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REGIONAL FARM BILL FIELD HEARING:

GRAND ISLAND, NEBRASKA

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

August 16, 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: Grand Island, Nebraska ............................... 1

Wednesday, August 16, 2006

STATEMENTS PRESENTED BY SENATORS 

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

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

Hon. Ben Nelson, a U.S. Senator from Nebraska ................................................. 3

Hon. Chuck Hagel, a U.S. Senator from Nebraska .............................................. 3

Panel I 

Ebke, Steve, President, Nebraska Corn Growers Association, Daykin, Nebraska .................................................................................................................... 6

Hilferty, David, Nebraska Wheat Growers Association, Grant, Nebraska ......... 9

Nagel, Doug, National Sorghum Producers, Davey, Nebraska ............................ 8

Wellman, Steve, American Soybean Association, Syracuse, Nebraska ............... 7

Panel II 

Kristensen, Duane, Chief Ethanol Fuel, Inc., Hastings, Nebraska ..................... 31

Nuttleman, Doug, Dairy Farmers of America, Stromsburg, Nebraska ............... 27

Olsen, Keith, Nebraska Farm Bureau, Grant, Nebraska ..................................... 28

Stoltenberg, Roy, Nebraska Farmers Union, Cairo, Nebraska ............................ 30

Panel III 

Hanna, Jim, Independent Cattlemen of Nebraska, Brownlee, Nebraska ........... 41

Luckey, Bill, Nebraska Pork Producers Association, Columbus, Nebraska ....... 42

Tisdale, Dwight, Nebraska Sheep and Goat Producers, Kimball, Nebraska ...... 44

Wolf, Jay, Nebraska Cattlemen, Inc., Albion, Nebraska ...................................... 40

APPENDIX 

PREPARED STATEMENTS: 

Nelson, Hon. Ben .............................................................................................. 54

Ebke, Steve ....................................................................................................... 59

Hanna, Jim ....................................................................................................... 62

Hilferty, David .................................................................................................. 72

Kristensen, Duane ............................................................................................ 75

Luckey, Bill ....................................................................................................... 77

Nagel, Doug ....................................................................................................... 93

Nuttleman, Doug .............................................................................................. 102

Olsen, Keith ...................................................................................................... 109

Stoltenberg, Roy ............................................................................................... 115

Tisdale, Dwight ................................................................................................. 120

Wellman, Steve ................................................................................................. 124

Wolf, Jay ............................................................................................................ 127

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Center for Rural Affairs ................................................................................... 132

Page

IV

DOCUMENT(S) SUBMITTED FOR THE RECORD—Continued

Contract Agriculture Reform Program RAFI-USA ........................................ 137

Improvements to the Next Farm Bill ............................................................. 140

Lyndon LaRouche Political Action Committee ............................................... 141

Midwest Association of Fish and Wildlife Agencies ...................................... 146

Mountain State Beet Growers Association ..................................................... 149

National Drought Mitigation Center .............................................................. 151

Nebraska Appleseed Center for Law in the Public Interest ......................... 157

Nebraska Dietetic Association ......................................................................... 161

Nebraska Sugarbeet Growers Association ...................................................... 165

Nebraska Women Involved in Farm Economics ............................................ 167

Statement from Hon. Adrian Smith a Senator from Nebraska .................... 170

Statement from Len Schropfer ........................................................................ 173

Statement of Dennis Demmel a farmer from Nebraska ................................ 174

Statement of John M. Dittrich a farmer from Nebraska .............................. 178

Statement of Kevin Raun a farmer from Nebraska ...................................... 183

Statement of Scott Kinkaid and Mike Korth, farmers from Nebraska ........ 185

(1)

REGIONAL FARM BILL FIELD HEARING: 

GRAND ISLAND, NEBRASKA 

WEDNESDAY, AUGUST 16, 2006, 

U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, Grand Island, NE 

The committee met, pursuant to notice, at 9:04 a.m. in the 

Hornady-Marshall Theatre, College Park, 3180 West Highway 34, 

Grand Island, Nebraska, Hon. Saxby Chambliss, chairman of the 

committee, presiding. 

Present: Senators Chambliss and Nelson. 

Also present: Senator Hagel. 

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

SENATOR FROM GEORGIA, CHAIRMAN, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

The CHAIRMAN. This hearing is called to order. I welcome everybody here to this facility as we prepare to write the 2007 farm bill. 

I want to thank College Park for allowing us to use the HornadyMarshall Theatre and to Randy Blair, who is Executive Director 

here at College Park. What a great facility this is and they have 

certainly been most accommodating to us in preparation for this 

hearing today. 

I also want to thank my colleagues, Senator Chuck Hagel and 

Senator Ben Nelson, for hosting us in the great State of 

Nebraska. As everyone in this room knows, both of these men 

sitting next to me are champions of agriculture and the interests 

of farmers and ranchers in Nebraska are certainly represented well 

in Washington because of them. They remind me every day abou’t 

the fact that you all grow a lot of crops in Nebraska that we don’t 

grow in Georgia and as Chuck has reminded me again, we always 

carr’y on about the Georgia peanuts that are hard to grow. Thank 

goodness you all can’t grow them in Nebraska because you all are 

pretty prolific. 

Agriculture in the United States is very diverse and in different 

areas of the country, they view our farm programs in their own 

unique way. Today, we hope to gain a better understanding and establish a record of the unique nature of the agriculture industry in 

the Midwestern United States. 

This is the sixth in a series of regional field hearings we will hold 

in preparation for the next farm bill. We have held hearings to date 

in Georgia, Missouri, Pennsylvania and Iowa. 

Yesterday we had a hearing in Oregon and tomorrow we will be 

in Montana. Our final farm bill hearing will be held in 

2

Lubbock, Texas on September 8. These hearings are intended to 

provide American producers with an opportunity to explain how 

the farm bill programs have worked for them, particularly relative 

to the 2002 farm bill and what changes we should make in these 

programs as we prepare to the new farm bill in 2007. 

This is an important exercise because it allows farmers and 

ranchers to provide Members of Congress with direct input that we 

will utilize during the development of the next farm bill. 

As many of you know, American agriculture will face tremendous 

challenges in the coming years. One need point no further than the 

recent suspension of the Doha round of World Trade 

Organization negotiations. In addition, we will most likely write 

the next farm bill in a climate of deficit reduction. 

This Committee is readying itself to take on those challenges and 

with your help and input, we can provide a safety net for 

America’s farmers that will assist them during times of need, 

while keeping them competitive in international marketplace and 

being fiscally responsible at the same time. Developing the next 

farm bill is a tremendous responsibility and as 

Chairman of the Committee on Agriculture, Nutrition and Forestry, I understand the importance of hearing the first-hand experience and input of actual farmers and ranchers who work the fields, 

herd the cattle and help provide this country with the most abundant, affordable and safest supplies of food this planet has ever 

known. I commend all of you for your hard work on behalf of all 

Americans and I look forward to hearing your testimony. For those 

of you who are not witnesses but are interested in submitting your 

thoughts to the Committee, the Committee’s website has guidelines 

for providing written statements for the record in a web form for 

informal comments. Any comments received will also be considered 

during the re-authorization process. I would like to remind our witnesses that each has 3 minutes to present testimony, followed by 

the opportunity to answer questions and we will certainly take 

your full statement and submit it for the record. Senator Nelson, 

who is a very valuable member of the Ag Committee, has obviously 

joined as has Senator Hagel and these two gentlemen are not only 

strong advocates of agriculture but they are my good personal 

friends. Senator 

Nelson and I serve on the Ag Committee together and we also 

serve on the Armed Services Committee together. Senator Hagel 

and I serve on the Intelligence Committee; in fact, we’re neighbors 

on the Intelligence Committee. At a recent hearing, where we were, 

I think, working on the confirmation of somebody, the New York 

Times put the picture of Chuck and I in and I’m sitting there listening very intently to him and there was a caption under there 

or something to the effect that 

Senator Hagel visits with Senator Chambliss about something 

relative to this very important nominee. Actually, we were sitting 

there talking about Nebraska football. 

[Laughter.] 

But I thank both of these gentlemen and as a member of this 

Committee, I recognize Senator Nelson first. 

3

STATEMENT OF HON. BEN NELSON, U.S. SENATOR FROM 

NEBRASKA 

Senator NELSON. Thank you, Mr. Chairman. First of all, let me 

welcome you to Nebraska. We’re delighted to have you here. We 

appreciate the fact that you have included Nebraska in your journeys. This is the second time you and I have had hearings in Nebraska. The previous time was in connection with the Armed Services. So I am just happy to have you back. 

I want to thank you for holding this hearing, particularly to get 

the input from Nebraska’s farmers and ranchers and agricultural 

producers. Hosting a field hearing in Nebraska is important to our 

farmers and ranchers because it allows them to have this opportunity to provide input to help shape what will be a very important 

project for us this coming year and that is putting together a farm 

bill. In a state where one in five jobs, at least, is related to agriculture and nine in ten acres of land is farm and ranch land, today’s hearing is significant because so much that affects the daily 

operations and the bottom line for our farmers and ranchers is intricately involved in the policy set at the Federal level and especially in the next farm bill. Agriculture is the 

No. 1 industry in Nebraska and our farmers and ranchers lead 

the Nation in many areas of production. They are in the trenches, 

producing our food and our fuel. Their input is extremely valuable 

and I appreciate your recognition of that fact in agreeing to hold 

this hearing in Grand Island and I thank you for granting my request for this field hearing. As you’ll be able to see, this hearing 

is very important because the next farm bill, which I prefer to call 

the Food and Fuel 

Security Act of 2007, because of its potential to feed the nation 

but also fuel our energy needs affects so much of the state. I’m 

pleased that Nebraskans will be able to provide this valuable information today. This input is great to have an opportunity for local 

viewpoints to be heard in Washington and bring Washington to Nebraska. So I’m looking forward to the testimony of all the witnesses 

here today and I ask that the rest of my testimony be included as 

part of the record. 

We have some additional testimony from others who were unable 

to be here or were unable to be on the list of testifiers and 

I would ask that those comments also be included in the record. 

The CHAIRMAN. Without objection, they’ll be included. 

Senator NELSON. Thank you, Mr. Chairman. 

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

appendix on page 54.] 

The CHAIRMAN. Thank you. Now, to my friend, Senator 

Hagel. 

STATEMENT OF HON. CHUCK HAGEL, U.S. SENATOR FROM 

NEBRASKA 

Senator HAGEL. Mr. Chairman, thank you. Welcome to 

Nebraska. We are always grateful for a fresh supply of 

Georgia peanuts. Senator Chambliss has been very generous over 

the years in supplying Congress with Vidalia onions and 

Georgia peanuts. 

4

Also, there is a very strong intellectual basis of leadership in the 

Congress that we get from Georgia and we are grateful that you 

would include our state in your series of hearings around the country, which you have noted. I want to also thank our witnesses, all 

three panels, the organizations that you represent, the producers 

that you represent. We could not do this job without your input, 

without your valuable counsel. We will go deeper into that treasure 

box of wise counsel and advice as we shape and mold and craft and 

hopefully, write, a new farm bill, which I think we desperately 

need. And as always, Mr. Chairman, it is good to see you. 

Nebraska producers consistently rank among the top five in the 

production of live animals and meat products, feed grains, soybeans 

and ethanol and other renewable fuels. The upcoming farm bill will 

significantly impact our state, our country and the world and we 

appreciate the opportunity to share our views here in the state 

with the Senate Agriculture 

Committee. 

Mr. Chairman, there are 99 new members of the House of 

Representatives and 21 new senators since Congress voted on the 

last farm bill in 2002. The Doha round of trade negotiations, which 

you have noted, has stalled over the last month and the outcome 

remains unknown. 

The Secretary of Agriculture, Mike Johanns, who we are all very 

familiar with, was in Lincoln yesterday. I was with him most of the 

day and he addressed the Doha round issue and it will obviously 

be part of this hearing this morning in more detail. 

The current drought conditions that you are very familiar with, 

Mr. Chairman, across the Midwest, specifically here in the State of 

Nebraska, budget constraints, global market access, the availability 

and cost of energy and many other issues will provide the backdrop 

for the 2007 farm bill debate. 

I voted against the farm bill in 2002. Our Federal farm policy, 

in my opinion, has drifted far from where it was originally intended 

to be 70 years ago. We need to re-evaluate the current system and 

adjust our farm policy for 21st century challenges and opportunities. Currently, about 70 percent of farm payments go to roughly 

10 percent of producers. The lopsided payments keep commodity 

prices low, drive up land prices, and allow large landowners to buy 

up small agricultural producers with taxpayer dollars. I am an 

original co-sponsor of the Rural American Preservation Act, which 

would lower farm payment limits from $360,000 to $250,000. Risk 

management must be a focus of the next farm bill. Some parts of 

Nebraska are suffering from their eighth year of continuous 

drought. Instead of a safety net already in place, agriculture producers are forced to rely on Congress to pass emergency disaster 

assistance each year. As I noted in Lincoln yesterday, we chase our 

tails around and around and around every year. The next farm bill 

needs to address this issue. We know that natural disasters will 

continue to occur. 

Why shouldn’t we anticipate them in a forward-thinking, visionary new farm bill? The 2002 farm bill has done little to promote 

rural development. We need to help rural communities jumpstart 

their economies with incentives that will keep talented Nebraskans 

5

right here in our state, using provisions like those in the new 

Homestead Act, which Senator 

Dorgan and I introduced in the last two Congresses. The new 

Homestead Act would provide multiple tax credits, loan guarantees and other incentives to attract individuals and businesses to 

rural areas. 

Energy must be a primary focus of the next farm bill. We need 

to increase exploration for oil and natural gas but we also need to 

do everything possible to expand the production and use of renewable energy sources like ethanol, biodiesel, solar, wind, geothermal 

and biomass. Renewable energy means less dependence, obviously 

on foreign oil and more jobs at home, both on and off the farm. 

Trade—trade will continue to play a central role in the world of 

agriculture. The future of agriculture lies is international markets. 

The recent setbacks in the Doha round of global trade negotiations 

are disappointing but we must continue to push for greater access 

to more worldwide markets. 

There is an irresponsible and dangerous protectionist streak 

growing in the Congress of the United States that be dealt with. 

It must be dealt with directly. Global trade has always meant for 

opportunities for America’s consumers and producers and I don’t 

know of an industry that has benefited more from global trade 

than agriculture. 

Conservation must be an important focus of the new farm bill. 

Conservation has been instrumental in reducing soil erosion and 

improving water and air quality. The biggest issue facing the State 

of Nebraska, Mr. Chairman, over the next few years, will be water. 

Water! Additionally, with the ongoing drought limiting the availability of water, conservation will take on an even greater significance. The 2007 farm bill will affect the relationship between the 

government and agricultural producers and you noted this, Mr. 

Chairman in your opening remarks. It will be critical that 

Nebraska’s agricultural producers get involved in the debate and 

sharply, deeply, involved in this debate. Lawmakers will rely heavily on the participation and the advice of our producers. We appreciate, Mr. Chairman, the efforts of this committee and your leadership because it will be continuously important to have your structured hearings as well as your involvement and attention if we, in 

fact, are to produce a relevant, meaningful farm bill next year. I 

look forward to today’s hearings and our witnesses, their testimony 

and again, thank you, Mr. Chairman, for being here and including 

me in the hearing. 

The CHAIRMAN. Thank you, Senator Hagel, as well as you, 

Senator NELSON. We’re excited about being here because we 

know we’re in the breadbasket of agriculture in America. I particularly look forward to hearing our witnesses today and gentlemen, 

our format will be, we will start with you, Mr. 

Ebke and we’ll move down the row for your opening statements. 

First panel consists of Mr. Steve Ebke, from Daykin, Nebraska, 

representing the Nebraska Corn Growers; Mr. Steve Wellman of 

Syracuse, Nebraska, representing the American Soybean 

Association; Mr. Doug Nagel of Davey, Nebraska representing 

the National Grain Sorghum Producers; and Mr. Dave Hilferty, of 

Grant, Nebraska, representing the National Association of 

6

Wheat Growers. Gentlemen, welcome. We look forward to your 

comments. Mr. Ebke? 

STATEMENT OF STEVE EBKE, PRESIDENT, NEBRASKA CORN 

GROWERS ASSOCIATION, DAYKIN, NEBRASKA 

Mr. EBKE. Thank you, Senators, for this opportunity to present 

input on the 2007 farm bill on behalf of Nebraska Corn 

Growers Association and our nearly 1,700 farmer members. It’s 

not the same nation or the same world as it was 4 years ago when 

the 2002 farm bill went into effect. The 2007 farm bill needs to reflect these changes and anticipate challenges to come. We believe 

that the agricultural safety net should have a component based on 

net revenue, not price alone. A revenue-based program could help 

moderate the fluctuations in farm payments that occur from year 

to year and it is hoped, reduce the frequency of emergency payments for program crops and the impact we have on the Federal 

budget. Resistance to change, comfort and familiarity with the current program, waiting until WTO talks are complete—these are 

some of the reasons suggested for maintaining the status quo. 

However, the 

Nebraska Corn Growers believe that the 2007 farm bill should 

represent the next step in the evolution of commodity support, improving on previous programs and addressing the concerns that 

producers have voiced over the past several years. We want to 

move forward involving a 2007 farm bill that at least maintains the 

current level of support, delivered through a revenue-based safety 

net that protects America’s farmers from events beyond their control. A revenue-based program can be in compliance with the current WTO provisions and would have the flexibility needed to 

adapt to potential changes in WTO rules. Most importantly, the 

revenue-based commodity title program makes better use of taxpayer dollars by investing government resources when and where 

they are needed most by 

American farmers. 

