coming,

we have a concentration of poultry production in Delmarva, two

hours’ drive from here, depending on how much traffic is on the

Bay Bridge. If you add up all the projects that are planned, both

energy and commercial fertilizer, I can see the day when there will

be a shortage of poultry litter on Delmarva. We are turning a problem into a real asset. People are going to have to bid for this material and that is a good thing.

The CHAIRMAN. I heard they might be doing something down in

Arkansas on that, too, but I will have to ask Senator Lincoln about

that, one of these power plants burning chicken litter. I visited the

one in England, and it was operating.

Mr. ROENIGK. Yes. It is based on the technology from England.

The important part is that they be long-term commercially feasible.

There are some tax breaks needed in the beginning to help them

get started. I would agree with that.

The CHAIRMAN. Sure.

Mr. ROENIGK. Over the life, they should be commercially feasible

and we shouldn’t ask taxpayers to keep on supporting those longterm, but some startup help would be appropriate.

The CHAIRMAN. Again, we can’t give tax benefits in the Farm

bill, but maybe we can promote some things that will get the Finance Committee to begin to look at. Maybe there are some things

we can do here to nudge them a little bit.

Last, I just wanted to ask Mr. Davis, the National Cattlemen’s

Beef Association, you expressed opposition to renewing the farmerowned reserve. I can tell you, there is some support for that. I don’t

know how widespread it is, but I keep hearing more and more that

we need some type of a support for a farmer-owned reserve, basically to give farmers the ability to market grain more orderly over

a period of time.

I hope you take a second look at that, because I can remember,

and one of the curses of having been here as long as I have been

on the Agriculture Committee, I remember things that went on in

the past, and I remember in the 1980’s, we had a big drought in

37

the last part of the 1980’s. We had a farmer-owned reserve at that

time. I remember a lot of my cattlemen and pork producers at that

time were very happy that we had that, because prices spiked very

high, but we had that reserve that let the grain out to the feeders.

That was in the late part of the 1980’s.

Again, I just wonder about having a hard and fast position about

some form of a farmer-owned reserve.

Mr. DAVIS. I appreciate your comments, Mr. Chairman. Our history has shown that we will work with you and the committee all

the way through this process and entertain the thoughts that come.

Yet, we do still have our policies that we have to represent, as well.

If I can expand just a bit on that, and kind of on some of the

things that have been alluded to all day, we need that balance,

that harmony. We need to back up a step or two from here. I am

not as old as I look, but I remember being around, not in this town

but out where I live, watching some of these things happen before.

That is why this panel is here today, because there have been

times in the past when we did not have that harmony and it

caused great weeping and gnashing of teeth out in the places

where we live.

I commend you and the Senate and your predecessors and, hopefully, your successors, when that time comes, to keep us involved

in this process. We intend to stay engaged and work with you—— The CHAIRMAN. Good. Well, you will be.

Mr. DAVIS [continuing]. To make it a balanced and harmonized,

hopefully, farm bill.

The CHAIRMAN. Don’t worry. We are going to make sure you are

involved. There is no doubt about that.

On the topic of exports, the Market Access Program and the Foreign Market Development Program are two that we do have jurisdiction over, and to varying extents, help different parts of the industry. Any further thoughts on either the MAP program or the

Foreign Market Development Program, the cooperator program,

and what countries might look promising? Do you feel that this

should be something that we should also strengthen in the next

Farm bill? I will just open it up for anyone.

Mr. DAVIS. Mr. Chairman.

The CHAIRMAN. Yes, Mr. Davis.

Mr. DAVIS. Yes. We would like to see the MAP program, in particular, strengthened. We think it has been beneficial to our industry and, really, all of the meat industries. At what level, as we get

into those details, either I am going to have to turn around and

talk to staff about details, but yes, we think that is an important

part of remaining competitive in a global market with our production.

The CHAIRMAN. The Pork Producers Council?

Mr. CASPERS. Yes. The Market Access Program is probably the

largest beneficial program that we have. We certainly encourage

that and we have called for a doubling of the funding in that. That

program has been around for quite a few years under the MAP

name, or I can go back far enough when it was called other things.

