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S. HRG. 109–642

REGIONAL FARM BILL FIELD HEARING: REDMOND,

OREGON

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

AUGUST 15, 2006

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,

SAXBY CHAMBLISS, Georgia, Chairman 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

JAMES M. TALENT, Missouri 

CRAIG THOMAS, Wyoming 

RICK SANTORUM, Pennsylvania 

NORM COLEMAN, Minnesota 

MICHEAL D. CRAPO, Idaho 

CHARLES E. GRASSLEY, Iowa 

TOM HARKIN, Iowa 

PATRICK J. LEAHY, Vermont 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

BLANCHE L. LINCOLN, Arkansas 

DEBBIE A. STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

MARK DAYTON, Minnesota 

KEN SALAZAR, Colorado

MARTHA SCOTT POINDEXTER, Majority Staff Director 

DAVID L. JOHNSON, Majority Chief Counsel 

VERNIE HUBERT, Majority Deputy Chief Counsel 

ROBERT E. STURM, Chief Clerk 

MARK HALVERSON, Minority Staff Director 

(II) 

(III)

C O N T E N T S 

Page

HEARING(S).

Regional Farm Bill Field Hearing: Redmond, Oregon .......................................... 1

Tuesday, August 15, 2006

STATEMENTS PRESENTED BY SENATORS 

Chambliss, Hon. Saxby, a U.S. Senator from Georgia, Chairman, Committee 

on Agriculture, Nutrition, and Forestry ............................................................. 1

Smith, Gordon, a U.S. Senator from Oregon ......................................................... 2

WITNESSES 

Panel I 

Bushue, Barry, Oregon Farm Bureau Federation, Salem, Oregon ..................... 5

Livingston, Sharon, Oregon Cattlemen’s Association, Salem, Oregon ................ 10

Reese, Sherman, National Association of Wheat Growers, Pendleton, Oregon .. 7

Souza, Ray, Mel-Delin Dairy, Turlock, California ................................................ 8

Panel II 

Brentano, Pete, Oregon Nurserymen Association, Wilsonville, Oregon .............. 22

Gallo, Ernest, Wine Institute and California Association of Wine Grape Growers, Modesto, California ....................................................................................... 23

Koompin, Klaren, Potato Growers of Idaho, American Falls, Idaho ................... 20

Lorensen, Ted, Oregon Department of Forestry, Salem, Oregon ........................ 18

Panel III 

Bernau, Jim, Willamette Valley Vineyards, Turner, Oregon ............................... 32

Euwer, Jennifer, Pear Bureau Northwest and Northwest Horticulture Association, Hood River, Oregon ................................................................................ 34

Krahmer, Doug, Oregon Blueberry Commission, St. Paul, Oregon ..................... 35

Wettstein, Mark, Nyssa-Nampa Beet Growers Association, Ontario, Oregon .... 37

APPENDIX 

PREPARED STATEMENTS. 

Wyden, Hon. Ron .............................................................................................. 48

Bushue, Barry ................................................................................................... 51

Bernau, Jim ...................................................................................................... 56

Brentano, Pete .................................................................................................. 59

Euwer, Jennifer ................................................................................................ 65

Gallo, Ernest ..................................................................................................... 70

Koompin, Klaren ............................................................................................... 79

Krahmer, Doug ................................................................................................. 83

Livingston, Sharon ........................................................................................... 92

Lorensen, Ted ................................................................................................... 98

Reese, Sherman ................................................................................................ 114

Souza, Ray ......................................................................................................... 117

Wettstein, Mark ................................................................................................ 123

Page

IV

DOCUMENT(S) SUBMITTED FOR THE RECORD. 

Connecticut Association for Human Services, Hartford, CT ......................... 146

Mallorie’s Dairy, Inc. ........................................................................................ 149

Oregon Cattlemen’s Association ...................................................................... 152

Oregon Dietetic Association ............................................................................. 155

Oregon Women for Agriculture ....................................................................... 158

The Linn Soil and Water Conservation District ............................................ 161

Tipping Tree Country Eggs ............................................................................. 163

Washington State Potato Commission ............................................................ 166

Statement from Larry Bishop a farmer from Oregon ................................... 169

Statement from Nels Iverson a farmer from Oregon .................................... 172

(1)

REGIONAL FARM BILL FIELD HEARING: 

REDMOND, OREGON 

AUGUST 15, 2006

U.S. SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, 

Redmond, OR 

The committee met, pursuant to notice, at 9 AM at the 

Deschutes Fair and Expo Center, Hon. Saxby Chambliss, chairman 

of the committee, presiding. 

Present. Senators Chambliss and Smith. 

OPENING STATEMENT OF HON. SAXBY CHAMBLISS, A U.S.

SENATOR FROM GEORGIA, CHAIRMAN, COMMITTEE ON

AGRICULTURE, NUTRITION, AND FORESTRY 

The CHAIRMAN. The hearing of the Senate Committee on Agriculture, Nutrition and Forestry will come to order. 

Let me welcome all of you here today, particularly to our witnesses who are going to be testifying and providing us information. 

We do especially welcome you, and I can’t tell you how pleased I 

am to be in Oregon. I have been out here a couple of times, visiting 

my good friend Senator Smith. But this has given me an opportunity to come out a day or so early and do a little agricultural experiment on some green grass and whatnot that we’ve seen around 

Oregon for the last couple of days. And what a beautiful part of the 

world. 

This is our fifth Farm Bill hearing. We’ve had hearings in Georgia, Missouri, Pennsylvania and Iowa, and we will hold two more 

hearings this week in Nebraska and Montana, followed by a final 

field hearing in Texas on September the 8th. 

With the 2002 Farm Bill expiring next year, the committee will 

be heavily involved in drafting a new law that will reflect the needs 

of farmers across the country. 

We have a number of factors that will influence the next Farm 

Bill, and one of those is the input we are receiving from our witnesses in these regional field hearings. 

Agriculture in the United States is very diverse. Different areas 

of the country view our farm programs in their own distinct way. 

Today we hope to gain a better understanding of the unique nature 

of the agriculture industry in the western part of the United 

States. 

The witnesses on the three panels today will provide us with a 

unique perspective and appropriately reflects the diversity of the 

crops raised in this region. 

2

We have appreciated the information received and the testimony 

delivered in our hearings so far and look forward to hearing from 

our witnesses today. The statements we hear today will play an integral role in helping the committee construct farm policy for the 

future. It will assist us in providing a safety net that works for 

farmers and ranchers while taking into account the likely impact 

of the budget deficit and international trade negotiations. 

For those of you who are not witnesses but are interested in submitting comments to the committee related to the Farm Bill, the 

committee’s website has guidelines for providing written statements for the record and a web form for informal comments. Comments received will also be considered during the reauthorization 

process. 

I appreciate Senator Gordon Smith hosting us here today and the 

hard work of his D.C. and his Oregon State staff. Matt Hill, Jason 

Billencort, and Susan Fitch have been particularly helpful to my 

staff over the last several weeks in putting this hearing together. 

I understand that Jason could not be with us here today, and on 

behalf of the Senate Agriculture Committee, we send our condolences to him and has family during this very difficult time. 

I commend all of you for your hard work on behalf of all Americans and I look forward to hearing your testimony. 

And now before I turn it over to Senator Gordon Smith, let me 

just say that the greatest thing about serving in public office is 

having the opportunity to be associated with people that you grow 

to have such admiration for and respect for. And Senator Smith 

and I have become very fast friends during my short time in the 

U.S. Senate. We sort of knew each other during my House days, 

but we immediately became very close personal friends. 

His wife Sharon is such a delightful lady. And he married way 

over his head. He freely admits that. That’s one good thing about 

him. 

But Gordon Smith is just one of those class individuals that 

makes serving in the U.S. Senate a pleasure for somebody like me. 

And I can’t over-emphasize to you folks in Oregon what an important role he plays in the U.S. Senate. He’s not a member of the Ag 

Committee, but he regularly gives me advice about what we need 

to be doing in agriculture. And I respect him for it, because I know 

his background in agriculture. And it’s just a real pleasure to have 

the privilege to serve with him. 

Ron Wyden and I serve on the Intelligence Committee together, 

and Ron is a terrific individual. And I’ve grown to have great respect for him. And I’m sorry Ron couldn’t be with us today, but I 

know he has some staff representing him here today. So, with that, 

I want to turn to Senator Smith for any comments that he wishes 

to make in the form of opening statement, and to recognize anybody here today. 

STATEMENT OF HON. GORDON SMITH, A U.S. SENATOR FROM 

OREGON 

Senator SMITH. Thank you very much, Mr. Chairman. We are 

honored to have you in the state of Oregon. 

As I have done my research, I believe this is the first time in the 

history of our state that the Senate Agriculture Committee has 

3

come here to have a hearing on a Farm Bill. And so we are all a 

little part of history today. But Senator Chambliss and I share several things in common. And first among them is a warm friendship. 

Second is that he married over himself as well. Juliane is his better, as Sharon is mine. And we are very thankful that you are here, 

and I am anxious for you to get a better sense of the unique agricultural community we have here in the state of Oregon. 

Oregon’s agricultural story is one that began over 200 years ago. 

You might think, well, no, that’s Lewis & Clark, they didn’t do 

much ag here. Actually, it began with a British ship in 1796 that 

came up the Columbia River. It was a ship owned by the Hudson 

Bay Company. And they began farming at Fort Vancouver, which 

was at the time part of the Oregon territory. They planted wheat, 

potatoes, and I was relieved to see peas. 

Soon after Oregon officially became part of the United States territory, and lured by lush, fertile valleys, throngs of wagon trains 

rolled from the East into the setting sun here in Oregon. Plows dug 

into the rich fertile soil of the Willamette Valley where glacial 

floods deposited blankets of nutrients thousands of years prior. 

By 1850 all of the best agricultural lands that they were obvious 

were claimed, but this did not stop the Oregon Trail from bringing 

thousands more, who spread throughout the state, looking for 

water and pasture. The same determination that brought them 

across the great plains and over the Rockies gave them the drive 

to make farming and ranching a common practice, even in tough 

territory. 

That spirit is why agriculture remains a leading Oregon industry 

here in Oregon, and why it’s so fitting to have one of these hearings here in this great state. Our state’s agriculture is second only 

to California in crop diversity. Over 250 different crops are grown 

in Oregon. Oregon agriculture output reached a record $4.1 billion 

in 2004. One in 12 Oregonians is employed in agriculture. 

Oregon is also vital to the success of agriculture across the 

Northwest and Midwest because its geographic advantages are so 

apparent. The Columbia River is the United States’ largest wheat 

export system, with 40 percent of all wheat exports shipped 

through Oregon’s ports. This reminds us of the importance of trade 

to Oregon agriculture. No one wants the United States to be a net 

food importing country. It is a national security as well as an agricultural security issue. Already we are rapidly seeing our import 

numbers approaching our export numbers, and this is of real concern to me. The U.S. agricultural trade surplus continues to fall. 

Between 2004 and 2005 it fell by nearly $4 billion. 

Farming is not unlike logging or fishing. If government regulation and unfair competition make life difficult, we will lose the next 

generation of farmers. Oregon farmers can compete any against 

any country’s farmers, but not against other governments or the 

cheap labor, high tariffs and minimal regulations of some countries. 

Since most of Oregon agriculture is not subsidized, we must be 

more creative about competing in the world. And that’s the importance of marketing, conservation and research. We must continue 

to strengthen these programs to remain competitive in the world. 

4

I also want to make mention of the nutrition title of the Farm 

Bill. Oregon has suffered very high rates, amazingly, in the category of hunger. This was a statistic by the U.S. Department of Agriculture which really surprised many of us in Oregon, when we 

live in a land of such abundance, both quality and quantity. And 

for that reason, I formed the Senate hunger caucus, and was joined 

by many colleagues, to try to help find better ways to get our good 

food to people in need. 

So, I want to thank Chairman Chambliss for his work in preserving funding for food stamps. We sometimes don’t understand or 

remember how critical the Food Stamp Program is to so many Oregon commodities, and certainly how important it is to the poor. So 

I look forward to working with the Chairman and the entire Senate 

to promote additional programs that help the less fortunate, as 

well as the farmer. 

We have assembled here a diverse representation of the Pacific 

Northwest agriculture, and we welcome very much your thoughts, 

your contribution today, and the Senate will be the better for it. 

More importantly, the 2007 Farm Bill will be better still because 

of the input that you make here today. We will remember your testimony. We will try and reflect it into our policy. And ultimately 

make—do our part in government to help you be competitive. I 

have always taken enormous pride not just in the diversity of our 

agriculture but frankly in its abundance and its quality. 

I have been to many agricultural shows. I have seen Northwest 

products cut against those of other regions, excepting Georgia, and 

we always come out on top. Senator Chambliss is an unabashed fan 

of Oregon Penoir, and I don’t drink a drop, but he more than 

makes up for everything I don’t drink. So, he knows something of 

the quality of Oregon agriculture. 

Senator, thank you for your coming this long way over the Oregon Trail a lot faster than they used to come here, but thank you 

for including Oregon in the Agriculture Committee’s consideration. 

Senator Chambliss and I office next to each other in the Russell 

Building. And when he was elected to the U.S. Senate, the quality 

of our effort and our work went up measurably. That will be evident to you when you hear his words and see his wisdom today. 

So we are thankful that you are here and thank you all for participating. 

The CHAIRMAN. Senator Smith, thank you very much for those 

generous words and, again, for being here today. You’re right, I 

have a great affinity, as I mentioned to Jim a little earlier, for Oregon Pinot Noir, and I try to do my best to keep the economy of 

the agriculture community in Oregon moving ahead. And I appreciate, I’m not sure who’s responsible for that table back there, but 

I’ve already told my staff that I want one of each when we leave 

here to take on the plane with us. We’ve already got some wheat 

and a great cookie there. I’m enjoying Sharon’s jerky up here. So, 

we’re going to eat during the whole hearing. We’re not going to let 

you all interrupt our appetite. 

One thing you don’t find back there that we grow a lot of, and 

we always have at our ag hearings, are good Georgia peanuts. So 

I want to make sure that all of these peanuts get eaten while we 

are here, so you all feel free to come up here and we will be happy 

5

to share these with you. Our first panel today consists of, Barry, 

I hope to get this right, Bushue from Salem, Oregon, representing 

the Oregon Farm Bureau Federation; Sherman Reese of Pendleton, 

Oregon, representing the National Association of Wheat Growers; 

Ray Souza of Turlock, California, representing the Mel-Delin Dairy, 

and Sharon Livingston of Salem, Oregon, representing Oregon’s 

Cattlemen—the Oregon Cattlemen’s Association. 