Nebraska Corn Growers are advocates of a strong conservation 

title. Under funding of the Conservation 

Security Program or CSP, has meant that the original concept of 

rewarding the best and motivating the rest simply cannot be accomplished by the reasons outlined in my written testimony. 

We’ve seen only sources of funding for CSP and do not favor a 

shift of funding from the commodity title. Our recommendation is 

that the CSP not be included in the 2007 farm bill. We support reallocation of the CSP budget to the EQIP program and to the 

NRCS to provide more technical assistance to farmers. 

The EQIP program, a program with proven benefits, supports the 

livestock sector and in particular, the largest customer of corn and 

a critical market for the storage grains produced by the ethanol industry. 

The Nebraska Corn Growers Association believes that the 2007 

farm bill offers the opportunity for us to rethink our nation’s approach to commodity support and rural development. 

We believe that the changes suggested in my remarks today as 

well as others in my written testimony, can lead to a 2007 farm 

bill that strengthens America’s leadership in agriculture and 

7

makes sense for America’s taxpayers. Thank you again for this opportunity to comment on behalf of the Nebraska Corn 

Growers Association. 

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

The CHAIRMAN. Thank you. Mr. Wellman? 

STATEMENT OF STEVE WELLMAN, AMERICAN SOYBEAN 

ASSOCIATION, SYRACUSE, NEBRASKA 

Mr. WELLMAN. Good morning, Mr. Chairman. It is my pleasure 

to represent the American Soybean Association today. 

Mr. Chairman, soybean producers support the safety net we have 

under the 2002 farm bill and most soybean producers would also 

support extending these programs. However, the current budget 

baseline for farm program spending declines over the next ten 

years and will probably not accommodate outlays based on current 

support levels. With the collapse of the WTO negotiations, there 

will not be a new agreement in place before your Committee writes 

the 2007 farm bill. Yet we want to avoid putting programs in place 

that are vulnerable to future WTO cases. Also, farmers need the 

certainty, for decisionmaking purposes, that a long-term farm bill 

provides. 

Given these circumstances, ASA’s policy for the 2007 farm bill is 

there be no further cuts in the budget baseline for agriculture 

spending, that farm programs do not distort planting decisions and 

that future programs are WTO compliant. 

To explore alternatives, ASA has been working with other farm 

organizations to look at Green Box programs. The results of this 

analysis indicate a variety of options that would guarantee 70 percent of historical income and still meet WTO compliant. These options include covering only program crops or all crops plus livestock 

and basing the guarantee on gross or net income. This revenue 

guarantee could be combined with other programs to create a more 

effective safety net. We are working to have recommendations to 

present to your full committee by this fall. Mr. Chairman, ASA is 

also very supportive of proposals to strengthen the energy, trade 

and conservation titles in the farm bill. We support the 25x25 vision to enable agriculture to address our energy needs. We are especially interested in programs that would support soybeans as a 

renewable energy source. Specifically, these would promote domestic biodiesel production. The CCC Bio——

Energy program has provided payments to biodiesel producers 

who utilize domestic feed stock such as soybean oil. This program 

has helped expand our domestic biodiesel production but the program sunsets after 2006. Therefore, ASA urges 

Congress to authorize and fund a biodiesel bio-energy program. 

A higher premium should be placed on domestic biodiesel production and expansion. The prospective cost of this program could be 

offset by reduced outlays from the soybean marketing loan and 

counter-cyclical programs. 

Related to trade promotion, we strongly support maintaining 

funding for foreign market development and market access programs, along with international food aid. With regard to conservaVerDate 0ct 09 2002 15:29 Nov 07, 2006 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\30125.TXT SAG2 PsN: SAG2
8

tion and research, we are concerned by recent actions that have depleted funding for these programs. 

ASA supports increased funding for conservation payments on 

working lands. In closing, ASA supports a bill that strengthens our 

rural economy by supporting farm income, renewable fuels, foreign 

trade and conservation on working lands and is WTO compliant. 

Thank you. 

[The prepared statement of Mr. Wellman can be found in the appendix on page 124.] 

The CHAIRMAN. Thank you. Mr. Nagel? 

STATEMENT OF DOUG NAGEL, NATIONAL SORGHUM 

PRODUCERS, DAVEY, NEBRASKA 

Mr. NAGEL. I would also like to thank the senators, 

Senator Chambliss, Senator Nelson and Senator Hagel for being 

here and listening to my testimony. A little bit about me—— my 

name is Doug Nagel and I farm with my father in Davey, 

Nebraska. We raise 500 acres of sorghum, 600 acres of corn and 

about 900 acres of soybeans. The eastern part of the state, while 

it usually receives about 26 1/2 inches of rain a year, but we have 

to keep in mind that Nebraska is a semi-arid region. So there are 

years like this when adequate rain does not fall or it does not fall 

in a timely manner. During those drought years, sorghum is the 

most consistent yielding crop that we raise on our farm. Last week 

I was able to forward contract sorghum for 11 cents more a bushel 

than I could for bushels of corn in Lincoln. Feed exports and markets like the 

IAM pet food plants are contributing to strong demand for my 

grain sorghum. Looking at the current farm program, direct payment and marketing loan programs, provide our operation with the 

most protection. We live in a time where day-to-day market volatility decides whether or not we can make a profit. 

Currently we have high prices on the board of trade but the loan 

rate happens to be within reach due to local cash price differences, 

high basis. This is mainly due to high shipping costs, high fuel 

costs and fuel surcharges. If Congress changes our farm programs 

because of WTO or budget constraints, I would ask that the Committee preserve the equitable relationships in loan rates between 

all grains that was achieved in the 2002 legislation and any new 

farm programs need to have a safety net for all farmers. 

Regarding conservation programs, sorghum is a water-sipping 

crop and it uses less water and nitrogen than other crops in my 

rotation. If a greener farm bill is to be developed, I ask that the 

program reward crops that use an overall lower quantity of water 

and require fewer inputs. For example, the EQIP program works 

well but I’m told by other sorghum growers that they have seen an 

overall water use increase rather than a decrease. Also, any new 

program needs to be distributed evenly and fairly to all farmers 

based on production and not just on the method that it is produced 

by. 

Finally, sorghum can and does play an important role as a feedstock in the renewable fuels industry. Currently, 15 percent of 

grain sorghum is used in the ethanol industry throughout the Midwest. In the future, sweet sorghum may be an option for farmers. 

9

Rather than the grain starch juices extracted from the stock, sugars from the stock are fermented and ethanol is made from that. 

Also, forage sorghums can be used as biomass production and this 

uses the whole plant where tons of convertible biomass per acre 

would also help drive the feed stock equation. So the next farm bill 

needs to expand the role of all types of sorghums in the move for 

renewable energy and let’s not overlook preserving and conserving 

our valuable natural resources. We look forward to working with 

you and I’d be glad to entertain your questions in a minute. 

[The prepared statement of Mr. Nagel can be found in the appendix on page 93.] 

The CHAIRMAN. Thank you. Mr. Hilferty? 

STATEMENT OF DAVID HILFERTY, NEBRASKA WHEAT 

GROWERS ASSOCIATION, GRANT, NEBRASKA 

Mr. HILFERTY. Mr. Chairman, Senator Nelson and Senator 

Hagel, and members of the Committee, my name is David 

Hilferty and I am a wheat farmer from southwestern Nebraska and 

I thank you for this opportunity to summarize my written statement. 

The wheat growers that I represent here today believe that the 

2002 farm bill has many good features and the next farm bill 

should build on those strengths. While I don’t want to pit any one 

commodity against another, but I’d like to quote what the Secretary of Agriculture Mike Johanns said when he was asked, are 

we going to have a new farm bill or are we going to have the 2002 

farm bill extended? He says, First thing is, you have five major 

program crops: corn, wheat, rice, cotton and soybeans and they get 

93 percent of the subsidies. But when you really kind of peel 

through the layers, one of those crops, wheat, has really had a 

rather challenging time of it. 

Wheat tends to be grown in more drought-prone areas; therefore 

a wheat crop can be very dependent upon what the drought conditions really are. In the current farm bill, you do not collect payments like LDP and often times, counter cyclical if you’ve lost a 

crop. The other thing with wheat, you don’t collect LDP and 

counter cyclical with this farm bill. I don’t think they’ve collected 

in any year since this farm bill has been passed. You may prove 

me wrong here or there, but they have really been on the short side 

of this farm bill. So to go to that fifth major crop, wheat, and say, 

are you satisfied? And do you want to re-extend it word for word, 

letter for letter, period for period? I think you’d get a very interesting discussion and debate there. 

Well, Mr. Chairman, I believe Secretary Johanns was probably 

looking at my farm when he made that comment because 

I’m in the fifth year of a moderate to severe drought and my 

farm income reflects exactly what the Secretary was alluding to. So 

the Domestic Policy Committee of the National Wheat 

Growers Association is recommending that the fixed payment be 

one dollar instead of fifty-two cents and the counter cyclical target 

price be five-fifty instead of three ninety-two. Those two changes 

will provide equity with the other four major crops. A higher fixed 

payment would also be more WTO compliant. Operating credit 

would be easier to obtain with a larger fixed payment and we also 

10

believe that conservation programs should continue as authorized, 

especially the 

Conservation Security Program and we also recommend that 

these programs be fully funded so that when a farmer does sign up, 

for say, CSP, that he knows he’s in for the long term. I thank you 

again for this opportunity and I’d be happy to answer any questions you may have. 

[The prepared statement of Mr. Hilferty can be found in the appendix on page 72.] 

The CHAIRMAN. Thank you very much, gentlemen. I want to start 

out by asking five questions that we’ve asked every panel, every 

commodity panel, as we’ve been around the country and these are 

questions that relate to particular parts of our current farm bill 

and issues that are important to all farmers and ranchers. First of 

all, Mr. Ebke, we’ll start with you. 

How would you prioritize the programs in the farm bill generally 

and the commodity titles specifically? How would you rank the relative importance of the Direct Payment 

Program, the Marketing Loan Program and the Counter Cyclical 

Payment programs? 

Mr. EBKE. Thank you, Senator. I think as far as prioritizing, I 

think most producers are going to, if you’re looking at titles, they 

are going to prioritize the commodity title as the main thing and 

as we alluded to, the other ones, conservation seems to be important. People, farmers will embrace those programs and again, probably then looking at trade and energy, and similar in that respect. 

As far as within the commodity title, I think the list would probably be the way most producers would rank them. The Direct Payment 

Program is widely accepted and probably the next thing, funds 

are very adaptive and the Marketing Loan Program has provided 

them with tools for marketing and they become used to those. 

If we were to maintain that program as it is, that would probably 

be the second thing of importance as far as the commodity title is 

concerned, counter cyclical probably ranking last. 

The CHAIRMAN. OK. Mr. Wellman? 

Mr. WELLMAN. I believe the Soybean Association would 

prioritize, we would begin with the commodity title also, as the top 

priority and maybe look at energy as their second priority and 

trade issues, third. There is still a big portion of the soybeans that 

gets exported out so that is a big issue for soybean producers. 

Within the Commodity 

Program, the commodity title itself, payments that can be directed into the Green Box would be our priority. It would help ease 

our issue of being WTO compliant. Marketing Loans, at times, 

works well but it is something that doesn’t really affect soybeans 

at all and also, that is based on for sure that you have to have production. So the years that we have a drought situation and not 

very much production, that is not a big component. I guess that 

takes it back to either Direct 

Payments or some other type of issue that could be developed to 

fit in the Green Box. 

The CHAIRMAN. OK. Mr. Nagel? 

11

Mr. NAGEL. I would have to agree with my two counterparts 

here. When it comes to the farm bill, the National Sorghum Producers, of course, we’re looking at commodity title. That’s very important to us and then energy is right up there. I don’t know how 

you prioritize one over the other. I think you have to have one with 

the other because that’s—we’re depending on that internal drive in 

the United States nowadays. We can talk all we want about trade. 

When I was in college, they talked about China was going to open 

up their doors and we’re going to feed the world—you know, feed 

the world. Well, that hasn’t happened yet and I was talking to my 

uncle about it and in the 1960’s, that same topic was coming up. 

So trade—it’s a big deal and I hope it comes to par some time but 

I think we need to protect ourselves internally right at the moment 

and that would be through energy legislation. Like I said, all—we 

have different kinds of sorghums to kind of fit that bill. We’re getting into biomass production, we’re getting into sugar production. 

So I think it would be good. But commodity title is the big deal. 

Third, I would rank the conservation title. 

In the State of Nebraska right now, there are regions in the area 

that have CSP or people are able to sign up for them. 

It’s been nothing but frustrating. That’s going to have to be revamped and it’s going to have to be fine-tuned in order for more 

people to take part in that because right now, it’s very constraining. The rules and regulations are very hard to live by and 

there are a lot of things in the paperwork right now about it, so 

I don’t know where it’s going or where it will end up, but that’s 

going to be the last priority. As far as commodity title goes, I would 

rank Direct Payments first because whether we produce a crop or 

not, we do get that. 

Nebraska, as I said earlier, is a semi-arid country. LDPs, sometimes they land when we don’t need them. Last year, we were producing a lot of corn. We had low prices and man, we were getting 

some big LDP checks. That’s no secret to anybody out there. This 

year it is just the opposite. We’re going to need the money. The 

crops aren’t going to be there in northern Lancaster County. LDP 

payments are going to be fairly low. So that’s my second priority. 

Counter Cyclical, 

I think that’s our third and I don’t really have much to expand 

on that. 

The CHAIRMAN. Mr. Hilferty? 

Mr. HILFERTY. I believe the commodity title is very important 

and probably second would be the conservation area of that. Within 

that, I think the direct payments would be our top priority and the 

counter cyclical part would be number two. The Marketing Loan 

program would be No. 3. I’d go back to the direct payments. Direct 

payments are reliable and they are able to be budgeted. They are 

all compliant with 

WTO and they don’t evaporate during a drought. 

The CHAIRMAN. Great. The second question. We can expect an effort to further reduce payment limits in the next farm bill. Do payment limits need to be modified in this next farm bill. Mr. Ebke? 

Mr. EBKE. Our organization has struggled with payment limitations for a number of years. We’ve had numerous policy discussions 

amongst the delegates at our annual meeting. We support payment 

12

limitations. What we’ve had difficulty with is assigning a dollar 

value and that seems to always be the situation. We’ll see how it 

plays out this year at our delegate session but at this point in time, 

we do believe that they should exist. We do not have a target number. One thing, when we talk about payment limitations and Senator 

Hagel quoted some statistics. I think we need to be cautious 

sometimes with those statistics. Tuft University had a study recently that talked about or tried to analyze some of the public comments made by environmental working groups’ data and so forth, 

about the percentage receiving payments and the percentage of the 

payments they received. I’ll have to admit that I have looked at 

their website and when I see that in my county, those people receiving payments and we won’t talk about the dollar amount because that’s where you come into where to cap it. But those people 

receiving the majority of the payments are those who are actively 

engaged in farming as their primary occupation and when you get 

down to the end of the list, you find my dad and my mother, who 

are receiving funds because they happen to own some land and are 

willing to rent it to me. So I do think, when we look at that and 

we look at some of those numbers and the percentages, we need to 

maybe dig a little deeper and sort through some of that information 

to find out where those payments truly are going. 

There may be some very egregious situations, I won’t deny that. 

But I think the bulk of the payments today are received by family 

farmers or individuals who are attempting to make their livelihood 

from the farm and they are not—if you want to call it recreational 

farms and whatever. 

The CHAIRMAN. Not Hollywood movie stars. Mr. Wellman? 

Mr. WELLMAN. I would agree with Mr. Ebke and their association, that very similar circumstances with the American 

Soybean Association in discussions about payment limits and 

where it should be set at and if there should be any. 

Currently, the American Soybean Association still has their longstanding policy that there be no payment limitations. We believe 

that the payments should follow where the production is at. It’s always a big headline in the news, with people drawing the big dollars and so I did a little research. I looked up the University of 

Minnesota Fin-Bin website where they do financial analysis and 

they had records there of a 3,200 farms out of four states. In 1997 

to 2002, the average government payment per farm, per year was 

$32,000 dollars. 

That represented 77 percent of the net income for those farms. 

So a large portion of those farms’ net income came from government payments. From 2002 to 2005, the annual government payment actually decreased. The average was $30,105 dollars and that 

represented 46 percent of their net income. Over that timeframe, 

that 5–year difference, the gross income for those farms grew by 

$100,000 dollars. So the gross, obviously went up, farm program 

payments went down, the percentage of net income decreased. 

Those are real numbers from real farms and the Nebraska Farm 

Business Association of 

Nebraska have data going back on that for 10 years and the average government payment there was about $40,000, which repVerDate 0ct 09 2002 15:29 Nov 07, 2006 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 C:\DOCS\30125.TXT SAG2 PsN: SAG2
13

resents 74 percent of the net income over those last ten years. That 

isn’t anywhere close to the payment limitations we’re talking about 

and we can see that it definitely plays a big role in keeping these 

farms vitally functional and profitable. 

The CHAIRMAN. Mr. Nagel? 

Mr. NAGEL. I think these two have covered everything that needs 

to be said amply. As far as the way it affects my farm and my 

neighbors, payment limitations is not an issue. 