Certainly, that is a huge benefit to us and it has been extremely

successful. It is competitive in nature, and so organizations that

use the funds effectively are rewarded with, hopefully, more funds

38

in the future, and we have gained through the U.S. Meat Export

Federation a fair amount of funding, but there is certainly a much

larger need and we can certainly use quite a bit more additional

funding to promote that and to continue to expand pork exports

from this country.

The CHAIRMAN. You are asking for a doubling, basically, of the

MAP?

Mr. CASPERS. Yes. Yes.

The CHAIRMAN. Did you have something, Mr. Roenigk?

Mr. ROENIGK. I believe the current program is funded at $90 mil- lion for MAP, and I recall not too many years ago, it was $200 million or even more, and certainly previous levels would be easily

used. I know there was an issue of big companies/small companies

using these funds. That can be addressed.

One quick example. In Hong Kong, when they had the chicken

flu and they had to depopulate their domestic population of chicken, the consumer there was confused as to whether chicken was

wholesome or not, and a little bit of advertising, letting them know

that U.S. chicken was wholesome, no problem with the flu and so

on, really paid off in big dividends. It is a kind of program you can

go in on a long-term basis, but also the short problems and address

them and it really makes a big difference with just a little bit of

money.

The CHAIRMAN. Very good. Anything else?

Mr. MOORE. Yes. I would like to add, the U.S. sheep industry has

expanded our wool exports from 7 percent to about 30 percent in

the last few years, so we have sent a lot of wool to the Asian countries. Definitely, the MAP program and our export markets are

very important to the sheep industry.

The CHAIRMAN. Very good. That is really all I have. Senator

Lugar, do you have any other followup questions?

Senator LUGAR. Thank you, Mr. Chairman. Let me just mention

one way of trying to perhaps move along the energy situation,

whether it is with the livestock producers or grain people, of course

is through our research programs that this committee has fostered.

I noted the Senate appropriators have included most of the research moneys that we needed, both for the formula grants as well

as the cutting edge research. Sometimes the House appropriators

have taken a more difficult view toward that. Hopefully, that offers

our universities an opportunity to try to convert what is actually

occurring in the field to something that is commercially viable and

can stand the test without subsidies or pilot projects or what have

you, and that is really critical for basic ethanol as well as with the

livestock-based energy.

I just want to sort of raise a general question. You have asked

Mr. Davis, Mr. Chairman, about the farmer-owned reserve. Let me

just say that the farmer-owned reserve, along with set-asides, 275

marketing loan for corn, and various other things bears some reminiscence of policies of the past. Some of those provide, at least in

the short term, a higher price of corn, at least if you had bushels

of corn to sell on the acres that you hand’t set aside.

I am just curious, from the livestock producers’ standpoint, and

I ask this from my own family’s history—Senator Nelson has alluded to my farm, and I don’t want to leave in doubt that it is tranVerDate 11-MAY-2000 12:54 Jan 22, 2003 Jkt 082537 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 82537.TXT SAG1 PsN: SAG1
39

sitional in the sense that we are heading out of there. The transitional farms in the Sparks report were the farms that come after

the leading 8 percent, the next 10 percent, and it was suggested

there that about half of the income for farms that are in that category come from off the farm. About half comes from on the farm.

Beyond that, almost all of it comes from off the farm on a net basis.

My Dad, who passed away 45 years ago, had this sort of a dilemma in the New Deal period. Supply control was the policy. As

a result, he was forced by the government to plow under acres of

corn and also to kill little pigs. The supply control worked on both

sides in those days.

Now, the harmony of the operation came from the fact that he

fed the corn to the pigs and some cattle that were on the farm.

Most farms in those days had livestock and grain operations, and

the economies came by going in the direction of the market. There

were times when the corn market or the grain markets were

stronger than the livestock market, so you fed fewer or more or

what have you.

Times have changed in the last 45 years and many people are

into specialties. They deal just with poultry or just with cattle, buy

the grain somewhere else, so that we have a problem in terms of

policy that is a little bit different. In the initial New Deal period,

supply control was across the board. The idea was just simply

farmers, if you let them produce, would produce too much. Inevitably, the price would go down, stay down, and there was no way

of ever elevating it without getting rid of supply. As a national policy, we did.