Again, welcome to each of you. Thank you for coming and sharing some thoughts with us today. We look forward to your comments. 

I would ask that you keep your opening statements brief. We’ll 

be happy to submit your full written statement for the record. And, 

Barry, we are going to start with you, and we will go right down 

this way. Again, thanks for being here and for your comments. 

STATEMENT OF BARRY BUSHUE, OREGON FARM BUREAU 

FEDERATION, SALEM, OREGON 

Mr. BUSHUE. Mr. Chairman and Senator Smith, I wanted to 

thank you for the opportunity to testify here today, especially here 

in Oregon. 

My name is Barry Bushue and I am honored to serve as President of the Oregon Farm Bureau Federation. We have the largest 

agricultural organization in the state. And our interests are wide 

and diverse. 

In light of the suspension of the World Trade Organization talks, 

Oregon Farm Bureau supports an extension of the framework of 

the current Farm Bill. Despite an ambitious offer by the United 

States to reduce spending on trade distorting domestic supports, no 

progress was made to increase market access for American food 

and fiber products. 

Extending this current farm program with some changes to take 

into account recent trade rulings and new opportunities, will help 

ensure U.S. farmers have the support they need to survive in today’s contentious global trading environment. This is not the time 

to reinvent the wheel. Mr. Mendelson, chief negotiator for the European Union, was quoted as demanding that the President veto 

any Farm Bill that resembles 2002. 

I hope we do not allow the European Union to dictate America’s 

agricultural policy. 

The CHAIRMAN. We won’t. 

Mr. BUSHUE. The conservation programs, Title 2, within the current Farm Bill are extremely important for Oregon producers. The 

Conservation Security Program rewards producers who are meeting the highest standards of conservation and environmental management by providing payments for a wide range of structural and 

land management practices. Additionally, CRP, EQIP, and WHIP 

are all examples of how government and private landowners can 

work together. 

The Market Access Program encourages the development, maintenance and expansion of commercial export markets for agricultural commodities. All regions of the country benefit from this program’s employment and economic effects from expanded agricultural export markets. 

6

Energy issues are very important in the next Farm Bill. Farmers 

are facing increased expenses due to energy prices. This is not only 

felt from energy our farms directly consume, but in price increases 

on production inputs. Oregon agriculture sees an exciting opportunity in the development of renewable energy resources. However, 

we need a continued investment in technology development along 

with grants and loans programs promoting farmer investments. 

The fruit and vegetable industry is very important to Oregon’s 

economy. It is a very fragile industry that has not traditionally 

been part of the Farm Bill structure. The planting prohibition on 

base acres has been the only benefit. That appears to be in jeopardy, and I encourage you to address this issue and make these 

growers whole. 

Crop insurance is an important safety net but the program needs 

an overhaul in order to better address the diversity of crops and 

plant varieties in a diverse state like Oregon. In addition, disaster 

payments need to be funded outside of the Farm Bill. 

This is an exciting time for United States agriculture. So much 

of what happens in Congress has a direct impact on the industry. 

As farmers and ranchers continue to utilize cutting edge technology, yields will increase while maintaining our international 

reputation of providing Americans with the lowest cost of food in 

the world. 

Finally, I would like to take a moment to thank the Chair and 

Senator Smith for their leadership in providing agriculture with a 

Guest Worker Program as part of a Comprehensive Immigration 

Reform Bill. 

It is with sincere gratitude that I thank you not only for the opportunity to share with you the many challenges facing agriculture 

today but also for the great work you folks do day in and day out 

in our behalf. 

[The prepared statement of Mr. Bushue can be found in the appendix on page 51.] 

The CHAIRMAN. Barry, thank you. Mr. Reese. 

STATEMENT OF SHERMAN REESE, NATIONAL ASSOCIATION 

OF WHEAT GROWERS, PENDLETON, OREGON 

Mr. REESE. Mr. Chairman and Senator Smith. My name is Sherman Reese. I am a wheat farmer from Echo, Oregon. I am currently serving as the past-President of the National Association of 

Wheat Growers. 

I thank you for this opportunity to discuss our members’ concerns about the current Farm Bill and our thoughts on the 1907 

Farm Bill. Effective farm legislation is essential not only for wheat 

growers but also for rural economies and American consumers. 

Farm programs are designed to cushion the boom and bust cycles 

that are inherent to agricultural production, and to ensure consistently safe, affordable and abundant food supply for the American 

people. 

The 2002 Farm Bill has strong points and the wheat growers 

that I represent here today believe that the next Farm Bill should 

build on these strengths. But while wheat growers generally support current policy, much of the, quote, safety net provided by the 

2002 Bill has not been effective for wheat farmers. Since 2002 

7

wheat growers have received little or no benefit from two key components of the current Bill, the Counter Cyclical Program and the 

Loan Deficiency Payment Program, for two main reasons. 

First, severe weather conditions for several consecutive years in 

many wheat states have led to significantly lower yields or total 

failure. The loan program and the LDP are useless when you have 

no crop. 

Second, the target price in the Counter Cyclical Program for 

wheat was set considerably lower than the market and conditions 

indicated, and severe weather conditions in some areas have created a short crop, which has led to higher prices in other areas. 

As a result, there’s been very little support in the form of counter 

cyclical payments. As you can see by the chart in my testimony, the 

support level for wheat as compared to other commodities for the 

2002 to 2005 estimated crop years even as a percentage of production costs is relatively low. We are not in any way suggesting that 

other crops receive too much support. Far from it. They face the 

same problems our growers face and rely heavily on this safety net. 

We are simply stating that wheat producers need a viable safety 

net also. There is no doubt that America’s farmers would rather depend on the markets than the government for their livelihoods, but 

the current economic and trade environments do not offer a level 

playing field in the global market place. Many of our trading partners support their farmers at much higher rate than the U.S. 

At the same time we face continually increasing production and 

transportation costs. Fuel and fertilizer prices are up an estimated 

24 to 27 percent for wheat growers just from last year, it is estimated in a recent FABRI report. And the current disaster situation, including droughts, floods and fires has been especially troubling for our members. 

In my own farm my costs for anhydrous has gone from 28 cents 

to 48 cents. Also our members would like to see the conservation 

programs continue as presently authorized with full funding, would 

like to explore opportunities to streamline the program sign-up to 

be less consuming and more producer friendly. We believe in the 

pursuit of renewable energy from agricultural resources support 

additional incentives. 

In closing I must state that we are firmly committed to developing an effective 2007 Farm Bill and welcome the opportunity to 

work with you to do so. 

Thank you for this opportunity. Thank you for coming to Oregon, 

Mr. Chairman, Senator Smith, thank you for the opportunity to 

testify. I will be happy to answer any questions. 

[The prepared statement of Mr. Reese can be found in the appendix on page 114.] 

The CHAIRMAN. Mr. Souza. 

STATEMENT OF RAY SOUZA, MEL-DELIN DAIRY,

TURLOCK, CALIFORNIA 

Mr. SOUZA. Good morning, Chairman Chambliss and Senator 

Smith. Thank you for holding this western field hearing and allowing me the opportunity to testify on behalf of Western United 

Dairymen, which is California’s largest trade producers, producer 

trade association. 

8

I’d like to begin by telling you that my name is Ray Souza. I own 

Mel-Delin Dairy in California and have a milking herd of about 

1200 total head of dairy animals. 

First of all, let me begin by telling you that there are many good 

things in our current Farm Bill. The Dairy Providers Support Program came into play early in the life of the Farm Bill and was not 

used at all during the middle of the 5–year period of the Bill. 

But unfortunately it has been reactivated during the past few 

months. But our producer members overwhelming support continuing the use of the Dairy Support Program. 

But there are four major points I’d like to remind you about in 

that Price Support Program. First of all, it has cost far less than 

the projected number at the original time the Bill was passed. 

Second, at the current level of 9.90 support for the program does 

not simulate any new production, for 9.90 is far below the actual 

cost of production. And in 2002 and early 2003, a period of the lowest prices in a generation, it did help keep the bottom from completely falling off, although I will tell you that implementation of 

the program could have clearly been improved, since the price got 

as low as $8.47 in California, while Californians intended that the 

program not allow prices to fall before the 9.90 support. 

The fourth point I would like to make is that this is a one farm 

safety program written that allows the Treasury to recoup its costs. 

The government either sells the surplus dairy products back to the 

commercial market when prices rise or use them for nutritional assistance programs, both domestically and abroad. 

So, not only are farmers supported when the prices are headed 

down, but consumers also benefit when the prices are headed back 

up as the stored product comes back into the commercial market, 

helping stabilize the price. 

Given the fact that a new WTO agreement seems very unlikely, 

there is no reason that the Dairy Price Support Program should 

not be continued. 

Given the history of the expenditures of the Farm Bill, the fact 

that the cost is recovered, and what appear to be far higher input 

costs for dairy farmers in the perceivable future, the score of this 

program in the next Farm Bill should be significantly lower if the 

cost level of 9.90 remains the same. 

The 2002 Farm Bill also includes authorization and funding for 

the Dairy Export Incentive Program for DEIP. DEIP is our counter 

to the European Union’s aggressive support subsidies that are 

often responsible for keeping world dairy products prices artificially 

low. 

It is fully WTO legal, authorized and funded by Congress and 

signed into law by the President of the United States. 

Mr. Chairman, during that period of the extremely low prices in 

2002 and 3 the Department only released DEIP bonuses for a small 

amount of butter. 

So far in 2006, again with very low prices and much economic 

pain for dairy farmers, there is nothing on DEIP. 

Something this committee could do tomorrow to help farmers in 

the rural communities nationwide is to ask the Secretary of Agriculture to authorize some DEIP bonuses as our hopes for a successful outcome in the Doha Round, have all been evaporated and this 

9

would be an appropriate time to pursue our export goals aggressively, using all available legal tools. DEIP is one of those tools. 

I’d also like to just briefly touch on the conservation title. The 

conservation title includes a very important program for western 

dairymen. 

The EQIP program has worked very well within California, and 

dairymen in my state have been very involved in the EQIP program. We have a very good relationship with NRCS chief Bruce 

Knight in Washington, D.C., and state conservationist Lincoln Burton. Mr. Burton was especially helpful in developing ways to move 

funds from counties where EWIP was under-subscribed to counties 

where the program was over-subscribed. This resulted in the additional completion of 21 critically important projects without requiring any additional funding for EQIP. 

This exemplifies the importance of local control to the success 

and efficiency of the program. 

Mr. Chairman, in the interests of time I will conclude my testimony, but I have provided additional comments in the testimony 

provided to you and the committee. Thank you again for holding 

this hearing and allowing me to testify. I will be happy to answer 

any questions you or other members of the committee may have 

about these issues. 

[The prepared statement of Mr. Souza can be found in the appendix on page 117.] 

The CHAIRMAN. Thank you very much. 

Ms. Livingston. 

STATEMENT OF SHARON LIVINGSTON, OREGON

CATTLEMEN’S ASSOCIATION, SALEM, OREGON 

Ms. LIVINGSTON. Chairman Chambliss, Senator Smith. Thank 

you for allowing me to be here and speak for the Oregon cattle industries’ perspective on the upcoming 2007 Farm Bill. 

I am Sharon Livingston. I live in Long Creek, Oregon. I am current President of the Oregon Cattlemen’s Association. 

And my grandmother came to Long Creek, across the Oregon 

Trail, with two very, very small children, and she settled in Long 

Creek, and I’m proud to still be there. 

The American public wants quality food and open spaces. Livestock producers provide quality food and open spaces. 

With regulations imposed by the Endangered Species Act, Clean 

Water Act, Clean Air Act and others, it is becoming increasingly 

difficult for producers to comply and still stay in business. 

Most areas, many areas are being turned to development, and 

good ag production land is lost. Livestock producers provide watershed, wildlife protection and habitat for numerous species. 

In turn, ranchers need to be rewarded for their environmental 

improvements and contributions. Programs such as EQIP and 

WHIP are most utilized by ranchers. We must have strategically 

located offices and qualified, credible personnel to aid in applying 

for and implementing these programs. 

Ongoing research into environmental issues and best grazing 

management practices is essential. We rely a great deal on Oregon 

State University for much of this research, and dollars need to be 

made available for continuing programs. 

10

Our association and industry just voted a 50 cent increase in our 

beef check-off, and ten cents of each goes to research for grazing 

and ten cents for animal science. We feel we’re stepping up to the 

plate. 

I can’t say enough about alternative fuel sources and the need 

to relieve livestock producers from the dependence upon foreign 

fuel. All you had to do was see the news this morning. 

Diesel’s not available. I buy my hay, and it has to be trucked in 

a minimum of 112 miles. 

The Market Access Program, I echo what Mr. Bushue said. We 

need to develop our markets and regain for Oregon the export market that we had to Japan. 

Country of origin labeling could go hand in hand with national 

animal I.D. They are not the same thing, however. I think it’s time 

that our people know where their beef is bred, fed and processed. 

Thank you for the opportunity to be here. I will answer any questions. The livestock industry is important to Oregon, and I appreciate your support in Congress. 

[The prepared statement of Ms. Livingston can be found in the 

appendix on page 92.] 

The CHAIRMAN. Thank you. I thank all of you very much for that 

very informative testimony. 

Let me start, Mr. Bushue, Mr. Reese, with a set of questions that 

we’ve asked in each hearing, and we will continue to ask as we go 

through this. And these are on some very basic issues of the current Farm Bill, and will help us prepare for, or how we need to address these issues in the next Farm Bill. 

First of all, how would you prioritize Farm Bill programs generally and the commodity title specifically and how would you rank 

the relative importance of the Direct Payment Program, the Marketing Loan Program, and the Counter Cyclical Payment Program. 

Mr. Bushue? 

Mr. BUSHUE. That’s a tough question to ask the President of a 

general farm organization, so I will pass that one off by basically 

saying, for as diverse of agriculture as Oregon has, it is difficult for 

us to prioritize. They all play a very significant role in various 

types of products and commodities that we raise here. So, we 

wouldn’t prioritize. We’d merely fund them at a higher level. 

The CHAIRMAN. OK. Mr. Reese? 

Mr. REESE. Well, I’ll go out on a limb. The wheat farmers, as my 

testimony indicated, feel that the last few portions of the LDP Marketing Loan Program and counter cyclical have not been helpful. 