We’re not even bumping up on them on a yearly basis. So it 

doesn’t affect me. As far as the National Association goes, if we 

were to move this geography into Texas, we have a whole different 

situation and I’ll let them do the explaining on that but one thing 

I do know is you’ve got—I’ve got a few landlords that I do some 

farming for that were kept out of the program because you’ve got 

the million dollar rule written in there right now. I think that 

might go a long way as far as keeping people that don’t need the 

income out of the program. 

Me, it will be a long time before I make a million dollars, so we’ll 

have to see how that works. 

The CHAIRMAN. Mr. Hilferty? 

Mr. HILFERTY. I have to agree somewhat with most of the other 

three members of the panel but the National Association of Wheat 

Growers believe that the payment limitation may need to be raised 

because of inflation and cost of diesel fuel and cost of fertilizer, 

which have gone up tremendously in the past two or 3 years, especially this last year. I personally believe that alluding back to what 

Senator Hagel said about the lion share of these payments going 

to a small percentage of farmers, I believe that is very true and I 

think you need to work on a method by which some of that income 

could be transferred back to the smaller and intermediate family 

farms. I think that would be a priority to me. 

The CHAIRMAN. Great. The Doha round of negotiations has 

sought to provide additional market access for U.S. agriculture 

goods in exchange for cuts in domestic farm payments. How important are exports to the future of farmers? 

Some of you have alluded to that already, so don’t worry about 

repeating yourselves, but how important are exports, Mr. Ebke? 

Mr. EBKE. Sometimes in Nebraska, we tend to think that they 

are not very important. Most of our products are used domestically 

or are moved within the relatively close area to our state. However, 

when you really do look at the broad issue, exports are important 

in Nebraska. No. 1, we found and have found in the past that if 

for some reason, 

Illinois and Iowa can’t move products down the river, they are 

very ingenious and they find ways to get into our market. So it 

does have a significant impact on us. So I think the 

Nebraska Corn Growers realize the importance of trade and the 

importance of exports, particularly when we look at what is happening with the ethanol industry and the fact that distillers greens 

are going to become a large volume item that we are going to need 

to handle and we’re assuming and we hope that with some research and so forth, that those become an export item that is going 

to be desired by our foreign trade partners. So we are interested 

in trade but we would not be willing to trade domestic supports 

14

without very solid assurances that the trade access that we receive 

are going to benefit us, come back to us. So that would be a word 

of caution. 

The CHAIRMAN. Mr. Wellman? 

Mr. WELLMAN. The U.S. produces 40 percent of the world’s soybean supply and we export a great deal of that. The 

American Soybean Association, International Marketing 

Division, currently has nine worldwide offices to expand and develop export markets for our products. We recently celebrated 50 

years of our office in Japan. So we’ve been at it for a long time and 

it has been a very big part of the expansion of our marketing and 

any kind of market competition we can get, I think is to get a good 

price for soybeans. It reduces the need for maybe some commodity 

payments and that type of issue. So I think it is going to play a 

big part, still. Currently we have some issues, the European Union 

has some biotechnology labeling laws that keep us out of their market and India and Russia are working on some very similar type 

of labeling requirements. We can have the trade agreements written but then they find some way to keep our product out. So that 

is an issue we would agree that we don’t want to substitute trade 

policy for domestic programs because those foreign export markets 

may be kind of iffy at times and we can’t always still have access 

to those markets that have been agreed upon. 

The CHAIRMAN. Mr. Nagel? 

Mr. NAGEL. Grain sorghum, right now, we probably export 55 

percent of our grain and we do enjoy access to places where other 

commodities don’t get right at the moment. We export to the European Union because we are not a GMO type of crop and we like 

that. If those tariffs go down in the European Union, that may end 

up hurting us overall, for our exports. But we’re going to have side 

agreements because right now, we look at the Philippines, India 

and a few of those other places that still, like he says, don’t want 

GMO issues. We should have market access there, whether there 

is a Doha agreement or not. 

We like our side agreement. 

The CHAIRMAN. Mr. Hilferty? 

Mr. HILFERTY. Wheat is in a unique situation. Most of all, it is 

only used for human consumption and only about 50 percent of the 

wheat raised can be used in the United States so of course, that 

leaves 50 percent that has to be exported. 

We live and die by the export market and when it comes to WTO 

negotiations, we would rather have a good deal than no deal at all. 

So I guess it has worked out probably better to have unilateral 

trade agreements than multi-lateral. We rely on our negotiators to 

get us a good deal but we want a good deal rather than—I mean, 

I would just as soon they would cancel out as to getting a poor 

deal. 

The CHAIRMAN. Mr. Ebke and Mr. Wellman, you have mentioned 

a revenue based approach for the commodity title as a possibility 

and Mr. Ebke, we have seen the preliminary paper from the National Corn Growers so I won’t ask you to repeat what you’ve said 

or maybe what it’s there, but what are your thoughts on a revenue 

based approach as a safety net replacement for the current commodity programs? 

15

Mr. EBKE. As you’ve suggested and as my counterparts in 

Nebraska, we’ve looked at that and we believe that concept 

should be explored and that exploration, flushing out of a proposal 

is in the process. We’re not radically changing the way we approach things now but we’re looking at maintaining a direct payment. We’re looking at having a basic revenue insurance program 

that would generate approximately 70 percent of net revenue and 

we’re looking at a counter cyclical component to cover that upper 

end. So we’re using some of the things that are in the current program, just reshaping them, making them more available. On the 

surface, I think it will provide a more consistent safety net and 

eliminate some of the difficulties that have been mentioned as far 

as LDPs and so forth, where sometimes those producers who really 

need the help because of production problems and possibly shortcomings within their own crop insurance coverage, they’ve missed 

out and others have maybe had support when it wasn’t necessarily 

needed. So in looking at a revenue-based proposal, we think it will 

even things out and help those individuals who need the help. 

The CHAIRMAN. Mr. Wellman? 

Mr. WELLMAN. I won’t add very much to what Mr. Ebke said. I 

just believe that it addresses the need to be WTO compliant and 

it could possibly support income in a manner that we haven’t seen 

before and if we can some way work in it with other programs and 

give a good safety net for net income, then it would take away 

some of the problems we have with marketing loans, when it comes 

in effect, the times we don’t need it or it’s not there when you do 

need it. So, I think it is something that we need to really look at. 

The CHAIRMAN. Mr. Nagel? 

Mr. NAGEL. Most revenue insurance work is being conducted on 

major crops like corn and soybeans so I don’t have any good numbers for grain sorghum right at the moment. 

The first—what we have to remember is that a crop needs to be 

produced to collect payment and if we’re having an insurance type 

of situation—when I pay my premiums, when I do all that stuff for 

my insurance, if I have 2 years of drought, my guarantee goes 

down after 2 years or 3 years or for instance, back in his area, it 

is 5 years of drought. So what is our revenue that we’re going to 

cover? 

That’s the main questions that we have. So right now, we’re a 

little bit iffy. We will have to put some numbers on it but to me, 

it doesn’t sound like a very good idea. It would be great for 

irrigators. It would be great for Iowa and Illinois but here in Nebraska, I don’t know. 

The CHAIRMAN. Mr. Hilferty? 

Mr. HILFERTY. I do know that wheat growers believe that a revenue based program would be better in some instances, especially 

in drought, than we currently now have but it would be a very 

tough program to implement. For example, compliance with WTO 

rules requires that no more than 70 percent of the crop value can 

be covered with a revenue-based program. That top 30 percent is 

when a real loss occurs. In fact, our insurance kind of covers that 

bottom 70 percent anyway but I do believe that the revenue-based 

theory is probably the best in the long run. 

16

The CHAIRMAN. I think I know the answer to this question. 

You’ve all spoken directly or indirectly to it, as a matter of fact, but 

just a quick answer. Should an increase in conservation or energy 

programs come at the expense of commodity program? 

Mr. EBKE. Well, again as I mentioned, all members would probably not support that. We support conservation but the commodity 

title seems to be pretty sacred for most producers and I’m not sure 

that they are willing to give that up at this point. I suppose it 

would depend upon the proposal and how that then might fall back 

to them as far as moving funds out of the commodity title. At this 

point in time, that would not be something that a Nebraska Corn 

Grower member would accept. 

The CHAIRMAN. Mr. Wellman? 

Mr. WELLMAN. With the current CSP program and the funding 

that has been stripped away from that program, and the way that 

it has been administered, I can’t see that we can—— unless there 

has been drastic changes to the way that program is—or a similar 

program is implemented. I can’t see where it would take the place 

of the commodity program that we have now. It has actually 

caused problems between neighbors because one neighbor can qualify for the program and the other one hasn’t because of lack of 

funding and things like that. 

It’s definitely a situation that would have to be changed. 

The CHAIRMAN. Mr. Nagel? 

Mr. NAGEL. Well, I mean, the commodity title is sacred and as 

a I said earlier, the energy title should be right up there and that 

should be looked at a national issue, too, national security issue, 

rather. What more can I say about it? The conservation CSP, I hit 

on that earlier and rather than repeat myself, there are just a lot 

of issues that we need to work out with that, too. I think energy 

is the way to go. I’m pretty high on energy. 

The CHAIRMAN. Mr. Hilferty? 

Mr. HILFERTY. Myself, I’d answer no, would not like to see the 

transfer from one program to another but we’re interested in the 

energy problem. There should be more money spent there. As far 

as taking money from commodity programs, there is already a 

backlog of un-funded conservation programs. 

So where does it end if you start taking money away from the 

commodity programs? 

The CHAIRMAN. All right. Senator Nelson? 

Senator NELSON. Thank you, Mr. Chairman. Mr. Wellman, in 

your testimony, you mentioned offsetting funding for biofuels research and development by reducing outlays from the commodity 

credit appropriation. What are your thoughts on how you do this. 

How would you make the reduction and balance that out? Do you 

have any thoughts that might help us as we look at that? 

Mr. WELLMAN. I think the theory there is that with increased 

biodiesel production, they would drive the price of soybeans up, 

therefore lowering the cost of the marketing loan program and the 

counter cyclical program. 

Senator NELSON. That would be the assumption. If you didn’t 

have that happen for whatever reason, it might not be such a good 

idea because all of you recognized the importance of the commodity 

17

program. So that would be your assumption, that if you didn’t have 

the prices go up, this would be a good way to offset it. Is that fair? 

Mr. WELLMAN. Yes. 

Senator NELSON. OK. And then, the Corn Growers, 

Steve, the Revenue Protection programs have been an interesting 

idea for reforming the farm safety net and one thing that jumps 

out at me is the concerns that many farmers have expressed to me 

about needing the payment limitations. 

Will the program be better equipped to help small and medium 

sized farmers stay in business and stay competitive if we are able 

to figure out the level of payment limitations? 

Mr. EBKE. I would expect that it would be supportive of all farmers. Small, medium-sized, depending upon their situation at this 

point in time, but it would provide them with that basic coverage, 

similar to a revenue insurance program, plus then we add that 30 

percent, would be covered with some sort of a counter cyclical field 

similar to GLIP insurance. But depending upon the situation, I 

think it will do more for them than what we have today. Again, 

some of that comes down to economically viable units and I’m not 

sure if we can develop any program that will help you if you’re not 

a viable enterprise. I think that this will do more than what we 

have today, as far as leveling it out and providing support in those 

years when the LDPs might not be available because of production 

problems. 

Senator NELSON. I’d like to concentrate on drought issues a little 

bit more. I think you’ve all mentioned it and we’ve all talked about 

it to one degree or another. Can you help us understand what 

might be the viable options to begin to deal with the impacts of 

drought? How reasonable is it to consider helping farmers transition toward growing more drought-resistant crops. You hear that. 

If we’re going to have to have a multi-year drought situation and 

maybe we ought to mitigate against that. I’ve been working with 

the 

University of Nebraska and we’ll have, I think, some testimony 

about drought mitigation. But just from your perspective, is it reasonable for us to talk about that? Will people change their direction 

in agriculture based on recognizing the impacts of drought? Are 

farmers open to that suggestion? I guess I’d like to get your 

thoughts individually about that. 

Let’s just go down the line there. I know you may have your own 

concerns about it because you get a little bit more rain than Mr. 

Hilferty. But Steve, would you start off for us? 

Mr. EBKE. I think certainly that agriculture producers are going 

to be open to that. They’re very innovative. 

They’re going to take advantage of what is offered and if, in the 

years that we have more moisture, maybe it’s normal—— maybe 

it was above normal. I don’t know. You can look at all kinds of 

charts and try——

Senator NELSON. It’s hard to understand what normal is anymore. 

Mr. EBKE. That’s the point. When it was adequate, there were 

transitions of crops that used more water. I don’t think there is any 

doubt that if this continues to persist, we’re going to see a transition to crops that are more resistant to drought, that tolerate it—

18

whatever, and that farming practices will change. They’ve been 

adapting for years. 

Technology may provide some help in that aspect. There are 

things that are being promised but they are always another couple 

3 years away and we’ll see how that develops. I think those things 

will be—if those things come to the market, they will be adapted 

rapidly. I think the producers are very adaptive and so they are 

going to figure out how to make the most of what they have. 

Senator NELSON. Yes. 

Mr. WELLMAN. I believe that in the past and in the future, farmers will be very flexible as to the crops that they can produce. Even 

in my area, we are 100 percent non-irrigated and as I look back 

when my father farmed a lot of grain sorghum and wheat and corn 

in that area. Over time, it has changed to more soybeans and corn. 

On my operation, we still don’t raise any milo at the current time 

but we still produce wheat and we have some cattle. I think it will 

be important for farmers to look at other options and diversify 

themselves. It may just be a matter of survival. If you can’t make 

the change, then—it’s just going to be necessary to make the 

change, I guess, to farming a product that we can grow and a field 

to grow it and still make a profit. 

Mr. NAGEL. You’ve heard us say it before, we always refer to 

milo as a water sipping crop and if there ever was a year that you 

could see a difference between a grain sorghum field and a cornfield on a dry land basis in Lancaster County, it’s this year. I do 

have neighbors right now that are chopping corn for silage. The appraiser has been out and they are looking at corn maybe in the 

mid-thirties, 30 bushel per acre. I am currently out working with 

my grain sorghum. We have to do a few extra steps. That’s why 

people don’t like it but I work hard at it and I keep it looking nice. 

I’m hoping for 100 to 120 bushel of sorghum, maybe more. I think 

we have some guys in Thayer County in the same situation. Corn 

is burned up and milo has never looked better. Timing is an issue 

when you get rainfall. Corn needs it earlier. Sorghum can use it 

earlier but it is able to put itself into a mode where it can just not 

take so much water until a rain comes and then, poof! The head 

comes out and you’ve got a lot of them. 

We’ve also done some studies on irrigation. By no means am I 

ever going to advocate replacing irrigated corn acres with sorghum 

acres because the yield won’t be there but maybe there should be 

a transition for some guys on saving water. 

We know that grain sorghum uses approximately 30 percent less 

water than corn. We know it uses a lot less in soybeans and it is 

just a hair below wheat. That’s according to studies that have been 

done in Bushland, Texas. Maybe we need to transition some of 

these irrigated corn acres into sorghum acres by using a little enticement somehow, go with corn rental rates and milo rental rates 

and pay the difference between them to get farmers to switch. It 

will save irrigation water—there is no doubt about it. You’ve seen 

my written testimony that if we do switch pivots in western 

Kansas or in Texas and those areas, the amount of water that 

we will save in 50 years time can definitely provide water for a city 

the size of San Antonio. So it is a big deal and I think farmers, 

19

they are always waiting for that new technology for corn. They say 

there is going to be a drought-tolerant——

I don’t know. I’ve got corn that has spread up next to me. 

They say it is better than milo but—I’ve got them in my pocket 

right now. Sorghum is a good deal, a good option. 

Senator NELSON. Thank you, Doug. Dave? 

Mr. HILFERTY. In my area, they call it drought-resistant wheat. 

They’re working on it. It may be 10 years away but it might be 

less. It’s more like drought-tolerant rather than drought resistant 

and wheat growers are working closely with a private company and 

I’m sure some of universities are working on this drought-resistant 

wheat. They can’t tell you whether it is going to increase your yield 

by 10 percent, 20 percent or 30 percent. They really won’t give you 

a figure on that so 

I don’t know exactly how much it would benefit us but I know 

when we have a dry year, it’s definitely going to help, even if it is 

a little 10 or 20 percent. I would like to see more research done 

on that. 

Senator NELSON. Just a general question. I mentioned the 

Drought Mitigation Center, where we’re pushing real hard at the 

University to try to get more research to get more information so 

that we can get word out to our farmers and ranchers, to what the 

expectation is about the next year or for two or 3 years, whether 

they are going to be the driest or less dry and to help, I think, producers understand. 

Do you think that you will make planting decisions if you can get 

that kind of information, which would—not only a single year but 

perhaps, multiple years in giving you the best expectation as to 

what the future holds? Would that help you make planting decisions for what you’re going to do? Just any one of you, just a couple. 

Mr. NAGEL. I base my planting decisions on what happens before. I didn’t expect a drought this year. We had an extremely wet 

spring and I’m out there, planting milo. I’m thinking, my goodness! 

I’m giving up a lot of income here when in the end, it ended up 

being all right. That’s what we’re dealing with in a semi-arid state 

like Nebraska. That’s why I said in my intro, we plant about an 

even amount of sorghum to corn and then a lot of soybeans on top 

of that. 

I’m going to keep doing that until something persuades me differently and I wasn’t persuaded this year. You’ll see more milo in 

northern Lancaster County next year. 

Mr. EBKE. Senator, I would think that any information that 

could be made available will be assessed. It still comes down to individual gut feelings or whatever but I think the producers are 

going to look at that information and certainly take that into account. 