What I am curious, and I ask this of the pork producers and the

cattle people, over the course of time in the livestock industry, farm

policy left the supply control situation. In other words, although it

remained with grain and still does, and when we are talking about,

whether it is the farmer-owned reserve or set-aside or any of these

policies, they get down to the idea, how do you limit supply and

how do you sort of knock it down to get the price up in some fashion. On the livestock side, things proceeded without these rigorous

management tools of supply control.

As a matter of fact, we have some testimony from the commission appointed by the last Farm bill, some difference even between

one of our members and one of the commissioners on strawberries.

The suggestion was there ought to be a strawberry program and

a fellow that was on the panel said, not on your life. Leave this

alone. Essentially, we have got a market out there that you haven’t

fooled with, in the way that you have fooled with the grain business.

Why did livestock proceed on a market situation without supply

control? You pointed out 53 percent of income in our farms come

from livestock. This is the majority of dollars at this point, in a

fairly untrammeled way. Do you want to leave it that way, and

how did it get that way, or what are the values of proceeding that

way as opposed to some other? Does anybody have any thoughts for

the good of the order?

Mr. DAVIS. I don’t know that I am smart enough to answer that

question, Senator. In the cattle part of the livestock industry, as

you know, we have tried to stay as market-driven as possible for

40

as long as I can remember. Yes, the programs have affected the

livestock industry and the way we as individual operators pick out

the economic things that we think are the best economic methods

to stay in business.

We recognize we have cycles. We are not always on the high of

a cycle, either. We have our good times, we have our bad times, but

overall, our philosophy, as you know, has been to take those, adjust

in response to the market signals, try to do those things to increase

demand, do other things to help take the peaks and valleys out of

the cycles. We have been unsuccessful in doing that since the

1920’s. We still have the peaks and valleys.

There is a recognition that that is part of the biological systems

we work with as well as the human aspects that make those decisions, and I guess the bottom line of where we have always come

down is we understand the importance of those various farm programs. We understand that they affect us. We understand that

most of us do more than one thing and are affected directly as well

as indirectly.

Let us let the market work as well as possible, and when we do

have programs, if it is a conservation program or a commodity program, if it is in the public interest to preserve or enhance or in

some way guide someone to doing a better job, then let us do it for

that reason. Understand that it has to be the public that pays for

it, and don’t do it on the back of another segment of agriculture.

Senator LUGAR. I presume the majority of your members still

favor that idea?

Mr. DAVIS. I believe they do, yes.

Senator LUGAR. Would that be true of the membership of pork

producers?

Mr. CASPERS. Yes. Our membership is generally supportive of

participating in the open free market as much as possible. Certainly, we have some requests where there is additional regulation

to be put on our industry, where the public benefits, that the public

would assist in the cost of that regulation.

Senator LUGAR. Well, that gets sort of to the EQIP discussion we

had earlier on. In other words, let us say you folks wanted to continue in the market, so that relieves the Federal Government from

subsidizing you or somehow propping up your prices and what have

you. Essentially, you are coming in and saying, if EPA or some

other well-minded organization of the government believes that

some things ought to occur for other reasons of national policy,

namely the good of clean water and the environment, then this is

where the Federal Government ought to intervene in your business

in terms of providing at least some assistance so that your members can meet these requirements. Otherwise, you have a cost factor vis-a-vis the Brazilians we heard about earlier today or others

who may or may not have governments that are that equally interested in the environment.

If that is the case, then we talked earlier about the limits of this

type of thing. If you get into this proposition in which we sort of

pick and choose what size farms we are going to assist with regard

to this, that is a difficult problem, although one that we talk about

all the time, but I raised it earlier for that reason. It appears to

41

me there is probably legitimacy in a governmental role there that

most of you support.

The other side of the thing that you tend to support is as a cost

comes from the environment, from EPA, cost also comes from farm

bill policies that deliberately increase the cost of feed, because if we

intervene while you are in a free market and make this a different

kind of market, you are likely to have a bottom line that is very

different, EPA being one subtraction and the Farm bill another.