We would prioritize the direct payment as being the most important, in terms of cash-flow and in terms of making your banker 

comfortable with an operating loan, the last two are maybes and 

the first one is for sure. 

So, for us the direct payment is most important, followed by the 

marketing loan, LDP program, and then last, counter cyclical. 

The CHAIRMAN. OK. We can expect an effort to further reduce 

payments limits in the next Farm Bill. The payment limits need 

to be modified in the next Farm Bill, and why? 

Mr. BUSHUE. I think from the Farm Bureau’s perspective, the 

Farm Bureau has always supported the current Farm Bill and 

11

there have been payment limitations in place I believe since the 

1970’s. 

We would not effectively ask for any change in that or reduction 

certainly. 

The CHAIRMAN. Mr. Reese? 

Mr. REESE. We feel the same way. Obviously, farms have gotten 

bigger, and those payment limits need to be commensurate with increased farm size. 

If we are going to look at increasing the direct payment, that 

portion of the commodity title is going to have to be increased as 

well, something up from the current 40,000 per unit. 

As far as the overall size, we would probably support, we do support keeping it where it is, the current limit, overall limit. 

The CHAIRMAN. OK. The Doha Round of negotiations seeks to 

provide additional market access for U.S. agriculture goods in exchange for cuts in domestic farm payments. 

Is this a reasonable exchange for farmers? 

Mr. BUSHUE. Well, it would be nice if the Doha Round had been 

completed, but certainly Americans produce a lot more than they 

are able to consume, and sometimes up to 30 percent of our agricultural products need to be exported, so trade is absolutely critical 

to the future of agriculture, not only in Oregon but in the United 

States. 

And I think if we could have gotten by with reducing domestic 

supports, mostly agricultural industry supported that, but only in 

a tradeoff for increased market access. And since that didn’t happen, I think it’s going to make your job as a Chairman of the Agriculture Committee considerably harder, but we’ll support you 

where we can. 

Mr. REESE. As far as wheat’s concerned, I think we’re in a more 

critical situation than probably almost any crop. 

In Oregon, as most of the people in the audience know, 85 percent of our wheat is exported. The figure drops to about 50 percent 

nationwide. So we are heavily dependent upon exports to keep 

wheat viable. 

At the same time a lot of our members across the Nation and in 

Oregon are hanging on by the finger tips, and these direct support 

payments that we are getting are in some cases the only profit 

margin the farmer has left. 

So, to trade that away for a hope in increased market access is 

a gamble we’re willing to make, but only if we can find a way to 

make it a quid pro quo. We haven’t found that yet obviously. 

The CHAIRMAN. Some organizations have explored the possibility 

of a revenue based approach for the commodity title. 

What are your thoughts on a revenue based approach as a safety—revenue based approach to a safety net as a replacement for 

the current commodity programs? 

Mr. BUSHUE. It is my understanding the corn industry is looking 

into this very strongly, but I think at this stage, going back to my 

comment about reinventing the wheel, I think it is an awfully large 

fundamental shift in the way in which Farm Bill programs are 

funded, and I don’t know that we would support that wholly at this 

stage. Maybe for 2007 or later on, after we have extended this 

Farm Bill. 

12

But I think at this stage we had probably better stay where we 

are, because I’d be concerned about what revenue base would affect 

on the conservation programs, crop insurance and maybe even Title 

1. So I think at this stage the Oregon Farm Bureau’s preference 

would be to say no to that one. 

The CHAIRMAN. OK. Mr. Reese? 

Mr. REESE. Well, Mr. Chairman, we’ve been looking at that concept internally within NAWG, and can’t find yet a way to make it 

work across the board. 

The most we’ve been able to see is 70 percent support. 

We’re wondering what happens with the other 30 percent. Do 

you fill that with crop insurance? Do you fill that with another direct payment? 

We farm in such a low margin level to begin with, that to have 

only 70 percent direct support for us probably would not work. 

The CHAIRMAN. OK. Last, should an increase in conservation or 

energy programs come at the expense of commodity programs? 

Mr. BUSHUE. You know, that’s another difficult one. We think 

that energy in the state of Oregon, and of course nationwide, is a 

huge issue and a huge cost to agriculture. 

But to take money from commodity payments to fund conservation seems like robbing Peter to pay Paul. 

I guess like most farmers, we want as much as we can get in 

terms of trying to make sure we have a safety net, because food 

security is clearly a national security issue. I’m not convinced that 

the tradeoffs would be worth it in terms of the agricultural industry as a whole. So, I would say no. 

Mr. REESE. Perhaps over time that concept would work. Right 

now I don’t believe it would. 

And one of the main reasons is, if you look at conservation and 

also energy crops, not every farm is blessed with the opportunity 

to participate in conservation programs. They’re very unequally 

spread. 

And so from that standpoint, I think there’s an inequality there 

that has to be addressed before that kind of fund transferable is 

even considered. 

Other than that, I think we still need to keep with the current 

commodity situation as it already is with the funding. 

The CHAIRMAN. Mr. Souza, the 2002 Farm Bill, as you know, included the Milk Income Loss Contract program to assist dairy producers when prices were low. This has been a somewhat controversial program. 

But should Congress extend this program, or are there other 

remedies low commodity prices that you would recommend? 

Mr. SOUZA. The MILC program is not something that’s worked 

very well for the western dairy producers. 

We feel that continuation of the program, you should do a couple 

things. 

One would be, it has to become more equitable. It’s very—discriminates toward western producers, family farmers in the West. 

As you know, it basically sets a cap of about 200 cows—or 150 

cows. And on the West Coast, out here, Oregon included, our numbers are much bigger. 

13

So we are not covered, as some of the smaller herds are. So we 

think any continuation of the MILC program or likewise program, 

should be less discriminatory, it should embrace all dairy producers, not just a select few. 

The CHAIRMAN. OK. Currently only dairy producer cooperatives 

have the ability to forward contract with their members. 

Does forward contracting provide producers with an additional 

risk management tool to manage price and income volatility in the 

marketplace, and should this option remain available only to dairy 

producer cooperatives, or should processors and noncooperative 

dairy producers also be able to utilize this risk management tool? 

Mr. SOUZA. Well, just a couple of things. One is that forward contracting really does not work very well with the concept of pooling. 

It does affect those people that prefer to stay, to take the pool 

price for their milk. 

Second, it was part of the 2002 Farm Bill as a pilot project. It 

was not driven by producers. It was primarily pushed by the processors. It has not been popular with producers. We had a very low 

participation in the pilot project. 

And the analysis shows that those producers that did participate 

in forward contracting actually fared less than those that did not, 

fared better than those that did. 

I don’t believe that it has a real value for long-term stability for 

producers. It may have that for the processors. 

Mr. Chairman. Ms. Livingston, what effect would bans on packer 

ownership and forward contracting of cattle and mandatory country 

of origin label have on livestock producers in this part of the country? 

Ms. LIVINGSTON. There is no definitive answer. I spent some time 

the last week speaking with major cow/calf and feedlot people, and 

we know that in order to get our product to the final market, we 

must have packers. When packers don’t have a supply, then they 

shut down. We lost a facility in the Pacific Northwest that was a 

major part of our marketing of cull cows. You know what those are. 

They are a major part of our income. Now when I sell a cull cow, 

or anyone in Eastern Oregon, I believe they go to Fresno, California, for slaughter. 

We must have our packing houses. I prefer to work through collaboration, consultation, and cooperation, rather than litigation and 

legislation. 

I think we have legislation on the books. Let’s enforce it. We 

don’t need anymore laws. 

Now, it’s a Catch–22, and here I sit telling you this. But it’s a 

serious issue. There will always be ways for packers to own cattle. 

We’re not going to stop that. And I don’t believe in whipping them 

to death, because we do need them. 

The CHAIRMAN. OK. Talk for a minute about mandatory price reporting. We have been trying to get this reorganized in Congress 

now for a couple of years. The House passed a 5–year reauthorization. We passed a 1–year. And we’ve been unable to agree with the 

House on a compromise on that issue. 

Mandatory price reporting is operating on a voluntary basis now. 

How is that working and what are your thoughts on whether or not 

14

we should reauthorize the legislation, requiring mandatory price 

reporting. 

Ms. LIVINGSTON. The people that I spoke with said they thought 

it was working. It’s like anything that’s voluntary. 

But when you force people, it seems there are always ways to 

avoid this. 

So, at this point I can’t give you a definitive answer on that, and 

I apologize. But it’s a very complicated, complex issue. And we’ll 

just have to live with it. And we don’t have the voice that some of 

the people in the Midwest do. And that’s where much of this takes 

place. 

The CHAIRMAN. From an Oregon Cattlemen’s Association standpoint, what’s your most pressing environmental issue and what’s 

your most important conservation program? 

Ms. LIVINGSTON. Anything to do with the Endangered Species 

Act is pressing. We can use the EQIP. I personally have used 

EQIP. We can use WHIP. 

Anything that rewards our people for their good conservation 

practices is important. 

The CHAIRMAN. OK. Senator Smith? 

Senator SMITH. Thank you, Mr. Chairman. I think as I am understanding these mikes, you’ve got to be close to them or you’ll be 

cutoff. 

I know this hearing is on the Farm Bill. But two of the committees, or at least one of the committees I serve on, the Finance Committee, deals with an issue that I believe has a great impact on the 

future of farming and ranching in this state. And that is the issue 

of the estate tax. 

So I wonder, Barry, if you, speaking for farmers generally, can 

you give us some idea what will be the impact to future farmers 

and ranchers if we don’t come up with some compromise that the 

President can sign? 

This is an issue that’s often described as something done for the 

rich. Are your members all rich, Barry? 

Mr. BUSHUE. We only wish we were, sir. 

The death tax, as we prefer to call it, has been a critical issue 

for agriculture, not only in Oregon but nationwide, and we were 

very frustrated and frankly very upset that we weren’t able to get 

some kind of rationale, common sense solution to the problem 

through the Senate. 

Of course, full repeal is where we would like to be. 

But frankly, we were looking for a solution, and solution appeared to be in the Thomas Bill. 

It was somewhat frustrating, I guess, just being blunt as I usually am, that there was a number of other issues thrown in there 

for reasons of trying to gain votes. 

The minimum wage issue was put in there. I understand that 

had some obvious problems. 

But getting right to the nuts and bolts of it, in order to pass on 

a family farm, and there’s folk in this room right here that are trying to do that today, they’re not wealthy people, they’re not big 

farmers, they’re family farmers that have invested their lives and 

their lifestyles in agricultural operations, and they are trying to 

pass it on to their children. 

15

To be faced with huge tax liabilities in the event of their unfortunate death, to pass it on to their children makes it almost impossible to pass some of these operations on and keep them in family 

farming. 

And when you look at agriculture as a whole nationwide, virtually all farms are family farms. I think the exact figure is 95 and 

a half percent or something like that, are family farming operations. 

Oregon has made a huge investment in its land use policies to 

try and maintain an agricultural land base. Nationally there is a 

need for an agricultural infrastructure to maintain agriculture 

without an opportunity to pass those family operations on and face 

these families with tax debts that the only way they can pay them 

is to sell land and their other assets, which land is their main one, 

seems somewhat short-sighted and very narrow minded, frankly. 

And I know where your support has been, and I’m sure Senator 

Chambliss shares that. 

And so, any voice you can use to rectify this situation is going 

to be not only welcome but absolutely critical to the survival of agriculture and the small farms that make up the bulk of agriculture 

in the United States. 

Senator SMITH. One of the most contentious issues that I have 

ever dealt with and have done so for the last 10 years in the U.S. 

Senate is the issue of immigration. 

I have, as people in this community know, I have been a sponsor 

of a Guest Worker Program from the first year I was in the Senate. 

And yet we seem to be at logger heads as a nation. 

But I wonder if Barry or any of you can speak to the issue, what 

it would mean to Oregon agriculture if we just passed the House 

Bill, which is a fence, security only, and fining employers. 

What would it mean to horticulturalists, nurserymen, wineries, 

farms in general? 

Mr. BUSHUE. Well, with the help of Senators such as yourselves, 

we have long tried as an agricultural organization, both statewide 

and nationally, to make sure we had a legalized work force. 

This isn’t something new to agriculture, and it frustrates us I 

guess that the American public seems to have taken this up as an 

issue as something that’s new. It’s not new to us. It certainly isn’t 

new to you, sir, by the fact that you’ve been so involved in this over 

the last 10 to 12 years. 

An enforcement only bill such as passed by the House would put 

us in the position of being law breakers and put us in the position 

of having to create a work force from nothing. 

We currently have a work force, some of which is legal. All of 

mine are, of course. But it does, it puts us in a bad position of trying to find a work force which cannot be filled from outside the 

place we have them now. 

If you look at the employment rate, the unemployment rate in 

the United States is rated somewhere around 4 percent. Many 

economists will tell you that that is full employment. 

If you were to deport 11 to 15 million people tomorrow, there 

aren’t enough American citizens left to fill that void that are employable. Let alone the rhetoric that we hear about people lining 

16

up to take these jobs, if only we paid enough. There isn’t enough 

profit in agriculture to pay 20 and $30 an hour for labor. 

Senator SMITH. Barry, on that point, I want to emphasize something. I often hear on talk radio in Oregon it said that all you have 

to do is pay them $50 an hour and you’ll get Americans to do this 

work. 

But assume, if you did that, say you were a pear grower in Med- ford or in Hood River, and you paid $50 an hour for your labor, 

doesn’t that just mean you wouldn’t grow pears and produce these 

commodities in Hood River or Medford? 

Mr. BUSHUE. It just means I wouldn’t produce them at all. 

Senator SMITH. It would go to another country. 

Mr. BUSHUE. Absolutely. 

Senator SMITH. OK. 

Mr. BUSHUE. And I think if I could just take liberty here, I seldom listen to talk radio because you get exactly what you pay for. 

Senator SMITH. Well, you know, I don’t in any way want to discount the security concerns our country has, and the legitimate demand the American people make that we secure our border. I think 

that those things are essential, and have so voted. 

But I think to stop there without a Guest Worker Program would 

be economically and humanitarilly damaging to this country, and 

this state in particular, in ways that are not comprehended by all. 