Senator NELSON. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Hagel. 

Senator HAGEL. Thank you, Mr. Chairman. Gentlemen, thank 

you. Mr. Hilferty, you talked a little bit about your experiences in 

representation that you provide for your industry. Over the last 

few weeks, I’ve had some opportunities to be in southwest Nebraska and see some of those wheat fields. They’re in as bad as 

20

shape as probably they’ve been in, in many, many years and the 

yield and all the measurements that you respond to and deal with. 

For you, I would start with this question and then, I would appreciate answers from the other panel members. It really is precipitated by a number of comments that were made to me over the 

last few weeks by wheat farmers, that our crop insurance programs 

will not help them and partly that’s a result, as you know, and a 

consequence of where you have to have a crop and the 5 years and 

all the things that you talked about. 

Here’s the question. What changes should we be making to our 

crop insurance programs, if any? And the second part of that is and 

I’d like a response from each of you, going back to a comment that 

I made in my opening statement. Should we include in the new 

farm bill, some new crop insurance/disaster assistance programs in 

anticipation of what we know comes every year, whether it is a 

flood, whether it is disease, whether it is drought, whether it’s 

fire—every year, we face something. Those are the two questions, 

starting with you, Mr. Hilferty. 

Mr. HILFERTY. I know from my own experience, from the fifth 

year of the drought, my APH on my insurance has dropped so bad 

that insurance is not even a good safety net. I don’t know if it is 

a way of changing the way they figure APHs over this 10–year theory that you can drop, having such poor crops for 5 years, this is 

going to ruin your APH and your coverage just isn’t there. I don’t 

know how you get around that unless you can not drop or be able 

to drop more of those low years, would be the way to get around 

that, I think. 

Senator HAGEL. So, we should change it? Not change it? 

Should there be some kind of a disaster assistance program written into the new farm bill? Should we take a different approach, 

a new approach? Change the approach? 

Mr. HILFERTY. I don’t think there would be any need for a disaster payment in there all time if you went to a revenue-based type 

of fund program. 

Senator HAGEL. Thank you. Mr. Nagel? 

Mr. NAGEL. Grain sorghum, as far as insurance goes, we’ve got 

a lot of questions on that and it all gets back to how the crop was 

reported to begin with. When a farmer sits down in Lancaster 

County right now, we’ve got an assigned yield to our—if you 

haven’t got a base built up, you get an assigned yield of your base 

on your crop insurance. Right now, corn sits at 106 bushel an acre. 

Milo is about 20 bushel to the acre less than 80. I find these numbers troubling. In my operation, I equal corn and this year, I’ll 

supercede corn and my base, on my personal crop insurance, makes 

it worthwhile for me to take it out. But corn—they start out with 

a high base, it drives farmers into that arena of planting corn because they started out at 106, they are guaranteed 80. Milo—we 

can’t live on 70 percent of a crop. 

We’re always striving for that 30 percent extra crop. So the first 

thing that we need to work on, that the national program has been 

working on, is data that is collected and where these sorghum 

yields come from. That’s our biggest gripe right now. 

As he said, if you get your crop insurance, if you are collecting 

on it every year, your base goes down. I don’t know how you make 

21

that better. I mean, if you are 5 years drought and your corn base 

is now 50 instead of 100—that tells me you need to switch practices. You need to think outside the box and maybe sorghum isn’t 

outside the box enough. Maybe it is sunflowers, maybe it is something else. 

You just have to think of something different once in a while, 

I guess. That’s kind of where I’m coming from on insurance. 

Senator HAGEL. So you would not necessarily see a need to make 

any specific changes, alterations as we look at——

Mr. HILFERTY. For crop insurance, just equalizing, I mean—determining the data is what we have to do. And if we can get people 

into growing more grain sorghum and having that insurance of a 

drought-hearty crop out there instead of corn, that’s where we need 

to make the changes. 

Senator HAGEL. Thank you. Mr. Wellman? 

Mr. WELLMAN. With the current crop insurance situation and it 

always has been based on yield, and that has always been a problem, is how that yield is figured out. In the years, like was mentioned, the yield before and you continually drop that basis for your 

protection. So I think a revenue package and then there is revenue 

assurance, crop insurance now, that still, one of the factors is the 

yield factor for the last 10 years. I believe yes, there needs to be 

some changes there and there needs to be, based on revenue and 

the question is, how do you get a consistent revenue that will actually support and back the producer in the year when he needs it. 

I’d carry crop insurance and it’s one of those things that we’re on 

such tight budgets that if you do have a yield where you have a 

total crop failure, like in my instance, was 2002, crop insurance 

was a very big part of my income that year. I didn’t make any 

money out of it but it kept me in business and kept me going to 

the next year. So to answer your question directly, I believe there 

can be, there should be changes to it and I will have to agree with 

Mr. Nagel—part of the reason that I don’t produce sorghum right 

now is because of the guarantee that is assured me under the crop 

insurance program for corn. I maybe don’t quite agree with Doug 

on the yield. I have raised milo in the past. I think the last time 

I raised it was 3 years ago, which happened to be the highest corn 

yielding year we had so milo didn’t compare very favorably that 

year. But I think there definitely can be some changes made to improve it and make it a better program. 

Senator HAGEL. Thank you. Mr. Ebke? 

Mr. EBKE. As has been expressed, the APH erosion has been a 

continuing problem. There are a lot of people who have addressed 

it. I’m not sure that anyone necessarily has come up with a solution at this point. They just continue to beat the revenue-based 

program—that still would have a component in it that would be 

based on production. So we still have to wrestle with that. I’m not 

sure what the answer is. 

Sometimes—well, I shouldn’t say sometimes—I’m thinking a little bit along the group risk programs that are available, somewhat 

new to Nebraska but they are available and in those cases, an expected yield is determined by using some math numbers and so 

forth. Those will erode too, if you experience drought, those numbers will erode so I’m not sure how you go about holding a base 

22

under those APHs. I know that there is a lot of effort being put 

forth to attempt to come up with some sort of solution that will 

prevent that. I don’t have an answer for you, Senator, I guess. I 

would say that there is a problem and we need to continue to look 

at it and see if we can find a way to prevent that erosion. Again, 

we go back to—maybe some people might think it is a cynical view 

but if you continue to encounter those types of situations, then it 

is time to become innovative and look for something that fits your 

climate at this particular time. Again, talking about the provision 

for emergency disaster programs, we’re going to continue to make 

the statement that we believe a revenue-based program available 

to all producers will reduce the frequency and the need for emergency, now, in program crops. I’m not talking about livestock. But 

in the cropping area, we think that will help out. But as far as livestock is concerned, that is a whole different game and there may 

need to be something allocated for that so we don’t have to continually rob another program or whatever. I know it has been expressed several times that we have some hurricane aid. It doesn’t 

seem to have to be offset by some other budget item. Yet when we 

look at agriculture, we always are expected to see some sort of 

budget offset. So in that respect, it might be good to allocate something for that. 

Senator HAGEL. Well, I—and I appreciate the answers but I go 

back to something that the Chairman noted in his remarks and he 

is exactly right. He made the comment, in a fiscally tight environment and I don’t have to remind any 

American citizen what kind of deficits we’re running in Washington. When we’re looking at new programs, spending money on 

any new program next year and the on years, it will be an issue. 

The smarter we can be on this, obviously the better off we’re going 

to be because the American people are not going to continue to accept these kind of deficits and we’re already seeing political consequences and we’ll probably see some significant consequences on 

Election Day on November 7th over this, in both parties, we’re 

talking about. And this will drive much of this farm bill. We need 

to be very smart on this and get ahead of it and that’s why you 

all will be critical to this and the Chairman noted it earlier. A couple of other questions, quickly—energy. Mr. Nagel, you mentioned 

energy a couple of times, how important it is and should be in this 

farm bill. Give me a couple of examples and suggestions that you 

think should be included in this new farm bill and if the three of 

you in addition to Mr. Nagel, would like to offer anything for the 

record as well, I would appreciate it. 

Mr. NAGEL. Well, of course, we’ve got the ethanol right now and 

it is mainly done from the start standpoint, from the grain that we 

get from either corn or sorghum—I believe you can make it out of 

any grain, for that matter. As I said earlier in my testimony, we 

are looking at some field trials in Florida, using sweet sorghum. 

Now, sweet sorghum might be an option. We know it is a lot like 

grain sorghum. It uses less water but the potential for producing 

ethanol out of sweet sorghum is extremely high. They are already 

using that technology in China and India right now and from what 

I understand, you’re looking at maybe 2 1/2 times more ethanol per 

acre being produced out of an acre of sweet sorghum than you are 

23

for an acre of irrigated corn. The problems that we have with that 

in the future, is going to be where is the market going to be? Who 

is going to be able to handle these big bales of sweet sorghum or 

how are we going to extract the sugars? Right now, I think it is 

a very expensive situation but technology is going to get it into a 

little bit better of a situation coming down the road. Other types 

of sorghum fit there well. I think you hit on it earlier. I think solar 

is a very good option. I think wind turbines are a very good option. 

I’ve always had it in the back of my mind, if I ever own a piece 

of ground in Lancaster County, would it be of benefit for a farmer 

to go ahead and put a wind farm up? Sell the electric back to the 

big city or have another option there. Maybe have a 40–acre solar 

panel. I don’t know how you would fund that and how I would go 

about implementing that on my farm is a whole different situation. 

It sounds kind of expensive. But I’m tired of depending on foreign 

oil. We’re looking at some huge, huge fuel bills coming up here for 

harvest. We just got through a busy irrigation season. There are 

guys who have doubled and tripled their fuel bills. They’re talking $15,000 dollar bills a month for diesel and a few 

years ago, it was one-third of that. To fill my semi up to go to town 

right now, we’re looking at $3.40. You talk about revenue—I’m 

worried about the input side. How much revenue are we going to 

need in the future to cover all that stuff? So energy—I’m getting 

off the subject here a little bit but I like all your ideas on energy 

and sorghum can fill that need, too. 

Senator HAGEL. Thank you. Gentlemen, any additional comments? 

Mr. HILFERTY. There is a lot of possibility with wheat straw in 

the biomass field, rice straw, wheat straw and even wood chips. 

There is a lot of room for expansion on ethanol if you go through 

the biomass method. But I think one thing that would help, if we 

can go back to a conservation program. 

And this maybe could go under the energy title. There has to be 

a method by which the Congress can encourage no-tell farming and 

you can save a lot of diesel fuel with the use of chemicals. So that 

would be one way to look at it—that could be part of the energy 

title. 

Senator HAGEL. Thank you. 

Mr. WELLMAN. I have one additional comment. I believe the renewable fuels can play a big part in our energy situation in the 

United States but it is going to take many different aspects of it. 

I don’t believe that just ethanol is the answer or biodiesel is the 

answer. I think it is a combination of any renewables that we can 

produce here and the other key to that is, our livestock producers 

and the relationship that we have between the corn, the commodity 

growers and the livestock producers because they are going to play 

a big part in using the co-products that come out of a lot of this 

manufacturing of renewables. 

Senator HAGEL. Thank you. Mr. Ebke? 

Mr. EBKE. Briefly a comment. You know, the cellulosic ethanol 

seems to have the spotlight right now and it’s in the future and I 

think it is going to be a major component. I guess we would look 

at continuing research, not only in that area but not to forget some 

of the processes that we’re utilizing today and looking for ways to 

24

make those more efficient. I think the farmer will benefit from all 

of those avenues, whether it is a cellulosic, whether it is cornbased, whether we are looking at the biodiesels. The farmer stands 

to play an important role in that so I think the research components on those are going to be very valuable as far as farm income 

in the future. 

Senator HAGEL. I’ve got one last question, Mr. Chairman, to each 

of you. Future generations. I’m going to read just one sentence 

from a letter I received from a Nebraska farmer after the 2002 

farm bill was passed and he said this: This farm bill is the same 

old thing and will do nothing to reverse the trend of fewer and 

fewer farmers on our land. You know the numbers. We are losing 

farmers at significant numbers, rates every year, in Nebraska and 

across the country. Is that just going to happen? Should it happen? 

Is it evolutionary? 

Anything we can do to stop it? Should we stop it? I think, when 

we are talking about farm policy in this country and we’re talking 

about a significant amount of investment that needs to be made in 

our agriculture community and all the dynamics that are included, 

which you all have covered rather well this morning, this question 

needs to be dealt with and certainly it cuts right to payments and 

can you afford to stay on the land and the next level of that, what 

about the young people? There is a very limited opportunity for 

entry into your business unless you are the son or daughter of a 

farmer or a producer. I hear this, as do my colleagues, all the time. 

Is it a matter of your industry just now being essentially closed to 

anybody who wants to get into it? I’ll start with you, Mr. Hilferty. 

Mr. HILFERTY. The trend started in the twenties and especially 

in the thirties, that the small farmers disappeared and that trend 

has just continued. There are fewer and fewer farmers and I’m not 

real sure what we do about that, whether changing the structure 

of government payments, trying to restructure it back to the small 

farmers and the medium-sized farmers, might reverse that trend. 

But in my own case, I know—my wife and I have four kids and at 

this point, I wouldn’t recommend any one of them to come back and 

farm. They can make more money elsewhere. 

Mr. NAGEL. It’s getting to easy to leave. Agriculture, as you 

know, is very capital-intensive. I have a magazine article here and 

it is talking about new combines that are coming out: bigger, better, stronger. Three hundred thousand dollars! You need trucks, 

you need planters, you need big tractors, you need all that stuff. 

If anybody wants to put themselves under that kind of stress, more 

power to them but 

I’m not happy about doing it any more. I’m almost 40. I live just 

a few minutes from Lincoln, where I know I can go to town and 

make a lot more money and go home at 5 o’clock at night and kick 

my feet up. I have brothers who do that, I have brother-in-laws, 

and man, I’ll tell you. It is pretty dog gone tempting. You know—

they don’t care if it is raining or if there is a drought or anything 

like that. When my situation is good, the farm pays for itself. OK? 

This year might be a little different. I’m going to have to chop the 

numbers on that but usually the farm paid for itself. But what I 

do have, is off-farm income because my wife works in town. She is 

buying the groceries, she is paying the rent, she is taking care of 

25

the kids. I have two boys that are 3 and 2 right now. They love 

the farm. They like to go out and walk in the corn and I’d love 

nothing more for them to do that in 10 or 15, 20 years or whenever 

they could take it over but it’s just too capital intensive and it’s too 

easy to make money if you go to town. 

Senator HAGEL. Well, life agrees with you, Mr. Nagel, You don’t 

look 40, if that helps you. 

[Laughter.] 

Mr. Wellman? 

Mr. WELLMAN. These are excellent points brought out and 

I don’t have the answer on how to necessarily stop that process 

of losing producers. In my situation, I joined my father on the farm 

and we expanded together and then, before you know it, he’s retirement age or has a health problem and so he’s not involved anymore 

and I’m still earning the same amount of acres and I hired some 

labor to replace him, and so it’s still basically the same. I’ve grown 

some since he retired, the size of the operation has, but basically 

it is the same operation that him and I had. But now, when we go 

back and look at payment limits, he is not involved anymore so 

then it is just myself that is drawing the payments on that. 

I do have a sister and we separated off part of that and that 

brings up an issue with estate planning and what we can do with 

the state tax to make that more affordable to pass on operations 

that have been grown over the years, to future generations so it 

isn’t maybe so costly, at least for the initial investment, if there is 

somebody to take over the operation. And if there isn’t anyone, it 

would be nice to some way have some type of program for a young 

individual to get started in agriculture and part of that goes back 

to maybe guaranteed loans and programs that have—well, they’ve 

been around a long time, through the farm credit and that type of 

situation but if there is a way to strengthen those programs. 

The bottom line is that it still comes down to profitability. 

If the farm isn’t profitable, nobody is going to be interested in 

being there anyway. So whatever we can do to increase market 

share, increase our revenue from our products, find new products 

and maybe—I don’t know what the water usage is for peanuts but 

maybe that can be moved up into Nebraska or something like that. 

We need to be looking at whatever we can to make sure that we 

can stay profitable. 

Senator HAGEL. Thank you. Mr. Ebke? 

Mr. EBKE. I could add a lot to what has already been said. It is 

capital intensive and there is no question about it. You look at 

those types of industries and access to those is somewhat limited 

unless you’ve got a tie. The other point that was made and I agree 

with it, it does take a certain type of personality to be an agricultural producer. It’s not for everyone and so I think those who seem 

to have an aptitude, I would hope that we would continue to have 

programs that may allow them to enter the system and as Mr. 

Wellman has talked about, expand those. It’s still going to probably 

take a mentor. If someone does not have the family ties, they are 

probably going to have to have a mentor and there have been some 

programs to try to allow for that to happen in Nebraska. 

There have been some tax proposals put forward that might help 

an older generation transition to a younger generation who might 

26

not have an heir of their own, find a unrelated party and help 

them out. I think those things need to be continued. 

But with the nature of the industry, it’s probably going to continue to consolidate and it’s probably going to consolidate within 

families. 

Senator HAGEL. Thank you. Mr. Chairman, thank you very 

much. 

The CHAIRMAN. Thank you. Well, we came out here to hear the 

issues and you all have laid a lot of them out there, let me tell you. 

This will be my third farm bill and I also was a member of the 

House Ag Committee when we reformed the crop insurance programs and this issue, Mr. Hilferty, relative to 

APH, comes up every single farm bill, every time we talk about 

crop insurance and we are never able to determine what is the 

right answer there. I have different parts of counties in my home 

state that historically don’t get rain so it’s the county average. It 

helps in some instances but yet it hurts those farmers that have 

had great production and see their county average down. Whether 

you talk about farm history or whether you talk about county history, it is always an issue and we struggle with it and I really don’t 

know what the answer is. 