To the degree you all have grain and livestock, why, you can sort

of work this out on the farm. To the degree you don’t, and increasingly, I gather, this is the case with some larger operations, why,

you have got a problem in which our intervention has some direct

effects on this thing.

Does anybody have any comment on that? I will then be still and

let the chairman adjourn the meeting. Yes, sir?

Mr. ROENIGK. Just a quick comment. I grew up on a dairy and

poultry farm in Pennsylvania. The dairy price was determined by

the market order and poultry by the free market order, and my father, I never heard him say that prices of either one were high

enough.

[Laughter.]

Mr. ROENIGK. I don’t have an answer, but I have a comment, and

I do remember the soil bank and my father did like the soil bank,

not because we had acres enrolled but because he got a part-time

job going out and measuring all the neighbors’ fields to make sure

that they were in compliance with the soil bank. Just a comment,

not an answer.

Mr. HERMANSON. I would just make the comment, I guess, that

we should help, as part of the EQIP, to keep production in the U.S.

rather than at least pushing it offshore, as was mentioned earlier.

Then the other thing that we need to support the grain side, the

crop production side of it so that the grain is produced in the U.S.

to feed the meat, and we would like to share some of that with the

rest of the world.

That is where the turkey industry is. We just want a—if somebody is going to impose some regulations, maybe we need some

help with that. We would like to have a good supply of feed, and

obviously if you can do some enhancement as far as export, that

is good for us, too. Thank you.

Senator LUGAR. I would just add finally, and I will ask Ms.

Rosmann to comment on this, I have made the observation in these

meetings and from my own experience that over the course of the

years, we have gotten about a 4-percent return on invested capital

on our farm. To many Indiana farmers, that sounds too high. We

are not sure that we have seen that. The others would say, who

are not farmers, why are you in the business at all? You could have

gotten six percent on government bonds for the last 30 years without the problems of trade.

I am just curious, even if we got it right, assuming we have this

market-oriented situation and it is harmonious, is anybody making

any money in this panel, I mean, not you individually, but your clients or the people that you are representing today?

Ms. Rosmann, with your farm, obviously, you have got a family.

You have 600 acres and you have a very interesting view in terms

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of marketing your product. Do you make four percent or more on

your invested capital? I am just curious, if not, aside from the fact

that you love farming, and that is the reason most of us are still

in it, because we do, why are you in it? What is the return that

comes from this type of operation?

Ms. ROSMANN. We believe strongly, sir, that sustainable agriculture, organic agriculture, not only sustains soil, water, and air,

but that it sustains people, and the social capital that is involved

with that is tremendous.

Why are we in it? I grew up in Sioux City, Iowa. I was not raised

on a farm. I had this notion of what farm life was going to be like

when we were married 23 years ago and I found out real quickly

that it is not that way. I married an individual who has a profound

love for the land. I married an individual whose parents have that

profound love and respect for the land and commitment to it.

Again, I call attention that many of us in rural America have to

have the second or third jobs to support the hobby of farming. We,

again, do not have off-farm employment. That is critical. We are

able to use what money we earn—this year, it has been poured

back into machinery repair because we are not able to afford to

keep up with the types of machinery that we need because it is a

diverse operation.

Why are we in it? We are in it because it is the appropriate way

to, we feel, raise a family, teach the next generation, should they

choose to decide farming as a career, and because we feel that feeding our clients and our global clients. We, too, are involved globally.

Our pork goes overseas. It is part of the Berkshire program, where

it is sold, marketed directly to Japan. We are part of a network of

growers who participate in that. Our soybeans we raise are tofu,

food-grade soybeans, so they are marketed directly through Heartland Organic Marketing Co-op, now out of Stuart, Iowa.

We are intimately involved in this process because we feel that

small- to medium-sized family farming is the only way to secure

our future and our community’s future.

Senator LUGAR. What sort of a return do you make on this?

Ms. ROSMANN. Do you think I am going to—— [Laughter.]

Ms. ROSMANN. We, again, make enough, sir, to sustain ourselves.

We do. We make a profit. We make a—a just wage? I don’t know.