And I just simply hope that the American people will understand 

that we can’t stop there. And I’m not talking about a path to citizenship. I’m talking about a Guest Worker Program, at a minimum, beyond the House Bill, must be ultimately enacted, or it will 

be damaging to people on both sides of the issue. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Well, thank you, and, you know, you raise one 

of the most significant issues that we have faced in this country, 

and certainly your tenure in the U.S. Senate and my tenure in the 

U.S. House and in the Senate. The immigration issue is the most 

volatile, most explosive, most politically charged issue that I’ve 

ever seen. 

And I have been a strong advocate of reforming the current H2A 

Program for agriculture, because it is too expensive and too cumbersome. 

And we’ve got to have a temporary worker program of some sort 

that will allow everybody at this table and every farmer and rancher across America the opportunity to have a pool of workers who 

are here legally from which to choose. And we’re going to continue 

to work on this very sensitive issue. 

Also a couple of you have mentioned Doha, and let me just say 

that Gordon’s exactly right, we’re going to write the Farm Bill. 

We’re not about to let Europeans dictate to us or participate in the 

writing of that Farm Bill. 

As I have so often said around the country, I’m a lot more concerned about farmers in Paris, Texas, than I am farmers in Paris, 

France. 

And I’m still very hopeful that we can reach some sort of agreement within Doha, because, again, each of you express how valuable it is to export your products, which we know are the finest agricultural products grown anywhere in the world. 

17

But unless we achieve the market access and unless the Europeans quit being protectionists, as frankly my friend Mr. 

Mendelson, who likes to criticize us, but the truth of the matter is, 

they have been extremely protectionists of their farmers. And we’ll 

never have an agreement unless they decide to get reasonable and 

give us true market access. 

Senator SMITH. Mr. Chairman, isn’t it true that U.S. levels of agricultural subsidies are about a third what European subsidies are? 

The CHAIRMAN. That is exactly right. They just provide them in 

a different way. Ours are more market oriented, which is why we 

think the 2002 Farm Bill policy has worked very well. 

We’ve got some shortfalls, as our wheat growers across the country have reminded us everywhere we have been. 

Mr. REESE. And will continue to do so. 

The CHAIRMAN. We will continue to look at that particular policy 

as we go forward with the next Farm Bill. 

So, again, thank all of you for being here. We appreciate it very 

much. 

And we will now ask that our second panel to come forward. Mr. 

Ken Lorensen, Salem, Oregon, representing the Oregon Department of Forestry; Mr. Klaren Koompin, I hope I’ve got that right. 

Mr. KOOMPIN. You did well, sir. 

The CHAIRMAN. From American Falls, Idaho, representing the 

Potato Growers of Idaho; Mr. Pete Brentano of Wilsonville, Oregon, 

representing the Oregon Nurserymen Association; Mr. Ernest 

Gallo, Modesto, California, representing the Wine Institute and 

California Association of Wine Grape Growers. 

So, gentlemen, thank you very much for being here. We will follow the same format of taking opening statements from you, and 

again I would remind you that we will accept your full written 

statement for the record. 

Mr. Lorensen, we will start with you. 

STATEMENT OF TED LORENSEN, OREGON DEPARTMENT

OF FORESTRY, SALEM, OREGON 

Mr. LORENSEN. Chairman Chambliss, Senator Smith, thank you 

very much for being here today and inviting me to testify. 

I notice from the introduction that the focus has been on agriculture and its importance to Oregon. 

I just want to talk a little bit about forestry and its importance 

to Oregon and the West as well. 

And before I get to that, I want to mention that I think that in 

the context of the Farm Bill, there’s some perspective at least in 

the West Coast that forestry is often the poor cousin to agriculture 

in that context. But at least in the West Coast and in Oregon I 

think there needs to be a very strong marriage between forestry 

and agriculture. Many of our producers do both types of activities. 

And having both means success is important to their overall 

health. 

Within Oregon 57 percent of Oregon’s forest land is owned by the 

Federal ownership. Both the Forest Service and Bureau of Land 

Management. But 85 percent of Oregon’s timber harvest comes 

from private lands. Oregon’s the nation’s largest producer of lumber. And we have been in that capacity for a long time. 

18

In the context of the Nation and forestry security, for a long time 

imports have been a big portion of how we’ve met our wood products demands. Now 30 percent of the nation’s demand for wood 

products, is met by foreign imports, mainly from Canada and increasingly from other nations, including nations such as South 

American countries and New Zealand. 

It’s very true that family forest lands are extremely important 

and vulnerable part of the land base, that’s been assisted by Farm 

Bills in the past. 

Nationally 40 percent of the nation’s forest lands are family 

owned forests. In Oregon that’s only 20 percent. But yet 85 percent 

of the wood products provided by Oregon’s landowners come from 

private lands. Increasingly the family forest lands are critically important to that 85 percent of the harvest. 

In some Eastern Oregon counties, particularly like Baker County, Malheur County, family forest landowners now make up the 

largest share of the timber harvest, even though they are only 20 

percent of the ownership. 

And, again, Eastern Oregon’s fairly unique in the sense of Oregon forestry, but I think that it is important to think about the 

difference as you look at Oregon’s forests from the dry east side to 

the wetter west side. 

So, forests are very important to Oregon from an economic standpoint. They provide 85,000–plus jobs that are direct and over 

190,000 indirect and direct jobs, because of a higher multiplier effect that occurs with the higher paying forestry type jobs. In terms of economic output, Oregon’s forest sectors provide $22 

billion of output, 11 percent of the total value of goods and services 

produced in Oregon. 

Again, that’s disproportionate because of the higher labor, higher 

prices for labor paid for those sector jobs. 

In the last several years we have done some fair amount of work 

looking at what the contribution to Oregon’s forests can add to Oregon’s economy. 

And I’ve provided a fair amount of information on some studies 

done by the Oregon Forest Resource Institute that really concluded 

that without major change in Federal timber harvest, the statewide 

Oregon harvest can be increased by 25 percent, or an additional 

20,000 forest sector jobs. 

The Farm Bill can contribute greatly to that kind of success, if 

it was written well. And in our opinion the Farm Bill needs to 

think about a broader policy perspective that we call sustainable 

forest management, that tries to integrate in a cohesive way environmental, economic and social values that come from our forest 

lands. 

Such a policy, to be undertaken, would include a number of concepts. 

I want to express the importance of a sustainable forestry management policy across all ownerships, including Federal, state, and 

other public, industrial and family forest lands. It would encourage 

and promote a dialog around establishing such a national policy. It 

would encourage new and innovative policies and create new nonregulatory programs. It would clarify and enhance the rolls of Federal, state and local governments, respectful of the delegation of 

19

powers, promote regional collaboration and joint planning and program delivery. 

It would respect the critical role of private forest ownership in 

our country while striving to conserve in a fair and equitable manner the public benefits they provide. 

And very importantly, it would recognize the Federal lands must 

better contribute to the goals of sustainable forests in a coordinated 

manner across landscapes, that in some parts of the country these 

lands have a pervasive influence on sustainability of all forest 

lands. 

I do know that you flew yesterday, looked at some of the fires, 

and again in the context of fire protection in Oregon, if the Federal 

lands cannot provide good fire protection, private lands will be at 

such risk, they will disinvest in those lands and convert them to 

other uses. And we’re seeing that happen across portions of Eastern Oregon and Southern Oregon. 

Sustainable forestry policy needs to promote new and creative 

delivery systems. Need to encourage reason in the forest tax policy. 

Again, the death tax was talked about earlier, but I think that’s 

equally important for forestry. And it does need to recognize the 

local influences that impact U.S. forests and how we need to be 

able to compete fairly and equitably. 

I do want to make the point in that context, that the National 

Association of State Foresters and Society of American Foresters 

are both working on these ideas and invite you to join them to further develop them as you develop the Farm Bill. 

Forestry needs to continue to be a part of the Farm Bill, and I 

know you’re probably going to ask the question, how do you 

prioritize things. 

But the bottom line, the Farm Bill needs to place a higher priority on forest lands than currently exists and needs to encourage 

better participation by forest landowners. 

I do want to make one point with regard to the Western States, 

particularly the coastal states, is that most of our states have regulatory forest practices acts. 

And as a principle that could be looked at, I think it’s important 

to think about in the Farm Bill, is to try and reward those states 

that are doing the most. 

And I think in the past there’s been a little bit of inequity in how 

some of the Farm Bill programs have treated forestry and often rewarded those that have done the least. 

As a simple example, in Oregon we require that landowners reforest after timber harvest. As a result of the requirement to plant, 

that makes those sorts of activities ineligible for Federal cost share 

programs. And we do provide cost share, Federal cost share dollars 

to land owners that plant at higher levels than what the regulation 

requires. 

But again those kind of concepts, as you get into wildlife issues, 

Federal ESA issues, those sorts of things, as a principle make a lot 

of sense to us. 

It’s very true that the Farm Bill has been very successful and 

education’s very important to that part, and we hope to continue 

that as well. Thank you. 

20

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

Mr. Chairman. Thank you very much. 

Mr. Koompin. 

STATEMENT OF KLAREN KOOMPIN, POTATO GROWERS OF 

IDAHO, AMERICAN FALLS, IDAHO 

Mr. KOOMPIN. You did very well. Chairman Chambliss, I’m going 

to attempt to poke five pounds of wisdom this three pound bag 

we’ve go, and I can see it’s pretty difficult, but I’m going to take 

off here. 

You did a great job with my name. I’m from American Falls, 

Idaho. We’re representing not only PGI but also the National Potato Council. 

I’ve served as President of the PGI as well as Executive Director 

of the United States Potato Board, as well as 9 years on county 

committee, FSA committee of Prior County. You can tell our name 

went from, start out of school, caboose, we hit Ellis Island, we went 

from Greek to Dutch just by the stroke of a pen. 

So that’s going to bring me into one of my first critical issues 

that probably transcends above all titles in the Farm Bill, and that 

is the labor shortage, immigrant shortage of farm workers here in 

the United States. 

As potato growers, we are very dearly affected by this. We applaud the vision of the Senate in passing a somewhat ag jobs bill 

by Senator Craig that we supported very well, and after listening 

to Senator Crapo’s statement in Moscow, I believe he softened his 

stance a little bit also, and is leaning that direction, so you might 

want to ask him if that’s still true. 

It will become very critical, and we need to solve it. We also need 

to give those people a pathway to citizenship. 

With respect to any other titles of the Farm Bill, we have to always keep cognizant that we do not put one farmer at an advantage over another one. And specifically talking about the CSP program. 

Any time you have the ability to pertain $40,000 more per year 

than your next door watershed neighbor, so to speak, and you’re 

going to do that for it looks like now maybe forever, because there 

will be watersheds that will never be eligible for the CSP, that’s 

a distinct economic disadvantage that the government has set up 

for one farmer versus another. 

And anything in the Farm Bill that puts an advantage of one 

area over another must never happen. 

The same with the RMA. There are provisions in that, as far as 

the AGR, it has been studied now for 5 years, and it either needs 

to be implemented across the country, as the CSP must be, or 

eliminated. It cannot be targeted to one area versus the other, and 

have that opportunity for one farmer and not the other. 

Getting to the Farm Bill titles. I think the first one the potato 

growers are most concerned with are obviously the planting flexibility. 

We all know that was specifically mentioned in the Brazilian 

case, and we all know that it didn’t—you know, it was not illegal. 

21

It was only said that this is obviously an amber box payment, not 

a green box payment. 

We cannot allow specialty crops, particularly potatoes, to be 

raised on base acre government subsidized soybean/corn acres. And 

we do not want any payments from the government, potatoes growers never have, and will not. 

But we feel very strongly that we do not want to subsidize potato 

crops on those soybean or corn acres also. And in fact that’s exactly 

what it is. And you’ve got my written testimony. 

Mentioned the only other one is transportation. It is absolutely 

critical. All 50 states trade with each other. We trade with the 

world. We need two tracks. We need an evening of the wage law 

between Washington, Oregon, New York, Florida. I believe a repeal 

of the 1975 law that fixed the weight limits would automatically 

terminate that, or allow a heavier load. 

Right now we’re working with an 80,000 limit. We should be able 

to go to 102. We have states that go from 80 to 146. You might be 

interested to know that the highest weight law in the states is 146. 

That’s New York. The 80,000 ones are pretty much stretched 

through the Midwest. All trucks have to go through the Midwest 

from coast to coast. So, they are limited to 80,000. That in itself 

would probably show, what, 15, 20, 30 percent savings in transportation costs. So that is something that has to be done. Thank you. 

[The prepared statement of Mr. Koompin can be found in the appendix on page 79.] 

The CHAIRMAN. Thank you very much. 

Mr. Brentano. 

STATEMENT OF PETE BRENTANO, OREGON NURSERYMEN 

ASSOCIATION, WILSONVILLE, OREGON 

Mr. BRENTANO. Chairman Chambliss and Senator Smith, my 

name is Pete Brentano of Brentano’s Tree Farm, and thank you for 

the opportunity to testify here today. 

I am co-owner of our family farm in Oregon’s Willamette Valley 

where we grow shade and ornamental trees as well as a variety of 

other specialty crops. 

And I have the pleasure this year to serve as the President of 

the 1500 member Oregon Association of Nurseries which represents Oregon’s nursery and greenhouse industry, which is the 

state’s largest sector of agriculture with annual sales in excess of 

$840 million. 

Today I want to focus most of my talk on plant pest and disease 

issues. 

Plant pest and diseases threaten West Coast nursery growers 

with serious economic harm due to crop loss, closed markets, or 

burdensome regulatory restrictions. 

In this respect we differ little from growers of Florida citrus or 

soybean farmers. What’s popularly known in the press as sudden 

oak death threatens to result in very restrictive and expensive regulations for West Coast nursery growers. 

A more effective approach to nursery regulation and inspection 

is needed. And one that relies on nurseries to develop and implement a system to prevent the introduction pests and diseases onto 

the nursery. 

22

We believe the next Farm Bill must provide for a multi-pronged 

effort as follows. Authorize and direct research on systems of nursery production and measure their efficacy in preventing the introduction and spread of plant pest and disease problems; develop and 

pilot test systems of production for various types of nurseries in different geographic regions of the United States; establish definite 

time tables for the dissemination and adoption of the new systems 

of production; and establish definite time tables for the implementation of regulatory programs, based on these new systems of production. 

We at the OAN believe tremendous opportunity exists to improve 

and enhance nursery regulation and inspection, and the Farm Bill 

should establish clear and overarching goals to guide development 

of new regulatory policy, based on a comprehensive program of research, demonstration and extension. 

And I’ve included with my testimony a brief discussion paper describing that position. 