Mr. Nagel, you make a good point in responding to Chuck’s last 

question there. I have—my son-in-law is a farmer and I have two 

grandchildren that are growing up on that farm and I often talk 

about the fact that I don’t know how long I’m going to be in Congress but when I leave here, I want to make sure that we’ve got 

long term farm policy in place that will allow those kids, if they 

want to come to the farm, to be able to do so. But I was in Iowa 

a couple of weeks ago at one of these farm bill hearings and there 

is a John Deere plant there. 

They were celebrating the one millionth engine that had come 

out of this one plant. It would have to go into a cotton picker. The 

cost of that cotton picker was $375,000 dollars. 

Now, that situation is an issue not just for folks coming back to 

the farm but for payment limits, for LDPs versus direct payments 

and I don’t know what the answer to that is. So we’re very appreciative if you guys for taking your time. 

This has been extremely insightful and what we always find is, 

you all don’t grow peanuts, you don’t grow cotton, but you have the 

exact same issues that we have with our rope crops. 

So we’re very appreciative of you being here. Thanks for the insight and we’ll look forward to continuing the dialog with you. 

Thank you very much. We’re going to take a quick break before we 

move to our second panel. 

[Recess] 

The CHAIRMAN. Before we move to our second panel, Senator 

Nelson and Senator Hagel and I would be quick to tell you that we 

don’t function very well in Washington without great staff and they 

have to spoil us. We make them spoil us but they always do. And 

coming to Nebraska, I happen to have a staffer who grew up here 

in Nebraska and is one of your native sons, Cameron Burke. Cameron, stand up, buddy and let them see a real Nebraskan that 

works for me. 

[Laughter and applause.] 

27

Cameron is from Omaha and his mother, Mathea Sanders, is 

here also. Mathea? Let us recognize you. 

[Applause.] 

I have my staff director, Mumscott Sacerly, who is a Mississippian that has been with me for almost all of my twelve years in 

Washington and does a great job and we also have Senator Harkin, 

who is my Ranking Member on the Ag Committee, his staff director, Mark Halvorson, is with us. Folks, thank you all very much 

for being here. 

Senator NELSON. Do you want me to introduce mine? 

The CHAIRMAN. Yes. 

Senator NELSON. Well, I’m not going to be outdone. I don’t know 

how we let Cameron get away from us but we have Jonathon 

Compus, who handles the legislative assistants. Of course, there is 

Dale Williamson, who works with us on Agriculture. Jonathon, if 

you would stand up and Dale——

[Applause.] 

He’ll be back. Thanks very much. 

The CHAIRMAN. I’ve got some others here but those native sons, 

we always like to make sure we recognize. Our second panel today 

consists of Mr. Doug Nuttleman from Stromsburg, Nebraska, presenting the Dairy Farmers of America; Mr. Keith Olsen from 

Grant, Nebraska, representing the Nebraska Farm Bureau; Mr. 

Roy Stoltenberg from—in Georgia, we would say, Kero and in 

Egypt, they say, Kiro. So I’m going to assume that you adapt to the 

Georgia name of Cairo, Nebraska, representing the Nebraska 

Farmers Union; and Mr. Duane Kristensen of Hastings, Nebraska, 

representing Chief Ethanol Fuel, Inc. Gentlemen, thank you very 

much for being here. 

We’ll follow the same format. We would ask you to hold your 

opening statements to 3 minutes. We will submit your full statement to the record. We’ll start with you, Mr. Nuttleman. 

STATEMENT OF DOUG NUTTLEMAN, DAIRY FARMERS OF 

AMERICA, STROMSBURG, NEBRASKA 

Mr. NUTTLEMAN. Thank you very much, Senator Chambliss, 

Senator Nelson, too. If I needed to bring snacks, I would have 

sent somebody out for cheese and crackers. 

[Laughter.] 

I’m Doug Nuttleman. I’m a dairy farmer from Stromsberg, Nebraska. My wife, Gloria and my three sons and I operate a 175 cow 

dairy farm and approximately 2,000 acres. We produced about 3.5 

million pounds of milk over the last 12 months. We have been in 

the dairy business ourselves for 20 years. My father-in-law was 

there 20 years before that and my sons will be the fourth generation on our farm. I represent my fellow dairymen on various state 

and regional organizations by serving on the National Dairy Board. 

While organizations that I serve have not officially established a 

position for all of the 2007 farm bill issues, I would like to share 

my thoughts on some of these items. Because we do not think there 

will be any radical shifts in policy directions as a result of the 2007 

farm bill, we support first the view that the extension of the current farm bill, which will work well for the nation’s dairy families. 

We need to have a more clear view of the Doha rounds and the 

28

WTO trade talks. We can see no reason to change our programs at 

the present time until we know what the rules are and who will 

be playing for those rules. We feel that the next farm bill should 

maintain some form of economical safety net for dairy farmers. 

Safety nets prevent prices from falling so low that businesses cannot become viable. Because dairy farmers produce such an excellent source of nutrition for our nation and due to the high fixed 

cost of becoming a dairy farmer, and the fact that most production 

assets have limited use in any other agriculture enterprises, past 

Congresses have maintained a safety net for the dairy industry. We 

hope this Congress will continue to do that. 

The most important safety net that we have in the dairy policy 

program right now is our price support program. We favor continued operation of the price support program at a target of $9.90, although that target price was set clear back in the eighties and has 

survived several farm programs, for the cost of operating a dairy 

farm, most dairymen would tell you they cannot operate a farm 

based on $9.90. 

Up until the present time, the CCC has purchased some non-fat 

dry milk, doing what safety nets are supposed to do. The last time 

milk prices fell to this safety net was in 2002, when the average 

Class 3 price for milk was at $9.74, which our support was at 

$9.80. The 10–year average price for this was $12.62, which we can 

live with. The second safety net provision is the Milk Income Loss 

Compensation—MILC—— program. My farm is affected by the 

payment limitations, restricting my ability to fully take advantage 

of this program. Like the Price Support program, I view the MILC 

program as a very good safety net for producers. Its key benefits 

are that it puts cash in the hands of dairy farmers at a very important time when prices are very low. In general, the guidelines for 

a safety net program should be that they do not discriminate between farmers of different sizes, they do not discriminate between 

farmers in different regions of the country and they are not high 

enough to encourage additional milk production. I guess I would 

note that under the current farm bill, our MILC payments run out 

a month before the farm bill expires and to be part of any type of 

extension, we would need to pass that as part of getting an extension policy. 

I would like to touch on just one area quickly and that is our 

CWT program. I don’t know if you are aware of it, but farmers 

have established a self-help program by contributing ten cents a 

hundred, to actually try to control the dairy herds within the 

United States and also by exporting products. So I thank you for 

listening to my remarks. 

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

appendix on page 102.] 

The CHAIRMAN. Gary Hanman reminds me of that. 

Mr. NUTTLEMAN. Yes, he does. I think he is a good friend here. 

The CHAIRMAN. He is. Mr. Olsen? 

STATEMENT OF KEITH OLSEN, NEBRASKA FARM BUREAU, 

GRANT, NEBRASKA 

Mr. OLSEN. Thank you. My family and I operate a dry land farm 

in southwest Nebraska. We raise wheat and corn. I appreciate you 

29

coming to Grand Island today to listen to the views of a Nebraska 

producer and I’m glad you brought your good friends, Senator Nelson, to keep you straight, or maybe keep the Committee straight. 

[Laughter.] 

The CHAIRMAN. Both of them. 

Mr. OLSEN. The landscape of agriculture is constantly changing 

and this is very true since the enactment of the 2002 farm bill. Unpredictable weather conditions, markets, uncertainty with international trade, and variable input costs have produced turbulent 

times for production agriculture. 

This year has been particularly difficult for Nebraska producers 

as we continue to have a widespread drought in the main parts of 

the state, and lately have been hit with some very severe fires. 

This will result in severe losses of crop, hay and livestock production. In addition, production costs have significantly increased due 

to skyrocketing costs of fuel, fertilizers and other energy related inputs. 

Our long-term goal is to have a level playing field, around the 

world, so that farmers and ranchers can compete in open markets 

without tariff and non-tariff barriers, without export subsidies, 

without currency manipulations and without production-distorting 

domestic subsidies. To get to that goal, there is a gap between 

where we are now and where we want to be in the future and it 

will take some time and it will take some transitional policies. The 

short-term reality is that we need a safety net in years when revenues decline due to low yield or low prices. The American Farm 

Bureau is taking the position that because of the collapse of the 

WTO talks, that we would support an extension of the current farm 

bill for at least 1 year, understanding that certain adjustments 

have to be made in the current farm bill to meet recent WTO rulings. We believe that the United States should not unilaterally disarm our farm program or give up negotiating opportunities when 

our trading partners remain unwilling to take the same steps. 

While we support the one-year extension, we understand the need, 

in the long-term, to look at a new farm bill. One of the keys that 

we think needs to be continued in the new farm bill is a good safety net. We talked about that with the past panel substantially. 

When you developed the 2002 farm bill, we talked substantially 

about a safety net, which were loan deficiency payments and 

counter cyclical payments but we kind of forgot about the people 

who have crop failures. What safety net is there for them? I understand that the farm bill and the Crop Insurance bill are two different bills in the past and talked about in different times. I think 

they need to be combined. They need to be hooked together when 

revenue insurance comes into effect. 

Just on my own farm, a quick example. On some of my fields, 

my wheat guaranteed bushels have dropped from 31 bushels to 24 

bushels. Yesterday, I dealt with the my crop insurance, trying to 

settle up for my crop that I lost a substantial amount on this year 

and I lost $33 dollars an acre in coverage from where I would have 

been 5 years ago. 

My time is up. I appreciate you being here. My full comments 

have been submitted to the Committee. Thank you. 

30

[The prepared statement of Mr. Olsen can be found in the appendix on page 109.] 

The CHAIRMAN. Great. Thank you. Mr. Stoltenberg? 

STATEMENT OF ROY STOLTENBERG, NEBRASKA

FARMERS UNION, CAIRO, NEBRASKA 

Mr. STOLTENBERG. Senators and guests, thank you for the opportunity to participate in your hearing today. I would like to start by 

stating that since the WTO talks are in limbo, now is not the time 

to make drastic concessions but to write a farm bill that works for 

our own country. We thank you for your efforts in the last farm 

bill. The direct payments and counter cyclical payments in the past 

have supplied some cash-flow and target prices to shoot for but it 

is not always wise to bet the farm on income transfers. Receiving 

a larger share from the marketplace would be a better practice. 

Recent price increases in crop inputs have eaten up our chances 

of showing a profit and the past farm bills have eliminated programs that producers could use to impact the market. While we 

support the efforts to increase exports, the facts also show that for 

feed grains, they have been flat for years, while domestic use has 

really increased, not only as feed but in the last few years, as a 

fuel. I believe we can supply our livestock and ethanol industry and 

exports while letting our producers gain some extra revenue in the 

marketplace. The following are some suggestions I have. 

A farmer-owned reserve should be established with storage payments starting upon enrollment. With the aggressive use of our 

current storage program through FSA, we could have a steady supply of quality grain for our end users. Temporary ground piles at 

our local elevators are very susceptible to spoilage and weather 

problems. Reserve storage payments would build more permanent, 

producer-owned bins and would allow producers to market their 

products where and when needed. 

Flexible fallow—with today’s technology of grid samples and 

yield monitors, we know where the spots are in our fields that do 

not return enough to cover our cost of production. We need incentives by conservation payments for producers who want to use this 

technology and identify those sandy knobs or alkali holes to 

produce forage for livestock. This program is very compatible with 

wildlife programs and would be a series of 1–year contracts so we 

could change, depending on demands and input costs. Country of 

origin labeling, which was introduced in the last farm bill, must be 

enforced. By putting your name and reputation on the label, consumers have more information to make an informed purchasing decision. A packer ban on long-term ownership of live cattle—most of 

our livestock producers in Nebraska are family owned and operated 

and those livestock receipts are a large part of our economy. We 

do not want to packers telling us, sorry we are out of the market 

for a time while we butcher our own cattle. Most producers own 

their animals. They raise their own feed and are proud of the high 

quality product they produce. They will also agree that low-priced 

feed grains will eventually lead to low-priced livestock. Research 

dollars to develop use for wet distiller’s grains—you don’t need to 

waste more energy driving this stuff down when it is already a 

good product the way it is. We just need some more uses for it. 

31

Encourage farmer ownership of renewable energy projects, either 

individually or through our local co-ops. These would include ethanol, bio-diesel or wind generation. These community-based plants 

would add greatly to the local economy. Payments limits are there 

to help family sized farms. It is time to be tough on enforcing these 

limits so that we don’t lose valuable programs for all producers. 

Thank you for your time. 

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

appendix on page 115.] 

The CHAIRMAN. Thank you. Mr. Kristensen? 

STATEMENT OF DUANE KRISTENSEN, CHIEF ETHANOL

FUEL, INC., HASTINGS, NEBRASKA 

Mr. KRISTENSEN. Welcome to south-central Nebraska and thank 

you for the opportunity to speak to the Committee. I’m proud to 

say that Chief Ethanol was the only ethanol facility operating 

when Senator Nelson began his term as Governor and we’re still 

running today, but at a sixfold increase from where we were at 

that time. Presently, we are at some heady times in the ethanol industry. The current geo-political climate proves true what some of 

us have been saying in the industry for a long time, that ethanol 

has a place in the transportation fuel industry in the United 

States. Ethanol is economically viable and environmentally friendly 

while being a tremendous economic driving force on Wall Street as 

well as, in my estimation, in rural areas such as we see here in 

Nebraska. At the outset, let’s be clear about the evolution of the 

Renewable Fuel Standard. The policy initiative responsible for ethanol growth was based upon the role of ethanol as an oxygenate. 

In that context, the Senate Environmental Public Works had jurisdiction over the issue because of the EPA administrative Clean Air 

programs. During debate over our efforts last year, members of the 

Energy Committee were actively involved because it was an issue 

that evolved into an energy program and a course was ultimately 

enacted as the Energy Provision and EPACT 2005. Today, we are 

clearly focused on the role agriculture can play in supporting domestic renewable energy development. DarFS may indeed be an ag 

issue today in addition to being an environmental and energy 

issue. That being the case, I encourage all of you and members of 

the Senate Energy Committee, as well, to take an aggressive position with regard to the key role biofuels can play in our agriculture 

future as well as our energy and environmental future. As a former 

member of the Senate Energy Committee, Senator Hagel previously proposed an RFS of 13 billion gallons. He stated, If we are 

going to adopt this policy of a renewable fuel standard, let’s make 

sure it is a meaningful policy and one that makes a meaningful 

contribution to our energy supply. At that time, 13 billion gallon 

RFS was considered by some to be a preposterous goal, a goal that 

could not be reached any time in the next decade. Today, that 13 

billion gallon figure is a meaningful figure and one that could serve 

as a potential floor and not as a ceiling. 

If changes are contemplated in the RFS, they should be based on 

practical limitations. If 15 billion gallons of grain-derived ethanol 

is considered to be a practical limit for grain ethanol in the nearterm, Congress should consider the contribution of cellulose-derived 

32

ethanol and biodiesel. Congress may also wish to consider a specific 

RFS for E85. This approach would encourage a greater total contribution from biofuels and therefore, a more meaningful contribution to the ag sector. 

Just the same, the important contributions of biofuels generally 

and ethanol specifically, it is important to have a stable public policy, especially on tax issues. The Federal Ethanol Tax Incentive, 

available to fuel marketers who blend ethanol is set to expire in 

2010. This incentive has proved to be an effective, flexible mechanism that helps stimulate ethanol marketing and the use of ethanol-based fuels. 

Congress should consider authorizing an extension for this incentive in the 2007 session. Delays in extending this mechanism will 

generate uncertainty in the financial community. If changes are 

contemplated to this tax policy, they should be gradual and certain. 

The incentive has gradually been reduced from $.60 cents a gallon 

for ethanol blended in gasoline to $.51 cents. Gradual changes can 

be accommodated in the marketplace. The ag sector has and will 

respond to the energy challenges we face today by providing challenging goals and a stable policy and we can continue to play an 

increasingly important role in the demand for renewable transportation fuels. Thank you. 

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

appendix on page 75.] 

The CHAIRMAN. Thank you very much. Mr. Nuttleman, the re- ported aggregate measure of support for dairy totals $4.5 billion. If 

the WTO negotiations resume and are successful, the United States 

will be restricted to $7.6 billion in the Amber Box. These reductions 

will require proportional cuts in all commodities, including dairy. 

How would dairy be able to adjust to that kind of scenario? 

Mr. NUTTLEMAN. I guess it would be my hope that we could 

maybe look at putting dairy in several different boxes, not only just 

the Amber box. If there was some type of program that could be 

in some of the other boxes, like the other commodity prices and 

maybe a program that could focus on dairy farmer income, as many 

of the panels before talked about as far as revenue goes, rather 

than on certain commodities. I know dairy has, in the past, used 

up quite a bit of the Amber box but when supports aren’t used, we 

really don’t use it. 

It’s in there as part of the payment. I think since I’ve been a 

dairy farmer, we’ve only used the support program probably about 

three different times in my 20 years. So I think by being able to 

move some of it out of the Amber box and into some other boxes 

when it is needed, and would be useful to dairy farmers. 