Again, a whole lot of it, when you own your own business, it gets

poured right back into the expenses. Remember—I will leave with

that.

Senator LUGAR. That is a very good reason why you are farming.

I just sort of still have the general question as to how we are going

to make money in American agriculture, and it is not really clear.

This is still a low-return business as you take a look at the opportunity cost for money. The strategy that we try to think of in terms

of our Federal legislation ought not to make it worse, but we are

really trying to make it better.

This is why I asked each of you to think creatively in terms of

really what kind of a policy would make any difference in terms of

either return on invested capital in any of your businesses, because

absent that, eventually, we are going to have an erosion of people

leaving the business. In various ways, we will prop it up, and that

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has been the policy of the committee and the Farm bill, to save

every farmer. Eventually, not everybody wants to be saved, in the

event that the returns are very unpromising, and that is sort of a

basic question that underlies our work here.

Thank you, Mr. Chairman.

Ms. ROSMANN. If I may, sir, the return on our poultry, the return

on our pork, the return on our beef is all a premium, a premium

because it is sold on the organic market. The barley, the other

small grains that we have, the corn and soybeans, again, are all

priced above market, traditional market rates. We would not be

able to survive in a traditional sense of that type of agriculture. We

are only able to do it because of the value-added concept, however,

value-added concept with appropriate pricing in the organic market.

Senator LUGAR. I am suggesting, just so I am not vague, is if you

have a 600-acre farm in Iowa, without guessing the land values,

but it would sound to me like you have a $1 million net worth if

you own all of that without loans, so four percent on that would

be $40,000 net profit, say, before taxes. Or if you have got more

value in it, why, you need more, and that is the sort of return I

am thinking about, just to quantify it. Nevertheless, I appreciate

your testimony.

Ms. ROSMANN. Thank you, sir.

The CHAIRMAN. I might add, Dick, that, again, I am hoping that

in our next Farm bill that we at least try to provide for support

for this kind of diversity. I mean, there is room for all. There are

a lot of niche markets out there for agriculture. I have seen other

farms in Iowa. I have a friend who grows Oagu beef up around

Penora. He has got a nice niche market there. It may not be for

everybody, but there are those markets out there. To the extent

that we can help promote those, it just gives us more options, gives

us more ways of doing things in agriculture to provide more income

and keep people on the land.

Obviously, you do have to have a decent return because you have

got to pay for the capital. If you are going to go into it, you have

to have a decent return, so you have to be able to pay for the capital and improvements and that type of thing, plus have enough

money to live on and build a house and raise your kids and send

them to school. Beyond that, there ought to be room for people who

want to engage in agriculture, as of a way of life. They may never

get very rich doing it, but they can have an enriching life and they

can be a good part of our rural environment.

It is not necessarily getting bigger, it is doing things differently.

The Rosmanns have shown that there are ways of doing that, and

other farmers are doing it in Iowa. It is not just the Rosmanns,

others are doing different things. Now, again, I am not saying that

this is how everything has to happen, but at least there ought to

be room for that and there ought to be support for that type of an

endeavor in our country.

If we are only spending one-tenth of a percent on the research,

maybe there ought to be some more research and support. How do

you make these kinds of transitions to different types of agriculture, for example, the knowledge of how to do it and how to

transition and do these different things. Like I said, there ought to

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be some support to at least enable people who maybe don’t want

to make immense wealth, but they do want to raise a family and

have a decent lifestyle and at least have some equity later on in

their lives. I am hopeful that we can at least provide for that kind

of support. There has got to be room for everybody in this.

With that, I thank you all very much. It was great testimony.

Again, I ask you, through your various organizations, that if you

have any thoughts on the energy aspect of it, please give us your

thoughts and suggestions on that. I would sure appreciate it.

Thank you very much.

The committee will resume its sitting on Thursday at 10:30 a.m.

[Whereupon, at 11:33 a.m., the committee was adjourned, to reconvene on Thursday, July 26, at 10:30 a.m.]

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A P P E N D I X

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DOCUMENTS SUBMITTED FOR THE RECORD

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QUESTIONS SUBMITTED FOR THE RECORD

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