Quickly I want to call your attention to several other issues that 

merit our attention. Water quantity and availability. Based on a 

Federal and state partnership study the availability of water for 

western agriculture and develop an inventory of potential new 

water stored sites, soil conservation and habitat restoration, support research and incentives to assist nurseries with soil erosion, 

water conservation and efficiency, create a specialty crop title in 

the Farm Bill. 

We want to see emphasis and organization of farm policy for the 

benefit of specialty crop agriculture. We don’t want subsidies but 

we have very focused issues and concerns. Support the industry’s 

growing partnership with USDA rural development in our joint effort toward energy efficiency. 

And even though it’s not a part of the Farm Bill, agriculture 

needs a comprehensive immigration reform bill that embraces a 

Guest Worker Program because frankly without labor, the nursery 

industry would not survive. 

Thank you for listening to my testimony today. 

[The prepared statement of Mr. Brentano can be found in the appendix on page 59.] 

The CHAIRMAN. Thank you. Mr. Gallo. 

STATEMENT OF ERNEST GALLO, WINE INSTITUTE AND

CALIFORNIA ASSOCIATION OF WINE AND GRAPE GROWERS,

MODESTO, CALIFORNIA. 

Mr. GALLO. Chairman Chambliss and Senator Smith, thank you 

for the opportunity to appear before you today and present to you 

some key facts of the wine and wine grape industry. 

I’m proud to represent both the Wine Institute, California’s public policy advocacy association, of over 900 wineries and associated 

businesses, and the California Association of Wine Grape Growers, 

also known as CAWG, which is the California advocacy group for 

our wine grape growers. 

I am a third generation to be involved with the family winery, 

the E&J Gallo Winery of Modesto, California. 

The California vintners face increasingly competitive environments. I’d like to share with you some of the key trends in our inVerDate 0ct 09 2002 15:30 Nov 07, 2006 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 C:\DOCS\30126.TXT SAG2 PsN: SAG2
23

dustry and propose solutions that rely upon the cooperation of the 

industry, state and Federal Governments. 

In the context of the Farm Bill, I believe laying out this information will help to convince you as policymakers that our industry is 

dynamic and could be a great fuel for the United States 21st Century agricultural economy, if given the proper support for research 

and development. 

Imports as of 2005 data represent more than 27 percent of the 

wine consumed in the U.S. today. Since 1984 the value of imported 

wines has grown from 954 million to 3.8 billion in 2000. This dramatic rise represents a structural shift from old world European 

wines to new world wines, particularly Australia. 

Australia surpassed France 2 years ago and is poised to overtake 

Italy as the No. 1 importer into the United States. Australia’s success reflects skilled marketing in a focused export driven campaign 

strongly supported by government and well organized industry. 

A partnership between the industry and the government has also 

created one of the best research programs for viticultural knowledge in the world. Their research program is seen as a key driver 

for improving quality and marketability of their wine into the export market. 

California’s home, and so is Oregon, to the most productive agriculture in the world. It is also the most urbanized and fastest 

growing state. These are pressures that our growers face on a dayto-day basis, and the pressures are increasing all the time. 

The Farm Bill debate is a perfect forum for this discussion to 

really come to fruition. 

To that end, several of us in the grape industry have developed 

an industry paper that I have submitted to the committee into the 

record with my full written testimony, which outlines more fully for 

you what we would like to see in the next Farm Bill to ensure the 

grape industry’s place as the sixth largest crop in America and the 

largest specialty crop. 

And this is by date value, not the added value that comes with 

the industry which is three times as much. 

Thank you for the opportunity to comment, and I’m delighted to 

answer any questions you may have. Thank you. 

[The prepared statement of Mr. Gallo can be found in the appendix on page 70.] 

The CHAIRMAN. Thank you very much, Mr. Gallo. And as I mentioned to you before the hearing, are the namesake of a very famous family that we’re all familiar with in the winemaking industry. And we’re very pleased that you’re here. I don’t limit myself 

to Oregon Pinot Noir, I want to assure you of that. 

Mr. Lorensen, you mention this fire we saw yesterday. I picked 

up the paper this morning, and, gee whiz, boy, when I look at 

something like that, what a gosh awful sight. Senator Smith and 

I got to see it up close and personal yesterday. And a couple of comments about it. 

Senator Smith has a bill, and we also passed a bill, the Healthy 

Forest Act, a couple years ago, that we’ve had some problems in 

the implementation of. But those types of measures, particularly 

the bill that Congressman Walden and Senator Smith have been 

working on, appear to be the types of measures that will not only 

24

help you here but even in our part of the world, where we have 

significantly less percentage of our land in the hands of the government. Most of it private lands, where we can do a lot of management practices. 

Let me just ask you about the types of practices you use to limit 

the possibility of disasters like this fire that’s ongoing right now at 

Lake George and your comments relative to the legislation that we 

have passed, and has it been a help to you, or are there other 

things that we need to do in that respect? 

Mr. LORENSEN. Chairman Chambliss and Senator Smith, good 

question, and I know you both worked on this issue in terms of 

Senator Smith’s Healthy Forest Restoration Act. It has been very 

helpful. There has been a lot of thinning work, forest health work 

has improved the stand conditions so they will be survivable in the 

context of a fire. 

There’s been a lot of work around communities, developing community welfare protection plans and implementing projects around 

those. 

But at the pace we’re going, we’re basically not catching up to 

the problem. And I know that Healthy Forest Restoration Act programs are being reviewed in terms of how we can improve the efficiency on those. 

In Oregon we have had very little success in using the stewardship agreements to do work on Federal lands that would protect 

the adjacent private lands. 

There’s lot of things we are trying to implement, but it’s been a 

struggle. And I guess one general comment, to the extent that 

those programs can be delivered through Farm Bill like programs 

rather than through a Federal agency where you might then have 

ESA consultation, those sorts of things, that would be an efficiency. 

Senator SMITH. Mr. Lorensen, to follow up on Senator Chambliss’ 

question, we saw land burning yesterday that was primarily Federal, but there was clearly some private land being burned. 

From what you observed over the years, after this fire is extinguished, what will be the treatment on one versus the other? 

Mr. LORENSEN. There will often be very different levels of treatment. Typically, on the Federal lands, time will become a huge factor and process will most often result in their inability to salvage 

timber, if that’s an allowed——

Mr. Smith. But will you see timber salvaged on private land? 

Mr. LORENSEN. On private lands, you will see salvage almost 

begin immediately. 

And in fact, to use an example, on state owned lands, where we 

had fire, we had a timber sale up within 3 weeks after a fire. So, 

a huge difference. 

Federal lands, it might be 3 years, and then the value becomes 

a huge issue on whether there’s a competitive opportunity——

Senator SMITH. And how about replanting of new seedlings? 

Mr. LORENSEN. Same sort of thing. With private lands, if they do 

salvage, which almost always will occur, they will have to plant, by 

law, in Oregon. We can provide some——

Senator SMITH. They have to replant, whether you cut it or 

whether you salvage it? 

25

Mr. LORENSEN. If they salvage it, they have to cut. If they don’t 

do any salvage work, they wouldn’t have to reforest. But again I’ve 

never seen any private landowner not reforest. 

Senator SMITH. And how much sooner do they have a new forest 

versus——

Mr. LORENSEN. Typically the seedlings will be free to grow in 

three to 5 years, which means they will be up above the brush and 

moving toward a timber crop. 

The CHAIRMAN. Let me ask you about your soft wood forests in 

this part of the country. We have seen—My home state happens to 

be, as you well know, a large timber producing district, large timber producing part of the world, primarily soft wood timber. 

We have seen the export of the pulp wood timber industry outside of the United States over the last several years, it is virtually 

non-existent now. 

But I was at Georgia Tech last week and had a chance to visit 

with a number of professors there and researchers who are very, 

very close, and I mean very close, within a matter of months now, 

rather than years, of developing a process for the conversion of soft 

wood timber into ethanol. 

Is there similar research going on in this part of the world relative to the use of your timber products for the manufacture of alternative energy? 

Mr. LORENSEN. Chairman Chambliss, there is, and indeed we 

have been doing a lot of work, and a study will be presented next 

week with regard to opportunities around bio-energy in Oregon. 

But there’s a huge opportunity in Oregon, not just to create 

ethenol, but to burn wood for the generation of heat and energy, 

and at least in this context, the Western States, that represents 

really what I call a quadruple win, and again if it gets into the 

Farm Bill, can provide support for that, that would be a big help. 

But in terms of bio-energy, the potential there, if successfully implemented, results in healthy forests, obviously provides energy 

and jobs, but it also would reduce CO2 emissions greatly. 

Again, you saw a lot of emissions yesterday, and I apologize for 

the smoke, but it’s really a choice of how you want to oxidize your 

forests, and you can oxidize them in a way that will produce energy 

and jobs, or you can oxidize them in the way that causes the Federal treasury to spend a lot of fire suppression dollars. 

The CHAIRMAN. Mr. Koompin, proposals have been made to provide more money to specialty crop industry, as we have been 

around the country talking with farmers relative to specialty crops. 

These proposals range from state block-grants to research money 

to some type of Counter Cyclical Program. 

Which of these ideas or others do you think would benefit the industry most, and do you have any particular ideas you want us to 

put in the world? 

Mr. KOOMPIN. Yes. I think the block-grant programs for the 

States work very well, here 4 years ago, when that was authorized. 

That works very well. We definitely need more dollars for research. 

And that can be very broad or very narrow. 

Just the introduction of the energy problem that we’re facing 

today is going to help any specialty crop. The nice thing about specialty crop production is you have the ability to raise a multitude 

26

of crops, given our environmental parameters or frost dates and so 

forth. 

But, you know, you may envision the day that we are back in the 

late 1940’s and early 1950’s where I think the latest statistics I 

read that fully 50 percent of the farm ground in the United States 

was dedicated to energy production; and in the form of grasses, 

grains, hays, for the horse feed. 

And maybe life is a full circle and we will come back to that. So 

any kind of research. 

Potatoes lend themselves very well to research manipulation and 

direction. 

With that being said, the Russet Burbank is still the largest potato plant and he’s been around for 105 years, so history’s with us. 

Continuation of the MAP funds. 

Anything that would help us export our products, that’s a new 

growth area for potatoes, has been and will be. We survived the 

low carb diet, but we did take a little hit. But we’re coming back 

and rebounding nicely. 

Any investment in prevention from introduction of pests; with 

trade, we know it is going to be a two-way street. We have to be 

critical that we don’t let anything in that devastates not only the 

potato industry but horticulture of any kind. 

And then of course any kind of transportation relief that can be 

handled by the Federal Government, and that truly is a Federal 

Government problem. We have 50 states with 50 different laws. 

And the interstate system has to be our artery. And so any of those 

above mentioned, Chairman Chambliss, would be greatly appreciated by the potato industry. 

The CHAIRMAN. My son-in-law is a vegetable grower. He prides 

himself in the fact of being a specialty crop producer, that he 

doesn’t look to the government for help with respect to farm payments. 

But he and I have talked from time to time about this issue of 

planting flexibility, and you addressed it in your opening comments. 

What would be the result, do you think, in the specialty crop industry in this part of the country if we changed our planting flexibility provisions in the next Farm Bill? 

Mr. KOOMPIN. Mr. Chairman, I can’t give you a specific figure, 

but I will be able to give you a specific figure in a month, and it 

may be available now. 

The National Potato Council has hired a private economic firm 

to ferret that number out. It would be in the hundreds of millions. 

We’ve got approximately a two billion dollar industry in the state 

of Idaho, as far as potatoes. That’s total processing value added as 

well as farm gate. And I can assure you nationwide that if planting 

flexibility changed, it again puts one farmer, without redoing the 

whole Farm Bill, because if you’re going to subsidize a potato crop 

in Indiana, or tomato crop in Indiana, by not taking away either 

base acres or farm program payment, and that’s what happens 

now. 

And so it’s somewhat controlled. But if you eliminate that, then 

you are in effect subsidizing that crop of tomatoes or potatoes, on 

what used to be soybean, corn ground. And if you are going to subVerDate 0ct 09 2002 15:30 Nov 07, 2006 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 C:\DOCS\30126.TXT SAG2 PsN: SAG2
27

sidize that acre of potatoes in Indiana, you are definitely probably 

going to have to subsidize the crop in Idaho, Washington or in Oregon, and you can do that in lots of different ways, I guess. 

You can create—increase everybody’s base acres across the nation. And we have to make sure that whatever provision we do, we 

do not jeopardize one farmer’s ability to compete with the government subsidy to another farmer. 

The CHAIRMAN. Mr. Brentano, you indicate support of conservation programs in your testimony. What’s the right balance between 

land retirement programs like the CRP and working land programs 

like EQIP? 

Mr. BRENTANO. All in all, I guess I believe that it’s not an either/

or issue. One is a conservation program and one is a program within the conservation title which helps farmers and ranchers to comply with all the laws. 

A program like EQIP, which is far more technical and helps with 

the best management practices and is quite project specific, is the 

way we like to see things. We like to see the land being in production and we think that that’s probably the best way to go about 

things for us. 

The CHAIRMAN. You mention the need for new regulatory structure for addressing plant, pest and disease issues at the USDA, 

and you specifically note that the basic features of HACCP could 

apply to the nursery industry. 

How much would compliance with this new system cost the industry? 

Mr. BRENTANO. Right. Much like HACCP, we like to look at a 

new system, which is based on the system’s approach where we’re 

looking at the way that the production is done rather than an end 

regulation point. 

As far as the cost to industry, right now we have a test pilot in 

Oregon that we’ve done with core nurseries. The costs to the industry vary greatly. Some of our nurseries are showing, and they’re 

fairly large nurseries, but anywhere from 18 to $20,000 a year, up 

to one of our larger nurseries, showing it to be closer to $80,000 

a year for their costs. 

What the cost would be to government is really hard to tell at 

this point. But I think that’s why we’re pushing for some research 

and a science-based program which would have a big test pilot element to it. 

Frankly, right now our system is somewhat broken, if you look 

at issues that have come up, like Emerald Ash Borer or the 

Phytophthora ramorum. These can be quite devastating and close 

the market. 

So perhaps the system where we are looking at what we’re doing 

in the fields and preventing and not allowing in the disease or the 

pest could be actually less costly in the end. 

The CHAIRMAN. Mr. Gallo, your comments and your numbers relative to the increase in imports into this country are particularly 

interesting. 