The CHAIRMAN. You mentioned MILC program in your opening 

comments. As we move to the next farm bill, is that the type of program that you would like to see continued or are there some other 

programs that we might ought to think about relative to a figure 

when commodity prices get lowered for small dairy farmers? 

Mr. NUTTLEMAN. For my particular farm operation, the MILC is 

a good form of a price safety net because when prices are triggered 

and they are a little lower, that money actually gets put back into 

my pocket, as a dairy farmer. I can use it to pay bills, I can use 

to pay input costs, and stuff like that. The MILC program, at its 

33

current level, the limitations are pretty low. I think we need to be 

able to look at Dairy Farmers of America which favors no caps. But 

we need to have a program that does not—incentivize over-production. But yet, at my family farm size, I’m only allowed to get about 

half of those. So we need to look at expanding that cap or putting 

it in an area where the family farm can still maintain an income 

from that program. Then again, as I mentioned before, if we need 

to extend that MILC program, if you would look at extending the 

current farm bill. I think the MIC program is a good program. 

The CHAIRMAN. Currently only dairy producer cooperatives have 

the ability to forward contract with their numbers. 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 non-cooperative dairy producers also 

be able to utilize this management tool? 

Mr. NUTTLEMAN. I think forward pricing and the ability to contract your product is very vital to us. I use commodities, as far as 

options go. I guess I wasn’t aware that maybe just co-ops had that 

particular provision but I think even if I didn’t market my milk 

through a co-op, there are times I have used options and futures 

contracts. Every producer does have the opportunity to lock in 

prices. I forward contract a lot of my cheese and everything else. 

I think dairy farmers should all have that option, to be able to forward contract their prices. I think if the statement says we are limited to co-ops doing that, I think there are other alternatives out 

there that allow dairy farmers to do the same as anybody that is 

with a co-op. 

The CHAIRMAN. Mr. Olsen, how would Iowa farmers, prior to the 

last farm bill programs generally and to commodity titles specifically? The same question I asked the previous panel and how 

would you rank the relative importance of those programs within 

the commodity titles? 

Mr. OLSEN. Well, since we are in Nebraska today, I don’t know 

how the Iowa farmers would answer that. 

The CHAIRMAN. Did I say Iowa? 

[Laughter.] 

The CHAIRMAN. Like I say, we have great staff. 

[Laughter.] 

Mr. OLSEN. I think my members would respond pretty much like 

the first panel did. I think the direct payment is a very important 

program. The farmers appreciate getting it in the springtime, when 

they can use those funds to pay for their expenses they incur in 

the spring. A lot of them would like to get it all at once instead 

of getting it two different times. The Marketing Loan program or 

Loan Deficiency Payment are extremely important to producers, especially in a year like last year when we had the really large corn 

crop. The prices went very poor. It gave farmers the opportunity to 

get some protection using the Loan Deficiency payment. Some of 

them were fortunate to contract corn at a little bit better price than 

that, so any price that they received for their corn was good. The 

counter cyclical payment—I don’t think it is a real big item because 

it hasn’t been used a whole lot. 

34

We get a little bit of the payments. I am more of a wheat farmer 

and we’ve gotten very little payments out of that. In fact, since 

2002, we’ve gotten very little payment from loan deficiency payments for wheat producers. But I think that is the way we 

prioritize the different levels of opinions. 

The CHAIRMAN. From a Farm Bureau perspective, on the issue 

of reduction in domestic support and as compensation for that, we 

receive access to European markets and the markets in Asia and 

South America. Do you think that is a fair compensation for a 

farmer? 

Mr. OLSEN. If we are allowed to move into foreign countries and 

hopefully increase our exports and in exchange, get less government payments, hopefully the market will reflect the increased exports. The challenges may be—and I’ll use wheat as an example—

A number of years ago, when I started farming, we would export 

close to 1.6 billion bushels of wheat some years. Lately we have 

been fortunate. We export 800 million bushels of wheat and I cannot see exports of wheat increasing substantially because wheat 

can be grown in a lot of different countries, a lot of areas and farms 

in other areas are getting very good at producing wheat. That particular commodity, I don’t know if there is much hope for an increase in exports. But those other commodities, I think it is very 

real and especially true if we can export meats. 

When we export a cow, we export pork, we are exporting our corn 

and we are exporting our soybeans. So it is extremely important 

that we have every opportunity possible to export agriculture commodities and the farmers of the United States will react to the effect that those exports have on the marketplace and we’ll be supported there. 

The CHAIRMAN. Mr. Stoltenberg, let me ask you that same question. Is it fair if compensation for our farmers for a reduction of domestic support, particularly by the 60 percent that has been proposed, to get access to foreign markets? 

Mr. STOLTENBERG. I guess in my opinion, exports are pretty fickle markets. They are there 1 year, they’re gone the next. I like the 

idea of exporting cattle and hogs because it adds value to what we 

do, when they export those. But as far as the raw products, to give 

up our domestic support, which are banker and everybody here, our 

ag suppliers, we all rely on those. I suppose the last I saw, the biggest exports numbers we had was in 1995 and 1996, for corn, anyway, when we had $5 dollar corn. People around the world, if they 

need it, they’ll buy it. But we need programs in place so that we 

can isolate these products and demand a little more from the marketplace instead of just turning it over to somebody that can ship 

it around the world. 

The CHAIRMAN. Should an increase in conservation or energy 

programs come at the expense of commodity programs. 

Mr. STOLTENBERG. No, I don’t think they should. Energy is a national concern. Why should farmers be cut back because we want 

the Nation to be more independent? So we can raise the grain and 

produce ethanol but we shouldn’t be asked to foot the whole bill on 

that. 

The CHAIRMAN. Mr. Kristensen, there is significant potential for 

all segments of agriculture to help supply the nation’s energy 

35

needs. Where should Congress focus its efforts and limited resources of the farm bill to help farmers across the Nation participate in this potential growth? 

Mr. KRISTENSEN. I think the Committee is in a unique situation 

here, as we go through these times, where the Agriculture Committee can take a very positive and prominent position in the energy situation and what is going on in this country, along with the 

Senate Energy Committee and the House, obviously. But I think 

there are a number of things that we need to look at. The renewable fuel standard—you can see by our production that the ethanol 

industry and agriculture overall, has responded to where these fuel 

prices are and we’re growing at a very rapid pace. We will be beyond any of our set points for the RFS substantially, as we go forward. So we need to revisit RFS and increase the RFS. Also, when 

we are looking at, the tax policy and provisions, I think we need 

to look at that and extend them out to make sure that we have a 

steady playing field as we go forward. There are a lot of things that 

are involved in the ethanol industry. 

The CHAIRMAN. How should Congress balance agriculture’s potential in renewable energy production with wildlife, environmental 

and feed stock concerns? 

Mr. KRISTENSEN. I think that we are sitting, again, in a position 

here in agriculture, that we have tremendous opportunities to 

produce crops and not only just the fundamental basic crops but 

also producing the energy crops, too. I think there are a lot of 

things that can be done in conjunction. Obviously, a lot of play has 

been on the cellulose, which is still a little ways a way, a number 

of years, before it economically works into it. But by taking some 

of the CRP ground and mowing them. That grass comes back 

stronger and better than what it was before. I don’t see tying up 

assets that we have out here and not being able to use to its maximum potential. 

The CHAIRMAN. Some have suggested that in the next farm bill, 

Congress should provide production incentives for other feedstock, 

such as switch grass, to be used to make ethanol. You addressed 

this somewhat, but in your opinion, do you believe we are ready for 

that and does technology exist now, to allow us to do that? 

Mr. KRISTENSEN. I’ve been in the ethanol business for over 20 

years and it continues to be more efficient, more cost effective 

every year that we go forward. Cellulose is not here today, economically but it will be. I believe there are some breakthroughs 

that could come. I think we need to look at an overall, comprehensive program. Grain-derived ethanol cannot meet enough of the 

needs of this country to supply the fuel but we certainly are a very 

important part that works today. Some of the other switch grass 

initiatives and some of the other products that we are looking at, 

I think certainly have their place. Which one will play out 5 years 

down the road, 10 years—I don’t know if any of us know that. But 

I think the Ag Committee and 

Congress overall, should be aggressively looking at this. I would 

prefer and I think most people would prefer that the money to stay 

in Grand Island and in this audience, as opposed to being shipped 

over to Iran or someplace. 

36

The CHAIRMAN. We don’t have the capability of growing corn 

with the yields that you did here in the Midwest but we do have 

an awful lot of soft wood timber and I was at Georgia Tech last 

week, visiting with those folks and they are on the verge, at Georgia Tech, of developing the technology to allow soft wood timber, 

in particular, for which we have lost our market over the years, 

into ethanol. And it is pretty exciting stuff. I imagine 20 years ago, 

you were still on the real initial stages of developing that here. So 

it is exciting for us to see what you all have done relative to the 

production of ethanol and to look forward to the day when we are 

producing it over our way, also. 

Mr. KRISTENSEN. I think that points out something very interesting. We are seeing that the ethanol industry is evolving into 

taking waste products, like pulp or like paper, and there are some 

real interesting things that have gone down because I could break 

down cellulose, the switch grass is getting a lot of attention, but 

that’s exactly what you have here and that’s exactly what you have 

in the waste trees. 

So there are an amazing amount of things going on right now. 

The CHAIRMAN. Senator Nelson? 

Senator NELSON. If we re-write Title I of the farm bill because 

of either a Doha round agreement or anticipated agreement, or because of trade litigations similar to Brazil’s successful challenge on 

cotton programs, what do you think would be the best approach 

that we could make in trying to protect ourselves but also put forward a farm bill. Would it be an extension of where we are or are 

there steps that we could take as initial steps? We’ll start with Mr. 

Nuttleman. 

Mr. NUTTLEMAN. At the present time, I would hope that it would 

just be an extension until it would be looked at more in-depth. As 

far as dairy goes, the dairy industry, in the United States, of what 

we produce, about 92 percent of the product is consumed at home. 

Eight percent of our product is exported and our exports are growing. About 2 years ago, we exported about 5 percent of our products 

and our co-op is working on joint ventures in other countries to see 

how we can do that. When it comes to dairy products, if we’re going 

to compete—I’m not going to say Brazil and some of them are going 

to be our competitors but our competitors are actually going to be 

New Zealand and Australia because they have to export about 90 

to 94 percent of their product. So just to have level playing field 

for them as far as to get our products in, without tariffs or the 

same amount of tariffs as what they could bring their products in 

right now. In the past, we’ve looked at trying to get tariffs on MPC 

that come into our country. There is no tariff on MPC so right now 

we do have an open door policy on the MPCs that come into our 

country. I know we’ve tried to get legislation through to get some 

type of tariff but dairy can compete very well in the open market. 

Right now, non-fat dry milk is trading at $.88 to $.90 cents, which 

is just a hair above what our price support program is. So right 

now, our non-fat dry milk is going into the world market. We just 

need a level playing field. I think we need to focus on the ones that 

challenge us the most, which is New Zealand and Australia, right 

now. I don’t know if that answered your question. 

37

Senator NELSON. Yes, it did. Thank you. From the standpoint of 

the Farm Bureau, facing a drought as we have for multiple years, 

you and I have talked about it, Keith, on so many occasions. Unfortunately, we like to think that the conversation will end but it 

doesn’t seem to end quickly. What are your thoughts about how we 

should deal with drought? We have crop insurance on the one 

hand, payments on the other and you’ve some of the problems that 

we have. Do you have any wisdom that you can share that we 

might consider in putting together this program? 

Mr. OLSEN. That’s a tough question. The drought, as we talked 

about before, has been going on for many years. 

Senator NELSON. I even named the drought to try to give it some 

significance, like hurricanes. 

Mr. OLSEN. In 1998, I went to McCook with Congressman Barrett, to talk about drought. He’s been out of office now about eight, 

9 years. I went back there this spring with the Governor, talking 

about drought again, in McCook. So those areas have been hurt 

hard for many, many years and I have spent a lot of time thinking, 

what do we do about this issue? How do we handle it? I can tell 

you how we’re trying to do it on our farm, right in the middle of 

the drought area. 

We’ve gone to 100 percent no-till operation. I mean we reduced 

our diesel purchases to what would amount to about $25,000 dollars this year. Of course, we increased our chemical costs. We 

bought a new header for our combine to leave our straw in the field 

instead of clipping it and it deteriorating, which will give us more 

cover for the shade, it will cover the soil and keep the soil cooler. 

Hopefully, it can conserve the moisture. There are things like that 

we can do but you’re looking at different crop practices but I live 

in that area. Normally—we used to be a wheat area. Now we raise 

wheat, corn, sunflowers, millet—or I should say, we attempt to 

raise because of the drought. None of the crops are working this 

year for most producers. Occasionally, we get a cup of rain, you 

have a crop. Maybe we’re having a permanent change in the weather and I think we need to look back at putting the ground into pasture, like we did 100 years ago. But so many pastures dried up this 

year, too. So it is really a frustrating situation we’re in and I don’t 

have a real good answer, but I think the role that the government 

needs to play—and I get this thought back from when I was in a 

class a few years ago. The instructor talked about the farm programs that evolved after the country went through the thirties. It 

was to make sure the farmers would not go through the same turmoil that they went through in the thirties. I think we have failed. 

I think a lot of farmers are going through the same turmoil that 

the farmers went through in the thirties. The answer—you know, 

we can work together and hope we come up with a solution. If I 

had the answer, I would be writing books or making talks and getting rich. But I don’t have the answers but together we can try to 

find those answers. I think the government needs to play a major 

role in providing a safety net and maybe we use that term too often 

but that’s what we need. We need that from the government. 

Senator NELSON. Well, would you suggest that the last thing we 

need to do is to eliminate the safety net? So we do need to have 

a program that will protect America’s capability to produce its own 

38

food. The second thing, as part of that, is that you’ve heard some 

discussion about how we structure the crop insurance program. In 

a multi-year drought, the base just keeps getting smaller so that 

the insured has a smaller base and as things get worse, there is 

less protection for them. So, would you agree that maybe structuring something that takes into account revenue as well as maybe 

yields, might be a good way to look at it so that we’ve got factors, 

more than one factor in calculating what the base is, so that if crop 

insurance is, indeed, a risk management tool, as it should be, that 

it is a better risk management tool? 

Mr. OLSEN. I absolutely agree with that. We need to have the 

ability to have a crop insurance program or revenue insurance program, whatever you want to call it, not to necessarily make a profit. 

Senator NELSON. No. 

Mr. OLSEN. But at least a guarantee that we can continue to stay 

in production. I don’t care if you are a livestock producer or a crop 

producer, even a peanut producer, we need to allow the farmers the 

right to be able to maintain their business. You know, you want 

to make a profit, that’s what we are in business for. But the government shouldn’t always guarantee a profit. 

Senator NELSON. Mr. Stoltenberg, in terms of specific ideas, do 

you have any workable solutions to make sure that farmers share 

in the benefits of biofuels production? One of the things that I’ve 

been noticing as I always like to point out and Duane did too, that 

when I started as Governor, we had one plant, the Chief plant and 

when I left, we had seven. There are 12–14 now. We’ve seen the 

increase and many of these are farmer invested, farmers are invested at the local level. Is there any other way to make sure that 

farmers can share in the benefits of ethanol and biofuels overall 

production? 

Mr. STOLTENBERG. I guess besides being an investor in one of 

these plants, the next best thing would be to hold your grain on 

the farm because in Nebraska, we’re just about going to have every 

bushel of corn raised in Nebraska almost run through an ethanol 

plant in the next few years and there is going to be tremendous 

competition to get that grain, especially in the summer—the July, 

August period when the only ones left are the stuff that are in the 

corners of the grain bins. So that’s why I mentioned if we could get 

a producer on reserve, we could hold that off the market and the 

farmer would benefit from that competition between ethanol 

plants, to secure their fuel needs. 

Senator NELSON. You run the risk of gambling multiple years on 

when you should hold and when you should sell, but do you think 

that the risk is—the reward is certainly there to take care of that 

risk. Would you agree? 

Mr. STOLTENBERG. I believe it is. That’s why when I propose 

these things, the competition, I believe, will offset the cost of the 

program because of lower counter cyclical payments, which we really kind of enjoy because when the price is low, we need that extra 

income. If it wasn’t that high, then we’re responsive to the taxpayers. We don’t take as much money from the government that 

way. I believe the competition going to these plants and through 

39

our livestock, will raise that floor on its own, eventually, and we 

won’t need those payments, near as much anyway. 

Senator NELSON. Mr. Kristensen, as you look out in the future 

and you see the ethanol industry in Nebraska, you did mention 

that the future for other cellulosis production—— we’re not quite 

there yet. What do you project that we would have in the way of 

production of ethanol just using corn-based production right now, 

what is the maximum, the ultimate that you would expect that we 

could do in Nebraska if we—and I say this to the cattle feeders—

close your ears for a minute—every kernel is ground into ethanol? 

Mr. KRISTENSEN. I don’t think the cattlemen need to close their 

ears because I’m a good proponent of why the ethanol industry 

really makes a good fit for Nebraska and states like us because we 

do have a good steady supply of corn—and when I say, corn—you 

don’t have to exclude other things—grain sorghum is used in the 

ethanol production but there is a tremendous corn crop that is 

being grown here every year and it is a very high quality and 

steady crop so we know consistently what we are using year to 

year. I was kind of pointing back to a little bit of what Mr. 