I don’t know whether you have any similar numbers to tell us 

what sales of domestic wines, what’s happened to the sales of domestic wines, whether we’ve seen a huge increase in that over the 

last several years, during that same period of increasing imports, 

28

but I would suspect it probably is, it’s your industry, thanks to any 

number of reasons, most importantly the quality of products that 

your winery and other wineries around the country are producing 

now. 

But the Market Access Program, which you mention in your testimony, has been a critical program, and is one that as we reauthorize the Farm Bill, we will be talking a lot about, particularly 

as we talk about trade. How has the Market Access Program affected your industry? Is it something we ought to expand on in general? Tell me your thoughts relative to that. 

Mr. GALLO. Thank you, Mr. Chairman. MAP, for the wine industry, is really the U.S. version of what every other major wine producing country offers their producers to help fund the promotion of 

exports. 

What does that mean? What that means is for the producer, it 

allows them to attend trade shows, it allows them to taste retailers 

and import trade on their products, it allows them to bring visitors 

to their wine country, and if you look at all our competition, all our 

competition enjoys similar programs. However, they tend to be 

funded at higher levels and supported by their governments. 

Now, let me address the benefits of MAP and what return we 

have seen in this country as a result of it. 

First off, MAP has been very successful in introducing our wines 

to international importers, consumers and retailers. I think the 

success is best illustrated by the growth of our exports over the last 

decade. 

In 1994 the value of our exports was about $196 million, the 

value of California wine exports outside the United States. By the year 2004, 10 years later, that value had swelled to $808 

million. 

Now, there’s still a lot of work to do. There’s still a lot of opportunity. Because even with that success, we only have a 5 percent 

market share of the global wine export market. 

So, to answer your question, I believe that the success of the program should justify that, A, it should continue, and more importantly, it should be increased as the expanding needs of all the participants demand it. 

Senator SMITH. Mr. Gallo, though I’m a teetotaler, Oregon’s wine 

industry is such an important part of our agriculture, I’ve had to 

learn a little bit about winemaking from Jim Bernau and others. 

I have recently read an article that talked about France is actually taking acreage out of grapes, and the point of their doing that 

is to keep their prices high. 

And as you noted in your opening testimony about Australia’s 

success, and I would probably throw New Zealand in that as well, 

it seems that it isn’t just the government involvement but also they 

are meeting quality standards comparable to those in Europe, and 

they’re doing so at dramatically lower prices. 

Is that what, in your view, is that part of the equation here? 

Mr. GALLO. Which part? The lower prices? 

Senator SMITH. The lower prices and equal quality. 

Mr. GALLO. Quality is what this business is all about. This isn’t 

a commodity business. This is a specialty crop. And specialty crop 

is all about value added, value added either in the product itself, 

29

quality, being can you offer the same quality at a given value, or 

can you offer a wine style or taste that can’t be offered somewhere 

else, it’s no longer a commodity because you can’t compare the 

price, or whatever other type of value adding you can add to it, 

such as if people come and visit the wine country, they leave with 

an experience that is beyond the product itself. 

Now, just to address, you know, the French comment that you 

made, you know, they state that they’re taking out acreage to raise 

prices. 

I think more than anything else, that may be true. But however 

the biggest driver is they have a tremendous surplus in Europe. 

And right now you’re seeing that the government is actively spending dollars to buy the grapes to distill into fuel ethanol, which I can 

assure you, you know, grapes should not be used by the Farm Bill 

for any sort of ethanol production. It is not the most cost-effective 

means of fuel. 

So I think——

Senator SMITH. Some of my colleagues seem to live on it. Pretty 

good fuel. 

Mr. GALLO. Human fuel versus automobile fuel. 

Senator SMITH. You know, it is interesting, and I understand obviously there’s expensive ones and there’s Two Buck Chuck. 

One of the investors in Two Buck Chuck told me that he moves 

2,000 cases a day through Costco. And I know the industry’s expanded dramatically in California. 

I’m from Eastern Oregon, and I never thought I would see what 

I see today, and that is hundreds, maybe thousands of acres of potato, wheat land, it’s all in vines now. And I’m wondering if the industry isn’t in danger of becoming a commodity. 

Is there a glut? I mean, that’s what makes it a commodity ultimately on a world market. 

Mr. GALLO. Worldwide, there is a surplus of grapes in the 

ground. Hands down, there is a tremendous surplus out there. 

But yet those producers who focus on quality, who focus on investment in new process technology, investment in new viticultural 

technology, investment in just simply how you run a fermentation 

so you can have a clean fermentation, all leads to a better product, 

and it’s rewarded by the consumer. So even in a commodity——

Well, let me step back. Even in a surplus situation, if you’re competing on quality, it doesn’t matter if there’s a surplus out there. 

Now, the issue with Two Buck Chuck is a little more complicated. Let me talk about the subtlety of Two Buck Chuck. 

Senator SMITH. That fellow told me after the first drink he 

couldn’t tell the difference between one versus the other anyway. 

I don’t know, but that’s what he said. 

Mr. GALLO. It depends on the size of his drink. Two Buck Chuck 

was the result of a planting boom in California that went through 

the 1990’s. 

In grapes, unlike most commodity crops, but I’m sure a lot of specialty crops, especially tree fruits follow this way, is that you don’t 

get your first crop, and you don’t get a full crop until your third 

year of production. 

So there is a lag effect. And as a result, if you see a trend and 

it’s trending upwards, like any agricultural situation, you know, 

30

farmers look at their neighbors and they say, you know what, this 

is a good business to be in, you can make more money, they jump 

on board. 

It doesn’t become apparent, it’s not visible, what are the supply 

and demand, because you have hidden supply coming on line. Once 

that comes—So you had a lagging supply curve, and it would further cause problems, we had a slight slowdown that followed the 

bust of 2000, which was the internet bust, and combined resulted 

in a glut in California, but the market forces did self-correct it, and 

we are now in balance. 

So, just in four or five short years, the industry was able to get 

in balance. 

How do you do it? Some vineyards came out of the ground. And 

some entrepreneurs, like my Uncle Fred, Two Buck Chuck, managed to find that he can buy wine, and buy grapes cheap, during 

that glut period. 

Senator SMITH. And that’s going away, so that will go away, too? 

Mr. GALLO. I think Two Buck Chuck has evolved. In the beginning it was literally a better opportunity than putting it to the still. 

And then now with Two Buck Chuck specifically, it’s a partnership with Trader Joe’s, and as a result, they have a longer term 

contract and with that, you can assign supply to that program and 

you work on thinner margins with a guarantied supply, or 

guarantied volume. 

Senator SMITH. Well, I thank you for helping me to understand 

that. 

Mr. Koompin, I was one of the creators of the Conservation Security Program. And I’m certainly open to changes and expansions. 

And I’ll tell you a part of what has driven my involvement in it. 

I have seen my farmer neighbors for years be penalized by the cost 

of environmental farm practice regulation. 

What I was trying to do was reward them for it, and to help have 

the dual benefit to the environment and without the penalty to the 

farmer. 

But I know it’s a very limited program, it’s frankly very underfunded, even at the authorized levels, it is nowhere near funded by 

the USDA. 

But my motive in being involved in it was frankly my fear, and 

I say this for the education of those who are here, if you read the 

New York Times, the Washington Post, was it the Journal of Constitution in Atlanta? 

The CHAIRMAN. Communist. 

Senator SMITH. The communist. The support for agriculture mirrors the population of those involved in agriculture. It’s probably 2 

percent, if you want to be liberal right now, in terms of how you 

calculate it. And these farm programs are deeply unpopular. 

What is popular is environmental issues. 

And so my thinking was, how could I help my farmers get ready 

for the world of tomorrow, because if there is not public support for 

farm programs, farm programs are in jeopardy every time a new 

one comes up, and everyone has said they need more; and the 

world community, and you have my commitment, you have the 

Chairman’s commitment, we’re not going to let Paris, France, determine the ag policy for Paris, Texas. 

31

But the facts are that our country, long before Saxby and I 

showed up in the Senate, we became members of the WTO, and 

WTO rules are going to tighten and tighten and tighten, ultimately 

even reducing European subsidies, which are two-thirds more than 

ours, and frankly their taxpayers can’t afford what their current 

programs are, but they’re going to tighten. 

And a lot of these things will lose public support, these farm programs, unless we can find some replacement. 

So, what I’m simply saying, and stating, is that we need your 

help to look for other ways consistent with WTO rules and regulations that will allow us to be helpful to the farm community. CSP, 

I believe is one of those. And so it’s simply an invitation for you 

to be open with my office, to make it bigger, to make it better. It 

is consistent with the WTO regulations. 

Mr. KOOMPIN. I can address that real quick, Senator Smith, and 

due to lack of time, my comments on the great vision of the CSP 

program was cut out, but now maybe it is a good time to say the 

idea, the principle, the vision of the CSP program, we realize in the 

farming community, is the way government support of agriculture 

is probably heading, if you followed it at all in the last 20 to 30 

years, and especially since the WTO. 

So, you know, our thanks and pat on the back for that program 

as far as it was envisioned. The problem with the CSP program is 

of course the implementation of the funding. 

Senator SMITH. Yeah. 

Mr. KOOMPIN. So, do we think that, are we going to look better 

in the eyes of the nation? Yes, we are. And can we make that CSP 

program or something like it work? Yes, we can. 

But it cannot target watersheds and for the most part I envision 

that there will be areas that will never, ever be able. So that how 

do you——

Then you get back to the questions we raise, how can we justify a $40,000 payment to Joe in watershed A, and the poor guy raising 

the same crop in a different state or in the same state, or in the 

same county, does not get that. 

So, that’s a definite problem. But we do, our hands would be 

ready to help work out any program you come up with, and we will 

be after some ideas. 

Senator SMITH. We will need your help, because I think you are 

right to perceive it as the future. 

Rather than ask more questions of more panelists, Mr. Chairman, I will ask it through written, through the record. 

But I do want to make note for the record the presence of Katie 

Koba. Katie, there you are. Katie is the Director of Oregon Department of Agriculture, and we’re honored to have you here, Katie. 

The CHAIRMAN. Thank you. Mr. Lorensen, I can’t help but note, 

as we are sitting here talking, we are hearing those airplanes take 

off, and I suspect that maybe a hundred percent of them are heading toward that fire out at Lake George. 

As Senator Smith and I flew over that yesterday, when those airplanes take off from here, they are a mighty big looking piece of 

equipment, but when you look at them dropping the retardant and 

the water on that fire, they pale in comparison to the size of that 

fire. But hopefully we’re going to see that controlled short term. 

32

To all of you, again, thank you very much for being here. We look 

forward to continuing to dialog with you, and we would like to be 

able to use all of you as a resource as we move into the writing 

of this next Farm Bill. So, thank you very much. 

We will now move toward panel three, if these members will 

come forward, Mr. Jim Bernau, Turner, Oregon, representing the 

Willamette Valley Vineyards; Jennifer Euwer Hunt from Hood 

River, Oregon, representing the Pear Bureau of the Northwest and 

Northwest Horticulture Association; Mr. Doug Krahmer from St. 

Paul, Oregon, representing the Oregon Blueberry Commission; and 

Mr. Mark Wettstein, Ontario, Oregon, representing the NyssaNampa Beet Growers Association. 

Again, we’ll follow the same format. Mr. Bernau, welcome to our 

panel, and we’ll start with you to take any opening comments from 

you. 

STATEMENT OF JIM BERNAU, WILLAMETTE VALLEY 

VINEYARDS, TURNER, OREGON 

Mr. BERNAU. Mr. Chairman Chambliss, Senator Smith, thank 

you for supporting the wine industry each in your own way. 

My name is Jim Bernau, and I am the founder and CEO of Valley Vineyards, a publicly held Winery in Turner, Oregon. Our winery currently farms over 250 acres of vineyard land and we sold 

last year about 140,000 cases of wine. 

I also serve as the Chair of the Legislative Committee of the Oregon Wine Growers Association and am here on their behalf. 

At $3.5 billion grapes the sixth largest crop in the United States, 

research conservatively estimates, that the production of wine and 

wine grapes and their related industries produced more than $90 

billion of economic value to the U.S. economy in 2004. 

Our industry accounts for over a half a million full-time jobs, and 

roughly 18 billion in annual wages. Additionally about 30 million 

tourists visit wineries each year, spending approximately $2 billion. 

The industries pays 4.3 billion in Federal taxes and almost five billion in local and state taxes. 

Almost 10 percent of the approximately 3,500 wineries in the 

United States are in Oregon. 

Oregon’s focus is on a high quality wine and wine grapes that 

translate into high quality of life for our neighbors and our communities. We’re environmental stewards of the land. Over 37 percent 

of our acreage is farmed with certified sustainable practices. 

Despite our growth, we have tens of thousands of marginal acres 

of land lying fallow, under-used, some with dying fruit and filbert 

trees on them. 

A 2005 study of the Oregon wine grape industry found our economic impact was about 1.4 billion. We generate about 8,500 jobs 

and pay more than 200 million in wages. We attract high value 

tourists who spend more than the average tourist, boosting hotel 

and restaurant sales. 

In 2004 our wineries generated tourism revenue that approached 

$100 million. 

As you heard from Mr. Gallo, over 25 percent of the wine consumed in the United States is imported, supported by well financed 

33

foreign government programs, a threat to the development of the 

Oregon wine industry. 

Our industry respectfully asks that the 2007 Farm Bill finance 

greater support of specialty agriculture. We have several specific 

suggestions. 

One, sustain and grow the funding of the Northwest Center for 

Small Foods Research. 

Two, provide continued support for the Market Access Program. 

Three, we appreciate your role in creating the Conservation Security Program and ask that you expand it. Authorize mandatory funding of the $5 million a year from the 

Commodity Credit Corporation to establish the national clean plant 

network. 

Expand the state block-grants for specialty crops program. 

Provide a funding mechanism to support industry-government research partnerships. 

And, seven, we appreciate our growing partnership with rural development. The Oregon Wine Board has applied for a value-added 

producer grant to support our efforts to increase the sale of Oregon 

wine out throughout the nation. The State of Oregon constitutes 

approximately 1 percent of the nation’s population but accounts for 

nearly half of all of Oregon wine industry sales. 

Thank you very much for the opportunity to testify before you 

today. 

[The prepared statement of Mr. Bernau can be found in the appendix on page 56.] 

The CHAIRMAN. Thank you. Ms. Euwer. 

STATEMENT OF JENNIFER EUWER, PEAR BUREAU

NORTHWEST AND NORTHWEST HORTICULTURE ASSOCIATION, HOOD RIVER, OREGON 

Ms. EUWER. Good morning, Chairman Chambliss. I am Jennifer 

Euwer, a fruit grower in the Hood River Valley. My husband Steve 

Hunt and I farm a total of 240 acres of—Is this on? 

The CHAIRMAN. I think it’s just quit on you. 

Ms. EUWER. Is that better? 

The CHAIRMAN. No. Let’s stop for a minute. 

Ms. EUWER. My husband Steve Hunt and I farm a total of 240 

acres of pears and cherries and apples. My family has grown pears 

in Oregon since 1912, the Columbia Red Anjou variety being initially discovered in one of our orchards. 

I appreciate this opportunity to provide comments about the importance of several components of the 2007 Farm Bill. Nutrition, 

the MAP program and research. 

The 2007 Farm Bill provides an excellent opportunity to bring 

agricultural policy in line with Federal health and nutrition recommendations. 

A strong fruit and vegetable agricultural policy will benefit tree 

fruit growers while at the same time make it easier for Americans 

to benefit from consuming a diet rich in a variety of fruits and 

vegetables. 

The 2005 dietary guidelines issued jointly by USDA and the Department of Health and Human Services recommends that all 

Americans eat five to 13 servings of fruits and vegetables a day. 

34

These guidelines are the strongest statement ever about the need 

to increase consumption of fruits and vegetables, recommending 

that Americans double their consumption of produce. 

For children, making fruits and vegetables more readily available 

at locations where kids spend a lot of their time, such as in schools, 

is one of the most effective means of increasing their consumption 

of produce. 

I believe that the upcoming Farm Bill should include language 

to expand the successful fresh fruit and vegetable snack program 

to all 50 states, including Oregon, and to double funding for the 

Department of Defense’s fresh fruit and vegetable program for 

schools. 

This would go a long way to promoting the health of the nation’s 

school children, while improving the economic health of the nation’s 

fruit and vegetable farmers. 

The USDA’s Market Access Program is another initiative that 

deserves to be fully funded in the new Farm Bill. It benefits growers and allows for USA pears or other U.S. agricultural products 

to be more competitive in overseas markets. 

By helping expand USA pear exports the MAP program helps 

stimulate more demand and therefore stronger overall returns for 

my fellow pear growers and me. 

With the help of the MAP funded promotional activities, U.S. 

pear exports have established a record value in each of the past 

seven seasons. Prior to the inception of the MAP only 10 percent 

of the crop was exported. Today that percentage is closer to 35 percent. 

I see the MAP program as a vital part of the upcoming Farm Bill 

and something that is ideally suited to support high value products 

such as pears and cherries and maintaining the export competitiveness of U.S. products. 

Agricultural research funding at both land-grant institutions and 

USDA’s agricultural research service should also be a major focus 

of the next Farm Bill. We need advances in technology, especially 

labor-saving devices, if we are to remain competitive on a world 

market. And I’ll point out that I brought the cherries in the back 

of room, and I grew them, but they were bred in Canada. 

The CHAIRMAN. This country of origin, labeling issue is tough. 

Ms. EUWER. Well, I just planted some more that were bred in 

Europe. The best way I can see to keep our fruit growers producing—the nutritional fresh produce that they provide for America is to provide an environment conducive to their profitability. 

Fully funding MAP to help our exports, expanding produce consumption through good and extensive nutrition programs, and providing for increased agricultural research funding are three specific 

policy objectives that I think Congress should achieve during its 

work on the next Farm Bill. 

Thank you, Mr. Chairman. I am happy to answer any questions, 

especially about what would happen if I had to pay $50 an hour 

as a pear grower in Hood River. 

[The prepared statement of Ms. Euwer can be found in the appendix on page 65.] 

The CHAIRMAN. Thank you very much. Mr. Krahmer. 

35

STATEMENT OF DOUG KRAHMER, OREGON BLUEBERRY 

COMMISSION, ST. PAUL, OREGON 

Mr. KRAHMER. Thank you, Mr. Chairman, and Senator Smith. 

My name is Doug Krahmer. I’m co-owner of Blue Horison Farms 

in St. Paul, Oregon. 

On our farm we produce a variety of commodities, including blueberries, grass seed, hazel nuts, clover, wheat, flower seeds and 

fresh cut flowers. 

The produce industry has experienced tremendous changes over 

the last several years. We’ve worked hard to remain profitable, satisfied consumer demands and conform to and develop new technology and compete in an increasingly global marketplace. 

Many of our products are highly perishable and are driven by 

risk taking entrepreneurial spirit that we produce in the produce 

industry continue to engage in. We take tremendous risk each year, 

not knowing if Mother Nature, retail channels, and the marketplace or any other number of issues will or will not stand in the 

way and cause us to lose or gain in the investment we have made. 

Our markets is highly volatile. Yet we have never relied on traditional farm programs to sustain our industry. Instead, we look to 

each other to promote efficiency and reward market competition 

that so marks our industry. 

Unfortunately, the marketplace in which we operate is becoming 

less neutral and even handed. Regulations driven by food safety 

concerns, responses to food defense requirements, and other very 

legitimate consumer and customer needs, are placing more and 

more burdens on farmers and their partners who pack and ship 

perishable agricultural commodities. 

In our effort to respond to these needs, we are obligated to introduce costly measures and undertake expensive actions. 

Farmers shoulder the responsibility of supplying high quality 

food that is safe, and nutritious, while not being too expensive for 

the consumer. We work hard at this, helping to continue to ensure 

the miracle of abundant fresh food production in the United States 

at prices the American—that are low to the American people by 

world standards. 

We do not support the extension of the 2000 Farm Bill. We believe government policy should provide incentives for private investment, tools to increase profitability, and help to those producers who are committed to constant improvement to better serve 

consumer needs. 

We do not want policies that sustain yesterday’s business. We 

want investment in the future. Ultimately the goal of any farm policy should be to enhance the tools necessary to drive demand, utilization, and consumption of our products, and not distort the production of those products with respect to domestic and international markets. 

The 2002 Farm Bill began to make progress toward those objectives and was further enhanced through the Child Nutrition Reauthorization Act of 2004, and the Specialty Crop Competitiveness 

Act which we signed into law in December of 2004. 

The fruit and vegetable industry strongly supports maintaining 

or strengthening the current U.S. planting policy which restricts 

36

producers from growing fruits and vegetables on acres receiving 

program payments. 

Fruit and vegetable producers are concerned that any alterations 

in this provision would allow commodity producers to mitigate any 

startup cost or mitigate risk inherent to fruit and vegetable production resulting in unfair competition. 

I would refer you to my written comments, and I thank you for 

the opportunity to testify here today. 

[The prepared statement of Mr. Krahmer can be found in the appendix on page 83.] 

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

Mr.Wettstein. 

STATEMENT OF MARK WETTSTEIN, NYSSA-NAMPA BEET 

GROWERS ASSOCIATION, ONTARIO, OREGON 

Mr. WETTSTEIN. Senator Chambliss and Senator Smith, members 

of the committee, thanks for this opportunity. 

My parents moved from Utah in the winter of 1946 and I was 

born that spring, and my mother at 91 told me this spring how big 

the sugar beets were that year. 

I farm with my brother Louis. We farm 1200 acres. 350 acres is 

in sugar beets, 175 acres is in onions, and the rest is divided 

among alfalfa, wheat and corn. 

Eight years ago there was 1200 growers that bought Amalgamated Sugar Company, also known as White Satin. These sugar 

growers are in Magic Valley and the Treasure Valley. 

And in order to raise the capital to buy that company, it cost us 

$400 a share, which allowed us to grow one acre. We purchased 

350 shares, so we could grow 350 acres of sugar beets, at a cost 

of $140,000. Minus our tractors, the equipment to plant, cultivate, 

and harvest sugar beets, would be another hundred thousand. 

If the sugar beat industry went south, we would lose at least 

$200,000. That investment would just be gone. 

Once an industry like sugar beets leaves an area, it never comes 

back. 

Idaho and Oregon is the second largest producer of sugar beets 

in the United States. 

There are thousands of jobs that rely on this crop, and it has an 

economic return of almost two billion dollars. 

Six miles from our farm is a little town called Nyssa, Oregon, 

population, 3,000. And in 1938 the sugar factory was built there, 

and 2 years ago this factory closed because of economic reasons. It 

wasn’t ready to cave in. It was well run, well maintained, and very 

efficient, but it just wasn’t economical. 300 people worked there. 

The payroll was 12 million, and another million-and-a-half went 

into the local economy for parts and services. 

But there are two forces at play on sugar. One is the food producers who have put pressures on sugar to keep it low, and in the 

last 20 years, ice cream, candy and bakery products has gone up 

between 30 and 50 percent, where the return to the sugar grower 

has gone down 20 percent. 

The other force are the trade deals, that we’ve allowed too much 

sugar into this country. We are the fifth largest producer of sugar. 

37

Also the fifth largest consumer. Yet we are the second largest importer of sugar. 

And so we are able to produce sugar for the U.S. market. But because of the trade deals, there’s too much sugar on the market. 

And so we support the Farm Bill because we hope that that 

would give us some guaranties against the glut that would come 

in from NAFTA, CAFTA, Columbia and Peru. This has operated at 

no cost to the taxpayers. And we feel that the American consumer 

doesn’t want to be in a position to have to rely on foreign sugar. 

And I have a longer version of our industry’s position that I’d 

like to submit, and I thank you for this opportunity. 

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

appendix on page 123.] 

The CHAIRMAN. Thank you, and certainly your statement will be 

included in the record. 

Mr. Bernau, during the consideration of the 2002 Farm Bill there 

it was much discussion of increasing our investment in the development of rural America, and specifically how wineries might contribute to this goal through the value added producer grant program that you alluded to. 

Has your industry been able to take advantage of the valueadded producer grant program and if so, what types of investments 

and rural development have been made by the beneficiaries? 

Mr. BERNAU. Chairman Chambliss, first of all we do view this 

program to be very important. We have not had an opportunity yet 

to receive funding, but we have made application for funding. 

A $265,000 value added producer grant has been requested. It 

has the support of our Oregon rural development. We estimate that 

this will increase the sale of Oregon wine by 117,000 cases, generating $16 million in revenue. 

So, it will pay for itself many times over if we’re able to obtain 

the grant and implement this plan. 

The CHAIRMAN. Proposals have been made to provide more 

money to the specialty crop industry, and these proposals range 

from state block-grants to research money to counter cyclical programs. 

You alluded to the state block-grants which have been received 

very favorably in this part of the country. 

Which others would benefit the wine industry the most and what 

ideas do you have about the funding of those proposals? 

Mr. BERNAU. The state block-grant program has been helpful to 

us. We actually did receive some money to expand our out-of-state 

sales. It was a small amount of money, which we matched with industry money, and increased our presence in specific markets. So 

that has been very beneficial. 

You know, I spent a considerable amount of my time in my earlier testimony talking about the economic impact of our industry. 

When I was just getting my first grapes off of my vineyard, and 

when Senator Smith first entered the Oregon State Senate, our industry was very small. Generating very little tax money. 

But just my little company last year paid $237,000 in Federal excise tax and $625,000 in Federal Income Tax. When that piece of 

ground I’m on, paid nothing. It was an abandoned plume orchard. 

38

So, the leverage is remarkable, when you apply these funds to 

these programs. 

The CHAIRMAN. This year you mentioned the importance of nutrition-related programs, export market development programs and 

research programs. 

Given the current budget situation of many competing priorities 

in the next Farm Bill, which of these do you believe will most directly benefit producers of specialty crops? 

Ms. EUWER. I wouldn’t rank them. I think they are all very important. The nutrition program in particular is so beneficial, both 

to the producers and to the consumers, that it seems clearly important to fund that. 

Market Access Program looks to me to be very valuable in helping both the producers and the import/export balance in the United 

States. And research is always very important. 

My point about the cherries was simply that these are things 

that are being done in other places, Breeding programs, for example, and we need research in the United States. It’s harder and 

harder to come by research money, and very important for our industry. 

The CHAIRMAN. Our school lunch programs all across the country 

are taking more and more advantage of the local crops grown in 

certain areas. 

Do you find that the school lunch programs in Oregon are taking 

advantage of buying specialty crops that you grow or folks in your 

organization grow? 

Ms. EUWER. I don’t really know. 

Senator SMITH. Ask blueberry guy. 

Mr. KRAHMER. Blueberries, they do. 

Ms. EUWER. I think they do some, but I don’t know to what extent. 

The CHAIRMAN. Well, I will ask Mr. Krahmer, relative to blueberries, are school lunch programs taking advantage of blueberries? 

Mr. KRAHMER. Yes. I think they have been. You know, blueberries over the last few years have certainly been higher priced 

than some of the other berry crops in Oregon, but I know, even our 

Marion blackberries and some of the other specialty berry crops in 

Oregon have used the school lunch programs to get some of their 

excess fruit out of the market and into the schools where it can be 

used for nutrition. 

The CHAIRMAN. OK. Let me address this again to you, Mr. 

Krahmer, and Ms. Euwer. A broad coalition of specialty crop interests have formed the Farm Bill Working Group and include within 

their 2007 Farm Bill priorities mandatory allotment of funding for 

specialty crop production within the EQIP program. 

Given the current participation levels by the specialty crop industry and conservation programs, such as EQIP, will the industry 

be able to utilize the mandated increase access? 

Mr. KRAHMER. I can answer that. Yeah. Our industry is strongly 

in favor of both the EQIP program and CSP. 

EQIP program, for example, I planted some berries in the last 

few years that I’ve used the EQIP program to help fund a drip system, and it does a variety of things. 

39

Number 1, it reduces the amount of water that I’m pulling out 

of the rivers to irrigate that crop. It allows me to put the water 

only where the plant needs it. It allows me to better utilize my fertilizers and my disease control methods. 

I don’t—I’m not putting water on the bush and encouraging disease up in the bush. 

And so, yeah, we’re—we use that program. We believe that it’s 

very advantageous for our industry to be able to afford some of 

these new technologies to better the environment. 

The other thing on the CSP is many of the specialty growers 

have put in these conservation practices, from sod, waterways, 

minimizing irrigation, doing integrated pest management, all of 

these kind of things on our own. 

And what CSP does, as Senator Smith alluded to earlier, is it 

comes in and it actually rewards us for having used those practices 

in the past. 