Stoltenberg said about having corn retained on the farm. That we 

see one of the advantages that you have on using feed grains and 

corn to be your feed stock, is that the corn quality is as good in 

July and August as it is. At the end of the growing season people 

do an extremely good job of maintaining the quality of corn. The 

benefits that we get and one of the things that we see in the transition over the years, is on our by-product. 

Back in the late eighties and early nineties, we dried all of the 

feed. By drying all of the distiller’s grain it is used as a protein 

source and we shipped almost all of that out of this state, predominantly California with a dairy industry because they were looking 

for proteins. We started a transition in the mid-nineties to wet 

ditillers and presently we don’t dry at all. We’re making all wet 

feed, which goes directly to the cattle industry, which the wet feed 

is sold more as an energy source and offsets corn. The cattle industry is very critical and vital for the ethanol industry. In fact, just 

from my own personal standpoint with this drought issue but we 

were out of grass early because we had an extremely dry spring 

and we spent the bulk of—this summer supplementing our cattle, 

our cows and calves, on grass with distillers grains. So it is a very 

advantageous thing that we have here in this state. When we talk 

about going into other forms of ethanol production one of the benefits that we’re going to get is, that there is a certain portion of the 

corn kernel and grain sorghum that just takes a ride through the 

plant and it ends up being into the feed. So there is a moderate 

amount of fiber and bran that ends up being in the distiller greens. 

With cellulosic enzymes that can break this down, all the sudden 

you are upping our ethanol yield on what we’re getting through our 

plants. 

Our yield has consistently increased over the 20-plus years that 

we’ve been producing. We’re growing well over a billion bushels of 

corn in this state. We’re 2.75 to 2.8 pretty consistently on ethanol 

yields. It’s going to climb up over three with cellulose enzymes in 

there. We’re going to get higher yields on that. You’re going to see, 

things that are coming on this corn production is phenomenal. 

40

We’re seeing yield curves increase relatively rapidly. I think we are 

going to see that continue. Talking to some of the companies, the 

genetics—— there is a tremendous potential out here for yields yet, 

this drought-tolerant gene is going to be out here for less water 

use. So, depending on how we want to structure all the acres, but 

there are a number of acres that will convert back over to corn if 

the incentive is there. I don’t know if I have a specific hard number 

but I can tell you that we are a longs way from it. 

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

The CHAIRMAN. Gentlemen, thank you. We could sit here and 

talk with you all day as we could with the commodity guys. But 

unfortunately, we have to move on. Thank you very much for being 

here, for your very insightful testimony and we’ll look forward to 

staying in touch and dialog as we continue forward. At this time, 

I’d like to ask our next panel to come up. Mr. Jay Wolf of Albine? 

Mr. WOLF. Albion. 

The CHAIRMAN. Albion, Nebraska representing the Nebraska 

Cattlemen; Mr. Jim Hanna of Brownlee, Nebraska, representing 

the Independent Cattlemen of Nebraska; Mr. Bill Luckey of Columbus, Nebraska representing the Nebraska Pork Producers Association; and Mr. Dwight Tisdale of Kimball, Nebraska representing 

the Nebraska Sheep and Goat Producers. Gentlemen, likewise to 

you as with the other panels, we appreciate you taking time to be 

here with us today to share some thoughts with us and we look forward to your comments. We’ll insert your full statement in the 

record. Mr. Wolf, we’ll start with you. 

STATEMENT OF JAY WOLF, NEBRASKA CATTLEMEN, INC., 

ALBION, NEBRASKA 

Mr. WOLF. Mr. Chairman, Senator Nelson, I am Jay Wolf, third 

generation cattle rancher and feeder from Albion, Nebraska. I currently serve as President Elect of the Nebraska Cattlemen and I 

am board member of the National Cattlemen’s Beef Association. I 

will provide comments this morning representing NC on several 

important issues. The Conservation Program—NC supports continuation of provisions that allow haying and grazing of the CRP 

acres at a reduced rate for that year. During times of drought, such 

as now, the opportunity to utilize grass on the CRP has helped cattle producers survive. It is the most common, effective disaster program the Federal Government has and we strongly advocate that 

these provisions continue. EQIP has been a very effective program 

for ranchers as it provides critical assistance in developing grazing 

and water management. This is especially true during these 

drought years. I can personally attest to the meaningful benefits of 

EQIP, as my ranch has received less than 20 percent of normal 

rainfall during the growing season. Yet EQIP has been instrumental in helping me maintain both the cattle herd and the health 

of the range. The use of EQIP to assist feedlots in constructing better waste management controls has been far less effective. 

NRCS requires extra expense and bureaucracy over and above 

what ETA requires, therefore the costs become greater than the 

benefits. We welcome the opportunity to work with NRCS to 

streamline and harmonize feed lot EQIPS so that it can be as effective as the grazing program. We encourage the Senate to continue 

41

and strengthen EQIP, as it is truly a program that helps producers 

make positive, long-term changes in the environment. It is a classic 

win-win. Disaster assistance and relief—failure to plan means 

planning to fail. Cattlemen need a drought relief program that is 

preplanned rather than reactive and ad hoc. It needs to be effective, efficient and funded. 

Title 10—COOL is a marketing program that would best be 

served outside the farm bill. While NC supports mandatory COOL, 

we cannot support the legislation as it is currently written, because 

it is seriously flawed. Language contained in the 2002 farm bill imposed unnecessary costs on the entire beef production system. Also, 

COOL prohibits use of mandatory animal live heat, which is illogical. Research—we need to possess research dollars, research funds 

will be needed to develop new uses for ethanol by-products and to 

develop ways to use these valuable co-products without threatening 

the environment. We need continued research to control or eradicate animal diseases. Johne’s Disease is one priority in need of expanded funding, to find a cost effective way to eradicate it. Additional NC priorities include re-authorization of mandatory price reporting, exempting manure from Super Fund regulations and exempting ag dust from EPA’s coarse particulate matter regulations. 

Thank you for providing the opportunity to testify and I’ll be 

happy to respond to questions. 

[The prepared statement of Mr. Wolf can be found in the appendix on page 127.] 

The CHAIRMAN. Thank you. Mr. Hanna? 

STATEMENT OF JIM HANNA, INDEPENDENT

CATTLEMEN OF NEBRASKA, BROWNLEE, NEBRASKA 

Mr. HANNA. Good morning, Senator Chambliss and Senator Nelson. My name is Jim Hanna. I am a fifth generation cow/calf producer from Brownlee, Nebraska. I appreciate the opportunity to 

provide comments on the development of the 2007 farm bill. The 

goal of any farm legislation should be to enhance the climate for 

America’s farmers and ranchers. With all due respect, Congress 

must understand that discussions of government subsidization, 

rural development and the like, are secondary to the more pressing 

problem of the lack of profitability we see in agriculture today. 

Until we come to grips with creating a business climate in which 

the income generated by the sales of our farm and ranch products 

is sufficient to pay for the land, cover the operating debt and the 

overhead and provide a modest profit, we will never attract young 

people back to the land or reverse the decline of our rural communities. U.S. consumers have access to the safest, most diverse and 

inexpensive food supply in the world. 

However, they must understand that the cost to produce to it is 

constantly on the rise. While it is true that cattle have reached new 

but certainly not unreasonable price levels, it should be noted that 

the percentage of the cost of beef at retail attributable to the cost 

of the animal continues to decline. In other words, cattle producers 

are receiving an ever-smaller share of each dollar generated by the 

retail sale of beef. With these comments in mind, the following 

items are critical for inclusion in the 2007 farm bill. First, a comprehensive competition title must be drafted in order to ensure 

42

that the more concentrated segments of our industry do not unduly 

influence the independent business structure that is the hallmark 

of our farmers and ranchers. This title, at a minimum, should address topics such as limits on a meatpacker’s ability to own and 

control cattle in excess of 14 days prior to slaughter, prohibiting 

discriminatory pricing and enacting reforms that would end unfair 

practices in agricultural contracts. It is important to note that currently, cattle markets are at the mercy of packers voluntarily reporting price information. Therefore, before the 2007 farm bill is 

written, we need the immediate re-authorization of the Livestock 

Mandatory Price Reporting bill, including the provisions proposed 

by Senators Grassley and Harkin. Our second concern is that at 

least cost and logical mandatory country of origin law remains as 

part of the farm bill package. Recent free trade agreements continue to expose the domestic live cattle industry to greater and 

greater threats from imports of cattle and beef products. U.S. producers must be given a tool to delineate and differentiate their 

product. Implementation costs can be lowered if processors can distinguish U.S. and foreign cattle entering into production lines. Currently, all cattle from Canada and Mexico are branded for health 

and safety reasons. Allowing packers to rely on these markings will 

greatly lower the cost of COOL. Immediately removing cattle from 

the J-List will make such marking of imports permanent and universal, while cutting the cost for COOL and simplifying animal 

trade pacts. 

In closing, thank you, Mr. Chairman and Senator Nelson, for 

taking the time to listen to the concerns of the Nebraska Cattle 

Producers here today. I welcome your comments and your questions. 

[The prepared statement of Mr. Hanna can be found in the appendix on page 62.] 

The CHAIRMAN. Thank you. Mr. Luckey? 

STATEMENT OF BILL LUCKEY, NEBRASKA PORK

PRODUCERS ASSOCIATION, COLUMBUS, NEBRASKA 

Mr. LUCKEY. Good morning, Chairman Chambliss, Senator 

Nelson. I am Bill Luckey, a pork producer from Columbus, Nebraska. Along with our swine operation, we also have a cow/calf 

herd and a small feedlot and we produce row crops. I am currently 

the President of the Nebraska Pork Producers Association and we 

are very grateful to you for holding these field hearings and for this 

opportunity to provide you with the pork industry’s views on what 

is working and what we need to improve upon as you consider the 

re-authorization of the farm bill. Pork producers have actively been 

engaged in discussions relating to the crafting of the 2007 farm 

bill. 

We have organized the 2007 farm bill Policy Task Force that is 

in the process of reviewing and evaluating many of the farm bill 

issues that will affect our industry. As pork producers, our livelihood is tied to many of the agricultural commodities. This morning, 

I would like to share some of the general comments and thoughts 

of the nation’s pork producers we have on the 2007 farm bill. Pork 

producers make an investment in the industry to maintain a competitive edge domestically and globally. The 2007 farm bill should 

43

also make an investment in competitiveness by increasing and encouraging research, open access to new markets, enhancing conservation efforts and rewarding producers for good practices. Taking these important steps will maintain a vibrant agricultural sector that provides a safe and secure food supply, innovative fuel options using our natural resources and continued abundant feed for 

our animals. We know that the members of this Committee understand better than anyone, the significant economic contribution the 

pork producers make to the U.S. agriculture sector, how important 

it is to grow our international markets and maintain our global 

competitiveness. The U.S. pork industry enjoyed its 15th consecutive year of record exports in 2005. These exports amounted to 

$25.44 per dead slaughter. Pork producers, along with other livestock and poultry producers are the single biggest customer for 

U.S. feed grain producers. 

Our single largest expense by far is the feed we purchase for our 

animals. USDA estimates that livestock feed will account for six 

billion bushels, over 50 percent of the total corn usage and livestock will use the majority of the domestic beans produced in 2005. 

Pigs consume just over one billion bushels of corn and the meal 

from nearly 418 million bushels of soybeans. Pork producers are 

strong and vital contributors to the value-added agriculture in the 

U.S. and we are deeply committed to economic health and vitality 

of our businesses and the communities that our livelihood helps 

support. The pork industry has changed dramatically in this country since the early and mid 1990’s. Technology advances and new 

business models changed operation size, production systems, geographic distribution and marketing practices. The demand for meat 

protein is on the rise in much of the world. Global competitiveness 

is a function of production, economics, environment regulation, 

labor costs and productivity. The United States must continue to 

be a leader in food production and meet the needs of increased consumer demands. As the pork industry evaluates the re-authorization of the 2002 farm bill, we have formulated some guiding principles for consideration. 

The next farm bill should help the U.S. pork industry maintain 

its current points of competitive advantage. These include low production costs, unparalleled food safety, further advances in animal 

health and consumer driven for the processing. The next farm bill 

should strengthen that position by expanding and including such 

elements as trade assistance, research, risk management tools, 

science-based conservation programs and EQIP regulations. Finally, the farm bill should not harm the competitive position of the 

U.S. pork industry by imposing costs on the industry by restricting 

its ability to meet consumer demand in an economical manner. 

Government intervention should not stand in the way of marketbased demands. In conclusion, while my comments today have been 

preliminary, together I believe we can craft a farm bill in 2007 that 

meets our objectives of remaining competitive producers in both domestic and world markets. We look forward to the journey and believe your leadership will allow the U.S. agricultural sector to continue and prosper for many years to come. Thank you. 

[The prepared statement of Mr. Luckey can be found in the appendix on page 77.] 

44

The CHAIRMAN. Thank you. Mr. Tisdale? 

STATEMENT OF DWIGHT TISDALE, NEBRASKA SHEEP AND 

GOAT PRODUCERS, KIMBALL, NEBRASKA 

Mr. TISDALE. Thank you, Senators. I appreciate the opportunity 

to speak today. I am representing the Nebraska 

Sheep and Goat Producers and the American sheep industry. 

There are approximately 68,000 farms and ranch families producing lamb and wool, driving about a $500 million dollar industry. 

That’s not a large industry compared to my colleagues here. I feel 

a little bit like the low end here but nevertheless, these producers 

have aggressively developed programs to strengthen domestic industry, like the $2 million dollar a year Lamb Board check-off program, promoting American lamb—not New Zealand or Australia 

but American lamb and the American Wool Counsel, which has 

helped develop some flame-retardant, exceptional combat clothing 

for our Armed Services. 

The Wool Loan Retention Program has been effective in helping 

the promotion and retention of ewe lambs and the growth of the 

industry and we want to continue that growth. The Wool Loan Deficiency has provided the only—and I repeat—the only safety net 

for the sheep industry business. I encourage the Committee to reauthorize the Wool Loan Deficiency payments at a base loan rate 

of $1.28 a pound, not the dollar that it is now. This would provide 

the benefit of the programs as originally intended. The sheep industry actively participates in the USDA Foreign Market Development, Market Access programs and Quality Sample programs and 

encourages the inclusion of these in the next farm bill. The National Sheep Industry Improvement Center was established to provide loans and grants to improve the industry’s infrastructures. 

Continued funding of the National Sheep Industry Improvement 

Center is vital and beneficial to the industry. That is the only place 

where places like packing plants, wool warehouses, etcetera, can go 

borrow money to develop these infrastructures. Our industry submitted in 2005, to USDA, the Lamb Risk Program. The lamb industry has no price risk tool available, unlike the cattle and the pork. 

We need this pilot program implemented. Our industry needs mandatory price reporting. The stop gap voluntary program was reporting something close to half the sales. That is not a reporting system. We need your help in re-authorizing this mandatory price reporting. Thank you very much for your time. 

[The prepared statement of Mr. Tisdale can be found in the appendix on page 120.] 

The CHAIRMAN. Thank you, each of you. We appreciate your very 

insightful testimony. I know all of you have environmental and 

conservation issues in your respective industry and I’d like to ask 

you to each address what is your No. 1 environmental or conservation issue to current conservation programs, address that issue and 

what do we need to think about as far as improvement of the conservation title to address your issues. Mr. Wolf? 

Mr. WOLF. The EQIP program would be near the top of our list. 

It works well for the ranching program. We would want to see that 

maintained and as I mentioned, we need to improve how it can be 

used by the feedlots. That’s important because we’re continuing to 

45

see added pressures constantly from EPA and we need an effective 

EQIP program for feed yards so that they can come into compliance. We talk about what is putting small producers out of business. We would start with the EPA and that is not in the farm bill 

but here’s a tool that can help us try to comply with some of their 

regulations that we’re not utilizing as well as we should. On the 

CRP, we really like the hay and grazing provisions for dry years. 

We would like to continue to find ways where we can streamline 

and simplify that so that it can be done quickly enough in dry 

years. You have a limited time horizon that you can do it effectively. You don’t want the delays to take you outside that effective 

window and furthermore, we want to find ways, if we can, to open 

up CRP acres that are in areas that have had sufficient rainfall but 

are within the transportation distance of the dry areas because 

often, that is where the feed is. You’re opening up CRP in dry 

areas and it is limited there. Those would be some of the environmental or the conservation thoughts that I have. 

The CHAIRMAN. Mr. Hanna? 

Mr. HANNA. From strictly a cow/calf producer’s point of view, the 

conservation programs that Jay alluded to may be aren’t as sharp 

of a focus for us. We see through feedlot’s ability to access money 

to do some of their manure control and some of those kind of 

things. For myself, EQIP funds have not been anything that we’ve 

pursued. They just aren’t there to do the kind of things that we 

need to do. But as far as other things that would help us access 

more feed, opening up CRP, as Jay alluded to, would certainly benefit cow/calf producers. 

Mr. LUCKEY. On the pork production side, the EQIP funds, we 

haven’t been getting very much money coming into that program 

for the pork producer. A lot of it seems to be going into the cow/

calf side or to the feedlot side, probably more so than what we’ve 

ever gotten for the pork industry. There are quite a few bells and 

whistles, so to speak, to jump through and some timing issues. 

Sometimes when you have a building construction going on, you 

need some answers a little bit quicker than what the government 

seems to be able to help you out with. I know of one producer who 

has used some money for some manure facilities and they said it 

has taken several years to get that but he waited for it. And it 

would be nice to move a little bit faster, possibly, to get these EQIP 

funds for the manure management program to utilize different 

types of facilities, whether it be lagoon or deep pits, things like that 

and possibly something also into a little research to help with some 

odor and control, research into those programs also. 