Ms. EUWER. I would answer much the same in our area. There 

are many, the CSP is in effect in Hood River, and we are being rewarded for the things that we were already doing. And I think that 

that was a very good way to address that problem. 

And EQIP, while I have not used it personally, many of my 

neighbors have, to do much of the same, water—specialty water irrigation, and I just don’t happen to be as close to a stream as other 

people. 

But even those of us who haven’t participated in it directly have 

seen what the other farmers are doing, and people are doing it on 

their own because they’re seeing it demonstrated, and so it is actually benefiting I believe even people who aren’t directly involved in 

it. 

The CHAIRMAN. Mr. Wettstein, you mentioned trade agreements 

and their affect on the current sugar program, and frankly your 

comments reflect one reason that I have been saying that the extension—or an extension of the current Farm Bill is really impractical because what’s going to happen is that beginning January 1, 

2008, which would be within 3 months of the expiration of the current Farm Bill, we will see imports from Mexico being increased 

under NAFTA. 

We also have some other agreements that will allow additional 

imports of sugar. 

And just recently USDA and OMB have come out with some 

numbers which suggest that the current No Net Cost Program, the 

current No Net Cost Sugar Program, will all of a sudden have a 

cost that will begin at about $30 million a year and very quickly 

will go to possibly as high as about $300 million a year. Now, that’s 

from a cost standpoint, what it will do. So that’s going to be a problem. 

What will the additional imports that are going to be allowed 

under our trade agreements, including NAFTA, do from a practical 

standpoint to the sugar industry in this country? 

Mr. WETTSTEIN. Well, first off, the sugar industry is not happy 

at all with any of its trade policies. It allows more sugar into this 

country, which makes it so we have to produce less, and because 

of the over-supply, we are paid less. 

40

But with the NAFTA agreement and some of the other agreements, when that expires, we’re unclear exactly just how that will 

affect us, because we don’t know how much sugar they will bring 

into this country, will export into us. We don’t know ourselves what 

our market will be doing in this country, how much sugar we will 

be using. 

And the problem with Mexico is they have never played by the 

rules. They have denied a side letter to the agreement on sweeteners, and they have a soda tax. So that stops our supply of sweeteners into their country. 

So, if we just have a glut of sugar come into this country, we’re 

done. The producers of sugar in this country are through. 

The CHAIRMAN. Well, I’m sure you’re familiar with the fact that 

the USDA and USDR just recently entered into an agreement with 

Mexico relative to the export in the United States of high fructose 

corn syrup down there, which is going to have a significant impact. 

I realize that that decision is not popular in your industry, and 

I guess we’ll have to see how it affects it over the next several 

months, as we get into the Farm Bill. 

Last, Mr. Wettstein, what is your industry’s outlook for commercial production of ethanol from sugar, and do you envision a market for ethanol from sugar in this country? 

Mr. WETTSTEIN. The USDA was supposed to have conducted a 

study that was to be completed in July on this very topic. And I 

haven’t seen that report. 

But Luther Markwart in Washington, D.C., has I think seen it. 

And I talked with him yesterday, and he said that it was just not 

economical right now to convert sugar into ethanol without it being 

highly subsidized. 

I think it is like Ernest Gallo said, it would be like converting 

grapes into ethanol. It could be done, and probably the only place 

that it’s viable at this point would be Hawaii. But until technology 

is developed and commercialized, it probably won’t be viable for at 

least 10 years. 

The CHAIRMAN. OK. Senator Smith? 

Senator SMITH. Mr. Wettstein, as I believe I understand, the 

plant that you spoke of that closed, that was the former U & I 

Sugar, or White Satin, is that the plant you are speaking of? 

Mr. WETTSTEIN. It was one of—Amalgamated Sugar. Amalgamated Sugar had four factories, four refineries, and this was one 

of them. This was the fourth one. 

Senator SMITH. The other four are open? 

Mr. WETTSTEIN. The others are open. And so our beets are 

transloaded and shipped to Nampa, Idaho, to be processed. 

Senator SMITH. So that plant is still open in Nampa? 

Mr. WETTSTEIN. Yes. 

Senator SMITH. OK. The plant that closed, and the others that 

are still open, are they making money? 

Mr. WETTSTEIN. You know, it’s interesting what happens in 1 

year. A year ago we had 500,000 tons of sugar in storage, and, a 

hurricane in Louisiana and Florida devastated the sugar cane industry, and so the USDA came to Amalgamated and said, you can 

put that sugar on the market. 

Senator SMITH. So it got valuable all of a sudden. 

41

Mr. WETTSTEIN. Right. 

Senator SMITH. But that’s an aberration. Katrina I hope doesn’t 

come every year, for their sakes, not for yours. 

Obviously, some of these plants, and the industry as a whole, 

were in extremous long before NAFTA and CAFTA, is that an accurate statement, but those have complicated it? 

Mr. WETTSTEIN. It’s complicated it. This plant closure was not an 

isolated case. In the last 10 years one-third of all the U.S. mills 

and refineries have closed. 

Senator SMITH. I’m aware of that. And certainly in Hawaii, 

there’s very little cane sugar done there now. Many mills have 

closed there. 

How uncompetitive are sugar beets to sugar cane? Or to high 

fructose corn? What’s the cheapest producer of sugar? 

Mr. WETTSTEIN. I think it’s more economical to produce sugar 

cane, because of the process. We are the world’s most efficient at 

producing sugar, and we’re doing that on top of, high labor cost and 

environmental regulations. 

We can compete with any country in the world. We just can’t 

compete with their sugar that’s highly subsidized. 

Senator SMITH. And how much of a damage do things like 

Splenda and Aspertain, these various nonsugar sweeteners, how 

much of a factor is that to the industry’s difficulties? 

Mr. WETTSTEIN. I think that’s sort of cyclical. It’s something sort 

of fad-ish. It’s like using margarine and butter. Some people will 

use Splenda and some will use sugar, and I think it is just a matter of taste, but I don’t think it has had a real huge impact on our 

industry. 

Senator SMITH. Ms. Euwer, do you employ people in your pear 

business? 

Ms. EUWER. Yes. 

Senator SMITH. Are any of them migrant workers? 

Ms. EUWER. T1YES. 

Senator SMITH. As you employ them, I imagine you’re very careful to look at their documentation? 

Ms. EUWER. Yes. 

Senator SMITH. And is it hard to tell which are legitimate or 

which are fraudulent? 

Ms. EUWER. Yes. 

Senator SMITH. Should you be fined if one of them, you learned 

months later, from the Social Security Administration, that a number doesn’t check out? 

Ms. EUWER. No. 

Senator SMITH. Do you have a way to determine in advance, is 

there anything you could do as an employer of migrant laborers to 

determine the legality when they first show up to work? 

Ms. EUWER. Not that I know of. 

Senator SMITH. I don’t know of anything either. 

So I agree with your statement, and I think the reason I have 

asked you that is to demonstrate just how unfair some of the proposals are to American agriculture and other employers who make 

a good faith effort to comply but have no government system by 

which to determine legality now. 

42

And frankly, the INS tells me it would be years before they could 

ever determine or develop such a system. And I simply state that 

for the record, to show the unfairness of some of the demagogoery 

that you hear on the radio waves. 

Do you pay the minimum wage? 

Ms. EUWER. No. 

Senator SMITH. What do you pay? 

Ms. EUWER. We may $8.00 an hour in general, and we picked our 

cherries by the hour this year because we didn’t think we were in 

full production, although it turned out we almost were. But we 

paid $12 an hour for that. 

And when people are picking during our harvest period, they’re 

making 14, $15 an hour, plus the housing that’s provided to them, 

they have housing provided for both them and their families and 

their utilities. 

Senator SMITH. So, you pay, when you factor in all the cost of 

employment——

Ms. EUWER. I try not to think about it. 

Senator SMITH. You pay well above the $7.50 Oregon minimum 

wage? 

Ms. EUWER. Yes. 

Senator SMITH. Way above. What do you think of the proposal by 

some that you ought to pay $50 an hour so you can hire—you could 

be certain that you could get American born citizen labor? 

Ms. EUWER. That would put the fruit industry out of business. 

And in Hood River, the development pressures are so great that 

that land, once it went out of fruit production, would be lost, paved 

over, never to be seen again in the form of agriculture. 

Senator SMITH. Where would American pears come from? Where 

would pears come from that Americans would then eat? 

Ms. EUWER. The largest source of pears I think that we eat right 

now are from South American, from the Rio Negro Valley in Argentina. 

Senator SMITH. So those who cavalierly throw out the suggestion 

for you, really what they’re advocating is the destruction of your industry, of your business, and frankly Oregon agriculture as well as 

many other industries. 

Ms. EUWER. Yes. But I don’t think people realize that. 

Senator SMITH. I don’t think they do either. Has the debate made 

it difficult for you to find employees, anyone at this point? 

Ms. EUWER. We personally have not had difficulty finding employees. We’ve had the same people working for us for a very long 

time. 

Senator SMITH. Have you heard that in your industry? 

Ms. EUWER. Yes. Especially, you know, for people that don’t have 

housing. Smaller farmers who can’t afford to have as much housing, yes. And as we get into cherries, too, it’s different than pears. 

Pears, we can pick pears for 2 months. We had to pick our cherries 

in 4 days. So you need a lot more people. And that’s something that 

we hadn’t really experienced before this year. And that is a different situation than we have been in the past. 

Senator SMITH. Have you ever had a green pea and pear salad. 

I’m trying to promote——

43

Ms. EUWER. I had a delicious pea salad the other day at the deli 

on Mt. Hood. 

Senator SMITH. Did you put pears in it? 

Ms. EUWER. No. I just ate the peas. I love peas. 

Senator SMITH. Oh, you are a great American. 

The CHAIRMAN. Did you ever try peanuts in that salad? 

Ms. EUWER. I take peanuts in my salads, too. 

Senator SMITH. Mr. Bernau, have you ever tried Two Buck 

Chuck? 

Mr. BERNAU. Yes, I have. 

Senator SMITH. Are yours better than that. 

Mr. BERNAU. The Two Buck Chuck has introduced many, many 

new consumers into the world of wine. And they’re trading up. 

They’re trading up. Once they’ve tried the wine, they’re looking for 

wines of higher quality. 

And so the glut of wine that produced the Two Buck Chuck has 

produced a whole new set of customers for us. 

Senator SMITH. I only asked that for the sake of humor, but I 

really do renew my question to you as to Mr. Gallo, do you see the 

vintner industry in danger of becoming a commodity, or do you see 

it as a value-added quality, ultimately can keep—can make a difference? 

Mr. BERNAU. Your line of questioning is excellent. Because it 

does reflect on what’s happening internationally. And that’s why I 

modified my first remarks to add the point of difference about the 

land that’s planted. 

The land that’s planted in Spain and France and other areas 

that are affected by the new world wines of Australia, are in the 

many, many hundreds of thousands of acres, planted for a long, 

long time. 

What we have here in Oregon is only about 14,500 acres planted, 

a very small amount of acreage. And I pointed out that many more 

acres are still available for planting. 

We produce products of high quality, which consumers are trading up to. 

Just because consumers are trading away from low quality wines 

doesn’t mean there’s an excess or a surplus. What it really means 

is that consumers are changing their habits. They’re drinking less, 

which is good. They’re moderating their lifestyles, which is good. 

They’re concerned about health and safety. And so they’re drinking 

less, but they’re drinking higher quality. 

The wine sales in Oregon are very high. Just our own depletions 

from our distributors to their customers are up over 130 percent 

year-to-date. What this means is there is a substantial opportunity 

for the American public, the taxpayer, and the Congress. Very 

small amounts of investment that allow us to grow, will leverage 

a great deal of economic activity, provide a lot of opportunity. 

Senator SMITH. Well, I wish you well, and all of you. Thank you 

so very much for your contribution to the Senate record. You have 

added measurably to our understanding. And we compliment you 

for what you do, and we thank you, on behalf of the Nation that 

is well fed because of folks like you. 

44

We’ve got to improve nutrition, work on obesity, and it’s ironic 

that on the one hand we are trying to reduce hunger and yet reduce obesity. So we’ve got to find that balance, I suppose. 

But I think the things that you produce by and large are good 

for people, and certainly we hope they’re good for your families and 

your businesses, and all the best to you. 

The CHAIRMAN. Well, to this panel, as with our other two panels, 

thank you very much for your great input. We again wish to continue to dialog with you, use you as a resource as we move toward 

writing this Farm Bill. And thank you for taking time to come to 

Redmond today to spend some time with us and to really open our 

eyes to western agriculture. So, again, thank you for being here. 

Senator SMITH. Mr. Chairman, may I say again on behalf of Oregon agriculture how much we appreciate the Chairman of the Agriculture Committee. As I said, this is the first time in history an 

Ag Chairman’s come to Oregon to hold a Farm Bill hearing, so how 

about a round of applause for Chairman Chambliss. 

[Applause.] 

The CHAIRMAN. Well, you’re kind. Thank you very much. And, 

again, thanks to all of you in the audience who came out today to 

participate and to listen to the testimony that we’ve had. 

I would remind you that if any of you are interested in submitting a statement into the record, as we move forward with writing 

the next Farm Bill, you’re certainly welcome to do so, by just going 

onto our website at Senate Ag Committee, you can find exactly how 

to do that. 

I want to say to the folks here at the Deschutes Fair and Expo 

facility, thank you for being great hosts to us. Boy, what a magnificent facility this is. I am very impressed with it. And particularly 

thanks to Roxie Toteroff, I hope I’ve said that right, Roxie, to Lois 

Tillman and to Grover Earp, who I understand is a relative of 

Wyatt Earp. 

I assume, Grover, your family migrated here from Dodge City, 

Kansas, because we all know that that is the home of the gun fight 

at O.K. Corral. 

We in Georgia are pretty proud of the fact that Valdosta, Georgia, which is very close to my home town, is the home of Doc Holiday. So Doc and Wyatt and all the Earp family out there did pretty 

well at the O.K. Corral. 

But we’re pleased that you all would extend such hospitality to 

us today. And we thank you for that. 

The record for this hearing will remain open for 5 days, and I 

wish to note specifically that we have a statement from Senator 

Wyden that without objection will be added into the record. 

And with that, thank you very much for being here. Thanks for 

your participation. And this hearing will now be closed. 

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

appendix on page 48.] 

[Whereupon, at 11.30 a.m., the hearing was adjourned.] 

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A P P E N D I X

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