The CHAIRMAN. Mr. Tisdale? 

Mr. TISDALE. Thank you. I’d like to speak from two perspectives. 

We have a farm in Kimball, Nebraska, raising things like sugar 

beets, edible beans, malt barley, wheat and corn. We farm for a living. When we talk about conservation, we raise corn, wheat and 

the barleys not as a revenue crop but to remain in conservation 

compliance with the present farm programs so that we can raise 

edible beans and we can raise sugar beets at a profit. Our farm has 

been working and works well with the present farm programs as 

they are written. As far as what is my most pressing concern, I’d 

have to say that water is at the top of the list. Water is our enviVerDate 0ct 09 2002 15:29 Nov 07, 2006 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 C:\DOCS\30125.TXT SAG2 PsN: SAG2
46

ronment and our environment feeds the American people. They 

talk about water and drought. We are in the midst of a drought. 

I think it is going to here for a long time. We’ve gone from 12 to 

14 inches of precipitation in Kimball County to I’m guessing an average around 7 or 8. You cannot raise a crop on dry land there, I 

don’t care what it is and return a decent amount for your investment for the risk involved. Because water is where it is in my environment, I use irrigation water. Everything we raise is under irrigation. Water is being taken from agriculture. It’s been taken for 

things like to water the yards in San Diego or to build lakefront 

property in Phoenix. 

I’m talking about the Colorado River. Water priorities have become turned upside down. Doesn’t it count that the American farmer feeds the American people but we have to give up our water for 

recreation? 

The last thing I have under environmental and conservation concerns is the American farmer. You know, he feeds all the people 

in the United States and it sounds to me like we’re going to have 

to produce the energy for the United States. We need to have a little protection in the United States of our water and our livelihood. 

Now, speaking from a standpoint of the sheep industry, the existing programs——

EQIP, etcetera are OK. Sometimes it is hard to fit those programs into your exacting environment. There needs to be more 

flexibility. And before you ever write the program, please fund it 

first because I hate to apply for a program and then finding out 

2 years later, I’m finally going to get the money when I needed it 

2 years ago. That does not work. I don’t know how it works in your 

cash-flow, but it doesn’t work in mine. 

The CHAIRMAN. Thank you. We are constantly remind the appropriators that we need money to fund our programs, I assure you. 

All of you have mentioned mandatory price reporting as a necessity 

in your respective industry and as you probably know, we are kind 

of at loggerheads right now. The House passed a 5–year mandatory 

price reporting bill and we passed a 1–year because of some concerns that Senator Grassley and Senator Harkin have relative to 

that particular issue. But I hear all of you saying that it is important to your respective operations that we have mandatory price reporting. Talk for a minute if you will, each of you, about forward 

contracting, as well as country of origin labeling. 

Mr. LUCKEY AND MR. Hanna mentioned COOL but I’d like for 

you to amplify on that in any way and particularly with respect to 

the funding of the cost of it, because what we have always seen at 

our level, from the policy level, that when we mandate these programs, that the folks that market the product, the folks that are 

putting it out in the grocery stores are not going to pay for that. 

The folks who deliver it to the grocery stores are not going to pay 

for that and it always comes back down to the farmer paying for 

it. That concerns me, for us to mandate a program and at the same 

time, we’re hearing you guys talk about what tough times you’re 

having and here we’re going to put another expense into your operation that you didn’t anticipate before. So if you will, talk to us a 

little bit about that and try to help us think through those respective issues. 

47

Mr. WOLF. Well, when it comes to COOL, when the rules were 

written, it was almost written in a way that there would be no possible way for the program to work. Big fines for retailers, especially 

small retailers would be, I think, very reluctant to support a program or even carry beef for those types of owners, penalties hanging over their heads. So you really need to think about turning that 

around and looking at from the producer’s standpoint and making 

it the producer’s responsibility to produce a U.S. product and be 

able to verify to buyers of our products that it is a U.S. product 

if it is going to be labeled that way. There was a real complex set 

of label rules written. It seemed way more complex than we ever 

anticipated or desired. It just got to be a bureaucratic nightmare, 

you’re absolutely right. So if there is going to be a COOL program, 

it’s got to be scaled way back and simplified, one that retailers 

would look at as an advantage rather than something that would 

be a penalty to try and utilize. 

Mr. HANNA. Senator, you asked a number of questions and we 

could probably spend all day talking about them. In the mandatory 

price-reporting field, of course, it is important to us in our cattle 

industry that we have transparency in that marketplace. Right 

now, I think we are lacking some of that. There are too many loopholes in that program as it has been administered. We need to take 

a strong look at the J-O recommendations and those recommendations of Senators Grassley and Harkin as well. As far as tightening 

up some of the requirements, making sure that we have a good feel 

for what our market is doing. An awful lot of our business—Jay’s 

business and my business—are decisions that we make, are dependent on what is going on in the current marketplace. And if 

that is not transparent to us, if we don’t have a good understanding of that cash marketplace, our forward contracting, our futures markets, don’t operate in a logical manner either. So it is 

critical that we are able to put together a price-reporting package 

that gives us a good feel, a good sense, of what is going on in the 

marketplace. Forward contracting, I think we’ve got two issues that 

we need to touch on in that arena. In restricting the use of contracts, I think it is important that the rules be written so that 

those contracts are handled in a fair manner so that certain entities in our business are not using leverage that they have to force 

producers into contracts that are essentially not good for their bottom lines. We need to make sure that we don’t confuse that with 

the idea of forward contracting through the use of futures markets. 

That is a viable thing for our industry and we need to maintain 

that ability to access those futures and options contracts. As far as 

COOL is concerned, COOL has been the cornerstone of our Independent Cattlemen’s Organization and the R-Calf organization as 

well. 

Certainly we agree with Jay that the rules as promulgated are 

unworkable. They definitely need to be revisited. There are a number of ways that we feel country of origin labeling, could be handled in order to address some of those. One of those I alluded to 

in my testimony, which would be removing beef from the J-List, 

recognizing it as being a cyclical and perishable item. Then we 

could use it to mark our imported beef as well. As far as the cost, 

I think we need to recognize that right now, the consumer doesn’t 

48

have a good concept of what it is that they are able to purchase. 

We’re able to apply a USDA grade stamp to nearly all the product 

that comes into the U.S., so there is no differentiation. We believe 

and our organizations believe that given the choice, if the markings 

are there, that the consumer will be willing to pay a higher price 

for those products, so much so that we firmly believe it is a necessary part of the farm bill and something that we are going to 

continue to pursue aggressively. 

Mr. LUCKEY. As far as the price reporting, mandatory price reporting, we are in favor of that again. The one thing that we have 

a little concern about is Nebraska. Actually, we have a law here 

in Nebraska, I believe, that states if we don’t have the mandatory 

price reporting at the Federal level, that Nebraska has to come up 

with our price reporting system. And if that be the case, we’re 

going to have to hire more people and have an extension here in 

Nebraska. Right now, we can utilize the Federal program to satisfy 

this need. Right now, the voluntary work that is being done is good 

for now but in the future, we’re going to have to be aware of that, 

if this sort of is put on the back burner or eliminated, Nebraska 

has to come up with the funds, the personnel and the resources to 

handle this price reporting in the State of Nebraska. It would just 

be a lot better to have the Federal Government do it instead of a 

lot of little pieces all over the place, little entities doing it all over. 

Just have it come from one source. As for the forward contracting 

aspect, the pork producers associations that producers should be 

able to have the marketing opportunities that they need to remain 

profitable. Let those producers figure out what they need to remain 

competitive. As far as the COOL situation, I’m going to be a little 

bit of the odd one up here, I think. We’re looking more for a voluntary COOL program instead of the mandatory. When the program first came out, we were for mandatory COOL but when you 

started to really dig into it and you saw the expense, the regulations, and paperwork—— everything going on, we thought, is this 

really to the benefit of our producers and to the consumer. If the 

consumer wants to have basic knowledge of where their product 

came from, let them pay for it. If a producer can receive a penny 

more a pound, then let that go back to the consumer and have the 

consumer help pay for that. If it is a really big thing that has taken 

off, you’ll have everyone doing it, if there is an economic impact for 

us. In order to make a few extra bucks, we’ll gladly do it but when 

you look at single-family households, living on a real strict budget, 

do we need to increase their expenses for food? We really want to 

maintain a key food supply, basically. Where else in the world can 

we go and have what—11 percent, I think, of our disposable income 

is spent on food. We don’t want to have to increase these food 

prices for people on fixed incomes. So that is one thing we would 

like to see. A voluntary—it becomes a marketing program then, basically or let the marketplace dictate the prices. 

I kind of think enough has been said about the mandatory price 

reporting. We really need it. As far as the sheep industry having 

any protection with the Board of Trade, there is none. We have no 

forward contracting. We have no insurance. We’re out there on our 

own and I’ll give you a little example of what we’re fighting. The 

European Union provides subsidies over $2 billion a year to their 

49

sheep producers and maintains strict and effective tariffs. This has 

created an unfair advantage for import lamb and made the U.S. 

the target for Australia and New Zealand lamb. Our industry looks 

to you to fix this problem. As far as country of origin labeling is 

concerned, we produce a far superior product than what Australia 

and New Zealand does. Country of origin label is a sales tool that 

we need. Besides that, if you are going to sell to the major food 

stores like Wal-Mart, you’re going to have to do it or they are not 

going to buy our products. Thank you. 

The CHAIRMAN. Thank you. Senator Nelson? 

Senator NELSON. Well, to Jay and Jim, I’m nixing that about 

grinding the last kernel of corn to get your attention but I’ve never 

felt that is much of a threat or something we have to be concerned 

about. But clearly, the corn that is grown in Nebraska has always 

in our mind, been for two sources: one to export any surplus but 

for value added purposes to our livestock industry. We recognize 

that is the case and so we all have an interest in making sure that 

the conservation programs that are in place for production agriculture, in turn for crops, are appropriate but also the production 

of your business also has to have appropriate conservation programs. You mentioned a need to streamline the conservation programs. I might not have picked up exactly whether you had some 

specifics, but maybe it would be helpful to us to have a couple of 

ideas of what we might do to have them more streamlined. Jay, 

let’s start with you. 

Mr. WOLF. I know that Nebraska Cattlemen’s staff has been 

working on those recommendations, Senator and I will have them 

forward them to you. 

Senator NELSON. Would you get those? 

Mr. WOLF. Yes. 

Senator NELSON. I think it would be very helpful because there 

are different kinds of conservation programs and we want to make 

sure that what we do is that we don’t have a one size fits all. We 

ought to have it industry specific. Jim, you stressed confrontation 

and market consolidation issues. Do you think that these are the 

major problem you’re facing within your industry right now. You 

mentioned them but are there others as well? Or are these the primary? 

Mr. HANNA. I guess from our organization’s standpoint and from 

my standpoint personally, I would probably rank those competition 

issues first and then probably following that quite closely would be 

environmental issues, water issues and some of those kind of 

things. Essentially, we’re looking at a situation right now where we 

have four companies in the beef packing industry that control over 

80 percent of the production. Generally, economists will you tell 

when you have a four-firm concentration over 40 percent, you need 

to start scrutinizing those industries very carefully for the kind of 

leverage and power that they are holding over the rest of the industry. I think it is just critical to the survival of independent, 

small farms and ranches here in the State of Nebraska, that we 

make sure that we’re being dealt with fairly, that all the transactions are open and available to all producers. It’s just a critical 

item on our list. 

50

Senator NELSON. I would have thought that CIRCLA might have 

been a bigger factor but I didn’t hear anybody focusing on it. 

Maybe I missed that in terms of trying to make animal waste into 

hazardous waste, for purposes of the EPA’s consideration. Since 

virtue can’t be the only reward in this business, I wanted to point 

out that I’m one of the co-sponsors of the legislation that would 

stop that from happening but maybe you can give us your concerns 

about environmental challenges that you face in terms of regulation, current regulation but also what you worry about on the horizon and what that will do for or to your industry, including Bill. 

I know you’ve already been down that pike. 

Mr. WOLF. You’re not going to turn the red light on me? 

Senator NELSON. No, I won’t. 

Mr. WOLF. OK. This could take a while. With EPA, it just goes 

on and on. Most recently, with the coarse particulate matter regulations, they are going to make dust illegal. Their own advisory 

group told the EPA that the science didn’t justify these regulations 

yet. Yet, EPA has gone ahead and gone forward with it. They’ve 

talked a little bit about an inclusion of agriculture and mining but 

we are not at all taking any comfort in that. That is one. Another 

one is, as you mentioned and I mentioned in my remarks, was the 

Super Fund. That’s insane, to try and list manure as a toxic waste 

or treat it like Love Canal. It’s insane but it is a tremendous threat 

to our industry. The K–4 rule, where it is one size fits all. You talk 

about something that is driving small producers out of business, 

that would be top on my list because small producers pose smaller 

risks to the environment yet they are all being required, basically, 

to meet the same standards. It is illogical. Like I said, I could go 

on and on. I’ll stop there. 

Mr. HANNA. Certainly from my point of view, I don’t own a feedlot. I don’t have cattle in confinement at any time during the year 

but what affects the small feedlots, what affects Jay and family 

feeders around the state and nationwide, affects my bottom line as 

well. If they are spending more money to get into compliance with 

these EPA regulations, they don’t have money to spend on cattle, 

very simply. So it’s important that those regulations be drafted appropriately and with these things in mind that Jay has mentioned. 

A concern to those of us in the cow/calf industry and like I said, 

we don’t have cattle in confinement right now but it is how those 

definitions of confinement get drafted. 

There has been some question about if you have cattle, say a 

number of cows in a lot during the springtime for calving, does that 

get defined as a confined animal feeding operation? 

And if it does, here again, trying to bring us into compliance with 

those regulations is ludicrous. We don’t have the ability to do that. 

We see small feeders around the state. A gentleman in the panhandle, who I fed cattle with for a number of years—or that back 

grounded cattle for me, I should say. Finally just went out of business. It was not a good financial decision for him to bring his yard 

up to compliance. He was over the number; he was over 5,000 

head. It was going to cost him between a quarter and a half of million dollars to bring that lot into compliance and that lot wasn’t returning the kind of money to justify putting that expense in. 

Senator NELSON. Bill? 

51

Mr. LUCKEY. As far as these programs, I think the little lights 

may have curtailed some of our comments on that. We would have 

gotten into that possibly, had we a little more time but right now 

with—when we came in and talked to you, I believe that spring 

and when you agreed to sign on to that and we appreciate that but 

right now in our area, fertilizer is almost considered a commodity. 

I have neighbors who call me up and say, hey, if you don’t have 

time to haul the manure or something, why, we’ll gladly do it if we 

can have it. And basically, it is treated almost as a commodity in 

some locations, especially in Iowa. But in Nebraska, on my own 

fields, we apply manure and we get to reduce the commercial fertilizers that we put on greatly. There are times when we haven’t 

put on any commercial fertilizer at all. This isn’t something that 

you put it on today and it’s going to be used up in 1 year. It’s going 

to stay in the soil and in coming years, it will still be available. It 

is all organic. It is a natural product and it is something that we 

produce in our own operations. Also, as far as other issues, things 

affecting us, I left one figure out of my presentation and it was 

about Special Interest groups or activist groups getting into the 

farm bill, about trying to regulate our production and the care of 

our animals, how we do these kinds of things. 

These are some of the things that we have to keep out of the 

farm bill. We know how to produce animals very well and we take 

great pride in doing that. I don’t think some activist group should 

be out here telling us how to produce the animals that we have in 

our care. 

Senator NELSON. Dwight, do you want to finish up? 

Mr. TISDALE. I don’t believe there are any sheep feed lots in Nebraska large enough to come under this rule, however speaking 

from the standpoint of Colorado and Wyoming feedlots, there are 

and it is ridiculous. I think that is the easiest way to put it. Speaking from the standpoint of an irrigation farmer, manure is an absolute necessity for continued fertilization of your land because you 

cannot put on enough artificial fertilizers to duplicate what manure 

will do. Thank you. 

Senator NELSON. Thank you very much, gentlemen. Thank you, 

Mr. Chairman. 

The CHAIRMAN. Well, gentlemen, we haven’t even gotten to 

Japan and Korea that we can certainly talk about. But again, we 

appreciate very much your being here and particularly somebody 

like me. People ask me all the time, why do you go around the 

country and hold these farm bill hearings? Well, we could probably 

fit most of our cattle in Georgia in your feedlots and in your pastures. We are just not big livestock producers like you are here and 

that is why it is so critically important that folks like me have 

more of an understanding of not just the way you have to operate 

everyday but these rules and regulations that I happen to agree 

with you, are ridiculous but unfortunately, some of them we have 

to live with. So I thank you very much for being here and for giving 

us your input as we move forward with re-authorization. 

I encourage anyone who is here who did not have the opportunity 

to testify, as I stated in my opening comments, to visit the Committee’s website and if you’d like to submit testimony, you can find out 

very easily how to do that. This hearing will be open for five busiVerDate 0ct 09 2002 15:29 Nov 07, 2006 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 C:\DOCS\30125.TXT SAG2 PsN: SAG2
52

ness days for any additional comments that we might receive. I 

want to thank Farm Credit Service, particularly Mr. James Nigren 

for providing our coffee and pastries back there. We appreciate that 

very much and I want to thank all of you for showing up today to 

show your interest and express your concerns about the farm policy. With that, this hearing is concluded. 

[Whereupon, at 12:17 p.m., the hearing was adjourned.] 

(53)

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AUGUST 16, 2006

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